Potential Implications of a Special Safeguard Mechanism in the WTO : The Case of Wheat
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 st...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100606235900 http://hdl.handle.net/10986/3820 |
| Summary: | 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. |
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