Analysis of Trade Creation and Trade Diversion Effects in Regional Economic Integration: A Case Study of the North American Free Trade Area

This article comprehensively reviews the impact of regional economic integration on trade creation and trade transfer, with a particular focus on the North American Free Trade Agreement (NAFTA) and the subsequent USMCA. By extensively synthesizing various existing literature materials, this study explores in depth the impact of regional economic integration on the economic development of member and non member countries. The article reveals in detail the specific manifestations of trade creation and trade transfer in agriculture and automobile manufacturing, two key industries, during different time periods. The research results indicate that NAFTA and USMCA have effectively promoted trade between these two industries within the region, but have also to some extent triggered trade diversion among non member countries. Although regional economic integration has improved the overall economic welfare level of member countries, it also faces many challenges such as decreased public support and limited policy implementation space. In the future, regional economic integration urgently needs to explore a balance between deepening internal cooperation and effectively addressing the challenges of globalization.