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Seoul seeks to scarp mandatory rice purchase
Asia Pulse, August 3, 2004
South Korea is on track to put an end to the system of purchasing rice from farmers at a higher price than the market would dictate, government officials said Tuesday.

Instead, the government will push to introduce a public rice reserve system as a way to secure a stable supply line in preparation for wider agricultural market openings.

"To brace for further market openings, we can't be swayed by political reasons anymore," an official at the Agriculture Ministry said, asking to remain anonymous.

But analysts expressed concern that lawmakers from rural areas will likely become an obstacle to the passage of a revision bill to the relevant law.

The state-led purchase system, adopted in 1950 and scrapped in 1972, was revived in 1988 after opposition lawmakers pushed for the protection of local farmers at a time when multilateral global trade talks gained momentum.

This year, the price was tentatively set at 161,010 won (US$135) per 80 kilograms of rice, down 4 per cent or 6,710 won from 2003, and the total amount of government purchases was to decrease about 1 per cent to 744,000 tons.

Government officials expressed hope that the abolition of purchasing rice would give South Korea more bargaining power in a series of upcoming negotiations with rice-exporting countries.

"It can be seen as an open option for a shift to the tariff system, so they can be more careful in pressing their demands," another agricultural official said.

Currently, the price of South Korean rice is four times higher than international prices, and the surplus reached 7.63 million seok in 2003. One seok equals 144 kilograms.

During this year's rice-market talks with major rice producers such as the United States and China, South Korea hopes to negotiate an extension of its right to bar most rice imports because it wants to provide continued protection to farmers under the multilateral trade agreement.

However, most officials implicitly admit South Korea may at least have to raise its import quota beyond 4 per cent of domestic consumption or shift to a tariff system.

Since 1995, South Korea has gradually increased rice imports to about 200,000 tons in return for the special treatment, called minimal market access. South Korea and the Philippines are the only countries that receive special treatment on rice.

South Korea is supposed to complete negotiations with WTO member states over the opening of the rice market by the end of 2004, because the 1994 Uruguay Round of multilateral trade negotiations expires this year.

Under the Uruguay Round agreement, South Korea was given a grace period of 10 years to enjoy special treatment regarding rice imports.

Despite South Korea's developing country status, the outlook for this year's rice market negotiations, to be held separately from the WTO Doha Development Agenda talks, is not bright, analysts say, given the hard-line stances of the United States, Australia and other rice exporters.

The rice exporters are expected to intensify pressure on South Korea to graduate from its developing country status.

WTO members launched the current trade talks in Doha, Qatar in 2001, with the end of 2004 as the deadline, and they reached agreement on the framework of a new global trade accord after a week of talks in Geneva on Sunday.

The deal, approved by a consensus of the 147-nation body, opened the way for full negotiations to start in September, which aim to end export subsidies on farm products and cut import duties across the world.
MGR Archive 3.8.2004
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