Rice

Main policy area

Remarks

Tariffs

• Bound tariff rates are generally high, often in excess of 100 percent. Some countries (India, the Dominican Republic and Panama) recently re-negotiated those bindings because of the alleged insufficient protection they conferred to their domestic sectors;
• Applied tariff rates are often set equal to the bound level when international prices are low. However, their level tends to change frequently, depending on the domestic and international market situations. Such variations contribute a high level of uncertainty to the world rice economy. Moreover, variable import duties, for instance price band mechanisms, are popular among certain countries in Central America and the Caribbean and in South America;
• Four countries (Japan, the Rep. of Korea, the Philippines and more recently, mainland China, and the China’s Province of Taiwan) have invoked deferred tariffication under the “Special Treatment” provisions of Annex 5. However, Japan resorted to tariffication in 1998, imposing a prohibitive level of yen 352 per kg (US$ 2943 per tonne). From the point view of the international rice exporters, deferred tariffication has been rather favourable, because it is associated with the opening of a larger tariff quota (to reach 8 percent of base-period consumption at the end of implementation period, instead of 5 percent, for the developed countries; 4 percent for the developing countries;
• Tariff escalation is of much less importance for rice than for other commodities, because of the relatively small volume of trade in paddy or unhusked rice. However, in general, tariffs on unprocessed rice are much lower than for milled rice. Tariff escalation is an important issue for rice imports into the EC when bound tariffs are analysed. However, the issue has become much less important there because of a provision that obliges the community to link the tariffs on husked and milled rice to the level of intervention prices. Such a provision has resulted in much smaller differentials in applied tariff across rice-based products.

Special safeguards against imports

• Several countries have included rice in their schedules among the commodities subject to Special Safeguard provisions. They rarely have been invoked in the case of rice, but this needs to be checked with the WTO Secretariat.

Tariff rate quotas

• Eleven countries have made commitments to grant minimum access through preferential-tariff rate quotas. Although they are often subject to high in-quota tariffs (e.g. 80 percent in Colombia, 90 percent in Indonesia, and 177 percent in Morocco), they often constitute the only means for accessing important markets (EC, Japan, Rep. of Korea, Taiwan Province, etc.), where out-of-quota imports are subject to prohibitive tariff rates;
• Problem of under-fill of TRQs are rare except in highly competitive, traditional exporting countries, such as Thailand;
• Administration of TRQs is often the responsibility of State Trading Enterprises or other government agencies. Various methods for allocating the quotas to external suppliers are being applied. For instance, they are allocated on the basis of tenders in Japan and in the Republic of Korea; on a first-come, first-served basis in the Philippines, or based on historical performance in the EC. The systems in place for allocating the TRQ among different exporting countries do not appear to have caused substantial problems. The erosion of preference benefits might become an issue for a small number of traditional suppliers to the EC. These schemes do not fall under the “minimum access” provision, since the EC imports some 40 percent of consumption. Such quotas are assigned to specific countries or country groupings (i.e. ACP countries) based on historical performance or special agreements. The “value” of such preference could be jeopardised by further reductions in tariffs or by the recently launched EC “Everything but Arms (EBA)” programme.

• Administration of TRQs is often the responsibility of State Trading Enterprises or other government agencies. Various methods for allocating the quotas to external suppliers are being applied. For instance, they are allocated on the basis of tenders in Japan and in the Republic of Korea; on a first-come, first-served basis in the Philippines, or based on historical performance in the EC. The systems in place for allocating the TRQ among different exporting countries do not appear to have caused substantial problems. The erosion of preference benefits might become an issue for a small number of traditional suppliers to the EC. These schemes do not fall under the “minimum access” provision, since the EC imports some 40 percent of consumption. Such quotas are assigned to specific countries or country groupings (i.e. ACP countries) based on historical performance or special agreements. The “value” of such preference could be jeopardised by further reductions in tariffs or by the recently launched EC “Everything but Arms (EBA)” programme.

Other market access barriers

• Phytosanitary barriers are less important for rice than for other commodities. However, certain restrictions on rice imports from Vietnam and Thailand are in force in several Latin American and Caribbean countries on phytosanitary grounds, which strongly influenced the pattern of flows into that region;
• State trading in rice is very common, since a large number of exporting and importing countries rely on Government trade agencies to sell or purchase rice on the international market. Transactions through these agencies are usually not made in the open, and the quantities, prices and other conditions of the deals are often kept secret. Lack of transparency is therefore often associated with State Trading. However, lack of transparency also characterizes trading by producer associations such as the one responsible for rice exports in Australia, which does not even reveal the destination of exports;
• Negotiations over the suspension of state trading on international markets (as well as in domestic markets) would be of special importance to rice. It is noteworthy, however, that the private sector has played an increasing role in international rice trade since 1995 even in some of the countries that mainly rely on state trading enterprises to import or export rice (India, Indonesia, Malaysia, the Philippines, Vietnam, Myanmar, etc.).

