Trade Agreements MCQ — 90 Practice Questions with Answers

Q1. Consider the following statements about an Early Harvest Scheme: 1. It is a precursor to a free trade agreement between two trading partners. 2. It helps identify certain products for tariff liberalisation while FTA negotiations are pending. 3. Its primary purpose is to raise customs revenue before an FTA is concluded. Which of the statements given above are correct?

Q2. Consider the following statements about stages of economic integration: 1. A common market is a customs union with provisions to facilitate free movement of labour and capital and harmonize technical standards across members. 2. An economic union stops at common external tariffs and does not involve harmonization of fiscal or monetary policies. 3. An Early Harvest Scheme is a precursor to an FTA between two trading partners. 4. An Early Harvest Scheme is primarily a confidence-building measure. Which of the statements given above are correct?

Q3. Consider the following statements about rules of origin in FTAs: 1. Rules of origin are mainly used to determine foreign-exchange rates for FTA partners. 2. Common origin criteria include change in tariff classification, regional value addition, and substantial manufacturing or processing. 3. Preferential tariffs under an FTA can be implemented even without rules of origin. 4. Rules of origin are enforced only through an importer's self-declaration and do not require a certificate of origin. Which of the statements given above are correct?

Q4. Consider the following statements about unilateral tariff preferences in India’s trade documentation: 1. Unilateral tariff preference schemes involve both developed and developing countries granting preferences to exports from developing countries, including least developed countries. 2. GSP is described as a non-contractual instrument by which industrialized countries extend tariff concessions to beneficiary developing countries. 3. India’s DFTP Scheme for LDCs originated from the duty-free quota-free access mandate of the Hong Kong Ministerial Declaration. 4. Unilateral tariff preferences are bilateral FTAs signed only between two developed countries. Which of the statements given above are correct?

Q5. Consider the following statements about trade in services under GATS: 1. GATS distinguishes four modes of supply: cross-border trade, consumption abroad, commercial presence and presence of natural persons. 2. Commercial presence is treated as Mode 1 under GATS. 3. Most GATS schedules consist of horizontal and sector-specific sections. 4. For service commitments to be commercially meaningful, they never need to extend to cross-border movement of consumers or temporary movement of service providers. Which of the statements given above are correct?