Trade agreements may be overestimating impacts, new approach reveals bias.
The article discusses how trade agreements often involve partial tariff elimination for sensitive sectors, which can introduce bias when using economic models. The researchers suggest a tariff line approach to model exemptions for sensitive goods in order to reduce this bias. By applying this approach to the Canada-EU trade agreement, they found that standard approaches to trade liberalization may overestimate trade and welfare impacts by not considering partial liberalization in certain sectors and substitution across tariff lines.