In 2020, a Free Trade Agreement (FTA), namely the United States-Mexico-Canada Agreement (USMCA), took into effect between the three ratifier nations. This FTA is also sometimes referred to as "NAFTA 2.0" or as the "New NAFTA", as it replaced the North American Free Trade Agreement (NAFTA) which was implemented since 1994. The NAFTA was in fact preceded by the Canada-United States Free Trade Agreement (CUSFTA) that was signed in 1988 between Canada and the United States. We will refer to this 2-country agreement for this question. Clausing (2001) studied the trade effects in this earlier bilateral CUSFTA, motivated by the unknown effects of tariff liberalisation. (a) With the use of an appropriate diagram, illustrate and explain the theory of trade creation and trade diversion (static effects), using the example of the FTA between Canada (home country) and the United States (foreign country). Please explain in details to compare before and after the implementation of the CUSFTA, to derive at the trade creation and diversion effects.