Most developing countries want a special safeguard mechanism (SSM) in the WTO to defend small farmers from import surges. However, some agricultural exporting countries argue this will affect their exports. Thus SSM is a major issue in the Doha talks.

By Aileen Kwa

The Agriculture Safeguards Issue at the WTO

The previously little known Special Safeguard Mechanism (SSM) in the WTO agriculture negotiations claimed its share to fame when it hit the headlines in July 2008. Supposedly due to disagreements over its details and how it could be operationalised, the WTO’s mini-Ministerial taking place then collapsed. For several other reasons, Doha talks have not quite regained momentum since then.

The SSM is an instrument proposed by a group of forty-six developing countries – the G33 at the WTO, and supported by nearly all other developing countries except a small minority. The instrument would allow countries to impose a safeguard (i.e. an additional duty) if i) agricultural import volumes are increasing rapidly so that they surpass a certain volume trigger level or ii) if prices of the imported products are on the decline, and go below a certain price level.

In both instances, subsistence farmers are squeezed out of their own domestic market. The safeguard, requiring governments to take action quickly based on import data or drops in prices of imported shipments, is intended to protect these vulnerable farmers.

Since the 2008 collapse in the negotiations, the issue has not hit the headlines. Nevertheless, it remains a heated matter in Geneva - in many respects contrary to the rest of the Doha talks which are generally in a fatigued and listless state.

At the heart of the debate, is the pitting of interests of farmers and corporations in key agricultural exporting developed and developing countries (such as Australia, United States, Canada, New Zealand, Uruguay and Paraguay etc), versus the subsistence farmers of a large number of developing countries. The exporters are fearful that the instrument will be used arbitrarily and regularly to stop their exports. The G33 and others, on the other hand, want an effective instrument that can respond to the crisis that has been ongoing in the last two decades – of agricultural imports flooding developing country markets, often due to liberalized borders.

In December 2008, an even worse elaboration of the SSM, from the standpoint of subsistence farmers, was released by the WTO’s Agriculture Chair, then Crawford Falconer. As one developing country ambassador noted, the revised texts were loaded with even more conditionalities that would essentially make the SSM ‘toothless’ as a safeguard. These texts remain, up till today, the basis of negotiations.

Throughout 2009, the agricultural exporting countries went on an attack of the SSM. They felt that the Chair’s December 2008 conditionalities were not even stringent enough. The issue of ‘normal trade’ took center stage. Questionable technical analysis emerged from various agricultural exporting quarters, claiming that the kind of agricultural import growth rates by developing countries would be stymied by the SSM. Their exports and small farmers would suffer. On this basis, they were innovating yet more conditionalities to make the SSM even less accessible. By doing so, they were shifting the goalposts – from an SSM that was devised to safeguard subsistence farmers, to one that would not hinder ‘normal trade growth’.

Outraged by the maneuvers of the exporting countries, the G33 in Geneva, on 27 January this year released a paper entitled ‘Refocusing Discussions on the SSM’. The paper notes:

‘Recent discussions on the SSM have highlighted the gulf that persists in perceptions on the rationale, structure and the design of the instrument. The proponents of the SSM have highlighted the need for an effective, easy to operate instrument which addresses their development needs, in line with the mandate in …the Doha Ministerial Declaration. However, some members have focused on its possible disruptive impact on trade flows. Based on this, they have sought to circumscribe the functioning of the SSM by proposing disciplines which would prevent it from disrupting ‘normal trade’. The concept of normal trade has never been defined in the debate.

‘…The correct perspective is to view (the SSM) as an instrument which allows developing countries to address their central concerns of food and livelihood security and rural development while undertaking liberalization commitments.’ (G33, TN/AG/GEN/30, 28 January 2010).

Technical Innovations by Agricultural Exporters to Paralyse the SSM

In this and other technical papers that were submitted, the G33 sought to put in proper perspective the different technical innovations the exporters had created, illustrating the redundancy of these conditionalities in some cases, and in others, their incompatibility with an effective and operable SSM.

Some of these conditionalities they objected to for the volume-based SSM include:

Prorating. Users of the SSM were told that if they had used the SSM before, and it had been effective, leading to reductions in volume imports, and thus a lower volume trigger, this lower trigger could not be used since the SSM could then be invoked too easily and frequently. Higher import numbers would have to be used instead for the calculation of the trigger level. This makes the SSM more inaccessible.

Cross Check. When import volumes increase, and countries want to use the volume-based SSM, they can do so only if domestic prices were also declining or at least are not increasing. Research shows that these two trends do not always take place in tandem. In fact, in the majority of cases, they are not in sync. Such a conditionality would put the SSM out of reach the majority of the time.

Seasonality. Exporting countries wanted to ensure that their seasonal products would not face the SSM. An SSM used against their seasonal products should only have a 6-month duration. G33’s technical research showed the redundancy of this concept. Whilst there is seasonality in production, for the most part, this does not get translated into seasonal trade trends for the exporters.

