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Potential implications of a special safeguard mechanism in the WTO : the case of wheat

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  • Hertel, Thomas W.
  • Martin, Will
  • Leister, Amanda M.

Abstract

The Special Safeguard Mechanism was a key issue in the July 2008 failure to reach agreement in the World Trade Organization negotiations under the Doha Development Agenda. It includes both price and quantity-triggered measures. This paper uses a stochastic simulation model of the world wheat market to investigate the effects of policy makers implementing policies based on the Special Safeguard Mechanism rules. As expected, implementation of the quantity-triggered measures is found to reduce imports, raise domestic prices, and boost mean domestic production in the Special Safeguard Mechanism regions. However, rather than insulating countries that use it from price volatility, it would actually increase domestic price volatility in developing countries, largely by restricting imports when domestic output is low and prices high. This paper estimates that implementation of the quantity-triggered measures would shrink average wheat imports by nearly 50 percent in some regions, with world wheat trade falling by 4.7 percent. The price measures discriminate against low price exporters -- many of whom are developing countries -- and tend to increase producer price instability.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5334.

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Date of creation: 01 Jun 2010
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Handle: RePEc:wbk:wbrwps:5334

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Keywords: Markets and Market Access; Climate Change Economics; Emerging Markets; Access to Markets; Trade Policy;

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  1. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Jean-Jacques Hallaert, 2005. "Special Agricultural Safeguards: Virtual Benefits and Real Costs-Lessons for the Doha Round," IMF Working Papers 05/131, International Monetary Fund.
  3. Martin, Will & Alston, Julian M, 1997. "Producer Surplus without Apology? Evaluating Investments in R&D," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 146-58, June.
  4. Finger, J. Michael, 2009. "A special safeguard mechanism for agricultural imports and the management of reform," Policy Research Working Paper Series 4927, The World Bank.
  5. Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  6. Grant, Jason H. & Meilke, Karl D., 2008. "Triggers, Remedies and Tariff Cuts: Assessing the Impact of a Special Safeguard Mechanism for Developing Countries," Working Papers 46627, Canadian Agricultural Trade Policy Research Network.
  7. DeVuyst, Eric A. & Preckel, Paul V., 1997. "Sensitivity analysis revisited: A quadrature-based approach," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 175-185, April.
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Cited by:
  1. Karapinar, Baris & Tanaka, Tetsuji, 2013. "How to Improve World Food Supply Stability Under Future Uncertainty: Potential Role of WTO Regulation on Export Restrictions in Rice," 135th Seminar, August 28-30, 2013, Belgrade, Serbia 160387, European Association of Agricultural Economists.

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