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US, Korea Reach Major Rice Export Agreement
The US and South Korea have reached an agreement to obtain greater market access for US-based rice growers.

The new trade pact - announced yesterday by US Trade Representative Robert Zoellick and US Secretary of Agriculture Ann Veneman - calls for Korea to double the amount of rice it imports over the next 10 years, provide guaranteed access for 50,000 metric tons of US-grown rice each year, and make imported rice available directly to Korean consumers.

The negotiations resulting in the accord "focused on improving the quantity and quality of the openings for US rice exporters in the Korean market," said Zoellick.

This, he said, "will allow our competitive rice industry to make significant gains in the Korean market. Not only will US rice imports increase, but the quality of access will be substantially improved as Korean consumers will now be able to buy rice from the United States at the retail level."

The new agreement is expected to create substantial opportunities for California's rice producers who grow approximately 2 million tons of the commodity annually, making the state the country's second largest rice-producer after Arkansas.

Rice cultivation is particularly important to the economy of the Sacramento Valley with the primary growing activity concentrated in Colusa, Butte, Sutter, Glenn, Yuba, and Yolo counties, which, combined, grow about 94% of the state's total rice crop.

According to the California Rice Commission, California - which grows about one-fifth of all the rice annually produced in the US - shipped about 49% of its total rice production to export markets in 2001 - the last year for which US Department of Agriculture statistics are available.

That share dropped to 43% in 2002 as export sales remained constant while production surged to record levels.

California rice exports, the Sacramento-based Commission said, were valued at $166 million in 2001and at $183 million in 2002, ranking the crop as the state's 9th most important agricultural export commodity, just behind walnuts and ahead of beef and beef products. Japan currently takes in about half the California export total, with California supplying about half of Japan's rice imports. In 2002, Turkey and Jordan together imported about 15% of California rice exports, while Taiwan bought another 13%. Uzbekistan and South Korea rounded out the state's top 5 rice export markets, which, combined, accounted for 95% of the state's total overseas rice sales. The state's export rice crop is shipped in three primary ways to those overseas markets - bulk and palletized/bagged rice through the ports of Stockton and Sacramento, and containerized shipments through the Port of Oakland. To qualify for continued 'special treatment' under the rules of the World Trade Organization (WTO), Korea is required to notify the WTO of the results of these negotiations by the end of the year.

The terms agreed upon during the negotiations will then be reviewed by the global trade group's 148 member nations. If the members approve the terms by consensus, Korea will implement them in 2005. Under the WTO rules established during the Uruguay Round, Korea designated rice as a "sensitive" product. Instead of liberalizing its rice import regime by establishing a tariff-rate quota, Korea committed to import a specific level of rice imports for a period of 10 years. That decade-long period ends at midnight today.

The rules also provided that Korea's market access quota for rice, known as "special treatment," could continue for an additional length of time, but only after individual WTO members had the opportunity to negotiate concessions as to how Korea would continue the "special treatment" arrangement.

Earlier this year, the country notified its trading partners that it sought an extension of the "special treatment" for rice, and Seoul began negotiating with the US and eight other countries that also formally expressed an interest in expanding their share of the Korean rice market.
MGR Archive 2.1.2005
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