the implementation of NAFTA, con...rming signi...cant trade diversion e¤ects, but found little in the way of third-country price impacts associated with these trade volume reductions. Both Romalis (2007) and Clausing (2001) found only insigni...cant trade diversion e¤ects from the Canada-US FTA, a result consistent with the analysis of Tre‡er (2004), who found that Canada’s trade creation associated with CUSFTA dominated the welfare e¤ects of any trade diversion. Using data on the manufacturing trade and FTAs for 64 countries over the period 1990-2002, Dai, Yotov and Zylkin (2014) report large trade diversion impacts of FTA formation, with the largest third-country impacts su¤ered by existing FTA members when a country joins a new FTA from which its other FTA partners are excluded. On the other hand, Frazer and Van Biesebroeck (2010) found no evidence that US preferences under the African Growth and Opportunity Act (AGOA) drew African exports in those products away from the EU in ways that may have a¤ected EU consumer prices.<sup>111</sup> A potential limitation of this literature is suggested by the results of Handley (2014) and Handley and Limão (forthcoming) which we have discussed at various points in the survey. They show that in the presence of policy uncertainty there can be large di¤erences between the trade e¤ects of, on the one hand, an applied MFN tari¤ of zero that is bound at a much higher level in the WTO, and on the other hand a PTA tari¤ that is both applied and bound at zero. Such di¤erences are likely to be missed in studies such as those above that attempt to relate trade e¤ects of PTAs to preference margins on applied tari¤s alone. Also relevant is the paper by Prusa and Teh (2010) discussed previously: their ...nding that PTA formation is associated with both a reduction in antidumping actions against PTA partners and an increase against non-partners suggests a form of third-country externality that may be di¢ cult for typical studies of the trade impacts of PTAs to measure.

Finally, in recent work, Spearot (2015) develops a general equilibrium version of the Melitz and Ottaviano (2008) model which allows for di¤erences in ...rm productivity distributions across supplying countries, and shows how the model can be structurally estimated with product level bilateral trade and tari¤ data and used for counterfactual experiments. Of particular interest to our discussion here is Spearot’s counterfactual calculations of the impacts of a country unilaterally eliminating all of its (post-2000) remaining tari¤s. As Spearot notes, if existing PTA-induced tari¤ discrimination causes su¢ cient trade diversion, even a large country such as the US with low MFN tari¤s could gain in terms of real national income by eliminating its remaining MFN tari¤s. And this is exactly what Spearot ...nds for the US (and others including India, Japan and Korea).

Relatedly, Caliendo and Parro (2015) and Tintelnot (2014) build on the Eaton and Kortum (2002) framework to quantify the trade impacts of NAFTA (Caliendo and Parro) and the trade and production impacts of the proposed Canada-EU trade and investment agreement (Tintelnot). Caliendo and Parro ...nd small price and quantity impacts of NAFTA on the rest of the world, while Tintelnot ...nds larger potential third-country impacts of the proposed Canada-EU agreement.

> 111 Furthermore, there is also mixed evidence on international externalities associated with the application of other discriminatory trade policy, such as antidumping. Bown and Crowley (2006, 2007) ...nd international externalities associated with US antidumping imposed on Japanese exports via the trade volume (“trade de‡ection”) and price (third-market terms-of-trade) e¤ects on its exports of those products to third markets. However, Bown and Crowley (2010) investigate similar trade restrictions imposed on a developing country exporter (China, during 1992-2001) and do not ...nd evidence of trade de‡ection to third countries in that setting.

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