Open the market for rice

The Philippines reached agreements with its trading partners to extend quantitative restrictions on rice, a special protectionist means arranged through the World Trade Organization that should have ended in 2012, to 2017 to buy more time to secure competitiveness for its local industry and self-sufficiency in rice production. Currently the Philippines and South Korea are the only countries that limit rice imports. But the price of upholding the protection against a deluge of cheap imports has been heavy. In return for the extension, the Philippines had to more than double its minimum access volume from the current 350,000 metric tons to 805,000 metric tons and lower its tariff to 35 percent from 40 percent. It also had to concede further opening its pork and meat markets. The cost of retaining the privileged quota for rice has been too much.

Seoul’s grace period expires at the end of this year. If it seeks a third WTO waiver, it would have to pay a similar price. Korea is deciding if it should replace the non-tariff import barriers with a tariffication arrangement.

“The more we delay market opening, the higher the price will be,” said an official of the Ministry of Agriculture, Food, and Rural Affairs. It must notify the WTO of its decision in the fall.

The cost of upholding the non-tariff restriction has been mounting. The 10-year waiver that began in 1995 with minimum market access of 51,000 tons increased the import volume by 20,000 tons each year to reach 408,700 tons this year. Imports already take up more than 8 percent of domestic consumption of the predominant staple. The privilege status cost the country about 3 trillion won ($2.93 billion)over the past two decades. About 20 billion won was spent last year to store unconsumed rice imports. The government has to rent storage to hold the imported rice. About 50,000 to 200,000 tons are sold dirt-cheap to processing companies. The rice that was imported at 900 won to 11,000 won per kilogram is practically given away for 300 won.

Korea, whose economy is nine times bigger than the Philippines, would have to offer more concessions than Manila if it wants to sustain the trade barrier. Even under similar terms with Manila, Seoul would have to import 940,000 tons in five years time. We cannot concede our meat market solely to protect our rice industry. Japan opened its rice market in 1995 and Thailand in 2003 after levying high tariffs. Imports have hardly increased. Our rice has already gained competitiveness in quality. Imports won’t be a threat to the local industry when levied with duties of 300 percent to 500 percent.

JoongAng Ilbo, June 21, Page 30