Trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union.

Name: Trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union.
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Trade creation occurs when imports from a higher-cost supplier outside of a customs union are replaced by purchases from a lower-cost supplier within the union.

Trade Creation Occurs When Imports from a Low-Cost Supplier Outside