Test: GATS, TRIPS & TRIMS - UGC NET MCQ

• Under the World Trade Organisation(WTO) agreements, member countries normally not discriminate between their trading partners means to grant someone a special favour and grant treat others normally.
• MFN means if the special statue is granted to a trade partner, it must be extended to all members of the WTO.
• Importance of MFN is shown by the fact that it is the first clause in the General Agreement on Tariffs and Trade (GATT)
• MFN is also a priority in the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of intellectual property rights (TRIPS).

• The assertion is correct as the TRIMs Agreement indeed played a pivotal role in regulating global trade practices during the late 1980s.
• The reason is also accurate as countries did impose restrictions on foreign direct investment to protect their domestic industries and foreign exchange reserves.
• However, the reason is not the correct explanation of the assertion because while both statements are true, the reason does not directly explain why the TRIMs Agreement had a significant impact on global trade regulations.

GATS aims to enhance consumer welfare by providing consumers with access to a broader range of services at better prices and quality due to increased competition. By promoting fair competition and liberalizing trade in services, GATS seeks to improve consumer choices and drive service providers to deliver higher quality services at competitive prices, ultimately benefiting consumers in the global market.

1. Local Content Requirements: The TRIMs Agreement prohibits measures that mandate foreign investors to purchase local inputs or include a specific percentage of local content in their products, which is a correct statement.

2. Public Safety, Health, and Morality: The TRIMs Agreement allows measures taken to protect public safety, health, and morality within the country, which is also a correct statement.

Therefore, both statements are correct according to the TRIMs Agreement.

The main purpose of GATS is to liberalize international trade in services. This involves reducing barriers, eliminating discriminatory policies, promoting fair competition, introducing predictable rules, and providing dispute resolution mechanisms. By liberalizing trade in services, GATS aims to foster growth, innovation, and efficiency in the service sector on a global scale.

• Statement 1 is correct. Local Content Requirements indeed oblige foreign investors to use local resources like labor, equipment, and materials, promoting local economies and fostering employment and supply chain growth.
• Statement 2 is incorrect. Export Restrictions typically focus on mandating a specific proportion of goods to be exported by foreign investors to boost exports and maintain a trade equilibrium, not limiting exports for domestic consumption.

Assertion: The assertion is true. Loosening TRIPS restrictions can help increase global safety during a pandemic by ensuring that vaccines and essential medicines are widely accessible.

Reason: The reason is also true. It is indeed crucial to have vaccines available worldwide to prevent the rapid spread of infectious diseases like COVID-19.

Explanation: The reason is the correct explanation of the assertion because by making vaccines more accessible globally, it directly contributes to preventing the spread of diseases, ultimately enhancing global safety.

Assertion: The assertion is correct. Patents do grant protection for inventions that are new, innovative, and industrially applicable.

Reason: The reason is false. The description provided is actually about industrial designs and not patents.

Explanation: Although the assertion is true, the reason provided is incorrect, making Option C the correct choice. The reason does not explain the assertion accurately as it discusses a different type of intellectual property right, namely industrial designs, rather than patents.

The primary objective of the TRIPS Agreement, negotiated during the Uruguay Round of the GATT and administered by the WTO, is multifaceted. It aims to eliminate trade distortions related to intellectual property, encourage the effective protection of intellectual property rights, and facilitate legitimate commerce without hindrance. By setting minimum standards for various forms of IP protection, TRIPS seeks to balance IP rights with public health and economic development goals, fostering a fair and efficient global trade environment.

The primary objective of the General Agreement on Trade in Services (GATS) is to achieve higher market access. This involves negotiating commitments from countries to open up more sectors and ease restrictions through ongoing negotiation rounds. By doing so, GATS aims to create a more open and competitive environment for services and service providers to operate across borders, ultimately fostering economic growth and innovation in various sectors.