The New SSM: A Price Floor Mechanism for Developing Countries

by Alberto Valdés and William Foster

Agricultural Trade and Sustainable Development Series • Issue Paper 1

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In this paper, the authors explore the use of national border measures to deal with food price instability and risk in low-income countries. Their focus is on the use of variable tariffs as safeguards against temporary international price declines below the long-term trend. These variable tariffs would be used to shield politically important, import-competing agricultural sectors that are competitive in the long term. The paper addresses several policy questions related to the dual objective of restraining the transmission of exceptionally low border prices to domestic farm markets in developing countries, while maintaining a commitment to overall low bound tariffs and the continued liberalization of trade.