Analytical Note, November 2009

The Price-based Special Safeguard Mechanism (SSM): Trends in Agriculture Price Declines and Analysis of the Conditionalities in the December 2008 WTO Agriculture Chair’s Text.

This paper begins by highlighting the frequency of price declines experienced by developing countries. It then touches on the use of the price-based Special Safeguard Provision (SSG) by developed countries.

The paper then looks at the conditionalities of the WTO Agriculture Chair’s December 2008 text (TN/AG/W/4/Rev.4). These include exclusion of en route shipments from the price-based SSM coverage; the trigger and remedy, and the omission to take into account the value declines in ad valorem duties when prices drop; the cross-check; and the exclusion of preferential trade from SSM coverage.

An analysis of these conditionalities is provided. Some of these clauses, if agreed upon, will severely curtail countries’ ability to invoke the price-based SSM. In addition, once invoked, the remedies, as they are currently drafted, are not likely to be effective in shielding domestic producers from price volatilities.

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