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?

  1. Under the India–New Zealand Free Trade Agreement, India has kept dairy products such as milk, cheese and butter outside its tariff concessions.
  2. 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?

  1. 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.
  2. 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?

  1. The opening of services trade in a comprehensive FTA is justified as an exception to MFN under GATT Article XXIV.
  2. Tariff-reducing arrangements on goods among developing countries can be covered by the Enabling Clause instead of GATT Article XXIV.
  3. 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?

  1. The tariff lines India has excluded account for only a small share of New Zealand's current trade with India.
  2. New Zealand's dairy exports to India will enter duty-free once the agreement is in force.
  3. 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?

  1. The signature of the two trade ministers in April 2026 was enough on its own to make the tariff commitments operative.
  2. The conclusion of negotiations in December 2025 obliged both sides to apply the concessions provisionally from that date.
  3. 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?

  1. 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.
  2. Cumulation allows a producer to treat inputs imported from any country, member or non-member, as originating.
  3. 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