Allowing developing countries to increase import tariffs based on price and supply triggers under proposed World Trade Organization rules would actually harm those countries, according to a Purdue University economic analysis.
A major factor in the breakdown of the Doha Development Agenda, which aimed to set new rules for agricultural trade under the WTO, was disagreement over whether a special safeguard mechanism should be included to allow developing countries to increase tariffs if imports surged or world prices dropped past certain trigger points. Developing countries lobbied for those safeguards, believing the measures would protect producers from cheap commodities flooding their markets.
But Thomas Hertel, a Purdue distinguished professor of agricultural economics and executive director of the Global Trade Analysis Project, said those safeguards actually would increase price volatility with developing countries faring the worst.
“Rather than stabilizing domestic producers’ incomes, it could destabilize them. It would also raise food prices faced by the poor,” said Hertel, who ran an economic analysis on the effects of the proposed safeguards.… Continue readingRead More »