BUSINESS

[Herald Interview] Korea to defend rice market in TPP talks

By Korea Herald
  • Published : Apr 27, 2015 - 20:33
  • Updated : Apr 27, 2015 - 20:33
Korea’s top agriculture policymaker has emphasized that the government would not further open its rice market, even when the nation participates in the U.S.-led Trans-Pacific Partnership to establish a free trade zone among Pacific Rim countries.

“Our government is firmly set on excluding rice from the TPP’s list of tariff concession,” said Lee Dong-phil, minister of agriculture, food and rural affairs.

“As regards to joining the TPP, our government’s position is that we will do so after carefully weighing the national interest,” Lee said in a recent interview with The Korea Herald at the Sejong Government Complex.

The minister was responding to concerns in the nation’s farming sector following a high-level U.S. official’s indications early this month that Korea may have to lower its barriers against rice imports in order to join the TPP.

Agricultural experts predict that the U.S. is expected to put pressure on Korea either to lower its 513 percent tariff rate on imported rice or to buy a certain quantity at a far lower tariff.

Lee Dong-phil

This year, Korea opened its rice market to foreign suppliers after ending its 20-year import quota system. The government notified the World Trade Organization that it would set a 513 percent tariff on imported rice.

But five rice-exporting countries including the U.S. and China have opposed it at the WTO, demanding a drastic cut of the nation’s tariff rate on rice imports.

“We will seek to persuade the five countries by emphasizing that the tariff rate was calculated in accordance with the WTO’s official formula, respective of the principles of the global market order,” Lee said.

The minister expressed hopes that rice-exporting countries would take into consideration Korea’s position on rice imports.

“Rice is not a mere commodity, considering the nation‘s high dependency on it. Rice is cultivated in most of the 1.1 million farming households here, affecting their income,” he said. “Importing more rice (at a lower tariff rate) will destroy the Korean rice producers.”

“The country suffers from an oversupply of rice because the national rice consumption has halved. Even so, we have abided by the WTO’s global quota on rice imports,” Lee said, emphasizing that Korea has been “more than faithful in meeting the WTO obligations.”

The minister, who took office when President Park Geun-hye’s government was inaugurated in 2013, expressed difficulties in walking the fine line between promoting trade liberalization and protecting the nation’s farmers.

“In the big picture, we need to go ahead with an open economy and make the most out of the global market order to sell our products,” he said.

For the Korean government, he believes, it is also important to join the TPP trade pact that oversees the mega-market home to 40 percent of the world’s population and nearly 60 percent of global gross domestic product.

The TPP is expected to include Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., Vietnam and Australia.

Lee saw South Korea as an already open economy in virtually all agricultural goods except rice. The country is already highly dependent on imported grains such as wheat, corn and beans, mostly consumed for animal feeds.

“Only five of the 150 WTO members disagree with South Korea’s maintenance of the rice tariff,” Lee said, claiming the rice protection move was compatible with the global standard.

China, one of the five contenders of the rice tariff, agreed to exclude South Korean rice and other sensitive agricultural goods upon initialing the Korea-China Free Trade Agreement on Feb. 25. Last year, the neighboring country sent about 53 percent of Korea’s imported rice.

The minister also sees “smart farming” as one solution for the Korean farming industry that is pressured by rising agricultural imports.

Among Korea’s 1.1 million farming households, about 600,000 households make less than 5 million won ($4,600) annually, according to government data in 2010.

“The Korean farming society is facing a major crisis,” Lee said, vowing to help the farming societies earn more by turning to “smart farming.”

Lee conceded that there is no easy solution to agricultural reform. The restructuring plan aims to raise farming households’ income, by combining advanced technology to boost production and pioneer larger markets. Agricultural restructuring is inevitable for the country to raise the Korean food self-sufficiency rate to 50-60 percent from the current 49 percent, he added.

“Most of this bracket includes the aged, small-sized farmers who barely make about 3 million won ($2,770) a month,” Lee said. “For them, we are trying to provide a happier agricultural environment where they can enjoy life with their families and friends, rather than forcing them to adopt the latest technology so they can make a massive income,” he added.

The minister pointed out that Korea’s limited farming space has reduced the agricultural production capacity. The average farmland here, 1.5 hectares per household, is far smaller than the 56 hectares of France or 187 hectares of the U.S., he added.

“We need to combine these small, individual pieces of farmland into the broader, ‘field-unit business entities,’ where people can join forces to organize and mechanize the farming process,” Lee suggested.

In addition to forming farming cooperatives, the country needs a major shift in production, such as turning rice paddies into farms, Lee said. The country’s dependency on the paddies is too high, which makes the country partially vulnerable to the falling demand for rice, he added.

Lee noted the remaining 300,000 of the 1.1 million farming households have high potential to link their farming businesses to local tourism.

“Korea may be small in size, but every region has abounding local specialties, made of locally grown ingredients,” Lee said.

Korea is home to more than 800 local breweries of makgeolli, or rice wine, which is worth exploring for tourists from here and overseas, the minister added.

He also expected the impact of the aging society will hit the hardest in the farming societies.

Lee called for the government and civil support to pave the way for self-sustainable agricultural societies.

“If we fail to foster the ‘heirs’ to self-sustainable farming, the local communities will not survive the free trade movement,” Lee said.

By Chung Joo-won
(joowonc@heraldcorp.com)