Handelsumlenkung (Trade Diversion) is a concept within International Trade Theory that describes a negative consequence of forming a preferential trade agreement, such as a Zollunion or a Freihandelsabkommen. It occurs when a country shifts its imports from a more efficient, lower-cost producer outside the agreement to a less efficient, higher-cost producer within the agreement, solely because the latter benefits from preferential Zölle or other reduced trade barriers. This shift can lead to a reduction in global Wirtschaftlicher Wohlstand due to less efficient resource allocation.
History and Origin
The concept of Handelsumlenkung was first rigorously analyzed and introduced into economic discourse by Canadian economist Jacob Viner in his seminal 1950 work, The Customs Union Issue. 6Viner's research laid the groundwork for understanding the complex effects of regional economic integration, distinguishing between beneficial "trade creation" and potentially detrimental "trade diversion." He argued that while customs unions could increase trade among members (trade creation), they could also redirect trade from more efficient external suppliers to less efficient internal ones, thereby reducing overall wirtschaftliche Effizienz globally.
Key Takeaways
- Handelsumlenkung occurs when a country imports from a less efficient partner within a trade bloc instead of a more efficient non-partner, due to preferential tariffs.
- This phenomenon can lead to a misallocation of global resources and a reduction in overall economic welfare.
- It is a critical consideration when evaluating the net benefits of regionale Integration and trade agreements.
- The negative impacts of Handelsumlenkung can include higher prices for consumers and reduced market diversity.
Formula and Calculation
The concept of Handelsumlenkung does not involve a specific quantitative formula in the same way a financial ratio might. Instead, its effects are typically analyzed through economic models, such as general equilibrium models, that evaluate the welfare implications of changes in trade flows. These models assess the shift in trade patterns, the change in production costs, and the impact on consumer and producer surplus to determine the net welfare effect. Therefore, this section is omitted as no universal formula applies to its calculation.
Interpreting the Handelsumlenkung
Interpreting Handelsumlenkung involves assessing whether a trade agreement genuinely enhances globaler Handel and efficiency (trade creation) or merely re-routes trade to less competitive sources (trade diversion). A high degree of Handelsumlenkung suggests that the benefits of a trade agreement may be outweighed by its costs, as resources are allocated inefficiently. Policymakers often analyze trade data to identify changes in import origins following the implementation of agreements, looking for shifts away from historically low-cost suppliers to new, higher-cost partners within the bloc. Understanding the magnitude of Handelsumlenkung is crucial for policymakers to balance the desire for regional integration with the goal of maximizing nationales Einkommen and consumer welfare.
Hypothetical Example
Imagine Country A traditionally imports Product X from Country C, a highly efficient producer, paying a 10% Zoll on these imports. Country B also produces Product X but at a higher cost than Country C. Initially, with the 10% tariff applied to both, Country C's product (cost $100 + $10 tariff = $110) is cheaper than Country B's ($105 + $10 tariff = $115). So, Country A imports from Country C.
Now, Country A forms a Freihandelsabkommen with Country B, eliminating tariffs between them, but maintaining the 10% tariff on Country C.
- Country C's product price in Country A: $100 (cost) + $10 (tariff) = $110.
- Country B's product price in Country A: $105 (cost) + $0 (tariff) = $105.
Despite Country B being a less efficient producer of Product X than Country C (its pre-tariff cost is higher), Country A now switches its imports from Country C to Country B because Country B's product is cheaper post-agreement. This is an example of Handelsumlenkung, as trade is diverted from the truly more efficient producer (Country C) to a less efficient one (Country B) due to the preferential tariff structure, leading to a net welfare loss for Country A and the global economy.
Practical Applications
Handelsumlenkung is a significant consideration in the design and evaluation of international trade policies and agreements.
For instance, studies on the North American Free Trade Agreement (NAFTA) examined whether it primarily fostered trade creation or led to substantial Handelsumlenkung by shifting trade patterns among the U.S., Canada, and Mexico. Similarly, analyses of the European Union's customs union have explored instances where member states began importing goods from less efficient EU partners rather than more efficient external suppliers due to the elimination of internal tariffs and the imposition of a common external tariff.
