Trade diversion is an economic term related to international economics in which trade is diverted from a more efficient exporter towards a less efficient one by the formation of a free trade agreement or a customs union.
Read more about Trade Diversion: Occurrence, Term, Downside, Example
Other articles related to "trade diversion, trade":
... An example of trade diversion is the UK's import of lamb ... Trade was diverted from New Zealand and created between France and the UK ...
... theory, the selective application of free trade agreements to some countries and tariffs on others can sometimes lead to economic inefficiency through the process of trade diversion ... place if a high cost producer has a free trade agreement while the low cost producer faces a high tariff ... Applying free trade to the high cost producer (and not the low cost producer as well) can lead to trade diversion and a net economic loss ...
... theory suggests that bilateral agreements like the FTA will lead to trade creation between the parties directly involved, but will also cause trade diversion from third ... may also undermine multilateral agreements such as those associated with the World Trade Organization ...
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