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Citation Information

Type Conference Paper - Annual Conference of the Agricultural and Applied Economics Association
Title A Need for Caution in Applying the Volume - Based Special Safeguard Mechanism
Author(s)
Publication (Day/Month/Year) 2011
City Pittsburgh
Country/State USA, Pennsylvania
URL http://ageconsearch.umn.edu/bitstream/103969/2/ivanic_martin_volume SSM AAEA 2011_05_03.pdf
Abstract
The proximate cause of the collapse of the Doha Agenda
negotiations in 2008 was disagreement
over the volume
-
based Special Safeguard Mechanism (SSM). This measure w
ould
provide a
right, but not an obligation, for developing countries to impose a duty
when imports increase
.
While many simulations of its impact
on domestic prices are available, there appear to be no
analyses of its potential impacts on the welfare of poor households
. Whether such a safeguard
will increase or reduce poverty can only be determined empirically

if there are enough small,
poor farmers
who are net sellers of the commodity
when the
duty
is imposed
, then imposition of
a safeguard duty may reduce poverty. If, by contrast, most small, poor farmers are net buyers of
the products subject to the duty, then it is likely that poverty will
rise
.
Empirical analysis for
twenty
-
eight
countries finds that poverty is
generally
increased following the imposition of a
safeguard
-
type measure
. The adverse
poverty
impact of the safeguard
-
induced increase in prices
is typically larger when the safeguard
can
be triggered, because the adverse output shocks
typically giving rise to import surges when import prices have not declined
reduce
the benefit to
poor producing households from higher prices.

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