31 Table 12: Effects on Hungary of changes in EC merchandise trade policy r6gime

|Imports<br>1983|<br>Est<br>No U.|imated<br>R.|trade incr<br>Uruguay|ease<br>Round|
|---|---|---|---|---|
|$S000|$S000||$'000||
|969305|||||
|No special treatment|||81049|8.4|
|Hungary gets treatmentof:|||||
|-<br>GSP beneficiaries|57984|6.0|125071|12.9|
|-<br>Mediterranean<br>countries|96086|9.9|155036|16.0|
|-<br>EFTA countries|145063|15.0|187848|19.4|
|-<br>Other EC countries|465654|48.0|418055|43.1|
|Hungary benefits from:|||||
|-<br>European space (tariffs=0)|||236978|24.4|
|-<br>European space (tariffs & NTBS=0)|||367372|37.9|

In the case of EC treatment, the categories recording the greatest gains in absolute terms are, in descending order: iron and steel (SITC 67), meat and meat preparations (SITC 01), fruit and vegetables (SITC 04), clothing (SITC 84) and textiles (SITC 65). The gains in the latter category are twice as great as for the next category - electrical machinery (SITC 72). In non-EC scenarios (overlaying the Uruguay Round results in which NTBs are reduced in agriculture, textiles and clothing), the greatest gains are recorded in textiles and clothing, followed by a wide range of chemicals and other manufacturing categories. Fruit and vegetables, meat and even beverages do well in the food categories. An examination of the results for individual tariff items - not reported here because of the enormous amount of detail - show that in these sectors the results are quite widespread, i.e., they are not a consequence of the changes for a few items only. This reflects Hungary's diversified production base.

The winners and losers among countries other than Hungary are not reported in detail for the various scenarios, but we comment on some of the more interesting results. Under all the Uruguay Round scenarios, the major trade diversion losses -- a combined total of some $1.3 billion -- accrue to Portugal and Spain which are now within the EC. The negative effects -- some $75 million -- are much smaller for Sweden and smaller again for Norway ($27 million), both of which benefit from the EC's special arrangements for duty free entry of manufactures from EFTA countries. These losses -- which result from the erosion -- of the preferential margin these countries have over Hungary in the EC market are the largest we estimate under any of the scenarios. There are only modest losses through trade diversion for some ACP countries which currently are at the top of the EC's pyramid of preferences because of the Lome Convention arrangements. (The greatest losses are $5 million for Uganda, $3 million for Ethiopia and $2.7 million for Somalia). However, under non-Uruguay Round scenarios the losses are much more modest and spread among a wider group of countries, e.g., losse3 are recorded for the US ($26 million), Spain ($36 million), Portugal ($12 million) if Hungary were to join the EC, but under the pure GSP scenario the losses to Spain and Portugal are estimated at only $3.1 million and $1.1 million, respectively. This suggests that fears of trade losses to Southern European members of the EC from its possible expansion to cover Hungary at least are greatly exaggerated.