Because It Is Difficult to Negotiate Multilateral Trade Agreements, Some

Multiple Choice

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?

A) Yes; any movement toward freer trade is better than no movement at all.
B) No; some preferential trade agreements may have higher trade diversion costs than trade creation gains.
C) Yes; all preferential trade agreements have higher trade creation gains than trade diversion losses.
D) No; all preferential trade agreements have higher trade diversion losses than trade creation gains.