Implementing a regional freetrade agreement may have an
Effect in which, due to reduced tariffs, a nation begins to import a
Product from another member country that it had previously
Imported from outside the new trade region.This effect is called:
A)trade creation.
B)trade diversion.
C)reciprocal trade agreements.
D)the employment effect of FTAs.

Question

Implementing a regional free­trade agreement may have an
Effect in which, due to reduced tariffs, a nation begins to import a
Product from another member country that it had previously
Imported from outside the new trade region.This effect is called:
A)trade creation.
B)trade diversion.
C)reciprocal trade agreements.
D)the employment effect of FTAs.

Quizplus · Accepted Answer

Trade diversion occurs when a country begins to import goods from a member of a free-trade agreement instead of a more efficient producer outside the agreement due to reduced tariffs within the trade bloc.

Implementing a Regional Free­trade Agreement May Have an

Implementing a Regional Freetrade Agreement May Have an