1. Discuss why countries may embark on a trade war, even where it is not in their interest to do so. (7.5 marks) 2. What effects are likely in terms of welfare of a bilateral trade agreement and how might this differ under trade creation and trade diversion? (15 marks) 3. Trade has been argued by many to generate negative environmental effects. Using the case of a negative production externality evaluate the effects of a move from autarky to free trade for a nation. (7.5 marks)