Answer:
D. trade diversion.
Explanation:
Trade diversion -
In this case , the trade is diverted from a more efficient exported to the less efficient exporter, via a customs union or free trade agreement .
The cost of the good reduces , due to lower tariff , in comparison to the trade with the country outside the agreement with lower cost goods but higher tariff .
The trade is created when the formation of the trade agreement between the countries reduces the good's price for more consumers and hence the overall trade increases .
