Special Products and the Special Safeguard Mechanism: Strategic Options for Developing Countries

Date period
1 December 2005

SummaryWhile it is widely recognised that developing countries as a whole would benefit from freer agricultural trade, some fear that most of the new opportunities the Doha Round is set to bring would be captured by a few middle-income countries and large food exporters. Lower income countries would gain only little and might even lose from further liberalisation. Many still have large rural populations composed of small and resource-poor farmers with limited access to infrastructure and few employment alternatives. Thus, these countries are concerned that domestic rural populations employed in import-competing sectors might be negatively affected by further trade liberalisation, becoming increasingly vulnerable to market instability and import surges as tariff barriers are removed.

A large number of countries still depend on the export of a few commodities, the prices of which show high volatility and long-term decline. Commodity dependence, the expected erosion of preferences that some countries depend on for their export earnings, as well as increased food import prices due to the elimination of export subsidies, will make it difficult for these countries to guarantee their growing populations the food they need. In this context, safeguarding domestic food production capacity has become an essential component of food security strategies in an increasing number of countries.

These concerns were first raised at the WTO in the context of the “Development Box” debate, in which developing countries tabled a set of proposals aimed at providing flexibility for countries to enhance domestic food production and adopt measures to protect the livelihoods of resource poor farmers. These proposals included concrete measures to address dumping and import surges. Some were eventually reflected in the so-called 2004 July package. The S&DT provisions under paragraphs 41 and 42 of this framework agreement are probably the most innovative from a sustainable development perspective. They specify that “developing country Members will have the flexibility to designate an appropriate number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. These products will be eligible for more flexible treatment“. The Framework Agreement further states that a “Special Safeguard Mechanism (SSM) will be established for use by developing country Members.”

However, key aspects of these instruments – such as the selection and treatment of SPs, or the specific modalities for a new SSM, including product coverage, possible trigger mechanisms and remedies – were left for future negotiations. As a contribution to this highly controversial debate, the ICTSD Project on Special Products and a Special Safeguard Mechanism aims to generate knowledge and options to better articulate and advance the concepts of SP and SSM from a sustainable development perspective.

In order to better articulate and advance the concepts of SP and SSM from a sustainable development perspective and facilitate better participation of developing countries in the WTO trade negotiations on agriculture, ICTSD undertook a series of six country case studies in Barbados, Honduras, Kenya, Pakistan, Peru and Sri Lanka. These country case studies are primarily intended as a contribution to the internal national discussion on the selection and designation of Special Products and to inform national policy makers and trade negotiators on their importance to national development and expected treatment in the WTO.

In keeping with ICTSD’s strategic approach, the studies involved a wide range of stakeholders, ranging form government officials to farmers groups and academia, in an inclusive and participatory process at the national and international levels. This empirical work was supplemented by a series of targeted analytical pieces that address selected cross cutting issues such as tariff structures in developing countries or the articulation between bilateral and multilateral negotiations on SP- SSM. The country studies aim to ensure that the countries choice of special products is not an arbitrary one and that these products address the specific needs of the country and effectively contribute to promoting food and livelihood security and rural development.

This issue paper is complemented by a more recent information note, summarising some of the key findings from some of the country studies.