UPSC Prelims Practice Questions — Beyond trade deals to building a new architecture
Q1. In the context of the 2026 India–US trade understanding, the 'reciprocal tariff' that the United States reduced from 25% to 18% on Indian goods is best described as which one of the following?
- A. A tariff the United States imposes on imports, calibrated to mirror the trade barriers the exporting country maintains against US goods
- B. A tariff that India levies on US goods in exchange for equivalent US market access
- C. A uniform, WTO-mandated Most-Favoured-Nation duty applied identically to all trading partners
- D. A penalty duty imposed specifically and solely on account of a country's purchase of Russian crude oil
Q2. The Most-Favoured-Nation (MFN) principle, which forms Article I of the GATT, is best described as which one of the following?
- A. A commitment that any trade advantage a country grants to one member must be extended to all other members
- B. A commitment to treat imported goods and domestically produced goods alike once they have entered the market
- C. A rule allowing a country to reserve its lowest tariff exclusively for its single most trusted trading partner
- D. A rule permitting a country to levy higher duties on partners that run a trade surplus with it
Q3. The World Trade Organization (WTO), which replaced the GATT as the institutional framework governing the multilateral trading system, formally came into existence in which year?
- A. 1948
- B. 1986
- C. 1994
- D. 1995
Q4. Which one of the following statements about China's April 2025 expanded export-control regime on rare earths is correct?
- A. It requires Beijing's approval to export magnets that contain even trace amounts of China-sourced rare earths
- B. It bans all exports of rare-earth magnets to every country, without any exception
- C. It applies only to raw, unprocessed minerals and never to processing technology or equipment
- D. It exempts every semiconductor and defence-related application from any form of control
Q5. With reference to China's dominance over rare earths and its April 2025 export controls, which of the following statements are correctly stated?
- China processes nearly 90% of the world's rare earths.
- China mines around 90% but processes only about 30% of the world's rare earths.
- China's April 2025 rules explicitly bar rare-earth supplies linked to foreign defence and semiconductor applications.
- China mines around 60% of the world's rare earths.
- A. 1, 2 and 3 only
- B. 2 and 4 only
- C. 1, 3 and 4 only
- D. 1, 2, 3 and 4
Q6. India's bilateral and regional free trade agreement negotiations, such as those for the India–EU and India–UK FTAs, are led and coordinated by which one of the following?
- A. Department of Commerce, Ministry of Commerce and Industry
- B. Department of Economic Affairs, Ministry of Finance
- C. Ministry of External Affairs
- D. NITI Aayog
Q7. Among the trade agreements India advanced in 2025–26, which one was described by the commerce establishment as the 'mother of all deals', reflecting its stature as India's most comprehensive FTA with its largest trading-partner bloc?
- A. India–EU Free Trade Agreement
- B. India–UK Comprehensive Economic and Trade Agreement
- C. India–UAE Comprehensive Economic Partnership Agreement
- D. India–Oman Comprehensive Economic Partnership Agreement
Q8. According to Department of Pharmaceuticals data placed before Parliament, approximately what share of India's bulk-drug/active pharmaceutical ingredient (API) imports is sourced from China?
- A. About 30%
- B. About 50%
- C. About 70%
- D. About 90%