Read the passage and answer the questions:
Trade Liberalisation
The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services.
Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developing countries to keep their own markets protected from foreign products.
Countries also need to be cautious about dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.
Trade liberalisation does not include ___________ .
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → environmental protection
Option (1) opening up of economies — Included (Incorrect). Trade liberalisation is the act of opening up economies for trading, so that goods and services can move in and out freely.
Option (2) lowering tariffs — Included (Incorrect). A tariff makes imported goods dearer and keeps them out. Bringing down trade barriers like tariffs is how economies are opened up.
Option (3) competition between domestic and foreign products — Included (Incorrect). Once the barriers fall, goods and services from everywhere reach the home market and compete with domestic products and services.
Option (4) environmental protection — Not included (Correct). Trade liberalisation is about removing barriers to trade. Protecting the environment is not a part of what it means.
NCERT (2025-26): “Case for Free Trade … The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services. Case for Free Trade … Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems goods and services can travel faster and farther than ever before.…” |