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More recently, geopolitical events have also triggered significant Handelsumlenkung. For example, economic sanctions imposed by the European Union and G7 countries on Russia following its invasion of Ukraine led to a considerable diversion of Russia's trade with the euro area, forcing Russia to seek new, often less optimal, trading partners and impacting global commodity markets. 4The United Kingdom's departure from the European Union (Brexit) also resulted in trade diversion, as Spanish firms, for instance, re-routed trade away from the UK to other markets, particularly within the EU, due to increased trade policy uncertainty and potential tariff barriers. 3These real-world instances underscore how shifts in trade policy, whether through integration or fragmentation, can have direct and measurable impacts on global trade flows and efficiency.
Limitations and Criticisms
While trade agreements often aim to boost economic welfare, Handelsumlenkung highlights a key limitation: they can inadvertently decrease overall Wirtschaftliche Effizienz. This happens when trade is redirected from a country with a true komparativer Vorteil (the most efficient producer globally) to a less efficient one within a newly formed trade bloc. The importing country may end up paying higher real costs for goods, despite lower tariff-inclusive prices, because the production costs of the new supplier are inherently greater.
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Critics argue that trade diversion can reduce Konsumentenrente and diminish global welfare, as it distorts natural trade patterns driven by comparative advantage. It can lead to a less optimal allocation of resources on a global scale, meaning that the world's total output could be lower than if trade flowed freely to the most efficient producers, regardless of regional affiliations. 1Furthermore, Handelsumlenkung can harm non-member countries whose exports are displaced, potentially straining international trade relations and leading to retaliatory measures or increased Protektionismus.
Handelsumlenkung vs. Handelsförderung
Handelsumlenkung (Trade Diversion) and Handelsförderung (Trade Creation) are two opposing effects that arise from the formation of preferential trade agreements like customs unions or free trade areas. While both describe changes in trade patterns, their welfare implications are distinct.
- Handelsumlenkung occurs when a country within a new trade agreement shifts its imports from a more efficient, non-member country (which now faces a tariff barrier) to a less efficient, member country (which enjoys tariff-free access). This redirection of trade is considered welfare-reducing because it moves production from a lower-cost global supplier to a higher-cost one, leading to an inefficient allocation of resources.
- Handelsförderung, in contrast, refers to an increase in trade between member countries of a trade agreement that results from the removal of internal trade barriers. It occurs when a country shifts from producing a good domestically at a high cost to importing it from a more efficient, lower-cost partner within the trade bloc. This leads to a more efficient allocation of resources, lower prices for consumers, and an overall increase in economic welfare for the participating countries.
The overall economic impact of a trade agreement depends on whether the beneficial effects of Handelsförderung outweigh the detrimental effects of Handelsumlenkung.
FAQs
What causes Handelsumlenkung?
Handelsumlenkung is primarily caused by discriminatory trade policies that favor member countries of a trade bloc over non-member countries. When tariffs or other trade barriers are reduced or eliminated for intra-bloc trade but maintained or raised for external trade, it can make products from less efficient member countries artificially cheaper than those from more efficient non-member countries. This leads to a shift in import sources.
Is Handelsumlenkung always negative?
From a global wirtschaftliche Effizienz standpoint, Handelsumlenkung is generally considered negative because it reallocates production from more efficient global producers to less efficient ones within a trade bloc. However, the net effect on the welfare of the member country can be ambiguous. If the gains from Handelsförderung (e.g., increased consumer surplus from lower prices on some goods) outweigh the losses from Handelsumlenkung, the member country might still experience an overall benefit.
How does Handelsumlenkung affect consumers?
Handelsumlenkung typically harms consumers in the importing country by forcing them to purchase goods from a higher-cost producer than the best available global supplier. While the price they pay might be lower due to the removal of tariffs within the bloc, the actual cost of production is higher, meaning resources are used less efficiently. This can lead to reduced Konsumentenrente, less variety, and potentially lower quality goods over time if competition diminishes.
What is the relationship between Handelsumlenkung and free trade?
Handelsumlenkung is seen as a deviation from the principles of pure freier Handel, which advocates for trade based solely on komparativer Vorteil regardless of geographic or political blocs. While regional trade agreements reduce barriers among members, they inherently create new barriers with non-members, leading to trade distortions like Handelsumlenkung. True free trade aims to eliminate all tariffs and non-tariff barriers universally to ensure that goods are produced and traded by the most efficient global suppliers.