Trade deflection occurs in a free-trade agreement because countries maintain their own national tariff schedules that may have different tariffs on the same product.

Question

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Trade deflection happens when goods are imported through a country within a free-trade agreement that has the lowest tariffs on those goods, and then shipped to another country within the agreement with higher tariffs on the same goods, to take advantage of the differing national tariff schedules.

Trade Deflection Occurs in a Free-Trade Agreement Because Countries Maintain