UPSC Prelims Practice Questions — Canadian PM denies FTA plans with China, after Trump’s tariff warning

Q1. In the context of WTO trade rules and the January 2026 Canada–China preliminary arrangement, the term 'Most-Favoured-Nation (MFN) tariff' most precisely refers to:

  • A. the standard tariff rate that a WTO member applies to imports from any other WTO member, on a non-discriminatory basis
  • B. a preferential concessional tariff offered exclusively to a country's single largest trading partner
  • C. a special tariff slab reserved only for imports originating in 'non-market economies'
  • D. a punitive duty imposed on imports found to be subsidised by the exporting government

Q2. Consider the following goods stated to be covered under the January 2026 Canada–China Preliminary Joint Arrangement on Addressing Bilateral Economic and Trade Issues: 1. Electric vehicles 2. Canola seed 3. Lobster 4. Crude petroleum Which of the above is/are NOT correct?

  1. Electric vehicles
  2. Canola seed
  3. Lobster
  4. Crude petroleum
  • A. 1 only
  • B. 2 and 3
  • C. 3 and 4
  • D. 4 only

Q3. In the context of PM Mark Carney's January 2026 outreach to Beijing, China was described as Canada's second-largest trading partner. Which one of the following is Canada's largest trading partner?

  • A. United States
  • B. Mexico
  • C. United Kingdom
  • D. Japan

Q4. With reference to the United States–Mexico–Canada Agreement (USMCA) and its predecessor, the North American Free Trade Agreement (NAFTA), consider the following statements: 1. USMCA replaced NAFTA when it entered into force on 1 July 2020. 2. USMCA introduced a provision (Article 32.10) requiring a member to notify other parties at least 30 days before beginning FTA negotiations with a 'non-market economy'. 3. Under Article 32.10, the entry into force of such an FTA automatically expels the offending member from USMCA without any notice period. Which of the statements given above is/are correct?

  1. USMCA replaced NAFTA when it entered into force on 1 July 2020.
  2. USMCA introduced a provision (Article 32.10) requiring a member to notify other parties at least 30 days before beginning FTA negotiations with a 'non-market economy'.
  3. Under Article 32.10, the entry into force of such an FTA automatically expels the offending member from USMCA without any notice period.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. With reference to the January 2026 Canada–China Preliminary Joint Arrangement on Addressing Bilateral Economic and Trade Issues, consider the following: 1. Canada will permit up to 49,000 Chinese-made EVs annually at the 6.1% MFN tariff. 2. China will lower its tariff on Canadian canola seed to about 15% by 1 March 2026. 3. The arrangement constitutes a comprehensive Free Trade Agreement (FTA) between Canada and China. 4. The arrangement reverses, on a quota basis, the 100% tariff that Canada had imposed on Chinese EVs in 2024. Which of the above is/are correctly identified?

  1. Canada will permit up to 49,000 Chinese-made EVs annually at the 6.1% MFN tariff.
  2. China will lower its tariff on Canadian canola seed to about 15% by 1 March 2026.
  3. The arrangement constitutes a comprehensive Free Trade Agreement (FTA) between Canada and China.
  4. The arrangement reverses, on a quota basis, the 100% tariff that Canada had imposed on Chinese EVs in 2024.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 4
  • D. 3 only