KSLU Solved Question Papers
International Trade Economics
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 10
2026 Jan Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 10 International Trade Economics 2026 Jan Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2026 Jan examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2026 Jan examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2026 Jan examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written either in English or in Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)Discuss the historical background of International Trade.[10]
Answer
For full marks, cover: what international trade is and why it arises; the early trade routes; mercantilism and the classical case for free trade (Adam Smith 1776, David Ricardo 1817); the nineteenth-century treaty network and its most favoured nation clauses; the interwar collapse (Smoot-Hawley 1930, quotas, exchange controls); Bretton Woods 1944, the Havana Charter and GATT 1947; the rounds and the WTO of 1995; India's place in the story; the lesson the history teaches.
What international trade is
International trade is the exchange of goods, services and capital across national borders. It arises because countries differ in natural resources, climate, skills, technology and cost of production. A country gains by selling what it makes cheaply and buying what others make cheaply. The law of international trade grew up to make this exchange predictable and fair.
Early trade
Trade between distant peoples is very old. Seals of the Indus Valley civilisation have been found in Mesopotamia, which shows trade across the Arabian Sea thousands of years ago. The Silk Road linked China, Central Asia, India and the Mediterranean. Indian pepper, cotton cloth and spices were carried by sea to Arabia, East Africa and Rome.
In this period trade was governed by custom, by the power of rulers and by local merchant law. There were no common rules between nations.
Mercantilism: trade as a contest
From the sixteenth to the eighteenth century, European states followed mercantilism. Its idea was simple. A nation becomes rich by piling up gold and silver. So it must export more than it imports. Governments therefore taxed imports heavily, gave bounties to exporters and kept colonies as captive markets. Trade was seen as a contest in which one nation's gain was another's loss.
The classical case for free trade
Adam Smith, in The Wealth of Nations (1776), attacked mercantilism. He argued that each country should specialise in goods in which it has an absolute advantage, and buy the rest. Both sides then gain.
David Ricardo, in Principles of Political Economy and Taxation (1817), went further with comparative advantage. A country gains from trade even if it is less efficient in every good. It should specialise where its disadvantage is smallest.
These ideas changed policy. Britain repealed its Corn Laws in 1846 and moved towards free trade.
The nineteenth-century treaty network
Trade was then governed by bilateral treaties of friendship, commerce and navigation between pairs of states. The Cobden-Chevalier Treaty of 1860 between Britain and France cut duties and set off a chain of similar treaties across Europe.
These treaties carried a most favoured nation (MFN) clause. It meant that any better tariff given to one country passed to the treaty partner as well. But there was no common text, no institution and no court. A state could end a treaty on notice or simply retaliate.
The interwar collapse
The weakness of this system showed after the First World War.
- In 1930 the United States passed the Smoot-Hawley Tariff Act, raising duties on thousands of imported goods.
- Other countries hit back with their own tariffs.
- Quotas, exchange controls and clearing deals replaced tariffs as the main tools.
- In 1932 the Ottawa agreements created imperial preference, closing much of the British Empire to outsiders.
- World trade fell by roughly two thirds in value between 1929 and 1934.
Two lessons were drawn. Protection is contagious, so one country's tariff war drags in all the others. And a trade promise that can be withdrawn at will is of little value.
Bretton Woods, the Havana Charter and GATT
The founders of the post-war order planned trade, money and development together.
- The Bretton Woods Conference (1 to 22 July 1944), attended by 44 nations including India, created the International Monetary Fund and the World Bank (IBRD).
- A third body, an International Trade Organization, was to govern trade. Its charter was adopted at Havana on 24 March 1948. It never came into force, because the United States did not ratify it.
- Meanwhile 23 countries, India among them, had signed the General Agreement on Tariffs and Trade (GATT) at Geneva on 30 October 1947. It was applied provisionally from 1 January 1948.
GATT was only an agreement, not an organisation. Yet for 47 years it worked as the world's trade rulebook. Its core was MFN (Article I), bound tariffs (Article II), national treatment (Article III) and a ban on quotas (Article XI).
The rounds and the WTO
Under GATT, eight rounds of negotiation cut tariffs step by step. The early rounds began at Geneva in 1947. The Kennedy Round (1964 to 1967) produced the first anti-dumping code. The Tokyo Round (1973 to 1979) added codes on non-tariff barriers.
The Uruguay Round (1986 to 1994) was the largest. It brought services, intellectual property and investment measures into the system. The Marrakesh Agreement was signed on 15 April 1994. The World Trade Organization (WTO) came into being on 1 January 1995, with a binding dispute settlement system.
India's place in the story
India was a trading nation long before colonial rule. Under British rule it became an exporter of raw materials and an importer of manufactures. After independence it followed import substitution, with high tariffs and licensing. From 1991 India liberalised its trade. It has been a WTO member from the first day, 1 January 1995.
The recent picture
The Doha Round, launched in 2001, has not been completed. The appellate stage of WTO dispute settlement has had no members since 2020. The Fourteenth Ministerial Conference at Yaounde in March 2026 closed without a declaration. Bilateral and regional trade agreements have grown fast in this gap.
Conclusion. The history of international trade runs from rulers and custom, through mercantilist rivalry and the classical case for free trade, to a rule-based system. The interwar collapse taught that trade needs bound promises and a neutral referee. GATT in 1947 and the WTO in 1995 were built to supply both, and India has been part of that system from the start.
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