1	Special Safeguard Mechanism: An appropriate mechanism to mitigate the impacts of import surges? AITIC Flash Meeting Agricultural Safeguards: “Make-or-Break” Issues in the Doha Negotiations? 22 October 2008, Geneva
2	Outline Rationale misconceptions? different concerns Key unresolved negotiation issues Evidence and analysis Extent and impact of import surges Analyses of SSM parameters
3	Rationale for an SSM WTO’s “Unofficial guide to agricultural safeguards” defines two philosophies: SSM as protection for poor and vulnerable farmers freer and easier to use smaller triggers larger tariff increases SSM as a time-bound means to help liberalization restricted use related to tariff cuts from pre-Doha bound levels not triggered by normal fluctuations in price or normal trade expansion limited to period of liberalization
4	What the SSM is not about Trade policy can protect “uncompetitive” import competing sectors likely to contract in face of greater import competition. This could help promote levels of investment in enhancing competitiveness, or allowing diversification into more “competitive” sectors. This is a prima facie case for longer term moderate level of protection for products which are critical to food security, livelihood development and wider rural growth. For example, through special product provisions
5	What the SSM is about Preventing short term disruption to agricultural sub-sectors which may: otherwise be competitive be susceptible to risk have limited access to risk management instruments and safety nets and therefore could suffer from exposure to low cost imports and associated price instability. This provides a case for temporary increases in levels of border protection For example, through access to a Special Safeguard Mechanism
6	But.....concerns about overuse Knock on effects Fear that application of remedies could further depress prices resulting in a domino effect of triggering, application and price depression Assumptions about frequency of triggering and application of remedy are critical Automatic application has not been suggested Many pressures NOT to apply a remedy (lobby pressures, economic arguments, data, analytical capacity etc)
7	And....concerns about inappropriate use Many importing countries are not in a position to respond in an appropriate way to changes in the trading environment Trade surveillance systems need to be enhanced Analytical procedures need to be strengthened Analysis is complicated by lack of available data Prices/trade statistics/production information lacking Need to analyze surges and impact at disaggregate product level
8	Key unresolved issues: the current blockages Defining situations where SSM raises tariff above pre-Doha Round bound rates Now negotiating an SSM that allows breaching of pre-Doha bound rates but with conditions: minimum increases in imports (is additional/more stringent trigger needed?) limit on how far pre-Doha bound rate can be exceeded limit on how many products could breach in a given year
9	The July 2008 negotiations Lamy proposal (25th July) SSM remedies to exceed UR bindings by up to 15% (or percentage points), but only if import volumes rise by 40% or more and applied to only 2.5% of tariff lines with remedies unavailable if prices not actually declining
10	July 2008 (cont) Alternative proposal -G33, African Grp, ACP, SVE (27th July) SSM remedies capped at 30% (or percentage points) above UR bindings triggered by volume increases starting at 10% allowed for 7% of tariff lines for remaining 93%, remedies added to post Doha bound but not breaching UR bindings
11	July 2008 (cont) Lamy proposal (28 July) SSM based on principles not numbers Country required to notify when imposing safeguard Country to show surge had caused “demonstrable harm” to FS, LH, RD Panel of experts to review necessity, level, duration (no possibility of appeal) Demarty proposal (29 July) introduced idea of tiered approach
12	G-7 September meetings Additional issues cross-checking mechanism year long “holiday provision” calendar years vs. 12 month rolling averages normal growth in trade
13	Using evidence on the extent and impact of import surges
14	There is no unique and accepted definition of an import surge Guidance from Agreement on Safeguards, SSG Different methods reveal different numbers of surges In an analysis of all food commodities in 102 countries between 1980-2003 Moving 3-year average (30 percent deviation) identified 7,132 surges SSG volume trigger identified 12,167 surges
15	Some generalisations from import data analysis Susceptible commodities Pig and poultry meat, sugar, eggs, bovine meat, soybean oil Not restricted to primary commodities – milk powder, refined vegetable oils Susceptible countries/regions 50% of poultry surges occurred in Africa, but continent only accounts for 5% of global trade Rice surges most common in Africa, C. America and the Caribbean Increasing incidence since mid 1990s For most (not all) commodity groups But import data gives only a partial picture: ?causes, ?impacts, ? remedies
16	Insights for policy response Pattern of import influences identification and response Nature, causes and impacts of surges differ So will appropriate policy response Causes often internal to the importing country Trade policy and trade remedies may still be relevant External causes accentuate susceptibility Actual responses will be case specific Stakeholder perceptions of injury differ widely Trade remedies need to be sufficiently flexible Product coverage should be comprehensive Market check may be too stringent
17	Insights for the SSM Variety of ways in which injury can be caused by increases in imports strengthens arguments for an effective trade remedy measures of the nature of the SSM. The currently available Agricultural Safeguard, because it can only be applied after investigation to establish injury or threat of injury, is essentially unavailable to countries with limited trade surveillance and analysis capacity. But....an SSM, whilst not requiring investigation, still requires a decision to be taken following a trigger activation
18	Further information – Import surges Six Import surge issues briefs Twelve Import surge country briefs Four Import surge commodity briefs http://www.fao.org/es/esc/en/41470/110301/index.html Eight Import surge working papers http://www.fao.org/es/esc/en/99982/110594/highlight_108226en.html
19	Analysis of volume triggers and remedies Triggers “Normal” trade Duration Simultaneous application Market cross-check
20	Restrictions on volume trigger What should the default trigger be? Current SSG as benchmark? 105% if s>30%; 110% if 10%<s<30%; 125% if s<10% or if consumption data not available Is a single trigger/single remedy approach most appropriate? Or are progressively higher remedies essential to limit increasingly surging imports?
21	Import volume SSM: how the threshold affects % triggers (MA-3)
22	NB: Compare to price trigger: % of triggers for various thresholds
23	“Normal growth” in trade: The Case of Dairy in Sri Lanka
24	Simultaneous surges – Country A
25	Simultaneous surges – Country B
26	Duration Remedy should only be in place for a short (less than one year) period For a given product (or tariff line) it should only be possible to trigger sequentially for up to three years Consistent with “holiday provision”? Do not agree that the SSM should only be available during a WTO implementation period - this is a mechanism which countries are likely to require for the longer term
27	Two distinct triggers? Cross-checking market test should not be compulsory Price may not be depressed when volumes increase (could even be rising prices, but domestic producers unable to fill, or even sustain market share) Targeted export sales, strategic trade/ predatory behaviour Difficulties with price data..... BUT design of each trigger/remedy could influence the choice between which to use in a particular instance
28	Concluding comments SSM can provide protection for “otherwise competitive” product sectors lacking alternative mechanisms for mitigating the effects of disruption from import surges and/or price depression Needs, application and impacts will be product/country specific SSM needs to be flexible Need to build capacity to use appropriately
29	Further information - SSM FAO: Trade Policy Brief on the SSM ftp://ftp.fao.org/docrep/fao/008/j5425e/j5425e01.pdf FAO Trade Policy Technical Note on the SSM ftp://ftp.fao.org/docrep/fao/008/j5425e/j5425e00.pdf Triggers and Remedy for a Special Safeguard Measure http://www.faologe.ch/SSM%20-%20triggers%20and%20remedy%20-%20Dec%202006%20-%20Sharma.pdf