Abstract
We measure the new gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the new gains from trade of a country as all welfare effects pertaining to changes in the set of firms serving that country as emphasized in the so-called new trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates traditional and new gains. We then apply this decomposition using Canadian and US micro data and find that the new welfare effects of CUSFTA on Canada were negative.
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