Potential implications of a special safeguard mechanism in the WTO : the case of wheat
AbstractThe 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 InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5334.
Date of creation: 01 Jun 2010
Date of revision:
Markets and Market Access; Climate Change Economics; Emerging Markets; Access to Markets; Trade Policy;
Other versions of this item:
- Hertel, Thomas W. & Martin, William J. & Leister, Amanda M., 2010. "Potential Implications of a Special Safeguard Mechanism in the WTO: the Case of Wheat," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61000, Agricultural and Applied Economics Association.
- Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-06-18 (Agricultural Economics)
- NEP-ALL-2010-06-18 (All new papers)
- NEP-CMP-2010-06-18 (Computational Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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