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

Kamal Saggi () and Mark Wu

Chapter 20 in Economic Analysis of the Rules and Regulations of the World Trade Organization, 2018, pp 455-482 from World Scientific Publishing Co. Pte. Ltd.

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: Multilateral Trading System; Trade Agreements; Trade Liberalization; International Tariff Cooperation; WTO Disputes; Case Studies (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2018
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Related works:
Journal Article: Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products (2016)
Working Paper: Understanding Agricultural Price Range Systems as Trade Restraints: Peru – Agricultural Products (2015)
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