UPSC Prelims Practice Questions — The India-EFTA partnership, one plus one equals three

Q1. With reference to the difference between a free-trade area, such as the European Free Trade Association, and a customs union, consider the following statements: Which of the statements given above is/are correct?

  1. In a free-trade area, each member keeps its own duties on imports from countries outside the area.
  2. Members of a customs union are free to set their own separate duties on imports from countries outside the union.
  3. Both a free-trade area and a customs union must remove duties on substantially all the trade between their members.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 2 and 3 only

Q2. With reference to how WTO rules accommodate regional trade agreements such as the India–EFTA TEPA, consider the following statements: Which of the statements given above is/are correct?

  1. A regional trade agreement should not make trade with non-member countries more restrictive than it was before the agreement was set up.
  2. Liberalisation of services in such an agreement is covered by a WTO provision separate from the one that governs trade in goods.
  3. The Enabling Clause route is available only for regional arrangements among developing countries, so it cannot cover an agreement between India and the EFTA states.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 1 and 3 only
  • D. 2 and 3 only

Q3. Under the India–EFTA TEPA, EFTA liberalised 92.2% of its tariff lines, covering 99.6% of the value of India's exports to EFTA. India liberalised 82.7% of its tariff lines, covering 95.3% of the value of EFTA's exports to India, and kept dairy, soya and coal in its exclusion list. Which of the following inferences can be drawn from the above?

  1. The tariff lines that EFTA did not liberalise carry only a very small share of India's present exports to EFTA.
  2. India's concessions cover a larger share of EFTA's export value than EFTA's concessions cover of India's export value.
  3. India's trade balance with EFTA must improve once the agreement is in force, since EFTA has opened more tariff lines than India.
  • A. 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1 only

Q4. In the context of trade in professional services, which the India–EFTA TEPA seeks to ease through Mutual Recognition Agreements, consider the following statements: Which of the statements given above are correct?

  1. An Indian architect who goes to Switzerland for a few months to deliver design services under a contract is supplying a service through Mode 4 under GATS.
  2. Mode 4 commitments give a foreign service supplier a right to permanent residence in the host country.
  3. Mutual Recognition Agreements work by lowering customs duties on professional services imported from the partner country.
  4. Mode 4 covers self-employed service suppliers as well as employees of service firms.
  • A. 1 and 2 only
  • B. 1, 3 and 4 only
  • C. 1 and 4 only
  • D. 2 and 3 only

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Iceland meets more than half of its energy needs from geothermal sources.
  2. Iceland lies on the Mid-Atlantic Ridge, where the North American and Eurasian plates are moving apart, bringing the Earth's internal heat close to the surface.
  • 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