Research Reports
Strategy Suggestion for Korea in the WTO Rice Negotiations
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AuthorSuh, Jinkyo
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Publication Date2004.12.01
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Original
ABSTRACT
Strategy Suggestion for Korea in the WTO Rice Negotiations
The main purpose of this study is to review issues related to the 2004 Rice Negotiation under the WTO and to propose efficient strategies for Korea in the upcoming negotiations.
This study examines the URAA and associated WTO rules, including Article 28 of GATT, and tries to understand its implications for the Korea's negotiation strategies. Furthermore, current situations and prospects of the rice industry in major rice exporting countries, for example, China, the U.S., Thailand, and Australia, are examined, and their potential responses in the upcoming negotiation are predicted. Finally, the expected quantity of imported rice is simulated, based on econo-metric and probability approaches.
Main results of the study are as follows: An expected quantity of imported rice in 2014 under the rice tariffication would be equivalent to 6.3~6.4% of MMA. However, the probability that actual imports exceed the expected amount is 50 percent. In order to reduce the probability of such import surge, the increase of MMA(to 7.1~7.5%) can be a proper solution to strike a balance between rice tariffication and the current quota system. However, the delay of rice tariffication can be a good choice in Korea, since it is considered to switch from the current quota system to tariffication during the grace period of 10 years. In that case, an expected import quantity is estimated to be equivalent to 6.5~6.6% of MMA. Therefore, if Korean government wants to reduce the probability of import surge, it needs to stick to the current quota system and then gradually switch to tariffication. Under this scenario, it has to pay additional cost equivalent to 0.2% of MMA (about 10,000 matric ton) each year. Meanwhile, the probability that a rice import exceeds 8% of MMA would never materialize.
Finally, the study emphasizes that Korea should utilize the option of tariffication properly in order to pay a minimum cost for maintaining the current quota system in the bilateral rice negotiations, particularly with the U.S.
Researchers: Jin-Kyo Suh, So-Yeong Lim, Sang-Hyun Kim,
Song-Soo Lim, and Jae-Ok Lee.
E-mail Address: jksuh@krei.re.kr
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