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Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products

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  • SAGGI, KAMAL
  • WU, MARK

Abstract

An agricultural price range system (PRS) aims to stabilize local prices in an open economy via the use of import duties that vary with international prices. The policy is inherently distortionary and welfare-reducing for a small open economy, at least according to the canonical economic model. We offer an explanation for why a government concerned with national welfare may nevertheless implement such a policy when faced with risk aversion and imperfect insurance markets. We also highlight open questions arising out of the Peru–Agricultural Products dispute for the WTO's Appellate Body to address in order to clarify how a PRS consistent with WTO rules could be designed. Finally, we discuss the possibility that a WTO member might resort to a free trade agreement (FTA) to preserve its flexibility to implement a PRS and how an FTA provision of this sort ought to be treated in WTO litigation.

Suggested Citation

  • Saggi, Kamal & Wu, Mark, 2016. "Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products," World Trade Review, Cambridge University Press, vol. 15(2), pages 259-286, April.
    • Handle: RePEc:cup:wotrrv:v:15:y:2016:i:02:p:259-286_00
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    Cited by:

    1. Gregory Shaffer & L. Alan Winters, 2016. "FTAs as Applicable Law in WTO Dispute Settlement: Was the Appellate Body Wrong in Peru-Additional Duty (DS457)?," RSCAS Working Papers 2016/65, European University Institute.
    2. Bown,Chad P. & Crowley,Meredith A & Bown,Chad P. & Crowley,Meredith A, 2016. "The empirical landscape of trade policy," Policy Research Working Paper Series 7620, The World Bank.
    3. Moise Nken & Halis Murat Yildiz, 2017. "Implications of multilateral tariff bindings on the formation of preferential trade agreements and quest for global free trade," Working Papers 068, Toronto Metropolitan University, Department of Economics.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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