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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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    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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    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.
    10. Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Julia Tobias, 2012. "Targeting the Poor: Evidence from a Field Experiment in Indonesia," American Economic Review, American Economic Association, vol. 102(4), pages 1206-1240, June.
    11. Rutten, Martine & Shutes, Lindsay & Meijerink, Gerdien, 2013. "Sit down at the ball game: How trade barriers make the world less food secure," Food Policy, Elsevier, vol. 38(C), pages 1-10.
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    13. Paul J. Gertler & Sebastian W. Martinez & Marta Rubio-Codina, 2012. "Investing Cash Transfers to Raise Long-Term Living Standards," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 164-192, January.
    14. Wolfe, Robert, 2009. "The special safeguard fiasco in the WTO: the perils of inadequate analysis and negotiation," World Trade Review, Cambridge University Press, vol. 8(4), pages 517-544, October.
    15. Ariel Fiszbein & Norbert Schady & Francisco H.G. Ferreira & Margaret Grosh & Niall Keleher & Pedro Olinto & Emmanuel Skoufias, 2009. "Conditional Cash Transfers : Reducing Present and Future Poverty," World Bank Publications, The World Bank, number 2597, July.
    16. Byerlee, Derek & Jayne, T.S. & Myers, Robert J., 2006. "Managing food price risks and instability in a liberalizing market environment: Overview and policy options," Food Policy, Elsevier, vol. 31(4), pages 275-287, August.
    17. Anderson, Kym & Kurzweil, Marianne & Martin, William J. & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Methodology for Measuring Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48326, World Bank.
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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. Lee Yong-Shik, 2016. "The Long and Winding Road – Path Towards Facilitation of Development in the WTO: Reflections on the Doha Round and Beyond," The Law and Development Review, De Gruyter, vol. 9(2), pages 437-465, December.
    3. 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.
    4. 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, December.

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    More about this item

    Keywords

    WTO safeguards; SSM; Food security; Rice market volatility;
    All these keywords.

    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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