2010年-世界发展银行全球_Potential_Implications_of_a_Special_Safeguard_Mechanism_in_the_World_Trade_Organization___The_Case_of_Wheat_30页_255kb

Summary of the Document: Potential Implications of a Special Safeguard Mechanism in the World Trade Organization – the Case of Wheat

Core Content

This document analyzes the potential implications of the Special Safeguard Mechanism (SSM) in the World Trade Organization (WTO), focusing on its impact on wheat markets. The SSM was a key factor in the July 2008 Doha Development Agenda negotiations, where consensus could not be reached due to disagreements over its design and implementation. The study uses a stochastic simulation model to evaluate the effects of both quantity-based and price-based safeguards on domestic and global wheat markets.

Main Points and Key Findings

• The SSM was a major obstacle to the Doha negotiations, as it introduced complexity and uncertainty in trade policy.
• Two types of safeguards are considered: quantity-based and price-based.
• Quantity-based safeguard:
  • Reduces imports and boosts domestic production.
  • Raises domestic prices, but increases price volatility.
  • Can impose additional duties of 25%, 40%, or 50% depending on the level of imports relative to a three-year moving average.
  • Limits the use of the safeguard to two years, with a mandatory two-year break if used consecutively.
  • Does not reduce the trigger level if imports fall below the previous level.
• Price-based safeguard:
  • Uses a three-year moving average of import prices as a reference.
  • Imposes a duty of 85% of the price shortfall when individual shipment prices fall below the reference.
  • Discriminates against lower price exporters, particularly developing countries.
  • Increases world price volatility due to its mechanical application.
• Impact on global trade:
  • The quantity-based safeguard could shrink wheat imports by nearly 50% in some regions.
  • Global wheat trade could fall by 4.7% if many developing countries implement the SSM.
• Consumer and Producer Impacts:
  • Developing country consumers are particularly vulnerable to food price shocks, as they spend a large portion of their income on food.
  • Producers in developing countries may benefit from higher prices but face increased volatility.
  • Farm households that are net buyers of food are negatively affected by higher domestic prices.
• Empirical Model:
  • Based on the Global Trade Analysis Project (GTAP) model, specifically tailored for agricultural applications.
  • Incorporates stochastic supply shocks and segmented factor markets to reflect short-run supply rigidities.
  • Uses Gaussian quadrature to approximate the distribution of supply shocks efficiently.
  • Simulates the effects of the SSM on import volumes, domestic prices, and returns to land.
• Scenario Design:
  • Three sets of simulations are conducted:
    1. Baseline (no safeguard).
    2. Quantity-based safeguard.
    3. Price-based safeguard.
  • The model considers the difference in mean and standard deviation of key variables between scenarios.
• Policy Considerations:
  • The SSM may not be effective in insulating developing countries from international price volatility.
  • The mechanical nature of the SSM can lead to discriminatory effects against lower price exporters.
  • The frequency of use is uncertain, as it depends on policy choices and market conditions.
  • The Uruguay Round special agricultural safeguard was rarely used, due to complexity, high bound rates, and perceived costs.

Key Variables Analyzed

• Import volumes
• Domestic prices
• Domestic production levels
• Producer returns (especially land returns)
• Price volatility (both domestic and global)
• Consumer costs

Conclusion and Recommendations

• The quantity-based safeguard is more likely to be used in response to domestic supply shocks.
• The price-based safeguard tends to discriminate against developing countries and may exacerbate price volatility.
• The widespread use of the SSM could destabilize global wheat markets.
• The study highlights the need for careful analysis of the SSM, considering both average impacts and volatility, as well as differences between imported and domestic goods.
• It suggests that future research should focus on the interaction between the SSM and other trade policies, and on the long-term effects of the mechanism on agricultural development and trade flows.

Authors and Affiliations

• Thomas W. Hertel: Distinguished Professor and Executive Director of the Center for Global Trade Analysis, Purdue University.
• Will Martin: Research Manager in the Development Research Group of the World Bank.
• Amanda M. Leister: Graduate Research Assistant at the Center for Global Trade Analysis, Purdue University.

References and JEL Codes

• JEL Codes: F1, F13, F51, O24, Q1, Q17.
• Key Terms: G33, Doha Development Agenda, Gaussian quadrature, safeguard, special safeguard mechanism, SSM, wheat, WTO, trade and development.