AGRICULTURE: NEGOTIATIONS

An unofficial guide to agricultural safeguards

Special Safeguard Mechanism (SSM) and Special Agricultural Safeguard (SSG)

NOTE: THIS UNOFFICIAL EXPLANATION HAS BEEN PREPARED BY THE INFORMATION AND EXTERNAL RELATIONS DIVISION OF THE WTO SECRETARIAT TO HELP THE PUBLIC UNDERSTAND THE AGRICULTURE NEGOTIATIONS. IT IS NOT AN OFFICIAL SUMMARY OF THE TEXT.

At the 2015 Nairobi Ministerial Conference, WTO members adopted a decision (WT/MIN(15)/43) to negotiate a Special Safeguard Mechanism (SSM) for developing countries in dedicated sessions of the Agriculture Committee in Special Session. Under this decision, the General Council will regularly review the committee's progress.

The SSM would allow developing countries to temporarily increase tariffs on agriculture products in cases of import surges or price declines.

This is distinct from the Special Agricultural Safeguard (SSG) that is provided for in Article 5 of the Agreement on Agriculture, and is available to 34 members that undertook reforms to convert all non-tariff measures into tariffs ("tariffication") in the Uruguay Round.

While the Nairobi decision indicates that "developing country Members will have the right to have recourse to a special safeguard mechanism (SSM) as envisaged under paragraph 7 of the Hong Kong Ministerial Declaration", there have been disagreements among members on various aspects of the SSM.

A coalition of developing countries pressing for flexibilities in opening markets, known as the “G-33”, has argued for a simple and accessible SSM as a trade remedy tool to mitigate price volatility risks and to balance distortions in agricultural trade. 

Other members consider that the SSM should be discussed in the broad context of liberalization of agricultural markets and an outcome on the SSM would be unlikely in the absence of outcomes on market access more generally.

Some members have sought to have sufficient disciplines within the SSM so as not to compromise the market access reform efforts in the negotiations nor members' existing binding commitments for agricultural tariffs. Some developing countries have specifically raised concerns about the potential negative effect of the SSM on their exports in general and on trade between developing countries in particular. 

WTO members also disagree on the rationale for negotiating an SSM.  This disagreement reflects two different and unresolved views:

  • The proponents for the SSM view it as protection for poor and very vulnerable farmers against price volatility. According to this view, the SSM should be easy to use, with effective remedies so as to be able to counter import surges and price falls. The proponents also argue there is a need for an SSM to remedy the existing distortions in international agriculture trade, including those caused by large subsidies in rich countries.
  • Other members view the SSM as a time-bound tool to support trade opening and increased market access. According to this view, the use of the SSM should be restricted, tariffs should not be increased above the levels that members committed to before the Doha Round, the SSM should not be triggered by normal fluctuations in prices or normal trade expansion, and it should be limited to the period of trade opening. This argument is based on the premise that enhanced market access and open markets are also critical for poor farmers trying to escape poverty, and that the existing tariff commitments form part of the balance of rights and obligations, which should not be altered.

Background: three types of safeguards

Safeguards are contingency restrictions on imports taken temporarily to deal with special circumstances, such as a surge in imports. They normally come under the Safeguards Agreement, but the present Agriculture Agreement has a special provision (Article 5), the Special Agricultural Safeguard (SSG). The proposed Special Safeguard Mechanism, or SSM, would be a third type of safeguard.

1. Article 19 of the General Agreement on Tariffs and Trade (GATT) and the WTO's Safeguards Agreement apply to all products, including agricultural products. The Safeguards Agreement allows temporary action to restrict imports of a product if the country’s domestic industry is injured or threatened with injury as a result of a surge in imports (accompanied by a price fall, but not a price fall on its own). The restriction/remedy under the general safeguard can be quantitative (such as a quota) or an increase in tariffs above the bound rate. The use of safeguard measures requires a prior investigative process, including test of injury, and negotiations for compensation.

2. The Special (Agricultural) Safeguard or “SSG” is provided for in Article 5 of the Agriculture Agreement. The safeguard raises tariffs. It can be triggered by import surges or price falls, virtually automatically, i.e., without any need to test injury or to negotiate compensation. The SSG can only be used on products that were “tariffied” (e.g. quantitative restrictions converted to equivalent tariffs). Further, they can only be used if the government reserved the right to do so in its lists or “schedules” of commitments on agriculture. Imports under tariff quota commitments are exempted from the SSG.

Members able to use the SSG and the percentage of agriculture tariff lines covered by the SSG (%):

Australia (1.3) Barbados (18.2) Botswana (39.5)
Canada (13) Colombia (27.2) Costa Rica (11.5)
Ecuador (1.1) El Salvador (11.4) European Union (31.1)
Guatemala (14.3) Iceland (36.7) Indonesia (0.9)
Israel (4.5) Japan (10.4) Korea, Republic of (7.8)
Malaysia (4.2) Mexico (31.7) Morocco (23)
Namibia (39.4) New Zealand (0.4) Nicaragua (6.4)
Norway (48.7) Panama (0.6) Philippines (15.9)
South Africa (39.4) Swaziland (39.4) Switzerland (53)
Chinese Taipei (7.5) Thailand (6.9) Tunisia (6.4)
United States  (10.3) Uruguay (0.1) Venezuela (31.5)

More information on the Special Agricultural Safeguard can be found in the Secretariat note TN/AG/S/29/Rev.1.

3. Special Safeguard Mechanism or “SSM”

  • The SSM would be available for developing countries only.
  • Objective: for developing countries to address import surges or price falls.
  • Like the SSG, it could be triggered if the import surge or price fall is big enough, without any need to test injury or to negotiate.
  • More details of the mechanism are being negotiated.

 

GATT safeguard

Special Agricultural Safeguard (SSG)

Special Safeguard Mechanism (SSM) (details still being negotiated)

Which products?

All, including agricultural

Agricultural, only if “tariffied” and identified in member's schedule of commitments (with  SSG)

Agricultural

Which countries?

All

Developed and developing

Only developing

Trigger

Import surge  causing injury

Import surge or price fall

Import surge or price fall

Remedy

Quantity restriction, tariff increase

Tariff increase

Tariff increase

Constraint / condition

Show injury or threat of injury, negotiate compensation

Respect  numerical trigger and remedy requirements, and transparency obligations

Trigger, remedy, duration etc. (to be negotiated)

Duration (expiry of mechanism?)

Permanent

Remain in force during reform process;  different views on expiry

Different views