WTO & Trade — Set 1
World Organizations · WTO और व्यापार · Questions 1–10 of 50
Which WTO term refers to duties imposed on imported goods to offset subsidies provided by the exporting country's government?
Correct Answer: A. Countervailing duties
• **Countervailing duties** = These are specific tariffs imposed on imported goods to neutralize the negative effects of subsidies provided by the exporting country. • **Agreement on Subsidies and Countervailing Measures** — This WTO agreement governs the use of these duties to ensure fair trade. • 💡 Wrong-option analysis: [Ad-valorem duties]: These are duties calculated as a percentage of the value of the imported goods; [Anti-dumping duties]: These are imposed on goods priced below their normal value to prevent unfair competition, not to offset subsidies; [Protective tariffs]: These are general tariffs designed to protect domestic industries from foreign competition, not specifically targeting subsidies.
In WTO terminology, which 'box' includes agricultural subsidies that are considered trade-distorting and must be reduced?
Correct Answer: C. Amber Box
• **Amber Box** = This box includes agricultural subsidies considered to distort production and trade, which WTO members must reduce. • **'de minimis' level** — Member nations are required to limit these trade-distorting subsidies to this specific threshold. • 💡 Wrong-option analysis: [Green Box]: This includes non-trade-distorting subsidies that are allowed without limits; [Blue Box]: This covers subsidies tied to programs that limit production, considered less distorting; [Red Box]: This is not an official WTO agricultural subsidy box, though sometimes used informally for prohibited subsidies.
What is the practice of exporting a product at a price lower than the price it normally charges in its own home market called?
Correct Answer: A. Dumping
• **Dumping** = This is the practice of exporting a product at a price lower than its normal value in the home market. • **Anti-dumping duties** — These are common corrective measures that countries can impose when dumping causes material injury to a domestic industry. • 💡 Wrong-option analysis: [Subsidizing]: This involves providing financial assistance to producers, not necessarily selling below cost; [Hedging]: This is a financial strategy used to mitigate risks, typically in currency or commodity markets; [Trade Liberalization]: This refers to reducing trade barriers to promote free trade.
Which WTO agreement deals with technical regulations and standards to ensure they do not create unnecessary obstacles to trade?
Correct Answer: D. TBT Agreement
• **TBT Agreement** = The Technical Barriers to Trade Agreement ensures that technical regulations and standards do not create unnecessary obstacles to international trade. • **Non-discriminatory regulations** — The TBT Agreement encourages countries to adopt international standards to prevent technical rules from acting as disguised protectionism. • 💡 Wrong-option analysis: [SPS Agreement]: This deals with sanitary and phytosanitary measures, primarily food safety and animal/plant health; [TRIPS Agreement]: This covers intellectual property rights; [GATS Agreement]: This sets out rules for trade in services.
A trade agreement that is signed by only a subset of WTO members rather than all members is known as a?
Correct Answer: A. Plurilateral agreement
• **Plurilateral agreement** = This is a trade agreement signed by only a subset of WTO members who choose to accept its specific terms. • **Information Technology Agreement** — This is a well-known example of a plurilateral agreement within the WTO framework. • 💡 Wrong-option analysis: [Multilateral agreement]: This involves all WTO members and creates obligations for the entire membership; [Bilateral agreement]: This is an agreement between two countries; [Unilateral agreement]: This is a trade policy action taken by a single country without agreement from others.
The principle that requires a country to treat imported and locally-produced goods equally is called?
Correct Answer: C. National Treatment
• **National Treatment** = This principle requires a country to treat imported goods no less favourably than locally-produced goods once they have entered the market. • **Foundation stone** — National Treatment, along with Most Favoured Nation, forms a crucial principle of the WTO trading system. • 💡 Wrong-option analysis: [Most Favoured Nation]: This principle requires treating all trading partners equally; [Quantitative Restriction]: This refers to non-tariff barriers that limit the quantity of imported goods; [Reciprocity]: This is the practice of exchanging things with others for mutual benefit, often implying balanced concessions in trade.
Which of the following is NOT one of the three main pillars of the WTO Agreement on Agriculture?
Correct Answer: D. Intellectual Property
• **Intellectual Property** = This is NOT one of the three main pillars of the WTO Agreement on Agriculture, as it is covered under a separate TRIPS Agreement. • **Three pillars** — The Agreement on Agriculture is structured around market access, domestic support, and export competition. • 💡 Wrong-option analysis: [Market Access]: This is a pillar focused on reducing tariffs and non-tariff barriers for agricultural products; [Domestic Support]: This pillar deals with policies like subsidies and other aid to farmers; [Export Competition]: This pillar aims to reduce trade-distorting export subsidies and other unfair export practices.
Which WTO agreement sets out the basic rules for food safety and animal and plant health standards?
Correct Answer: D. SPS
• **SPS Agreement** = The Sanitary and Phytosanitary Agreement sets out the basic rules for food safety, animal health, and plant health standards in international trade. • **Science-based standards** — The SPS Agreement mandates that countries' safety standards must be based on scientific principles and applied only as necessary to protect life. • 💡 Wrong-option analysis: [TRIMS]: This covers Trade-Related Investment Measures; [GATS]: This is the General Agreement on Trade in Services; [TFA]: This refers to the Trade Facilitation Agreement, which aims to streamline customs procedures.
Under the WTO, what are the specific 'safety valve' measures that allow a country to temporarily restrict imports of a product to protect a domestic industry?
Correct Answer: B. Safeguard measures
• **Safeguard measures** = These are temporary import restrictions taken to protect a specific domestic industry from a sudden, sharp increase in imports that causes or threatens serious injury. • **Temporary restrictions** — Safeguard measures are applied for a limited period to allow the domestic industry to adjust to the increased competition. • 💡 Wrong-option analysis: [Countervailing measures]: These are used to offset subsidies from exporting countries; [Anti-dumping measures]: These address unfair pricing practices (dumping) by foreign exporters; [Quantitative measures]: This is a broad term for limits on import quantities, but 'safeguard measures' is the specific WTO term for this context.
Which WTO mechanism involves a periodic peer review of the trade policies of individual member countries?
Correct Answer: B. Trade Policy Review Mechanism
• **Trade Policy Review Mechanism** = This WTO mechanism involves a periodic peer review and examination of the trade policies of individual member countries. • **Transparency and accountability** — The TPRM aims to increase transparency and understanding of trade policies, with review frequency depending on a country's share of world trade. • 💡 Wrong-option analysis: [Dispute Settlement Mechanism]: This is for resolving legal disputes between members; [Market Access Mechanism]: This is not a formal WTO mechanism but rather an objective or pillar of agreements; [Transparency Mechanism]: While TPRM promotes transparency, this is too general and not the specific name of the mechanism.