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GTAP Resource #3365

"Potential Implications of the Special Safeguard Mechanism (SSM) in Agriculture"
by Hertel, Thomas, Will Martin and Amanda M. Countryman


Abstract
The Special Safeguard Mechanism (SSM) is particularly complex in including both a price (P-SSM) and a quantity-triggered measure (Q-SSM). This paper investigates their effects for wheat by stochastic simulation of the world wheat market. Implementation of the Q-SSM is found to reduce imports, raise domestic prices, and boost mean domestic production in the SSM regions. Rather than insulating countries that use it from price volatility, it would increase domestic price volatility in developing countries, partly by directly reducing imports when domestic output has declined, and partly by increasing the volatility of world prices. We estimate that implementation of the Q-SSM would shrink average wheat imports by as much as 50% in some regions, with world wheat trade falling by 6%. The P-SSM has less dramatic impacts on world markets, although its shipment-by-shipment specification results in discrimination against wheat exports from low unit-value developing countries and it has very small impacts—sometimes favorable and sometimes unfavorable—on the volatility of domestic prices.


Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2010
Version:
Created: Martin, W. (4/15/2010)
Updated: Martin, W. (4/15/2010)
Visits: 1,634
- Agricultural policies
- Economic development


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