Chapter 11 HEADLINES: China-ASEAN Treaty Threatens Indian Exporters

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Questions to Consider

After reading China-ASEAN Treaty Threatens Indian Exporters, consider the question(s) below. Then “submit” your response.

Question

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Countries often require an agreement—or commitment—in order to agree to reduce trade barriers bilaterally. Also, tariffs are not always welfare reducing. If the country is large, a tariff may even generate increased social welfare.)

Question

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Trade creation would include any new trade created (not existing before the FTA) between China, Brunei, Indonesia, Malaysia, the Philippines, Singapore and/or Thailand.

Question

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Trade diversion would include any trade diverted because of the FTA. That is, trade that previously existed between one of the FTA member countries (e.g., China) and a non-member country (e.g., India) that was diverted from India to intra-FTA trade between FTA member countries as a result of the agreement.