International Organizations (External Sector) Part-III

Total Questions: 50

31. Consider the following statements about farm subsidies in India. [U.P. P.C.S. (Pre) 2022]

1. The input subsidies in India, such as on fertilizers fall under indirect farm subsidies.

2. Reduction in power and irrigation bills offered to farmers fall under direct farm subsidies.

3. The agricultural provisions of the World Trade Organization (WTO) though allow direct farm subsidies, prohibit indirect subsidies.

4. All subsidies provided by the governments in India fall under the indirect subsidies.

Select the correct statements using the code given below.

Correct Answer: (c) 1 and 4
Solution:Agriculture subsidies are categorized into indirect and di- rect farm subsidies. India provides direct subsidies in very limited forms like food subsidy, etc. Though, direct farm subsidies are very common in most of the developed countries.

Indirect farm subsidies are not provided in the form of cash but indirectly supporting the farmers. For example - providing cash directly to the farmers to buy fertilizers is an example of direct subsidy, but subsidizing fertilizer companies to provide cheap urea to farmers amounts to indirect subsidies.

Other examples of indirect subsidies may include -cheap credit facilities, farm loan waivers, reduction in electricity and irrigation bills, investments in agricultural research, farmer training, environmental assistance, etc. Hence, statements 1 and 4 are correct, while statements 2 and 3 are incorrect.

32. In the context of the affairs of which of the following is the phrase 'Special Safeguard Mechanisms' mentioned in the news frequently? [I.A.S. (Pre) 2010]

Correct Answer: (b) World Trade Organization
Solution:Special Safeguard Mechanism' (SSM) is a tool of "World Trade Organization that allows developing countries to raise tariffs temporarily to deal with import surges or price falls. It is a special protection mechanism for developing countries that allows them to raise tariffs on agricultural imports that are injurious to domestic farmers.

33. Most-Favoured-Nation (MFN) clause under the General Agreement on Tariffs and Trade (GATT) implies: [I.A.S. (Pre) 1993]

Correct Answer: (b) Most favour to all countries
Solution:A most-favoured-nation (MFN) clause requires a country to provide any concessions, privileges, or immunities granted to one nation in a trade agreement to all other WTO (previously GATT) member countries.

Although its name implies favouritism toward another nation, it denotes the equal treatment of all countries. The members of the WTO agree to accord MFN status to each other. However, exceptions allow for preferential treatment of developing countries, regional free trade areas and customs unions.

34. GATT stands for: [U.P.P.C.S. (Pre) 2008]

Correct Answer: (b) General Agreement on Tariffs and Trade
Solution:GATT stands for 'General Agreement on Tariffs and Trade'. The GATT was signed on October 30, 1947 by 23 countries in Geneva, Switzerland. The tariff concessions came into effect by June 30, 1948 through a 'Protocol of Provisional Application' and so the GATT was born with 23 founding members (officially 'contracting parties'). It was a legal agreement minimizing barriers to international trade by elimination quotas and tariffs. The Secretariat or headquarters of GATT (Now WTO) was established in Geneva, Switzerland.

35. When and where was the office of GATT established? [M.P.P.C.S. (Pre) 2014]

Correct Answer: (d) Geneva, 1948
Solution:GATT stands for 'General Agreement on Tariffs and Trade'. The GATT was signed on October 30, 1947 by 23 countries in Geneva, Switzerland. The tariff concessions came into effect by June 30, 1948 through a 'Protocol of Provisional Application' and so the GATT was born with 23 founding members (officially 'contracting parties'). It was a legal agreement minimizing barriers to international trade by elimination quotas and tariffs. The Secretariat or headquarters of GATT (Now WTO) was established in Geneva, Switzerland.

36. Dunkel proposal is related to: [R.A.S./R.T.S. (Pre) 1992]

Correct Answer: (c) Right to Intellectual Property
Solution:Arthur Dunkel's draft treaty for the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) was presented in December, 1991. In this round of talks, the GATT ambit was being expanded to cover not only trade in goods but also trade in services (GATS), trade-related intellectual property rights (TRIPS) and trade-related investment measures (TRIMs).

The World Trade Organisation is not simply a continuation of the GATT. It, rather, has a completely different character. The difference between the two can be seen as follows.

Basis of DifferenceGeneral Agreements on Trade and TariffWorld Trade Organisation
Institutional FoundationA series of rules, a multilateral agreement without an institutional foundation and with just an ad hoc secretariat, originating from the attempt to establish an International Trade Organisation in the 1940s.A permanent institution with its own secretariat.
ApplicabilityGATT rules applied to trade in goods only.The WTO covers trade in goods as well as services and also trade-related aspects of intellectual property rights.
Disputes Settlement SystemGATT has less powerful dispute settlement system which is also slow and less efficient, and its ruling could be easily blocked.The dispute settlement system of the WTO is based on automatic mechanism, and not on dilatory mechanisms. It is also quicker and binding on the members.

