Trade Policy Note Final-rev08 - Development

Box 18: Applying Special Safeguards
Article 5 of the WTO Agreement in agriculture institutes a system of Special Safeguards
(SSG) under which countries can apply additional charges to imports based on trigger
volumes or trigger prices. This facility is available only for items which have been “tariffied”
and have been designated for SSG by the country concerned. While some 21 developing
countries have been able to make use of this facility it has been used overwhelmingly by
developed countries.
Agricultural markets are by nature cyclical and are affected by natural factors such as
weather. To this is added the man-made factors of subsidization and the behaviour of trading
firms. The food price index has actually become more volatile since the WTO’s
establishment. 58 .As a consequence of massive subsidization in the United States and the
European Union, export prices of key food commodities are below the costs of production,
for example wheat (by 43%), rice (by 35%) and maize (by 13%). 59
The further reduction of bound tariff rates on agricultural imports could expose vulnerable
producers in developing countries to severe external shocks that could drastically affect their
livelihoods. 60 It was confirmed at the sixth WTO Ministerial Conference that developing
countries should have access to a Special Safeguard Mechanism (SSM) which would be used
to shield vulnerable producers from surges of low priced imports. The SSM would be
activated by trigger volumes and prices. The G33 proposed that the trigger price would be the
average monthly price of that product, and the trigger volume would equal the average annual
volume, for the most recent three year period. The SSM would apply to all products and all
trade including that under FTAs. The specifics of the proposal are yet to be agreed.
Defining the indicators for these special protective measures is a crucial element in
both national trade policies and in the ongoing multilateral trade negotiations, as well
as in FTAs. The SP criteria and SSG mechanisms should be incorporated into national
regulations so as to provide the basis for their inclusion in the WTO agreement and
any FTAs.
SPS regulations present a serious barrier to exports of agricultural products,
particularly those of small scale farmers. Improvement in the implementation of the
WTO SPS regime is being sought in the Doha Round. The aim is both giving more
time to developing countries to adjust to new regulations, and seeking a commitment
on the part of the importing country to provide the technical and financial assistance
necessary to permit the developing country to meet the standards. This should also be
a priority in any Aid for Trade programme.
Agricultural products have proven a complex issue in the negotiation of FTAs. In
some cases, North South FTAs have excluded major export products of interest to the
developing partner (rice, sugar), while failing to impose any disciplines on the
subsidization provided by the developed partner (although agreements not to apply
export subsidies to mutual trade have been included in some FTAs) FTAs often
preclude the possibility of excluding “Special Products”. While some FTAs include
58 Pal, op. cit., and Paz, Julio, “Identificación de Productos Especiales y Mecanismos de Salvaguardia
Especial en el Peru”, ICTSD, Geneva 2005.
59 IATP
60 See Hathaway, Dale, “A Special Agricultural Safeguard: buttressing the market access reforms of
developing countries ”, comments in FAO Papers on Selected Issues Relating to the WTO Negotiations
on Agriculture, FAO, Rome 2002 (http://www.fao.org/docrep/005/Y3733E/y3733e05.htm).
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