Editing Free trade (section)

=== Trade diversion ===
According to [[mainstream economics]] theory, the selective application of free trade agreements to some countries and tariffs on others can lead to [[efficiency (economics)|economic inefficiency]] through the process of [[trade diversion]]. It is efficient for a good to be produced by the country which is the lowest cost producer, but this does not always take place if a high cost producer has a free trade agreement while the low cost producer faces a high tariff. Applying free trade to the high cost producer and not the low cost producer as well can lead to trade diversion and a net economic loss. This reason is why many economists place such high importance on negotiations for global tariff reductions, such as the [[Doha Round]].<ref name="landsburg">[[Steven E. Landsburg]]. ''Price Theory and Applications'', Sixth Edition, Chapter 8.</ref>