Export related measures

• Export subsidy reduction commitments have been made under the URA by Colombia, Indonesia, Uruguay, the EC and the United States. Actual use of export subsidies has fallen short of the aggregate ceiling, although information is difficult to get even from WTO. Proposals for further reduction commitments are likely to meet the opposition from the EC;
• Other issues have arisen in relation to export competition in rice, in particular the granting of export credits by the United States. However, the use of export credits is known to be widespread, especially under Government-to-Government transactions, though little information is released in connection with such practices (provision of long term credits at low rates of interest);
• Restrictions on exports of paddy/unhusked rice are also applied by a large number of exporting countries as a way for protecting their milling industries. This reduces substantially the choice of importing countries that are trying to promote value-adding processing industries by importing non-milled rice.

Amber box support

• Developed countries completed their Aggregate Measurement of Support (AMS) reduction commitments in 2000, mainly through cuts in price support. Such cuts have been associated with a rise in compensatory payments to producers, classified either under the Blue or Green Box, which have been particularly important in the EC, Japan and the United States. The shift from price to income aids has not been associated with a major fall in production and certain developed countries are now confronted with large rice stocks. Support to the rice sector accounts for a very high proportion of the total AMS in Japan and the Republic of Korea. These countries are expected to resist proposals for a reclassification of policies (for instance from the green or blue boxes to the amber box). They are also likely to oppose further reductions in the AMS on the ground of concerns over national food security and preservation of the countryside, from the environmental, cultural and social viewpoints;
• Few developing countries have submitted a base AMS, thus few are subject to reduction commitments. Most developing countries still have ample scope for increasing their assistance to the sector, should they choose to do so, under the de minimis provision. Only very sizeable reductions in the de minimis ceilings could negatively affect rice producers in those countries where it account for an important share of total agricultural outlays, i.e. many Asian countries and several Latin American and Caribbean countries. The proposal to raise the “de minimis” under a special and differential treatment for least developed countries may have little effect since the 10 percent of base production value already granted does give ample scope for domestic support to the commodity;
• The impact of inflation and changes in exchange rates on current AMS may be of far greater importance for those countries that submitted a base AMS in domestic currencies and where inflation is high.

Blue box support

• Decoupled, production-limiting payments are made to rice producers in the EC, Japan (Paddy Land Diversion Programme), the Republic of Korea, Mexico and the United States. Since 1999, they have been of critical importance to allow producer to weather the impact of low prices. They have been strongly criticised by other players in the rice market, for not being truly “decoupled”, and demands are made for their elimination/reduction by shifting decoupled income support and income safety nets from the blue to the amber box, subject to reduction commitments;
• The “multi-functionality” role of agriculture to cater for environmental, social and cultural concerns, was developed by the EC and Japan and is being used for defending the permanence of blue box payments in these countries. In Japan, most of the emphasis on multi-functionality and food security would be in relation to rice. In those developed countries where rice is a non-marginal crop, an elimination of blue box payments could considerably impair the sector.

Green box support

• Considerable resources have been channelled to the sector in the United States through Production Flexibility Contracts, Retirement payments and payments for natural disasters, which have been classified in the “Green box”;
• In general, there is a prevailing tendency to promote non-commodity specific programmes, such as producer insurance schemes, also in the developing countries;
• A number of developing countries support the inclusion of a “Food Security” box under the policies exempted from reduction commitments. This would contain, inter alia, poverty alleviation measures and product specific support to low income farmers. It would be of very high relevance to rice production in a large number of countries, especially India.

Environmental

• Rice production sites are often the habitat of a wide variety of birds and plants. Water management in rice lands also ensures a soil desalination process essential to the maintenance of land fertility. As a result, environmental concerns are frequently brought up in defence of the sector, especially in the developed countries.

Food safety

• It is not very significant in the case of rice, although concerns are arising regarding GMOs. Rice varieties containing new genes (i.e. carotene-enriched rice) are being developed but are not yet internationally traded.

Geographical indications

• One important emerging issues for WTO is related to the intellectual property rights over particular varieties of rice, in particular “Basmati” and “fragrant rices”, which have been developed in the United States. “Bio-piracy” of the genes is very much suspected. It is feared that the new strains developed in the United States could compete with rices from India, Pakistan and Thailand in international markets, especially in Near East countries, with serious negative implications for the traditional Basmati and fragrant rice exporters;
• There have also been some issues regarding the use of certain denominations such as “Basmati” or “Jasmine” rices. India and Pakistan are now fighting to get the name associated with the geographical zone of production.