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[Lee Jae-min] Time for rice tariffication

[Lee Jae-min] Time for rice tariffication

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Published : 2014-01-07 19:42
Updated : 2014-01-07 19:42

The 10th anniversary has come ― again. Among the many issues on the national agenda in the new year is how to address the perennial problem of rice market opening. This issue was on the radar throughout last year, but apparently put under the rug with a policy of hush because of the political explosiveness. Now the moment of truth is coming up soon.

Last time this issue erupted was in fall 2004, when Korea’s 10-year obligation to suspend opening the rice market (called tariffication) was coming to an end. Amid much debate and difficult negotiation, Korea was able to secure one more extension for 10 years to fulfill its tariffication obligation. This extension is now going to expire as of Jan. 1, 2015.

This, then, means that negotiations with other interested countries and, more important, eliciting consensus among domestic constituents should be done for the next 11 months or so ―a doable but a very challenging task. Remembering how much effort was put into this volatile issue last time around, tackling this homework is already long overdue.

At the moment, Korea and the Philippines are the two countries that have extended their rice market tariffication obligations. Japan and Taiwan converted to tariffication in 1999 and 2003, respectively.

The problem is, a second extension is not permitted under the WTO’s Agricultural Agreement. So, talking about securing another extension misses the point. The only available alternative to avoid the market opening obligation is to receive a “waiver,” wherein a country receives an exception for a measure that is otherwise in violation of applicable trade agreements with an approval from the supermajority (three-quarters) of all members.

The “no free lunch” canon equally applies here, and a country applying for a waiver is usually forced to offer something equally valuable in return. Just imagine how many countries would voluntarily sympathize with the difficult situation of another country and agree to provide an exception for free while they struggle to abide by the obligations despite their own domestic headaches. A waiver is theoretically feasible, but will most likely come with a high price tag.

By looking at what the Philippines has gone through since last March in this regard, we can do a dry run. In an effort to continue to postpone its rice market liberalization obligation, Manila has chosen to pursue a waiver option. In response to the waiver request, other countries were quick to put their wish lists on the table covering many outstanding issues in bilateral trade. Considering the volume of Korean trade, we should expect much longer wish lists from other countries in any waiver proceeding.

The real cost of a waiver, however, is beyond the visible compensation packages. During the 19 years of the WTO’s lifespan, there have been only 31 instances of waivers, mostly developing countries. Korea’s pursuit of a waiver to get away with an explicit legal obligation, even if approved, would put a stigma on its trade liberalization effort and probably haunt the country in other areas.

One of the pitfalls many debates fall in the course of discussing issues like this is an illusion built on a theoretical possibility, which in fact is far from being practically available. If the cost to be paid is extremely high, the deal is not practically feasible, even if it is permitted in the rule book.

That is why a careful and candid comparison between the waiver option and the tariffication alternative is now necessary. The time is running out fast. With much more at stake, we are moving at a slower pace than the Philippines. Obviously, this issue just can’t wait until after the local election in June. From June, only five months remain ― a very short window to untangle this complex 20-year-old problem.

By Lee Jae-min 

Lee Jae-min is an associate professor of law at Seoul National University. ― Ed.

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