A special safeguard mechanism is an attractive policy tool for low-income importing countries because it is automatic and does not require an injury test. Exporters might accept a safeguard for low-income countries if it results in larger tariff cuts than in its absence. The effects of a special safeguard mechanism on market stability and welfare are evaluated using wheat as a case study. The results show that a safeguard mechanism is not very trade distorting. Almost 80% of the increase in world welfare is still realized when low-income countries are granted a safeguard mechanism.
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Document Type: Research Article
Jason H. Grant is a Ph.D. candidate in the Department of Agricultural Economics at Purdue University.
Karl D. Meilke is a professor in the Department of Agricultural Economics and Business at the University of Guelph.
Publication date: March 1, 2006