Potential Implications of a Special Safeguard Mechanism in the WTO: The Case of Wheat

45 Pages Posted: 20 Apr 2016

See all articles by Thomas W. Hertel

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Will J. Martin

International Food Policy Research Institute (IFPRI)

Amanda M. Leister

Colorado State University, Fort Collins - Department of Agriculture and Resource Economics

Date Written: June 1, 2010

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.

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

Suggested Citation

Hertel, Thomas W. and Martin, William J. and Leister, Amanda M., Potential Implications of a Special Safeguard Mechanism in the WTO: The Case of Wheat (June 1, 2010). World Bank Policy Research Working Paper No. 5334, Available at SSRN: https://ssrn.com/abstract=1623712

Thomas W. Hertel (Contact Author)

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

William J. Martin

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Amanda M. Leister

Colorado State University, Fort Collins - Department of Agriculture and Resource Economics ( email )

Fort Collins, CO 80523
United States

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