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The World Trade Organization’s Special Safeguard Mechanism is a special protection mechanism for developing nations that permits them to boost duties on agricultural imports that harm indigenous farmers.
If the import spike causes welfare losses to domestic poor farmers, the contingency measure is to impose tariffs. Under the WTO, the design and usage of the SSM is a source of contention. Safeguards, as defined by the WTO, are temporary import limitations imposed in response to unusual conditions, such as a surge in imports. An emergency restriction means imposing a tax on imports if the imports are detrimental to the local agricultural sector. Initially, the General Agreement on Tariffs and Trade (GATT) allowed such restrictions to protect the national economy.
The Doha Ministerial Conference made concessions for developing countries with the introduction of Special Safeguard Mechanism (SSM) to complement existing safeguards (e.g. Special Agricultural Protection or SSG).
India, along with the G33, promoted an easy and on hand Special safeguard Mechanism as an alternate trade solution method to take a look at the obstacle of price volatility and offset the distortions in agricultural trade.
India wanted higher tariff levels and lower import growth for making Special Safeguard Mechanism.
However, some agricultural exporting nations, such as the US and Brazil, contended for lower levels of tariffs and higher import growth to use Special Safeguard Mechanism.
Doha Development Agenda and the Origin of the Special Safeguard Mechanism
The Doha Ministerial Conference made concessions for developing countries with the introduction of Special Safeguard Mechanism (SSM) to complement existing safeguards (e.g. Special Agricultural Protection or SSG). This SSM constituted an important part of promises offered to the developing world at Doha (known as the Doha Development Agenda) and the Doha MC became known as the Development Round.
Special Safeguard Mechanism and Other Safeguards under Agreement on Agriculture
The SSG was available to all countries, developing and developed alike, whereas the SSM is only accessible to developing nations. It’s worth noting that the SSG was available since it was included in the General Agreement on Tariffs and Trade, whereas the Special Safeguard Mechanism was a Doha MC invention.
Differences between members on SSM
India, along with the G33, promoted a simple and accessible SSM as a trade solution tool to check the risk of price volatility and offset the distortions in agricultural trade.
- India wanted higher tariff levels and lower import growth for making SSM.
- However, some agricultural exporting countries, such as the US and Brazil, argued for lower levels of tariffs and higher import growth to use SSM.
- The developed countries want the Special Safeguard Mechanism to be applied when imports increase by 40% over the past year on a consistent basis. However, India and others contend that the SSM should be permitted to be used if imports increase by 10%.
- Advocates for SSM argue that it saves poor and vulnerable farmers in their own economies from price instability. Others, on the other hand, feel that it is a time-limited tool to promote increased market access and trade liberalisation.
- The underlying reason for the disagreement among members was the lack of ability to distinguish between import surges that do not threaten the livelihood conditions of developing nation’s farmers and those that do.
- Much of the debate has centered on the circumstances under which the SSM could be evoked and how high the safeguard duties could rise.
Conclusion
Under Special Safeguard Mechanism the developing countries can impose restrictions on imports of agricultural commodities in case of surge in imports or falls in their prices. With Special Safeguard Mechanism, WTO provides a special provision to the developing nations to help the domestic industries of developing countries by increasing tariff rates on imported goods.
The Doha development agenda played an important role in the origin of Special Safeguard Mechanism.
The reason for differences between members of SSM was due to the lack of ability to distinguish between import surges that do not threaten the livelihood conditions of developing nation’s farmers and those that do.
