A Theoretical Analysis of Special Safeguards (SSG)

Abstract

Special safeguards (SSG) sanctioned tariffs that are triggered when a minimum import level is reached emerged as part of the unique and complex WTO Agreement of Agriculture (AA). Unlike more conventional safeguard measures such as antidumping SSGs do not require proof of injury compensation or consultations with relevant countries. The special safeguard was initiated as an outcropping of the hard law process aimed to mediate an impact of tariffication. This presenation considers the policy impacts of SSGs in the presence of large multinational firms with oligopoly power. We show the conditions by which firms endogenously limit imports to avoid triggering the tariff and when they will not. Models with a domestic industry and with commodity storage option are considered.