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 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.

Bibliographic Details

Main Authors:	Hertel, Thomas W., Martin, Will, Leister, Amanda M.
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2010-06-01
Subjects:	AGRICULTURAL ECONOMICS, AGRICULTURAL PRICE, ANTI-DUMPING DUTIES, AVERAGE PRICE, BILATERAL TRADE, CHANGES IN PRICES, CLIMATE, COMMODITY, COMMODITY PRICES, COMPETITIVENESS, COUNTRY MARKETS, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING COUNTRY MARKETS, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC PRICE, DOMESTIC PRICES, DOMESTIC PRODUCERS, DOMESTIC PRODUCTION, DUMPING, EXPORT COMPETITIVENESS, EXPORT PRICE, EXPORT PRICES, EXPORT SUPPLY, EXPORTS, FOOD PRICES, FREE TRADE, FREE TRADE AGREEMENTS, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODEL, GLOBAL EXPORT, GLOBAL MARKETS, GLOBAL TRADE, IMPORT DUTIES, IMPORT DUTY, IMPORT PRICE, IMPORT PRICES, IMPORT VALUE, IMPORT VOLUME, IMPORTS, INCOME, INCOMES, INTERNATIONAL LAW, INTERNATIONAL MARKETS, INTERNATIONAL TRADE, LOWER PRICES, MARKET PRICE, MARKET VOLATILITY, MONETARY FUND, MULTILATERAL TRADE NEGOTIATIONS, OUTPUT, POLICY MAKERS, PREFERENTIAL BASIS, PRICE ADJUSTMENT, PRICE CHANGES, PRICE COMPARISON, PRICE FLOOR, PRICE INSTABILITY, PRICE VARIATION, PRICE VOLATILITY, PRODUCER PRICE, PRODUCER PRICES, RELATIVE PRICES, SALE, SCENARIOS, SMALL ECONOMY, SOURCING, SPECIAL SAFEGUARD, STOCKS, SUBSTITUTION, SUPPLIER, SUPPLIERS, SUPPLY CURVE, SUPPLY CURVES, SUPPLY SHOCKS, SURPLUS, SUSTAINABLE DEVELOPMENT, TARIFF BINDINGS, TARIFF LEVELS, TARIFF LINES, TARIFF RATE, TARIFF RATES, TRADE DISTORTIONS, TRADE MODEL, TRADE POLICY, TRADE VOLUME, TRADING PARTNERS, WHEAT TRADE, WORLD MARKET, WORLD MARKETS, WORLD TRADE,
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
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