RICE, one of the world's most basic commodities, is caught up in
the complex web of trade politics.
A staple to billions, this starchy grain is among many
agricultural products whose prices and trade volume are subject to
the whims of national governments.
Farm products have largely defied attempts by the Geneva-based
General Agreement on Tariffs and Trade (GATT) to impose regulations.
The international institution is charged with the fair regulation of
world commerce. GATT's Trade Negotiating Committee, scheduled to
meet at the end of this month, will once again try to tackle the
debate over agriculture, which has been called the linchpin of a
successful current round of world trade talks.
Government subsidies and closed markets are at the heart of the
GATT dispute over agriculture. While attention has centered on US
consternation over the internal supports of the 12-nation European
Community (EC), the problems are global in scale. Producers and
consumers alike pay a high price for the trade distortions which
result from unfair trade practices.
Rice industry advocates point to huge disparities between various
governments' support for rice production: US support is just over
$200 per metric ton; Japan's is roughly $2,000 per ton; South
Korea's is between $1,000 and $1,800; and the EC's runs from $400 to
Liberalizing import rules would mean that costly local production
would give way to internationally competitive imports. Governments
that spend a lot on subsidies strongly defend their local market
share in order to defray some of their costs.
Most developing economies, by contrast, cannot afford to pump up
local production through heavy government subsidies. If they do, it
is at an extraordinarily high cost, which cannot be successfully
passed on to domestic consumers.
The US's history of international rice trade is a window into the
problems caused by restrictions and protectionism. As the world's
largest economy, the US has an advantage in its capacity to absorb
local production and aggressively market internationally. Its
exports amount to roughly one-fifth of the world rice trade, ranking
second only to Thailand in volume of rice exports. Depending on
weather conditions, Vietnam is tied with the US, or in third place.
American rice exporters have had a mercurial experience with
important markets: Countries that once offered the most bountiful
opportunities are now inaccessible. The reasons range from
international calamities to overnight protectionism.
Until August 1990, Iraq was the largest commercial market for US
rice, absorbing 20 percent to 22 percent of rice sold by the US
Department of Agriculture's Commodity Credit Corporation (CCC), a
commercially viable program through which foreign governments can
buy US foodstuffs with USDA credits.
One industry official calls Iraq's 1990 invasion of Kuwait and
the ensuing international embargo of Iraq "a blow to the rice
But US-Iraqi relations prior to the Aug. 2 invasion braced US
rice producers for problems. After Iraq used poison gas on its
Kurdish population in 1988 and was threatened with US trade
sanctions, the rice industry lobbied the Bush administration to
leave the door open for US exports to Baghdad. …