UPSC Prelims Practice Questions — U.S. midterm impact on India: faster trade deal talks, higher tariffs likely

Q1. With reference to how India enters into and gives effect to international trade agreements, consider the following statements: Which of the statements given above is/are correct?

  1. The executive power of the Union extends to exercising the rights and authority that the Government of India holds by virtue of a treaty or agreement.
  2. A trade agreement signed by the Union Government can enter into force only after both Houses of Parliament approve it by resolution.
  3. Parliament's power to make laws giving effect to international commitments covers decisions taken at international conferences or bodies, and not merely treaties with other countries.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 3 only

Q2. At a time when the WTO Appellate Body has no sitting members, the party that loses a WTO panel dispute files an appeal against the panel report. Which one of the following is the most likely outcome?

  • A. The panel report stays unadopted, so its ruling does not become binding
  • B. The appeal passes to the DSB, which decides it by a simple majority vote
  • C. The panel report is adopted automatically once the appeal period lapses
  • D. The panel that heard the case reconstitutes itself to decide the appeal

Q3. With reference to free-trade areas under the rules of the World Trade Organization, consider the following statements: Which of the statements given above is/are correct?

  1. An interim agreement can qualify under GATT Article XXIV if it includes a plan and schedule for forming a free-trade area within a reasonable length of time.
  2. WTO members have agreed on a precise percentage of bilateral trade that satisfies the 'substantially all the trade' requirement.
  3. Members of a free-trade area that satisfies Article XXIV must extend their mutual tariff cuts to all other WTO members.
  • A. 2 and 3 only
  • B. 1 only
  • C. 1 and 2 only
  • D. 1 and 3 only

Q4. Consider the following developments reported after the 2026 US midterm elections: the Democratic Party won control of both the Senate and the House of Representatives; trade experts expect President Trump to lean more on executive powers to secure a quick trade 'win'; and higher US tariffs on India are considered possible until a bilateral trade deal is closed. Which of the following inferences can be drawn from the above?

  1. India is bound to secure a trade deal on terms more favourable than it would have obtained before the midterms.
  2. The midterm result does not, by itself, end the President's tenure in office.
  3. The President is expected to be able to raise at least some tariffs without a fresh law being passed by Congress.
  4. The experts expect the President's ability to raise tariffs on India to shrink because the opposition now controls Congress.
  • A. 2, 3 and 4 only
  • B. 1 and 4 only
  • C. 2 and 3 only
  • D. 1, 2 and 3 only

Q5. With reference to domestic support for agriculture under the WTO Agreement on Agriculture, consider the following statements: Which of the statements given above is/are correct?

  1. As a share of the value of agricultural production, the de minimis threshold for trade-distorting support is higher for most developing countries than for developed countries.
  2. Green Box subsidies are allowed without limit whatever their effect on trade, as long as they are notified to the WTO.
  3. Domestic support measures considered to distort production and trade generally fall in the Amber Box.
  • A. 1 and 2 only
  • B. 2 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q6. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Although agriculture is a State List subject, the Union can commit India to lower tariffs on imported farm goods in a trade agreement.
  2. Trade and commerce with foreign countries, including import and export across customs frontiers, is a Union List subject, and the Union's executive power extends to matters on which Parliament can legislate.
  • 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

Q7. With reference to the dispute settlement system of the World Trade Organization, consider the following statements: Which of the statements given above is/are correct?

  1. Members of the Appellate Body are appointed by the Dispute Settlement Body, so persistent disagreement among WTO members can leave its seats vacant.
  2. An Appellate Body report, once circulated, can be rejected by the Dispute Settlement Body only by consensus.
  3. Because the Appellate Body cannot review appeals at present, WTO panels have also stopped hearing new disputes.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1 only
  • D. 1 and 2 only

Q8. With reference to the Enabling Clause of the GATT/WTO system, consider the following statements: Which of the statements given above is/are correct?

  1. It is the legal basis on which developed countries grant tariff preferences to developing countries under the Generalized System of Preferences.
  2. Preferences granted under it may be more generous for least-developed countries than for other developing countries.
  3. Under it, a developed country may grant preferences to some developing countries while denying them to other similarly placed developing countries.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3