Downside
Diverted trade may hurt the non-member nation economically and politically, and create a strained relationship between the two nations. The decreased output of the good or service traded from one nation with a high comparative advantage to a nation of lower comparative advantage works against creating more efficiency and therefore against more overall surplus. It is widely believed by economists that trade diversion is harmful to consumers. The dynamics of trade diversion was described by Ravshanbek Dalimov in 2009. He used similarity of trade flows to the flux of gas or liquid stimulated by the pressure difference, while the flows of trade flows are stimulated by the price difference. This allowed use of Navier-Stokes equations for the interregional dynamics of trade flows.
Read more about this topic: Trade Diversion