S. Korea's terms of trade snaps 4-month fall in Sept.

Korea to open its rice market from next year

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Published : 2014-07-18 09:51
Updated : 2014-07-18 10:10

The South Korean government announced Friday it will open the rice market to tariffed imports, ending a 20-year waiver.

 "As the result of an economic ministers' meeting held July 18, the government decided to open the country's rice market with tariffication from Jan. 1, 2015," the Ministry of Agriculture, Food and Rural Affairs said.

 "The government decided that opening the rice market with import tariffs is inevitable, and also the best choice available," it added.

South Korea's agreement with the World Trade Organization (WTO) that allowed the country to postpone its rice market opening for the past 20 years expires at the end of this year, leaving a choice between seeking another waiver or opening the market under tariffication. 

The government argued that another waiver would come with a large cost.

In case of a waiver, South Korea would have to increase its mandatory rice imports under the so-called minimum market access (MMA). 

For the past 20 years, the country's imports have increased in 20,000-ton increments per year under the MMA.

MMA imports, to reach 409,000 tons this year, are currently subject to a 5 percent tariff. The amount accounts for nearly 10 percent of South Korea's annual consumption. The MMA import quota is retained even after a country liberalizes its rice market.

South Korea would also have to provide other incentives, such as a bigger mandatory import quota, to win the required consent of other WTO members in order to obtain another waiver, according to the ministry. 

Although Seoul did not specify the tariff rate in Friday's announcement, government officials have said that a rate of 400 percent to 500 percent would make the imports more expensive than locally produced products.

"Based on local and global prices of rice and the amount of tariffs the country would impose on rice imports, it is believed the amount of rice imports in addition to the country's mandatory import quota will be insignificant even after the country opens its rice market," the agriculture ministry said. 

The ministry said South Korea will soon set the country's tariff rate on rice, which is subject to verification by the WTO.

Negotiations on the terms of the market opening will begin in late September. (Yonhap)

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