Economics · International Trade

Consider the following with reference to international trade agreements and their implications for textile trade: I. Preferential tariff access under bilateral trade agreements is permitted under WTO rules as an exception to the Most Favoured Nation (MFN) principle. II. Rules of Origin may mandate the use of inputs sourced from a specific partner country as a condition for availing preferential tariffs. III. Trade diversion necessarily improves the overall welfare of all participating countries by reallocating production to the most efficient global producers. IV. Merchandise exports of cotton yarn are recorded in the capital account of the Balance of Payments. V. Preferential trade agreements automatically eliminate the applicability of MFN tariff rates on all third-country imports of similar goods. How many of the above statements are correct?