The diversion of trade away from nations not belonging to a trading bloc and toward member nations is called trade diversion.

Question

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Trade diversion occurs when a trading bloc imposes low or zero tariffs within its members, but high tariffs on non-member countries. This encourages trade between the member countries, while discouraging trade with non-member countries, leading to the diversion of trade.

The Diversion of Trade Away from Nations Not Belonging to a Trading