33 Table 13 provides more detailed estimates of the impact<sup>of the Uruguay Round on</sup> average OECD tariffs. From the perspective of most<sup>developing countries one of the most</sup> disappointing results were the far smaller than<sup>average reductions (19 and 25 percent,</sup> respectively) on leather manufactures, textiles and clothing.<sup>In addition, while the Round did</sup> make some progress in reducing tariff escalation<sup>this issue will continue to remain a (post-</sup> Uruguay) point of contention between developing and developed<sup>countries.</sup>

# B. Empirical Evidence on the Round's Effects

In recognition of developing countries' need for<sup>technical assistance in the UR</sup> negotiations, UNCTAD and the World Bank initiated<sup>a joint project to help them evaluate</sup> various trade liberalization proposals. This project (named SMART -- Software for Market Analysis and Restrictions on Trade) developed a desk-top<sup>system that allows a country to analyze</sup> the level, structure and restrictive effect of trade barriers<sup>on its exports. 6</sup> SMART includes, with its other elements, a simulation model that projects<sup>the change in a country's exports that</sup> should result from a change in foreign trade barriers (see<sup>Laird and Yeats, 1990). SMART</sup> projections are made at the tariff line level (US and EC tariff<sup>schedules identify over 8,000 tariff</sup> line products) and these estimates can be summed to more<sup>aggregate groups. SMART accounts</sup> for trade creation (the substitution of foreign goods for domestic<sup>production) and trade diversion</sup> (the substitution of one foreign supplier for another) which<sup>results from preference erosion (see</sup> Box 6 for information on how Egypt's preferences will be affected).

Before proceeding, it should be noted there are UR effects<sup>that SMART does not account</sup> for. These include a (potentially important) stimulus to<sup>merchandise trade from the UR</sup> liberalization in services, and the stimulus resulting from<sup>strengthened rules on how trade is</sup> conducted. There is also ample evidence that a lowering of trade barriers<sup>in developing</sup> countries will increase their ability to compete in foreign export<sup>markets (see Nash and Thomas,</sup> 1990). Such factors are omitted because of problems in<sup>their quantification and not because of</sup> the assumption that they are unimportant. In addition, there are major problems in projecting the impact of the Round's elimination of NTMs --particularly<sup>in the agricultural, textile and</sup> clothing sectors where information on relative production<sup>costs in individual LDCs would be</sup> needed. Finally, it should be noted that the SMART projections<sup>are "short-term" estimates of</sup> trade changes and do not allow for efficiency gains associated<sup>with larger export volumes or the</sup> addition of new production capacity.

'<sup>6</sup> SMART shows tariff line level information on trade barriers a country faces in about<sup>40 major markets. The</sup> system also indicates: (i) unit values of competing exports, (ii) the level<sup>and type of tariffs (MFN, GSP, Lome</sup> Convention, CBI, EC Regional Preferences) that are applied,<sup>and (iii) information on nontariff measures facing the</sup> product. SMART provides procedures for aggregating tariff line statistics<sup>to broad aggregates like; foodstuffs,</sup> agricultural raw materials, or manufactures. See Laird and Yeats (1991),<sup>Erzan and Yeats (1992), Safadi and Yeats</sup> (1993), or World Bank (1992) for illustrative applications.