The production and trade of manufactured products in the EEC and EFTA: A comparison

This paper presents an examination and comparison of trade creation and trade diversion in the EEC and EFTA. The methodology is based upon changes in shares of expenditure on apparent consumption of manufactured products between 1960 and 1968 on a disaggregated basis. The results indicate that there was considerable trade creation and only a modest amount of trade diversion for each trade bloc. In fact, there was in the aggregate net external trade created due largely to an expansion in imports from outside of either trade bloc and the United States. Despite their different memberships and tariff experiences, the results for the two trade blocs are remarkably similar.