chapter  9
13 Pages

China’s Trade-Related Investment Measures and Their Development Following WTO Accession

WithJian Zhang

Defining Trade Related Investment Measures (TRIMs) is new for China, although some related policies were already in place. The World Trade Organization recognized that some TRIMs might lead to trade distortions and violate the principles of the General Agreement on Tariff and Trade. TRIMs are established by the host country governments for foreign investors in order to ensure the positive impacts of foreign direct investment (FDI) on the FDI-receiving countries' employment and export performance. TRIMs were one of the new issues addressed in the Uruguay Round (UR) negotiations in 1986. The UR started with a discussion about whether a more ambitious approach should be adopted in order to include more general investment incentives. The United States and Japan were in favor of an international investment regime that would establish rights for foreign investors and reduce constraints on multinational enterprises. Neoclassical economic theory assumes perfect competition, and any government intervention in the market is regarded as inefficient and welfare-reducing.