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Could the proposed WTO Special Safeguard Mechanism protect farmers from low international prices?

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  • Thennakoon, Jayanthi
  • Anderson, Kym

Abstract

This paper offers an empirical analysis of the proposal by some developing countries for an agricultural Special Safeguard Mechanism (SSM) in the World Trade Organization. It draws on political economy and market theory to demonstrate that the loss-averting domestic producer benefits that proponents believe the SSM would offer agricultural-importing developing countries may be illusory, insofar as agricultural-exporting countries also seek to avert producer losses. By way of illustration, the paper then uses time series data to analyze past government responses to fluctuations in the world’s rice markets. The results suggest that the proposed SSM would deliver at most only a small fraction of the loss-averting benefits that have been advertised by the proponents of the SSM. Since the analysis applies to upward as well as downward spikes in international prices, it underscores the importance of strengthening multilateral disciplines on both import and export trade interventions to reduce beggar-thy-neighbor unilateral trade policy responses to food price fluctuations.

Suggested Citation

  • Thennakoon, Jayanthi & Anderson, Kym, 2015. "Could the proposed WTO Special Safeguard Mechanism protect farmers from low international prices?," Food Policy, Elsevier, vol. 50(C), pages 106-113.
  • Handle: RePEc:eee:jfpoli:v:50:y:2015:i:c:p:106-113
    DOI: 10.1016/j.foodpol.2014.10.014
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    References listed on IDEAS

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    1. 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.
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    3. Hans G. Jensen & Kym Anderson, 2017. "Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis," World Bank Economic Review, World Bank Group, vol. 31(1), pages 158-175.
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    6. Croser, Johanna & Anderson, Kym, 2011. "Changing contributions of different agricultural policy instruments to global reductions in trade and welfare," World Trade Review, Cambridge University Press, vol. 10(3), pages 297-323, July.
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    8. Finger, J. Michael, 2010. "A Special Safeguard Mechanism for Agricultural Imports: what experience with other GATT/WTO safeguards tells us about what might work," World Trade Review, Cambridge University Press, vol. 9(2), pages 289-318, April.
    9. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," World Trade Review, Cambridge University Press, vol. 7(4), pages 675-704, October.
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    Cited by:

    1. Countryman, Amanda M. & Narayanan, Badri G., 2017. "Price volatility, tariff structure and the special safeguard mechanism," Economic Modelling, Elsevier, vol. 64(C), pages 399-408.
    2. Countryman, Amanda & Ufer, Danielle, 2016. "Potential Poverty Effects of the Special Safeguard Mechanism: the Case of Wheat," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236023, Agricultural and Applied Economics Association.
    3. Kym Anderson, 2016. "Agricultural Trade, Policy Reforms, and Global Food Security," Palgrave Studies in Agricultural Economics and Food Policy, Palgrave Macmillan, number 978-1-137-46925-0.

    More about this item

    Keywords

    WTO safeguards; SSM; Food security; Rice market volatility;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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