Trade Agreements - TOEFL Reading Practice Test

Proficiency in reading academic texts is essential for success in the TOEFL Reading section, which reflects the demands of English-speaking academic settings. This section assesses your ability to locate main ideas, extract details, make inferences, and grasp text structure. Regular practice is key to improvement.

Our practice tests simulate the TOEFL’s format, preparing you thoroughly for the test. Try the "Trade Agreements" TOEFL Practice Test to become accustomed to the exam format and identify where you can improve.

Reading Instructions:

• You have 15 minutes to read the following passage and answer all 9 questions related to it.
• Most questions are worth 1 point, but the last question is worth more. The directions indicate how many points you will receive for that specific question.
• The specific section/paragraphs have been provided again with the question for ease of understanding and quick solution.
• Some questions include a word or phrase that is highlighted in the question as well as in the paragraph for quick reference.

Trade agreements have become important means in international economic relations, helping the exchange of goods and services across national borders. These agreements can take different forms, including two-sided agreements between two countries, many-sided agreements involving several nations, and regional agreements that focus on specific geographic areas. The main goal of trade agreements is to remove obstacles to trade, like tariffs, quotas, and import restrictions, promoting economic growth and improving the well-being of participating countries. In the past, trade agreements have changed a lot, reflecting shifts in global economic interactions, political relationships, and new ideas. For example, the General Agreement on Tariffs and Trade (GATT), established in 1947, laid the groundwork for later trade negotiations and agreements, leading to the formation of the World Trade Organization (WTO) in 1995.

One of the most important examples of a trade agreement is the North American Free Trade Agreement (NAFTA), which was put into effect in 1994 between the United States, Canada, and Mexico. NAFTA aimed to remove trade obstacles and promote economic teamwork among the three nations. The agreement resulted in a major increase in trade volume, with exports and imports among the member countries rising dramatically. According to data from the Office of the United States Trade Representative, trade between the U.S. and Mexico increased from $81 billion in 1993 to $614 billion in 2016. However, NAFTA also faced disapproval for its effect on domestic industries and employment, especially in the manufacturing sector. Critics argued that the agreement led to job losses in the United States. Companies moved production to Mexico, where labor costs were lower. This debate highlights the complex relationship between trade agreements and domestic economic conditions, raising questions about the balance between free trade and protectionism.

Alternatively, the European Union (EU) represents a more combined approach to trade agreements, covering not only trade in goods and services but also the free movement of people and capital. Established after World War II, the EU has evolved into a smooth market that allows for the easy exchange of goods and services among its member states. The EU's trade agreements often include terms related to environmental standards, labor rights, and consumer protection, reflecting a broader understanding of trade that goes beyond just economic factors. For example, the EU's Comprehensive Economic and Trade Agreement (CETA) with Canada includes commitments to sustainable development and rule-related cooperation. This comprehensive approach has been praised for its inclusivity and reviewed for its complexity. Member states must navigate a variety of regulations and standards, which can sometimes create problems in trade rather than help it.

The rise of globalization has also led to the growth of regional trade agreements (RTAs), which are designed to help trade among countries within a specific region. For example, the Association of Southeast Asian Nations (ASEAN) Free Trade Area aims to promote economic integration among its ten member states by reducing tariffs and fostering teamwork. As of 2020, ASEAN countries made up about 8% of global trade, showing the importance of regional agreements in the global economy. RTAs can serve as a stepping stone towards broader multilateral agreements, as they allow countries to build trust and set common standards. However, critics argue that RTAs can create a "confusion" effect, where overlapping agreements lead to problems in trade. This situation raises questions about the effectiveness of regional agreements in achieving their goals, especially in a world increasingly defined by complex supply chains.

The impact of trade agreements on economic growth and development is a subject of continuing research and debate. Supporters argue that trade agreements stimulate economic growth by providing access to larger markets, encouraging foreign direct investment, and fostering competition. For example, studies by the Peterson Institute for International Economics show that countries involved in trade agreements tend to experience higher rates of economic growth compared to those that do not. On the other hand, opponents contend that trade agreements can worsen income inequality and lead to negative social outcomes, especially for at-risk populations. The challenge lies in designing trade agreements that not only promote economic growth but also address social and environmental concerns. For example, including labor rights and environmental protections in trade agreements could help reduce some of the negative effects linked to free trade.

In conclusion, trade agreements play a vital role in shaping the global economy, influencing trade patterns, and affecting the lives of millions. As nations continue to manage the complexities of international trade, the importance of crafting agreements that balance economic interests with social and environmental considerations cannot be overstated. The future of trade agreements will likely involve a greater focus on sustainability and inclusivity, as countries seek to address the challenges brought by globalization and its impact on local economies. In addition, ongoing dialogue and cooperation among nations will be essential in ensuring that trade agreements serve as a force for positive change in the world. As the landscape of international trade continues to evolve, questions remain about the effectiveness of existing agreements and the potential for new structures that better serve the interests of all parties involved.

Directions: Once you have read the passage, answer the following questions.

