The World Trade Organization Special Safeguard Mechanism: A Case Study of Wheat

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.