Free Trade Agreement Sentences
Both the creation of trade and the diversion of trade are crucial effects observed during the establishment of a free trade agreement. The creation of businesses will lead to the relocation of consumption from an inexpensive producer to an inexpensive producer, which will increase trade. On the other hand, trade diversion will have the effect of shifting trade from a lower-cost producer outside the area to a more expensive one under the free trade agreement. [16] Consumers will not benefit from such a deferral under the free trade agreement, as they will be disinterested in the possibility of buying cheaper imported goods. However, economists find that trade diversion does not always harm aggregate national welfare: it can even improve aggregate national welfare if the volume of diverted trade is low.
