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Triggers, Remedies and Tariff Cuts: Assessing the Impact of the G33 Special Safeguard Mechanism and G20 Tariff Cuts

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  • Grant, Jason H.
  • Meilke, Karl D.

Abstract

The Framework Agreement and Chairman Falconer’s recent draft text commits WTO Members to establish a new Special Safeguard Mechanism (SSM) for developing countries. An SSM may be an attractive policy tool for low-income countries because it is automatic and it does not require an injury test nor the provision of compensation. In this study we calibrate a global, stochastic, partial equilibrium model to assess the economic impact of the recent G33 SSM proposal on low-income, developing countries. We pay close attention to the stabilization effects of the G33 SSM on developing country domestic markets as well as the welfare cost on developed country exporters using the world wheat market as our case study. The results show that an SSM can stabilize domestic markets and costs very little in terms of economic welfare. However, the SSM can destabilize domestic market conditions. Frequent use of the volumebased SSM leads to domestic price instability in 22 out of 31 low income countries examined.

Suggested Citation

  • Grant, Jason H. & Meilke, Karl D., 2008. "Triggers, Remedies and Tariff Cuts: Assessing the Impact of the G33 Special Safeguard Mechanism and G20 Tariff Cuts," Conference papers 331672, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331672
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