Editing Customs union (section)

=== Static effects ===
There are trade creation effects and trade diversion effects. The trade creation effect refers to the benefit generated by the transfer of domestic production to other countries in the union with lower costs. The trade diversion effect refers to the loss incurred when a product is imported from a non-member country with lower production costs to a member country with a higher cost. This is the price of joining the customs union. When the trade creation effect is greater than the transfer effect, the combined effect on the member countries is a net gain, which boosts the economies of the member countries; otherwise, it is a net loss and a decline in economic terms.{{cn|date=April 2025}}

The trade creation effect is usually regarded as a positive effect. This is because the domestic production cost of country A is higher than the production cost of country A 's imports from country B. The Customs Union made Country A give up the domestic production of some commodities and change it to Country B to produce these commodities. From a worldwide perspective, this kind of production conversion improves the efficiency of [[resource allocation]].<ref name="Smirnov 805–811">{{Cite conference |last=Smirnov|first=Valery|date=2019-03-29|title=Management of Food Import Substitution in Russia |conference=International Scientific Conference "Social and Cultural Transformations in the Context of Modern Globalism" |series=The European Proceedings of Social and Behavioural Sciences|pages=805–811|publisher=Cognitive-Crcs|doi=10.15405/epsbs.2019.03.02.92|doi-access=free}}</ref>