Duration, On/Off Conditions. The G33 proposal of a 12-month duration for the SSM has been questioned and exporters are suggesting 4 – 8 months. After it has been used once, exporters want to set the rule that it would not be used again for an equivalent period.

En route shipments. Any shipment that has left the port of the exporting country should not be faced with the SSM.

There were also major problems with the price-based SSM which G33 has highlighted:

Inadequate Remedy. The remedy for the price-based SSM should bridge the gap between the reduced imported price and the previous higher imported price if the domestic products are not to be undercut. However, the remedy offered falls far short of this goal in several ways. For instance, ad valorem tariff drops in monetary terms, resulting from decline in prices of a product, were not accounted for.

En Route Shipments. There is even a built-in mechanism that would halt any possibility of operationalising the price-based SSM. The Chair’s text notes that the price-based SSM is applied ‘on a shipment-by-shipment basis’. Yet ‘en route’ shipments - shipments which ‘have been contracted for and were en route after completion of custom clearance producers in the exporting country’ - are exempted from any SSM duty (TN/AG/W/4/Rev.4, December 8 2008).

For both the volume and price-based SSM, the SSM cannot be used for preferential trade. This is incredibly unfair since the EU and US have access to a similar safeguard in their preferential trade agreements, the Special Safeguard Provision (SSG).

The Challenge of Using the SSM for Most Developing Countries

Even without these stringent additional conditionalities, the SSM would already be very difficult for the majority of developing countries to implement.

The volume-based SSM requires a country to closely monitor import data, track an import surge and take action, all within a 12-month period. For instance, a country would have to begin collating import data (eg. starting from January), take note if an import surge has taken place (the SSM volume trigger may perhaps be met in August) and have the necessary institutional arrangements in place to apply the safeguard before December. Most countries may only realize an import surge had been triggered 6 months down the line – perhaps in February the following year. By this time, the 12 months (from January) would have elapsed, and they can no longer invoke the SSM.

The ability to use the instrument therefore depends on the efficiency of countries to collate customs data from different customs points, and excellent coordination between customs, statistics offices and trade departments. This remains an aspiration for many low-income countries with other immediately urgent resource needs.

SSM: Not Sufficient to Address Structural Problems in Agriculture

The food crisis of 2007/8 merely unveiled the production crisis that had already been taking place across much of the developing world in the last 30 years – that of rapidly decreasing production capacities. This production problem has resulted, in large part, from liberalized borders due to structural adjustment, so that cheap and often subsidized imports have displaced local production.

In Senegal, poultry imports made up 1% of domestic consumption in the 1980s. By 2005, imports made up 31% of total consumption. FAO reports that the cheaper imported poultry has led to 70% of poultry processing operations closing down in recent years (FAO 2007 ‘Import Surges in Developing Countries: The Case of Poultry’). Least developed countries used to have a food import bill of $3.9 billion in the early 1980s. This bill has exploded to $23 billion by 2008 (UNCTAD 2009 LDC Report). At the same time, it is no accident that malnutrition in LDCs had increased since 2000, long before the food and financial crisis, evidenced by declining food consumption per capita (UNCTAD 2009 ibid).

Agricultural markets today are still ruled by the law of the jungle, and when countries liberalise through the WTO’s Doha Round, or worse through free trade agreements, their subsistence farmers are pitted against giant corporations. In addition, developed countries are still exporting their subsidized products e.g. cheap EU chicken displacing West Africa’s chicken producers.

The SSM, if the G33 wins the battle in Geneva, can offer some limited respite. But structured as a temporary safeguard, it cannot solve the food and production crisis which millions of rural poor today are facing. The strategic protection of domestic markets, fair regulation of international trade, including strict rules against dumping by EU, US and others, must take center stage.

South Centre’s Analytical Notes on the SSM include the following and can be downloaded from

http://www.southcentre.org/index.php?option=com_content&task=view&id=1117&Itemid=1&lang=en

·    ‘The Extent of Agriculture Import Surges in Developing Countries: What are the Trends’ SC/TDP/AN/AG/8;

·    ‘The Volume-based SSM: Analysis of the Conditionalities in the December 2008 WTO Agriculture Chair’s Texts’ SC/TDP/AN/AG/9;

·    ‘The Price-based SSM: Trends in Agriculture Price Declines and Analysis of the Conditionalities in the December 2008 WTO Agriculture Chair’s Text’ SC/TDP/AN/AG/10;

·    ‘Comparing the Special Safeguard Provision (SSG) and the Special Safeguard Mechanism: Special and Differential Treatment for Whom?’ SC/TDP/AN/AG/11.

Aileen Kwa is the Coordinator of  the Trade for Development

Programme of the South Centre. She can be contacted at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it