Understanding Agricultural Price Range Systems as Trade Restraints: Peru – Agricultural Products

Kamal Saggi () and Mark Wu

No 2015/58, RSCAS Working Papers from European University Institute

Abstract: An agricultural price range system (PRS) aims to stabilize local prices in an open economy via the use of import duties that vary with international prices. The policy is inherently distortionary and welfare-reducing for a small open economy, at least according to the canonical economic model. We offer an explanation for why a government concerned with national welfare may nevertheless implement such a policy when faced with risk aversion and imperfect insurance markets. We also highlight open questions arising out of the Peru – Agricultural Products dispute for the WTO’s Appellate Body to address in order to clarify how a PRS consistent with WTO rules could be designed. Finally, we discuss the possibility that a WTO member might resort to a free trade agreement (FTA) to preserve its flexibility to implement a PRS and how an FTA provision of this sort ought to be treated in WTO litigation.

Keywords: Agriculture; free trade agreement; price range system; WTO law (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-agr and nep-int
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Related works:
Chapter: Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products (2018)
Journal Article: Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products (2016)
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