MCQ
Trade Agreements MCQ - Practice Questions with Answers
Solve 90 Trade Agreements questions for RAS/RPSC preparation.
Practice questions
Q1Consider 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?
Statements 1 and 2 are correct because the Early Harvest Scheme is a precursor to an FTA and identifies products for tariff liberalisation pending negotiations. Statement 3 is incorrect because the source describes it as primarily a confidence-building measure, not a revenue-raising tool.
Q2Consider 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?
Statements 1, 3 and 4 are correct. Statement 2 is incorrect because an economic union extends a common market through further harmonization of fiscal and monetary policies and shared institutions.
Q3Consider 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?
Statement 1 is incorrect: rules of origin determine origin-related treatment such as MFN or preferential treatment, not exchange rates. Statement 2 is correct. Statement 3 is incorrect because preferential tariffs cannot be implemented without rules of origin. Statement 4 is incorrect because enforcement is through a certificate of origin issued by authorised agencies.
Q4Consider 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?
Statements 1, 2 and 3 are correct. DGFT describes unilateral preferences as preferences granted to exports from developing countries including LDCs, describes GSP as non-contractual, and traces India’s DFTP Scheme to the Hong Kong Ministerial Declaration mandate. Statement 4 is incorrect because unilateral preferences are not bilateral FTAs between two developed countries.
Q5Consider 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?
Statements 1 and 3 are correct. Statement 2 is incorrect because commercial presence is one of the four modes, but it is not Mode 1; Mode 1 is cross-border trade. Statement 4 is incorrect because meaningful service commitments may need to cover consumer movement, commercial presence or temporary movement of service providers.
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6Consider the following statements: 1. All WTO members are also members of GATS, though their individual service-sector commitments may vary. 2. GATS requires every WTO member to assume identical commitments in every service sector. 3. Specific commitments under GATS may be modified subject to Article XXI procedures. 4. Countries affected by modification of a GATS commitment can request compensatory adjustments, which are to be granted on an MFN basis. Which of the statements given above are correct?
7Consider the following statements about PTA and FTA: 1. In a PTA, partners reduce tariffs on an agreed number of tariff lines. 2. In an FTA, the negative list contains items on which duty is not reduced or eliminated. 3. Compared to PTAs, FTAs are generally less ambitious in coverage of tariff lines. Which of the statements given above are correct?
8Consider the following statements about common criteria in rules of origin: 1. Change in tariff classification can be one criterion. 2. Regional value addition can be one criterion. 3. Exchange-rate movement of the exporting country's currency is a standard origin criterion. Which of the statements given above are correct?
9Consider the following statements about WTO agriculture and subsidy disciplines: 1. The WTO Agriculture Agreement provides a framework for long-term reform of agricultural trade and domestic policies. 2. WTO members' agriculture schedules set limits on tariffs, domestic support and export subsidies. 3. Under the SCM Agreement, a financial contribution can be a subsidy even if it is made only by a private body without government direction. 4. The SCM Agreement creates two basic categories of subsidies: prohibited and actionable. Which of the statements given above are correct?
10Consider the following statements about Back-to-Back Certificates of Origin: 1. DGFT's online Back-to-Back CoO procedure is for non-preferential certificates. 2. These certificates cater to goods not of Indian origin intended for re-export, trans-shipment, or merchanting trade. 3. Such certificates are issued without documentary evidence from the foreign country of origin. Which of the statements given above are correct?
11Consider the following statements: 1. In GATS terminology, services supplied from one WTO member to another are known as cross-border supply or mode 1. 2. Consumption abroad is mode 3 under GATS because the supplier establishes a commercial presence in the consumer's country. 3. Commercial presence includes a foreign company setting up subsidiaries or branches to provide services in another country. 4. Presence of natural persons covers individuals travelling from their country to supply services in another country. Which of the statements given above are correct?
12Consider the following statements about safeguards, review and dispute settlement in a modern CEPA: 1. A safeguard mechanism may be used in a situation of sudden surge in imports. 2. As a safeguard measure, a party may suspend further tariff reduction or raise the tariff rate on the concerned good up to the applicable MFN benchmark specified in the agreement. 3. Review of the agreement may be operationalized through a Joint Committee. 4. Disputes under such an agreement must be taken directly and only to the WTO Dispute Settlement Body, with no consultation or arbitral-panel route under the agreement. Which of the statements given above are correct?
13Consider the following statements: 1. Rules of origin are criteria used to determine the country of origin of a product for international trade purposes. 2. The importance of rules of origin partly arises because duties and restrictions may depend on the source of imports. 3. Rules of origin are used only for trade statistics and never for anti-dumping duties, safeguard measures, labelling or government procurement. 4. Common origin criteria include change in tariff classification, regional value addition and substantial manufacturing or processing. Which of the statements given above are correct?
14Consider the following statements: 1. The Department of Commerce's FTA FAQ lists APTA as a PTA. 2. The same FAQ lists SAFTA as an FTA. 3. The same FAQ lists BIMSTEC Economic Cooperation as an already concluded FTA. 4. The same FAQ lists the Japan-India CEPA as a PTA rather than an FTA. Which of the statements given above are correct?
15Consider the following statements about FTA benefits and Rules of Origin: 1. A tariff concession under a trade deal can require the relevant ROO to be met. 2. Exporters may need documentation to prove origin if importing-country customs verifies the goods. 3. ROO allow any third-country good to automatically receive FTA tariff concessions through a partner country. Which of the statements given above are correct?