In a free-trade area, trade deflection occurs if trade between member countries expands as a result of less trade with nonmember countries.

Question

Quizplus · Accepted Answer

Trade deflection occurs when goods are imported into the member country with the lowest tariffs and then transported to another member country with higher tariffs, bypassing the payment of higher tariffs, not because trade expands as a result of less trade with nonmember countries.

In a Free-Trade Area, Trade Deflection Occurs If Trade Between