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Abstract

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. Using wheat as a case study the effects of a special safeguard mechanism on market stability and welfare are evaluated. The results show that a safeguard mechanism is not very trade distorting and costs less than 20 percent of the world welfare gain that would be realized if developing countries were not granted a safeguard.

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