An example of Trade creation is when countries formed a free trade agreement that one of the countries that used to produce its own refrigeration units at a higher cost will imports them from the other country at a lower cost
A Trade creation is an agreement that takes place when domestic consumers in countries import more goods and services as import prices fall due to a removal of tariifs.
These agreement occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.
In conclusion, It also occur when higher-cost external producers are replaced by lower-cost external producers within the free trade area.
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