UPSC Prelims Practice Questions — ‘India has no excess capacity, bans forced-labour imports’
Q1. With reference to the non-discrimination principles of the World Trade Organization (WTO), consider the following statements: Which of the statements given above is/are correct?
- A WTO member that cuts its customs duty on a product from one member must, as a rule, extend the same cut to like products from all other members.
- Charging a customs duty on an imported good while levying no equivalent tax on the identical domestically produced good violates the National Treatment principle.
- Once an imported good has entered the market, subjecting it to a higher internal tax than an identical domestic good breaches National Treatment rather than the Most-Favoured-Nation principle.
- A. 2 and 3 only
- B. 1 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q2. A WTO member wishes to treat imports from some trading partners differently from imports from others. Consider the following measures: Which of the measures given above would fall within the recognised exceptions to the Most-Favoured-Nation obligation?
- Removing tariffs only on goods originating in partners with which it has formed a free trade area
- Granting lower tariffs to goods from developing countries under a preferential access scheme
- Lowering tariffs on goods from one major partner, outside any free trade area, in return for that partner's commitment to buy more of its exports
- Imposing an additional duty on a product from one specific partner after an investigation finds that product is being traded unfairly through dumping
- A. 1, 2 and 4 only
- B. 3 and 4 only
- C. 1 and 2 only
- D. 1, 2, 3 and 4
Q3. With reference to anti-dumping and countervailing duties under WTO rules, consider the following statements: Which of the statements given above are correct?
- The WTO agreements prohibit firms from dumping, and an anti-dumping duty is the penalty for that breach.
- An anti-dumping duty responds to an exporting firm's pricing below what it normally charges at home, whereas a countervailing duty responds to support from the exporting country's government or public bodies.
- A subsidy that is generally available across the economy, rather than specific to an enterprise, industry or region, is subject to countervailing action in the same way as a specific one.
- A countervailing duty can be imposed only after it is shown that subsidised imports are injuring the domestic industry and that there is a causal link between the two.
- A. 1, 2 and 4 only
- B. 1 and 3 only
- C. 2, 3 and 4 only
- D. 2 and 4 only
Q4. Country P, a WTO member, believes that Country Q, also a member, is violating its obligations under a WTO agreement and that this is hurting P's exporters. Consider the following courses of action open to P: Which of the courses of action given above is/are consistent with P's obligations under the WTO's Dispute Settlement Understanding?
- Seeking redress by invoking the rules and procedures of the Dispute Settlement Understanding against Q
- Determining, through an investigation under its own domestic trade law, that Q has violated the agreement and then raising tariffs on Q's goods
- Determining for itself that Q has violated the agreement, but raising tariffs on Q's goods only after bilateral talks with Q have failed
- A. 2 and 3 only
- B. 1 only
- C. 1, 2 and 3
- D. 1 and 3 only
Q5. Consider the following statements: Which of the following is correct in respect of the above statements?
- As of 2026, the WTO Appellate Body remains unable to hear appeals, a situation that began in December 2019.
- The WTO General Council voted to suspend the Appellate Body until members agree on a reform of the dispute settlement system.
- 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
Q6. Consider the following statements: Which of the following is correct in respect of the above statements?
- The General Agreement on Tariffs and Trade expressly lists measures relating to the products of prison labour among its general exceptions.
- The 1996 Singapore Ministerial Declaration of the WTO designated the International Labour Organization as the competent body to set and deal with core labour standards.
- 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. Suppose a large economy uses government support to sustain manufacturing capacity in a sector far above its domestic demand for several years. Consider the following possible consequences for its trading partners: Which of the consequences given above are likely?
- Surplus output is pushed into export markets at depressed prices, raising concerns about dumping.
- World prices for the product rise because the supported economy keeps its surplus output off global markets.
- Producers in importing countries face price pressure, which may lead their governments to open anti-dumping or countervailing duty investigations.
- A. 1 only
- B. 2 and 3 only
- C. 1, 2 and 3
- D. 1 and 3 only