UPSC Prelims Practice Questions — Moves by the North of England to unlock India trade

Q1. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. A machine manufactured in a non-member country and only repackaged in the United Kingdom before export to India does not qualify for preferential duty under the India–UK CETA.
  2. Under a free trade agreement, eligibility for preferential duty depends on where a good is treated as originating under the agreement's rules, not on the country from which it is shipped.
  • 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. With reference to the principles commonly built into India's bilateral social security agreements, consider the following statements: Which of the statements given above is/are correct?

  1. Under 'exportability', a worker who returns home can continue to receive benefits earned under the partner country's scheme without having to remain resident there.
  2. Under 'detachment', a worker posted abroad for a short period continues to contribute to the home-country scheme and is exempted from host-country contributions for a specified period.
  3. Under 'totalisation', a worker draws full benefits from both countries' schemes for the same period of service.
  • A. 2 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 1 and 2 only

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The India–UK Double Contribution Convention exempts Indian employees temporarily posted to the UK, and their employers, from UK social security contributions for a limited period.
  2. The Convention achieves this by allowing social security contributions paid in the UK to be set off against the employee's income-tax liability in India.
  • 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

Q4. Under the India–UK CETA, the UK has eliminated tariffs on 99% of its tariff lines, covering almost all of India's exports by value, while India has offered concessions on 89.5% of its tariff lines, covering 91% of UK exports by value. Which of the following inferences can be drawn from the above?

  1. The tariff lines India has kept out of its commitments make up a larger share of its tariff lines than of UK export value.
  2. Every product on which India has offered concessions becomes duty-free on the day the agreement enters into force.
  3. The commitments are asymmetric, with the developed partner opening a larger share of its tariff lines than the developing partner.
  4. India's customs revenue from imports originating in the UK will fall by about 91% once the agreement is in force.
  • A. 1, 2 and 3 only
  • B. 3 and 4 only
  • C. 1 and 3 only
  • D. 2 and 4 only

Q5. In a free trade agreement, a country liberalises 90% of its tariff lines, but these lines account for only 60% of its imports by value from the partner. Which one of the following best explains this gap?

  • A. The agreement's rules of origin are too strict for most of the partner's exporters to claim the preference.
  • B. The excluded lines are few but include the products in which its imports from the partner are concentrated.
  • C. The liberalised lines are cut to zero at once instead of being phased in over a number of years.
  • D. The excluded lines are numerous but cover mainly products that it hardly imports from the partner at all.

Q6. With reference to free trade agreements under World Trade Organization rules, consider the following statements: Which of the statements given above is/are correct?

  1. A free trade agreement between two WTO members departs from the most-favoured-nation principle, as its preferences are not extended to other members.
  2. GATT Article XXIV requires duties to be eliminated on 'substantially all the trade' between the parties, and WTO members have agreed a numerical threshold for that phrase.
  3. Preferential liberalisation of trade in services under such an agreement is covered by Article V of the GATS rather than by GATT Article XXIV.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q7. With reference to how a bilateral trade agreement such as the India–UK CETA becomes operative, consider the following statements: Which of the statements given above is/are correct?

  1. Each party is obliged to apply the agreed tariff concessions from the date on which the agreement is signed.
  2. Entry into force of such an agreement generally requires both parties to complete their internal procedures, so ratification by one party alone does not bring it into force.
  3. In the United Kingdom, a treaty becomes part of domestic law only when legislation giving effect to it is adopted.
  • A. 3 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q8. Mayors from the North of England jointly led a trade mission to India to help their regional businesses use the India–UK CETA. In this context, consider the following statements: Which of the statements given above is/are correct?

  1. Such outreach is an example of paradiplomacy, since the mayors promote trade and investment abroad without being parties to the agreement.
  2. In India, a State government's investment outreach abroad does not empower it to change the customs duty applicable to goods imported from a foreign country.
  3. The rationale for such missions is that tariff cuts in an agreement do not by themselves ensure that firms actually use the preferences.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3