Imported rice duty stays at 513%

Korea will keep its 513 percent tariff on imported rice as it reached an agreement with five countries after years of negotiations, according to the Ministry of Agriculture, Food and Rural Affairs on Tuesday.

The sky-high tariff has been disputed by the United States, China, Australia, Thailand and Vietnam through the World Trade Organization (WTO) since late 2014, when Korea was forced to open its market to imported rice. Official discussions among the countries began the following year.

Prior to 2014, Korea had only imported a small mandatory amount of foreign rice with low tariffs. Due to increasing pressure from major rice exporters, it agreed to open the market beyond the symbolic amount, known as the tariff-rate quota (TRQ). But to protect its domestic producers, it slapped on the 513 percent tariff.

Korea levies a 5 percent tariff on the TRQ amount of 408,700 tons, while additional foreign rice imports are effectively restricted by the 513 percent tariff. The five countries have argued that the tariff should be lowered to around 200 to 300 percent.

“As a result of the discussions, Korea has made a final agreement with other countries to maintain the existing 513 percent tariff rate on rice and the TRQ level,” said Lee Jae-ouk, vice minister of agriculture, food and rural affairs during a briefing at the Government Complex in Sejong.

In exchange, Seoul agreed to create import quotas for the five countries that disputed the measure.

Of the total TRQ amount, 388,700 tons will be shared by the five countries, with levels based on their rice exports to Korea over the past three years. China will be allowed to export the largest amount of 157,195 tons, followed by the United States at 132,304 tons.

The vice minister said the high tariff rate will continue to protect local rice producers and foreign rice imports will be held to the mandatory quota.

Rice remains a sensitive product as it is a staple for Koreans and a major industry for local farmers.

While rice consumption has fallen recently, the average Korean ate 61 kilograms (134.5 pounds) of rice in 2017 compared to just 32 kilograms of wheat, according to government data.

The latest agreement is expected to introduce more imported rice to Korean tables compared to the past, when it was largely used for processed foods.

“There were complaints from countries during the discussions over imported rice being mostly processed,” said Lee. “Restricting imported rice just for processing could also be in violation of WTO regulations, according to trade experts.

“Importing rice for ordinary consumers is inevitable considering the situation,” he continued. “The government plans to work toward minimizing such rice having an impact on the local rice market.”

The vice minister also addressed concerns about Korea’s decision last month to forgo its developing country status in future negotiations at the WTO, saying the government would continue to protect sensitive products such as rice.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]