UPSC Prelims Practice Questions — India-New Zealand free trade agreement takes effect
Q1. Consider the following statements: Which of the following is correct in respect of the above statements?
- Under the India–New Zealand Free Trade Agreement, India has kept dairy products such as milk, cheese and butter outside its tariff concessions.
- GATT Article XXIV requires a developed-country party to a free trade area to remove duties on all its tariff lines, while allowing a developing-country party to exclude sensitive sectors.
- 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
Q2. Consider the following statements: Which of the following is correct in respect of the above statements?
- Once the India–New Zealand Free Trade Agreement is in force, India must extend the same tariff concessions to all other WTO members under the Most-Favoured-Nation principle.
- GATT Article XXIV allows WTO members to depart from their MFN obligations in order to form free trade areas and customs unions.
- 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
Q3. With reference to the legal bases for preferential trade agreements under the WTO, consider the following statements: Which of the statements given above is/are correct?
- The opening of services trade in a comprehensive FTA is justified as an exception to MFN under GATT Article XXIV.
- Tariff-reducing arrangements on goods among developing countries can be covered by the Enabling Clause instead of GATT Article XXIV.
- WTO rules explicitly empower the WTO to reject a free trade agreement that fails to meet the conditions of Article XXIV.
- A. 1 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 2 only
Q4. Under the India–New Zealand FTA, New Zealand removes duties on all its tariff lines. India offers market access on 70.03% of its tariff lines, which cover 95% of New Zealand's bilateral trade, and keeps 29.97% of lines, including dairy, in an exclusion list. Consider the following: Which of the following inferences can be drawn from the above?
- The tariff lines India has excluded account for only a small share of New Zealand's current trade with India.
- New Zealand's dairy exports to India will enter duty-free once the agreement is in force.
- India's tariff on every line with market access falls to zero on the day the agreement enters into force.
- A. 1 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 2 and 3 only
Q5. The India–New Zealand FTA was concluded in December 2025, signed in April 2026 and came into force on 20 October 2026. In this context, consider the following statements: Which of the statements given above is/are correct?
- The signature of the two trade ministers in April 2026 was enough on its own to make the tariff commitments operative.
- The conclusion of negotiations in December 2025 obliged both sides to apply the concessions provisionally from that date.
- Entry into force required both countries, not just one of them, to complete their domestic procedures.
- A. 2 and 3 only
- B. 3 only
- C. 1 only
- D. 1 and 3 only
Q6. With reference to preferential rules of origin in free trade agreements, consider the following statements: Which of the statements given above is/are correct?
- Under a change-in-tariff-classification test, a good gains origin when processing of non-originating inputs moves it into a different HS chapter, heading or sub-heading.
- Cumulation allows a producer to treat inputs imported from any country, member or non-member, as originating.
- A value-addition test makes preferential status depend on a minimum share of value added within the agreement's territory.
- A. 1 and 2 only
- B. 1, 2 and 3
- C. 1 and 3 only
- D. 2 and 3 only
Q7. Suppose India and New Zealand were to turn their free trade agreement into a customs union. Which one of the following would necessarily follow?
- A. Both would have to extend their bilateral tariff concessions to every WTO member
- B. Both would have to apply a common tariff on imports from non-member countries
- C. Both would have to remove duties on all goods imported from non-member countries
- D. Both would have to adopt a common currency for settling their bilateral trade