International economic circles have a popular perception that trade diversion customs union could lead to trade creation while diverting trade,but this is not correct.

This paper provides the development progress of customs unions theory and the analyses of the welfare effect from Jacob Viner s trade diversion and trade creation theory to R.

In the second chapter it analyzes international trade innovation arising from electronic commerce from the theoretical analysis, primarily from technological advances and the theory of trade growth and welfare point of view of e-commerce innovation on the role of international trade theory mechanism.