the subject of the dispute.

The empirical question of this paper is thus whether evidence of the terms-of-trade theory arising from the original trade agreement negotiations setting (Bagwell and Staiger, 2011) also extends to the trade agreement’s _enforcement_ negotiations setting. Our results add to an emerging literature on international trade agreements, as a number of recent contributions demonstrate the empirical relevance of the terms-of-trade theory for the conduct and negotiation of trade policy across a variety of settings both inside and outside the GATT/WTO framework. Broda, Lim ̃ao and Weinstein (2008) examine a set of _pre-_ trade agreement levels of import protection and find evidence consistent with the theory that market power affects unilaterally-imposed (noncooperative) tariffs. Bagwell and Staiger (2011) assess a set of countries that newly acceded to the WTO between 1995 and 2005 and find that the negotiated, post-accession tariff levels that governments take on after joining the agreement are also consistent with the core theoretical predictions of what such negotiations can deliver. Ludema and Mayda (2013) find evidence that heterogeneity of exporter concentration can also be used to explain variation in the most-favored-nation tariff schedules for many of the long-term members of the GATT/WTO system as of the end of the Uruguay Round. Finally, Bown and Crowley (2013) focus on a government’s time-varying resort to import protection through potentially permissible trade agreement “exceptions” such as antidumping and safeguards. They provide evidence that even when applied import tariff policies are constrained by a trade agreement, governments can resort to other non-tariff policy instruments to respond to terms-oftrade motivated incentives to adjust levels of import protection in the face of trade volume shocks (Bagwell and Staiger, 1990).<sup>1</sup> The totality of this recent evidence that terms-of-trade incentives affect trade policymaking, including the Ludema-Mayda and Bown-Crowley results that such incentives are not extinguished upon entry into trade agreements, also identifies potential challenges and limits to international cooperation over trade policy. Our evidence suggests that this would include trade policy changes that arise through dispute settlement negotiations.

While the literature on trade agreement enforcement is much more nascent than that concerning the formation of trade agreements more generally, the recent increased interest in dispute settlement is driven at least partially by the tacit acknowledgment that the trading system’s legal procedures may be playing a particularly important role. Legal scholars have now established a significant body of research assessing WTO jurisprudence and case law; in this work the system’s dispute settlement procedures are referred to as the “crown jewel” achievement of the international trading system, especially vis-a-vis the much less legalistic dispute system made available under the GATT period of 1947-1994.<sup>2</sup> Moreover, in their survey of the bilateral trade flows of the products that member

> 1See also Nicita, Olarreaga, and Silva (forthcoming). A more general survey of the economics literature on trade agreements is Maggi (2014).

> 2For an introduction to WTO law see, for example, Jackson (1997) or Palmeter and Mavroidis (2004). Furthermore, beginning with the WTO case law decisions arising in 2001, Horn and Mavroidis (2003) published an annual series from a project teaming legal scholars and economists that jointly assessed the newly arising WTO legal decisions. The series is now more than a decade old (subsequently having been extended by Bown and Mavroidis, 2013), and in total now covers nearly 100 formal legal decisions arising under WTO Panel Reports and from the Appellate Body.

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