Question

Suppose country X currently produces widgets. Then it establishes a regional trade agreement with country Y. Following the formation of the regional trade agreement, country X no longer produces widgets and now imports widgets from country Y. What has occurred?

Answer 1

Probably country Y had a comparative advantage over country X in the production of widgets, therefore trade resulted between the countries and it increased the gains for both countries.

Country Y will probably continue to produce and export widgets and country X will be producing and possibly exporting some other good.