Final answer:
Trade diversion is the condition that leads to shift in trade towards member countries in a trading bloc, away from non-member nations, which can lead to trade imbalances.
Step-by-step explanation:
The condition that leads to the diversion of trade away from nations not belonging to a trading bloc and toward member nations is known as trade diversion. This occurs when trade barriers like tariffs and quotas are reduced or eliminated between member nations within a trading bloc, making it cheaper to import goods from these countries compared to non-member nations. Consequently, trade that might have been otherwise conducted with more efficient producers outside of the bloc is diverted to member nations, potentially creating a greater imbalance of trade if the internal producers are less efficient than the external ones.