Paragraph 1

Trade agreements have become important means in international economic relations, helping the exchange of goods and services across national borders. These agreements can take different forms, including two-sided agreements between two countries, many-sided agreements involving several nations, and regional agreements that focus on specific geographic areas. The main goal of trade agreements is to remove obstacles to trade, like tariffs, quotas, and import restrictions, promoting economic growth and improving the well-being of participating countries. In the past, trade agreements have changed a lot, reflecting shifts in global economic interactions, political relationships, and new ideas. For example, the General Agreement on Tariffs and Trade (GATT), established in 1947, laid the groundwork for later trade negotiations and agreements, leading to the formation of the World Trade Organization (WTO) in 1995.

Factual Information Question

1. According to paragraph 1, what is the main goal of trade agreements?
   1. To increase tariffs and quotas
   2. To promote economic growth and improve well-being
   3. To limit the exchange of goods and services
   4. To establish political relationships

Negative Factual Information Question

1. The author mentions all of the following as forms of trade agreements EXCEPT:
   1. Two-sided agreements
   2. Many-sided agreements
   3. Regional agreements
   4. International treaties

Paragraph 2

One of the most important examples of a trade agreement is the North American Free Trade Agreement (NAFTA), which was put into effect in 1994 between the United States, Canada, and Mexico. NAFTA aimed to remove trade obstacles and promote economic teamwork among the three nations. The agreement resulted in a major increase in trade volume, with exports and imports among the member countries rising dramatically. According to data from the Office of the United States Trade Representative, trade between the U.S. and Mexico increased from $81 billion in 1993 to $614 billion in 2016. However, NAFTA also faced disapproval for its effect on domestic industries and employment, especially in the manufacturing sector. Critics argued that the agreement led to job losses in the United States. Companies moved production to Mexico, where labor costs were lower. This debate highlights the complex relationship between trade agreements and domestic economic conditions, raising questions about the balance between free trade and protectionism.

Inference Question

1. What can be inferred about the impact of NAFTA on employment in the United States?
   1. It created more jobs in the manufacturing sector.
   2. It had no effect on employment levels.
   3. It led to job losses due to companies relocating to Mexico.
   4. It improved job security for American workers.

Rhetorical Purpose Question

1. Why does the author mention the increase in trade volume as a result of NAFTA?
   1. To illustrate the success of the agreement
   2. To argue against the agreement
   3. To highlight the negative effects on employment
   4. To provide a historical context for trade agreements

Paragraph 3

Alternatively, the European Union (EU) represents a more combined approach to trade agreements, covering not only trade in goods and services but also the free movement of people and capital. Established after World War II, the EU has evolved into a smooth market that allows for the easy exchange of goods and services among its member states. The EU's trade agreements often include terms related to environmental standards, labor rights, and consumer protection, reflecting a broader understanding of trade that goes beyond just economic factors. For example, the EU's Comprehensive Economic and Trade Agreement (CETA) with Canada includes commitments to sustainable development and rule-related cooperation. This comprehensive approach has been praised for its inclusivity and reviewed for its complexity. Member states must navigate a variety of regulations and standards, which can sometimes create problems in trade rather than help it.

Vocabulary Question

1. The word "smooth" in paragraph 3 is closest in meaning to:
   1. Complicated
   2. Efficient
   3. Uneven
   4. Difficult

Sentence Simplification Question

1. Which of the following sentences best expresses the essential information in the following text from paragraph 3? 
   

"The EU's trade agreements often include terms related to environmental standards, labour rights, and consumer protection, reflecting a broader understanding of trade that goes beyond just economic factors."

1. 1. The EU's trade agreements focus solely on economic factors.
   2. The EU's trade agreements consider various social and environmental issues.
   3. The EU's trade agreements are simple and easy to understand.
   4. The EU's trade agreements do not address labour rights.

Paragraph 4

The rise of globalization has also led to the growth of regional trade agreements (RTAs), which are designed to help trade among countries within a specific region. For example, the Association of Southeast Asian Nations (ASEAN) Free Trade Area aims to promote economic integration among its ten member states by reducing tariffs and fostering teamwork. As of 2020, ASEAN countries made up about 8% of global trade, showing the importance of regional agreements in the global economy. RTAs can serve as a stepping stone towards broader multilateral agreements, as they allow countries to build trust and set common standards. However, critics argue that RTAs can create a "confusion" effect, where overlapping agreements lead to problems in trade. This situation raises questions about the effectiveness of regional agreements in achieving their goals, especially in a world increasingly defined by complex supply chains.

Prose Summary Question

1. Select the TWO answer choices that are mentioned in paragraph 4 as being features of regional trade agreements (RTAs). To receive credit, you must select TWO answers. 
   

1. 1. They promote economic integration among member states.
   2. They are designed to eliminate all tariffs.
   3. They can lead to overlapping agreements that create confusion.
   4. They are only beneficial for larger countries.

