UPSC Prelims Practice Questions — India-New Zealand trade ties set to scale new heights

Q1. With reference to the constitutional framework for India's international trade agreements, consider the following statements: Which of the statements given above is/are correct?

  1. The Union's executive power to conclude trade agreements is confined to Union List subjects, so an agreement touching a State subject needs the consent of the States concerned.
  2. Parliament's power to legislate for implementing international obligations covers decisions made at international conferences or bodies, not only treaties with other countries.
  3. Parliament may make a law implementing an international agreement even on a subject that otherwise falls in the State List.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The India–New Zealand FTA could be signed and brought into force by the Union government without Parliament voting to approve it.
  2. Article 253 of the Constitution empowers Parliament to make laws for implementing any treaty or agreement with other countries.
  • 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 WTO rules on free trade agreements, consider the following statements: Which of the statements given above is/are correct?

  1. GATT Article XXIV requires members of a free-trade area to eliminate duties on substantially all the trade among them, which is not the same as all the trade.
  2. GATT Article XXIV does not require the partners in a free-trade area to liberalise an identical share of their tariff lines.
  3. Regional arrangements in goods among developing countries made under the Enabling Clause are not bound by the substantially-all-trade requirement.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 only

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Because New Zealand grants zero duty on Indian goods under the FTA, the most-favoured-nation principle obliges it to extend the same zero duty to like goods from all WTO members.
  2. WTO rules authorise regional trade agreements as a derogation from the most-favoured-nation principle, subject to conditions.
  • 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

Q5. With reference to rules of origin in a free trade agreement such as the one between India and New Zealand, consider the following statements: Which of the statements given above is/are correct?

  1. They are needed in a free-trade area chiefly because each member keeps its own tariffs on imports from non-members.
  2. Stricter rules of origin make it easier for goods with a large third-country content to qualify for the preferential duty.
  3. Preferential rules of origin are relevant only to goods claiming the agreement's concessional duty; non-member goods continue to pay the importing country's normal duties.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 1 only

Q6. With reference to free-trade areas and customs unions as defined in GATT Article XXIV, consider the following statements: Which of the statements given above is/are NOT correct?

  1. Members of a free-trade area eliminate duties on substantially all trade among themselves, but each keeps its own tariffs on imports from non-members.
  2. A customs union additionally requires its members to apply substantially the same duties to imports from non-members.
  3. A customs union, unlike a free-trade area, need not eliminate duties on substantially all the trade among its own members.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 3 only

Q7. Consider the following pairs of a services transaction between India and New Zealand and its GATS mode of supply: Which of the pairs given above are correctly matched?

  1. An Indian software engineer travels to Auckland to work on-site for a New Zealand client : Mode 4 (presence of natural persons)
  2. An Indian IT company sets up a subsidiary in Wellington to serve New Zealand clients : Mode 3 (commercial presence)
  3. A New Zealand university delivers an online degree course to students living in India : Mode 1 (cross-border supply)
  4. A New Zealand architect in Auckland emails building designs to a client in Delhi : Mode 2 (consumption abroad)
  • A. 1, 2 and 3 only
  • B. 1, 3 and 4 only
  • C. 1 and 2 only
  • D. 2 and 4 only

Q8. With reference to the GATS classification of services trade, consider the following statements: Which of the statements given above is/are correct?

  1. An Indian student who travels to New Zealand to study at a university there is an instance of Mode 2 (consumption abroad), not Mode 4.
  2. Mode 4 covers a foreign national supplying a service in the host country either as an independent supplier or as an employee of a service supplier.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2