TaxTMI 
TaxTMI 
TaxTMI 
Here are 25 objective-type questions (MCQs) on Free Trade Agreements (FTAs), covering basics, examples, benefits, and challenges:
Basics and Definitions
- What is a Free Trade Agreement (FTA)?
A) Agreement to ban imports
B) Agreement to increase tariffs
C) Agreement between countries to reduce trade barriers
D) Agreement to export only raw materials
- Which of the following is not a feature of an FTA?
A) Elimination of tariffs
B) Quotas on trade
C) Rules of origin
D) Mutual market access
- FTAs are generally signed to encourage:
A) Protectionism
B) Trade liberalization
C) Monopoly formation
D) Domestic production only
- Rules of origin in FTAs determine:
A) Quantity limits
B) Country where the good was manufactured
C) Selling price
D) None of the above
- The primary goal of an FTA is to:
A) Increase government revenue
B) Eliminate trade deficits
C) Promote free trade
D) Decrease employment
Examples of FTAs
- Which of the following is a bilateral FTA?
A) NAFTA
B) ASEAN Free Trade Area
C) India-UAE CEPA
D) EU Single Market
- Which countries were part of the original NAFTA agreement?
A) US, UK, and Canada
B) US, Canada, and Mexico
C) US, Mexico, and Brazil
D) Canada, Brazil, and Argentina
- What is the new name for NAFTA, updated in 2020?
A) Trans-Pacific Partnership
B) USMCA
C) CPTPP
D) T-TIP
- Which regional FTA includes Japan, Australia, and China?
A) EU
B) MERCOSUR
C) RCEP
D) NAFTA
- India opted out of which major Asia-Pacific trade agreement in 2019?
A) RCEP
B) ASEAN
C) SAFTA
D) APEC
Benefits of FTAs
- FTAs often lead to:
A) Increased tariffs
B) Higher trade costs
C) Enhanced market access
D) Currency devaluation
- Which sector often benefits most from FTAs?
A) Real estate
B) Manufacturing and exports
C) Judiciary
D) Taxation
- FTAs can improve consumer choice by:
A) Reducing product variety
B) Encouraging monopolies
C) Allowing import of cheaper goods
D) Raising import tariffs
- Lower tariffs through FTAs can help businesses by:
A) Increasing import costs
B) Reducing competitiveness
C) Lowering production costs
D) Limiting supply chains
- Which of the following is a non-economic benefit of FTAs?
A) Trade surplus
B) Lower prices
C) Strengthened diplomatic relations
D) Increased employment
Challenges and Criticisms
- A common criticism of FTAs is that they can:
A) Encourage protectionism
B) Harm domestic industries
C) Increase government income
D) Boost inflation
- Developing countries may face issues in FTAs due to:
A) Strong domestic industries
B) Lack of negotiation capacity
C) Abundant trade surplus
D) High levels of automation
- FTAs can lead to ‘trade diversion’, meaning:
A) Trade shifts to less efficient producers due to tariff benefits
B) Trade is banned
C) Only services are traded
D) Trade stops between member nations
- Which type of FTA involves comprehensive trade and investment deals (e.g., CEPA, CECA)?
A) Limited FTA
B) Preferential Trade Agreement
C) Deep Integration Agreement
D) Bilateral Investment Treaty
- One environmental concern with FTAs is that they may:
A) Encourage green technologies
B) Weaken environmental regulations
C) Promote local sourcing
D) Fund eco projects
Miscellaneous / Current Affairs
- Which Indian FTA was signed in 2022 and came into effect in 2023?
A) India-Australia ECTA
B) India-Japan CEPA
C) India-EU FTA
D) India-China PTA
- Which of these is a trade bloc, not an FTA?
A) SAFTA
B) MERCOSUR
C) India-ASEAN FTA
D) India-South Korea FTA
- Which organization helps in settling trade disputes globally?
A) IMF
B) WTO
C) UNCTAD
D) G7
- The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is made up of how many countries as of 2024?
A) 5
B) 7
C) 11
D) 14
- Which of these is an FTA India is currently negotiating (as of 2024)?
A) India-Brazil FTA
B) India-EU FTA
C) India-OPEC FTA
D) India-SAARC FTA