Negotiations for a comprehensive free trade agreement (FTA) between the UK and India have reached their final stages, with both nations seeking to dismantle longstanding trade barriers. Trade economists estimate that a successful deal could boost bilateral trade by up to £24 billion annually by 2035. (1)
While some domestic manufacturing groups have expressed concern over increased competition, the UK government has emphasized the substantial welfare gains for consumers. A key provision of the proposed deal is the phased elimination of customs duties on primary and intermediate goods. (5)
Government analysis indicates that a comprehensive free trade agreement eliminating bilateral tariffs would significantly boost import volumes in key manufacturing and agricultural sectors. By removing these import duties, the UK hopes to secure cheaper inputs for its domestic food processing and industrial sectors, while Indian exporters gain unprecedented access to the British consumer market. (10)
Extract B (lines 8–9) states: 'Government analysis indicates that a comprehensive free trade agreement eliminating bilateral tariffs would significantly boost import volumes in key manufacturing and agricultural sectors.'
With the help of a tariff diagram, explain the extent to which the removal of a tariff might affect the volume of imports into the UK.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.