Central Data Catalog

Citation Information

Type Working Paper
Title Poverty Impacts of the Volume-Based Special Safeguard Mechanism
Author(s)
Publication (Day/Month/Year) 2014
URL https://www.gtap.agecon.purdue.edu/resources/download/6743.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 is more cumbersome
to use than the price-based safeguard and hence seems likely to be used mainly when price-based
safeguard cannot be used, particularly when import prices have not declined and imports are
rising because of an adverse shock to domestic output. While many simulations of the SSM on
domestic prices are available, there appear to be none examining its 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 it may reduce poverty. If most small, poor farmers
are net buyers of dutiable products, then poverty will likely rise. Empirical analysis for thirty-one
countries finds that poverty is generally increased following the imposition of this safeguard. The
adverse poverty impact of the duty is larger when the quantity safeguard is likely to be triggered,
because declines in farm output reduce the benefit to poor producing households from higher
prices.

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