USA Rice seeks Administration help to turn back punitive EU import duties on U.S. brown rice

Washington, DC, July 19, 2004 — The USA Rice Federation today called on the U.S. government to react swiftly and decisively to the European Union’s decision to replace the margin of preference (MOP) for rice, a key trade concession of the Uruguay Round, with punitive duties on imports of U.S. brown rice.



“The withdrawal of the margin of preference concession by the EU without adequate compensation means the imminent loss of a cash market for U.S. brown rice that’s averaged just over $90 million annually in the last five years,” said Carl Brothers, chairman of USA Rice’s International Trade Policy Committee and senior vice president of Riceland Foods, a farmer-owned cooperative in Stuttgart, Ark.



“We are urging in the strongest terms that the U.S. government respond aggressively to the EU’s action, which ignores the EU’s World Trade Organization obligations to compensate the United States and other rice suppliers for withdrawing a negotiated concession,” he continued. “The EU’s action contains no compensation, and it’s time for U.S. trade officials to respond in kind to products exported from the EU to the United States. Rice producers and marketers must have faith that trade agreements will be enforced by our government.”



The Agricultural Council of the EU today approved by a narrow vote to replace the margin of preference with a straight import duty of euro 65 per metric ton (approx. $80 per metric ton) on all brown rice imports except basmati rice from Pakistan and India. The MOP, negotiated during the Uruguay Round trade talks, has kept open the EU market for U.S. brown rice by tying the import duty to changes in the U.S. price and changes in the EU’s rice support price.



The EU will implement a major rice reform in September, switching from propping up internal rice prices to a program of direct producer payments. “Rice prices in Europe are set to drop significantly starting in September, and the import duties on U.S. brown rice would go to zero in response if the MOP were applied. Instead, the EU is putting up more trade barriers when there should be none,” said Paul T. Combs, a Missouri rice farmer and member of USA Rice’s EU Trade Policy Subcommittee.



Under WTO rules, countries can withdraw trade concessions, but only if they provide adequate compensation to affected WTO members. The level of compensation is agreed to through negotiation, and WTO members are allowed to retaliate if inadequate or no compensation is offered. “I and other USA Rice members look forward to working with the Administration to identify a retaliation list that gets the EU’s attention and gets them back to the negotiating table,” said Combs.



The USA Rice Federation is the national advocate for all segments of the rice industry, conducting activities to influence government programs, developing and initiating programs to increase worldwide demand for U.S. rice, and providing other services to increase industry profitability for all industry segments. For more information, visit www.usarice.com.





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