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.
Which of the following statements is NOT correct?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Free trade is always beneficial for all types of countries.
Option (1) Free trade increases competition between foreign products and domestic products. — True. Free trade brings down barriers like tariffs, so foreign goods enter the home market more cheaply and freely. Buyers can now choose between the two, and domestic products have to compete with foreign products for the same customers.
Option (2) Globalisation does not give equal playing fields to different types of countries. — True. Rich countries enter the markets of developing countries, which face conditions that are unfavourable to them. Their producers start from a weaker position, so they get no equal playing field.
Option (3) Free trade is always beneficial for all types of countries. — False. The passage says that free trade along with globalisation can adversely affect developing countries, which should be allowed to protect their own markets, and that cheap dumped goods can harm domestic producers. So free trade is not always good for every country.
Option (4) Faster modes of transportation and communication promote trade. — True. Better transport and communication let goods and services travel faster and farther. Distant markets come within reach, so more goods are bought and sold across borders.
Note: The passage follows the NCERT book (2025-26), which prints that free trade should ‘allow the developed countries to keep their own markets protected from foreign products’. The paragraph is about the harm free trade can do to poorer countries, so the line needs developing countries, as NTA printed it. The slip is in the book, and the passage has it right.
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. But free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products.…” |