UPSC CSE Prelims
World Trade Organization (WTO) Previous Year Questions (PYQs)

Detailed Explanation:

Answer: Option 3 — 1 and 3 only

The Trade-Related Investment Measures (TRIMS) agreement under WTO prohibits investment measures that restrict and distort trade in goods. It addresses measures like quantitative restrictions on imports and local content requirements but does not regulate foreign investment per se or extend to services.

✅ Statement 1 – Correct: TRIMS prohibits quantitative restrictions on imports by foreign investors, such as mandatory local sourcing requirements that distort free trade in goods.

❌ Statement 2 – Incorrect: TRIMS applies only to investment measures related to trade in goods, not services. Trade in services is governed by the General Agreement on Trade in Services (GATS).

✅ Statement 3 – Correct: TRIMS is not concerned with regulating foreign investment itself; it focuses on investment measures that affect trade in goods, ensuring they do not create trade barriers.

📝 Short Notes: TRIMS Agreement

• Full Form: Trade-Related Investment Measures
• Part of: World Trade Organization (WTO) framework, came into effect in 1995
• Scope: Applies only to investment measures affecting trade in goods, not services
• Prohibited Measures: Local content requirements, trade-balancing requirements, foreign exchange restrictions related to imports, and export restrictions
• Objective: To eliminate investment measures that cause trade-distorting effects inconsistent with GATT Articles III (National Treatment) and XI (Prohibition of Quantitative Restrictions)
• Not Covered: Does not regulate foreign investment policies directly; does not cover performance requirements unrelated to trade
• Relation to Services: GATS (General Agreement on Trade in Services) governs trade in services, not TRIMS

Detailed Explanation:

Answer: Option 1 — 1 and 2 only

The Trade Facilitation Agreement (TFA) is a multilateral deal aimed at simplifying customs procedures, reducing costs, and improving speed and efficiency of trade. India ratified this agreement, which was a key component of the WTO's Bali Ministerial Package of 2013. However, the TFA came into force in February 2017 (not January 2016), after receiving ratification from two-thirds of WTO members.

✅ Statement 1 – Correct: India has ratified the Trade Facilitation Agreement (TFA) of WTO, demonstrating its commitment to streamlining trade procedures.

✅ Statement 2 – Correct: The TFA is indeed a part of the WTO's Bali Ministerial Package of 2013, which was agreed upon at the Ninth Ministerial Conference in Bali, Indonesia.

❌ Statement 3 – Incorrect: The TFA came into force in February 2017, not January 2016, after two-thirds of WTO members completed their ratification process.

Detailed Explanation:

Answer: Option 1 — WTO affairs

The terms 'amber box,' 'blue box,' and 'green box' are classification categories used in the World Trade Organization's Agreement on Agriculture to categorize domestic agricultural subsidies based on their trade-distorting effects. The Amber Box includes trade-distorting subsidies like price support and input subsidies that are subject to reduction commitments. The Blue Box contains subsidies tied to production-limiting programs that are exempt from reduction commitments. The Green Box covers minimally trade-distorting subsidies such as government services, food security programs, and environmental protection measures that are permitted without limits. These classifications are central to WTO negotiations on agricultural trade liberalization and subsidy disciplines.

Detailed Explanation:

Agreement on Agriculture (AoA), Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), and Peace Clause are all key agreements/provisions under the World Trade Organization (WTO).

AoA regulates international agricultural trade and subsidies; SPS Agreement sets standards for food safety and plant/animal health in trade; Peace Clause protects developing countries from legal challenges on certain agricultural subsidies provided they meet specified conditions.