form of international trade before the reform, which suggests that lower input tariffs can help firms to start exporting. This is also found in a paper by Bas (2012), who investigates the trade liberalization in Argentina during the early 1990s and demonstrates that firms producing in industries with the largest declines in input tariffs experienced the greatest increase in the probability of entering the export market. Moreover, Bas and Strauss‐Kahn (2015) show that Chinese firms that benefitted most from input tariff cuts accessed higher quality inputs to quality‐upgrade their exports, which is key to penetrate the most advanced markets around the globe that place strict quality requirements on imports. A thorough assessment of the cost implications of a tariff reform for firms should thus be an integral part of any trade policy analysis considering different reform options.

Second, with the growing importance of global manufacturing networks along global value chains, even low tariffs can have large effects on production costs, as parts and components comprising a product are produced in multiple locations crossing borders various times before they are assembled into the final product (Rouzet and Mirodout, 2013). Moreover, when value chains are global, it is not only the nominal values of tariffs that matter, but also their distribution between processed and unprocessed goods. In many developing countries, tariffs are lower on unprocessed than on processed goods. Diakantoni and Escaith (2014) discuss how the combination of such ‘tariff escalation’ and high levels of nominal duties can lead to a significant anti‐export bias and reduce firms’ incentive to export. On the one hand, this arises because steep tariff escalation increases firms’ returns on the domestic market relative to the international market. On the other, it stems from the fact that on the global stage exporting firms will be at a disadvantage compared to foreign competitors operating in a free trade environment with zero tariffs. Establishing changes to effective protection rates, which take into account the spread between tariff‐related upstream costs and the nominal protection accorded to a sector, is thus an essential aspect of trade policy analyses.

By shedding light on how tariffs intertwine with an economy’s production structures across sectors, UTAS seeks to promote a more evidence‐based policy decision‐making process. It joins the set of trade analysis tools that the World Bank puts at the disposal of policy makers in client countries following the principles of accessibility, simplicity, and tractability.<sup>2</sup> The tool is MS Excel‐based, not requiring particular programming skills. It is straightforward to use and builds on a simple and transparent underlying trade model, where users can choose between different modeling assumptions and parameters. The data needed to run UTAS are relatively limited, requiring a country’s current tariff schedule, a proposed tariff schedule, and an input‐output table with a reasonable sectoral disaggregation.<sup>3</sup> The tool is also highly flexible to accommodate and combine different sector classification systems, which often make combining tariff schedules and sector‐specific production data a cumbersome and time‐consuming exercise.

The remainder of this paper explains how UTAS can assist policy makers in considering the impact of different trade reform options on tariff‐related costs for firms active in downstream activities and on effective protection rates across sectors. Section 2 outlines the overall objective of UTAS and how it allows policy makers to overcome a series of practical challenges when assessing the impact of tariff reform. Section 3 describes the analytical framework underlying UTAS. The structure of the tool and data requirements are discussed in section 4. Section 5 presents a series of policy examples that can be addressed with UTAS. Section 6 concludes.

> 2 Previous simulation tools include, for example, TRIST and SMART (Brenton et al., 2011).

> 3 I/O tables from GTAP are provided alongside the tool.

3