data elicit less information from which to draw inference. Second, and more importantly, we drop these disputes from the sample in which we examine details of the inter-temporal _changes_ to trade flows associated with the timing of implementation of WTO-inconsistent policies coming under dispute.

Consider next the subsample of WTO disputes triggered by a respondent’s change to its policy, and thus for which there is data from both before and after the disputed policy went into effect. Our questions of interest include whether different inter-temporal changes in bilateral trade are associated with different types of policies or participation decisions by countries across disputes. So as to avoid partial year effects, we define variables that compare changes to the import data from the first full year after the policy change went into effect relative to the year prior to the policy change. We construct measures by dispute for changes to the value of imports (in 2005 constant US dollars and in percent changes), the percent change in the volume (quantity) of imports, the percent change in prices (unit values), and the change in the respondent’s import market share. Nevertheless, we do provide the additional caveat that bilateral trade data at the product level can be quite volatile when measured at the annual frequency, potentially for reasons that have little or nothing to do with the imposition of any particular policy. While the results that we present below do rely on data defined at the annual frequency, the qualitative pattern of our basic results holds under alternative definitions of the data, such as use of two-year averages.

Finally, the terms-of-trade theory suggests that changes to exporter-received prices may be of central interest when examining the role of trade agreements, and by extension, its dispute settlement procedures. Indeed, large importing countries with market power may utilize trade agreements to neutralize their otherwise unilateral incentives to implement policies that impose externalities on trading partners by lowering the prices that exporters receive for products sold. Our approach is to use the variation across different types of disputes and across different exporting countries to begin to investigate the potential impact of the disputed policies on exporter-received prices. However, it is important to clarify that our measures of exporter-received prices are unit values constructed from importer-reported data. While such data are more reliable than exporter-reported data, they are compiled on a c.i.f. basis and thus include the insurance and freight costs that accrue in getting the product from the exporter to the importer’s (respondent’s) border. For our analysis below that examines changes to these unit prices over time, our estimates will be unaffected by any across-product differences in levels of these freight and insurance costs, provided any cost differentials do not change substantially during the years around the policy change.<sup>14</sup>

> 14 It is important to note in our penultimate section that provides a comparison of price levels across exporters of products under dispute that we cannot rule out that differences arise due to c.i.f. differences across export sources.

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