37. The name of Arthur Dunkel is associated with: [U.P.U.D.A/L.D.A. (Spl.) (Mains) 2010, U.P. U.D.A./L.D.A. (Spl.) (Pre) 2010]

Correct Answer: (b) GATT
Solution:Arthur Dunkel was the Director General of the GATT during 1980-1993. He was at the helm of the launch of the Uruguay Round of multilateral trade negotiations in September, 1986 and steered the multilateral trading system to the doorstep of what is now known as the World Trade Organization.

The World Trade Organisation is not simply a continuation of the GATT. It, rather, has a completely different character. The difference between the two can be seen as follows.

Basis of DifferenceGeneral Agreements on Trade and TariffWorld Trade Organisation
Institutional FoundationA series of rules, a multilateral agreement without an institutional foundation and with just an ad hoc secretariat, originating from the attempt to establish an International Trade Organisation in the 1940s.A permanent institution with its own secretariat.
ApplicabilityGATT rules applied to trade in goods only.The WTO covers trade in goods as well as services and also trade-related aspects of intellectual property rights.
Disputes Settlement SystemGATT has less powerful dispute settlement system which is also slow and less efficient, and its ruling could be easily blocked.The dispute settlement system of the WTO is based on automatic mechanism, and not on dilatory mechanisms. It is also quicker and binding on the members.

38. Which of the following statement/statements about the Dunkel draft is/are correct? [I.A.S (Pre) 1994]

1. It is mandatory for the Government of India to accept all its proposals in all the sectors.

2. In the field of agriculture, the main proposal is to cut agricultural subsidies.

3. In the field of textiles, it reiterates the operation of the multi-fibre agreement.

4. The proposals have already been accepted by the Parliament.

Select the correct answer from the codes given below:

Correct Answer: (c) Only 1, 2 and 4
Solution:Arthur Dunkel's draft for the Uruguay Round of GATT was widely seen as the last chance for any breakthrough in this so far stalemated GATT round. In the field of textiles, Dunkel draft did not reiterates the operation of the multi-fibre agreements.

Instead of this, the Agreement on Textiles and Clothing (ATC) was negotiated in the Uruguary Round, which replaced the Arrangement Regarding International Trade in Textiles (or Multi-fibre Agreement) of 1973. Other three statements are correct about the Dunkel draft.

The World Trade Organisation is not simply a continuation of the GATT. It, rather, has a completely different character. The difference between the two can be seen as follows.

Basis of DifferenceGeneral Agreements on Trade and TariffWorld Trade Organisation
Institutional FoundationA series of rules, a multilateral agreement without an institutional foundation and with just an ad hoc secretariat, originating from the attempt to establish an International Trade Organisation in the 1940s.A permanent institution with its own secretariat.
ApplicabilityGATT rules applied to trade in goods only.The WTO covers trade in goods as well as services and also trade-related aspects of intellectual property rights.
Disputes Settlement SystemGATT has less powerful dispute settlement system which is also slow and less efficient, and its ruling could be easily blocked.The dispute settlement system of the WTO is based on automatic mechanism, and not on dilatory mechanisms. It is also quicker and binding on the members.

39. Uruguay round pertains to: [U.P.R.O./A.R.O. (Mains) 2017]

Correct Answer: (c) GATT
Solution:The Uruguay round was the 8th round of multilateral trade negotiations conducted within the framework of the GATT (General Agreement on Tariffs and Trade), spanning from 1986 to 1993 and embracing 123 countries as 'contracting parties. The Uruguay round led to the creation of the World Trade Organization (WTO).

40. TRIMs stands for: [B.P.S.C. (Pre) 2017, Uttarakhand P.C.S. (Pre) 2016]

Correct Answer: (c) Trade-Related Investment Measures
Solution:The Agreement on TRIMs (Trade-Related Investment Measures) is a World Trade Organization (WTO) agreement that restricts preference of domestic firms and thereby enable international firms to operate more easily with foreign markets. This agreements, negotiated during the Uruguay Round, applies only to measures that affect trade in goods.

Recognizing that certain investment measures can have trade-restrictive and distorting effects, it states that no member shall apply a measure that is prohibited by the provisions of GATT Article III (national treatment) or Article XI (quantitative restrictions). It is one of the four principal legal agreements of the WTO trade treaty, which was concluded in 1994 and came into force in 1995.