Paragraph 5

The impact of trade agreements on economic growth and development is a subject of continuing research and debate. Supporters argue that trade agreements stimulate economic growth by providing access to larger markets, encouraging foreign direct investment, and fostering competition. For example, studies by the Peterson Institute for International Economics show that countries involved in trade agreements tend to experience higher rates of economic growth compared to those that do not. On the other hand, opponents contend that trade agreements can worsen income inequality and lead to negative social outcomes, especially for at-risk populations. The challenge lies in designing trade agreements that not only promote economic growth but also address social and environmental concerns. For example, including labor rights and environmental protections in trade agreements could help reduce some of the negative effects linked to free trade.

Insert Missing Sentence Question

1. In paragraph 5, there is a missing sentence. The paragraph is repeated below and shows four letters (A, B, C, and D) that indicate where the following sentence could be added.

"Trade agreements can have both positive and negative effects on different sectors of the economy." 

Where would the sentence best fit?

The impact of trade agreements on economic growth and development is a subject of continuing research and debate. (A) Supporters argue that trade agreements stimulate economic growth by providing access to larger markets, encouraging foreign direct investment, and fostering competition. (B) For example, studies by the Peterson Institute for International Economics show that countries involved in trade agreements tend to experience higher rates of economic growth compared to those that do not. (C) On the other hand, opponents contend that trade agreements can worsen income inequality and lead to negative social outcomes, especially for at-risk populations. (D) The challenge lies in designing trade agreements that not only promote economic growth but also address social and environmental concerns.

1. 1. Option A
   2. Option B
   3. Option C
   4. Option D

Paragraph 6

In conclusion, trade agreements play a vital role in shaping the global economy, influencing trade patterns, and affecting the lives of millions. As nations continue to manage the complexities of international trade, the importance of crafting agreements that balance economic interests with social and environmental considerations cannot be overstated. The future of trade agreements will likely involve a greater focus on sustainability and inclusivity, as countries seek to address the challenges brought by globalization and its impact on local economies. In addition, ongoing dialogue and cooperation among nations will be essential in ensuring that trade agreements serve as a force for positive change in the world. As the landscape of international trade continues to evolve, questions remain about the effectiveness of existing agreements and the potential for new structures that better serve the interests of all parties involved.

Purpose of the Passage Question 

1. What is the main purpose of paragraph 6?
   1. To summarise the benefits of trade agreements
   2. To discuss the future of trade agreements in a globalised world
   3. To highlight the challenges faced by trade agreements
   4. To provide historical context for trade agreements

Before moving forward to check your answers, don't forget to go through the updated TOEFL Exam Pattern and Syllabus. 

Answer Key with Explanation for TOEFL Reading Passage - Trade Agreements

1. Answer: B

Explanation: The passage clearly states that the main goal of trade agreements is to "remove obstacles to trade" and "promote economic growth and improve the well-being of participating countries." This directly aligns with option B, making it the correct choice. The other options either contradict the passage or do not reflect its main point.

2. Answer: D 

Explanation: The passage lists two-sided agreements, many-sided agreements, and regional agreements as forms of trade agreements. However, it does not mention "international treaties" as a form of trade agreement, making option D the correct answer. This highlights the specific types of agreements discussed in the text.

3. Answer: C

Explanation: The passage mentions that critics argued NAFTA resulted in job losses in the United States because companies moved production to Mexico, where labor costs were lower. This inference aligns with option C, while the other options contradict the information provided in the passage.

4. Answer: A

Explanation: The author mentions the significant increase in trade volume as a result of NAFTA to demonstrate its success in promoting trade among the member countries. This supports option A, while the other options either misinterpret the author's intent or focus on negative aspects.

5. Answer: B

Explanation: In the context of the passage, "smooth" refers to the EU's market functioning effectively and allowing for easy exchanges. Therefore, "efficient" is the closest synonym, while the other options suggest complications or difficulties that do not fit the context.

6. Answer: B

Explanation: The original sentence emphasizes that the EU's trade agreements include terms related to environmental standards, labor rights, and consumer protection, indicating a broader understanding of trade. Option B accurately captures this essential information, while the other options misrepresent the content.

7. Answer: Options A and C

Explanation: The passage discusses how RTAs promote economic integration and mentions the potential confusion caused by overlapping agreements. Both options A and C are directly supported by the text, while options B and D are not mentioned.

8. Answer: C

Explanation: The missing sentence fits best after option C, as it introduces the contrasting views on trade agreements' effects. This placement allows for a smooth transition between the positive and negative perspectives discussed in the paragraph.

9. Answer: B 

Explanation: The main purpose of paragraph 6 is to address the future of trade agreements, focusing on sustainability and inclusivity in the context of globalization. While it touches on other aspects, the emphasis on future considerations aligns with option B.

How was the difficulty level of the practice reading test? Whether you find it challenging or not, we're here to support you. Keep practicing with our extensive collection of sample tests and build your confidence along the way!

Also Read:

• Grammar - TOEFL Reading Practice Test
• Theory of Evolution - TOEFL Reading Practice Test
• The Easter Island - TOEFL Reading Practice Test
• The Neolithic Revolution - TOEFL Reading Practice Test