Dilemma Strikes Korean Government During Negotiations to Open Rice Markets

During negotiations to determine the future of rice trading in Korea, the U.S., China, and nine other nations demanded that Korea increase its maximum quota of rice imports to 8.9 percent (comparing to 1988-1990 rice consumption) over the next 10 years.

If Korea concedes to this demand, Korea will be obligated to increase its rice imports by more than twice what it had imported this year (four percent).

In relation to this incident, research shows that Korea would be more competitive if it were to employ a tariff policy targeted on imported rice rather than further delaying rice tariffs.

The results of the negotiations were made public by the Ministry of Agriculture and Forestry after attending a Presidential Committee on Agriculture, Fishery and Rural Policy-sponsored forum entitled, ‘Negotiations concerning rice and alternative options to increase rice profits,” held at the Seoul National Agricultural Cooperative Federation headquarters on November 17.

Yoon Jang-bae, director of the International Agriculture division in the Ministry of Agriculture and Forestry, said, “While most of the major trade nations agreed with the 10-year delay of tariffs, some demanded that Korea go through an inspection sometime after five years.”

China has surfaced as one of such nations.

If China’s demand is included in the negotiation draft, scheduled to be reported to the World Trade Organization sometime near the end of next month, Korea will once again have to decide whether it will open its markets again in five years or not.

The trade nations also demanded that the compulsory import quota be increased to 8 or 8.9 percent (twice as much as this years imports) and that 75 percent (307,500-341,250 tons) of such imports be sold in discount stores.

In addition to the announcements made by Yoon concerning the negotiations, Seo Jin-gyo, a researcher from the Korean Rural Economic Institute, made public an analysis containing various scenarios in which the government can refer to during negotiations.

According to the analysis, if the demands of compulsory imports from other nations are not lowered beneath 7.5 percent, it would be more profitable to choose tariff policy which is importing rice with tariffs of 400-500 percent.

It is analyzed that opening markets through imposing such tariffs will increase rice imports to 6.3-6.4 percent in the next ten years, which is a 2.3-2.4 percent increase over this year’s imports.

Ji-Wan Cha cha@donga.com