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Overview of Korea’s development experience

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Rice negotiations

Import barriers have long played a central role in Korea’s rice policy. As a result of the UR agricultural negotiations, Korea received special treatment for rice, permitting the suspension of the introduction of a tariff system for ten years from 1995 to 2004. Instead, Korea was required to start in 1995 to import an amount of rice that was equivalent to 1percent of average annual rice consumption between 1988 and 1990, with the amount of imports to be raised to 4 percent by 2004.1)  Korea was allowed to impose a tariff of 5 percent on the rice imports, with the rice trade remaining strictly under government control during the 10-year grace period.

According to the URAA, the replacement of the Minimum Market Access (MMA) was to be negotiated with Korea’s trading partners before December 31, 2004. Negotiations continued through much of 2004 and culminated in an agreement just before the deadline that set the rules for Korean rice imports for the period 2005-2014.

Under the agreement, the MMA import quota will almost double in size by 2014, but there is no provision for imports above the quota. The tariff on rice imported under the quota will remain at 5 percent. The Korean government is committed to releasing a portion of the imported rice into local markets with a permitted mark-up in price.

The minimum import quota for the period 2005-2014 was divided into two stages. In the first stage, an import quota of 205,228 tons was set in 2004, with supplies coming from four countries, including China with 116,159 tons; the United States 50,076 tons; Thailand 29,963 tons; and Australia 9,030 tons. The second stage involved agradual increase in the quota each year between 2005 and 2014, with countries enjoying most-favored-nation (MFN) status with Korea being allowed to sell rice within the quota. The initial MFN quota was set at 20,347 tons and the quota was increased by 20,347 tons each year thereafter. The total rice import will reach 408,700 tons by 2014, with the MFN quota being 203,472 tons.

Korea reserves the right to terminate the quota and replace it with a tariff-rate quota (TRQ) system at the beginning of any year during the ten-year period. If aTRQ system is adopted, the quota size remains at the level stipulated for that year when the switch to the TRQ system is made, with no further increase thereafter. The TRQ allows for imports exceeding the quota and the tariff for these excess imports will be calculated according to the URAA guidelines. If global trade negotiations are ever concluded under the DDA, the tariff for the excess imports and the size of the TRQ would be changed to reflect the rules of the DDA agreement. In the event of a switch to the TRQ system, the country-specific quotas would end and the entire quota amount would be open to imports on an MFN

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.

NOTE


1)Such an import quota is often called as Minimum Market Access (MMA)