trade diversion

English

Etymology

• Credited to Jacob Viner in his 1950 book The Customs Union Issue.

Noun

trade diversion (countable and uncountable, plural trade diversions)

1. (economics, usually negative) The changing of import sources as a result of political agreements, rather than to increase mutual benefit.
   • 1987, Robert Mitchell Stern, Philip H. Trezise, John Whalley, University of Michigan, University of Western Ontario. Centre for the Study of International Economic Relations, Perspectives on a U.S.-Canadian free trade agreement:

     Even if trade diversion is not important in aggregate terms or in relation to trade creation between the bilateral partners, it still represents an inefficient use of global resources […]

   • 1992, Gerhard Pohl, Piritta Sorsa, European integration and trade with the developing world:

     First, the lowering of trade barriers among members leads to trade diversion from outside suppliers to firms in member countries […]

   • 1997, Riccardo Faini, Enzo R. Grilli, Multilateralism and regionalism after the Uruguay Round:

     An excessive increase in the share of intraregional flows is typically taken as an indication that trade diversion has been predominant and the regional integration programme has been welfare-reducing.

See also

• trade diversion on Wikipedia.Wikipedia
• trade creation