UPSC Prelims Practice Questions — Trade deal with India is not ‘imminent’, says U.S. official

Q1. With reference to free-trade areas permitted under Article XXIV of the GATT, consider the following statements: Which of the statements given above is/are correct?

  1. The parties must eliminate duties and other restrictive regulations of commerce on substantially all the trade between them in products originating in their territories.
  2. Article XXIV permits such an area to be formed only when all its members are developing countries.
  3. Once the area is formed, its members may raise their overall duties on imports from non-members above the earlier level, provided that the duties among themselves are fully removed.
  • A. 1, 2 and 3
  • B. 2 and 3 only
  • C. 1 only
  • D. 1 and 2 only

Q2. Preferential trade arrangements that depart from the WTO's Most-Favoured-Nation principle need a legal basis within the WTO. Consider the following arrangements: Which of the above derive their WTO legal cover from the Enabling Clause rather than from Article XXIV of the GATT?

  1. A developed country granting zero or reduced duties on imports from developing countries without seeking concessions in return
  2. Developing countries exchanging tariff concessions among themselves under the Global System of Trade Preferences
  3. A customs union between two developed economies that adopt a common external tariff
  4. A free-trade agreement between a developed and a developing country that removes duties on substantially all their mutual trade
  • A. 1, 2 and 4 only
  • B. 1 and 2 only
  • C. 2 and 4 only
  • D. 1, 3 and 4 only

Q3. Suppose a WTO member raises the customs duty on a product imported from only one other WTO member to a level above the rate it has bound in its WTO schedule, and the measure is not covered by any exception. Consider the following statements about this measure: Which of the statements given above is/are correct?

  1. It violates the national-treatment principle, because the higher customs duty puts the imported product at a disadvantage against the same product made at home.
  2. It breaches the member's tariff commitment, because a bound rate operates as a ceiling on the customs duty that can be charged.
  3. It breaches the Most-Favoured-Nation principle, because the higher rate is applied to goods from one WTO member but not to the same goods from others.
  • A. 2 and 3 only
  • B. 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. As of 2026, a WTO trade dispute in which a party appeals the panel report cannot be carried through the WTO's two-tier adjudication process.
  2. Members of the WTO Appellate Body are elected by a vote of the WTO Ministerial Conference, which has not held such an election since 2020.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. With reference to the G20 and the WTO Ministerial Conference, consider the following statements: Which of the statements given above is/are NOT correct?

  1. Like the WTO, the G20 has a permanent secretariat that carries its work over from one presidency to the next.
  2. The WTO Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.
  3. The G20's agenda for a year is steered by a rotating presidency, which also hosts that year's Summit.
  • A. 2 and 3 only
  • B. 2 only
  • C. 1 and 3 only
  • D. 1 only

Q6. Consider the following statements: Which of the statements given above is/are correct?

  1. Meetings of G20 trade ministers fall under the G20's Finance Track, which is led by finance ministers and central bank governors.
  2. Between sessions of the WTO Ministerial Conference, the WTO General Council also meets as the Dispute Settlement Body and as the Trade Policy Review Body.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2

Q7. Which of the following correctly distinguishes a free-trade area from a customs union, as these terms are used in the GATT?

  • A. Free-trade area members keep separate tariffs on outside imports, while customs union members apply a common external tariff
  • B. A free-trade area must remove duties on substantially all trade, while a customs union may cover a selected list of goods
  • C. A free-trade area draws its WTO legal cover from the Enabling Clause, while a customs union draws it from Article XXIV
  • D. A free-trade area must cover goods only, while a customs union must also liberalise services and investment among members

Q8. Two WTO members, a developed and a developing country, sign a 'first tranche' agreement. It cuts tariffs on each other's goods on a reciprocal basis, but only for a limited list of products. Consider the following statements about how this agreement fits WTO rules: Which of the statements given above is/are NOT correct?

  1. It cannot be justified as a Generalized System of Preferences scheme, because its tariff concessions run in both directions.
  2. It could be justified as an interim agreement if it contained a plan and schedule for forming a full free-trade area within a reasonable length of time.
  3. Since the concessions are agreed bilaterally, the two members need not extend them to other WTO members, because the MFN principle covers only concessions negotiated multilaterally.
  • A. 2 and 3 only
  • B. 1 only
  • C. 1 and 2 only
  • D. 3 only