Because it is difficult to negotiate multilateral trade agreements,
Some economists argue that preferential trade agreements are
Always beneficial since they represent a movement toward freer
Trade, which is better than no movement at all.Is this argument
Always correct?
A)Yes; any movement toward freer trade is better than no movement at all.
B)No; some preferential trade agreements may have higher trade diversion costs than trade creation gains.
C)Yes; all preferential trade agreements have higher trade creation gains than trade diversion losses.
D)No; all preferential trade agreements have higher trade diversion losses than trade creation gains.

Question

Quizplus · Accepted Answer

Some preferential trade agreements may have higher trade diversion costs than trade creation gains. While any movement toward freer trade is generally positive, it is important to carefully assess the impact of particular preferential trade agreements on trade diversion and creation. Some agreements may end up creating more economic harm than good.

Because It Is Difficult to Negotiate Multilateral Trade Agreements