Because it is difficult to negotiate multilateral trade agreements, some economists argue that regional 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?

Question

Quizplus · Accepted Answer

While it is generally true that regional trade agreements represent a movement toward freer trade, some preferential trade agreements may actually result in higher trade diversion costs than trade creation gains. Therefore, the argument that any movement toward freer trade is always beneficial is not always correct.

Because It Is Difficult to Negotiate Multilateral Trade Agreements, Some