Tariffication – What it Means for Farmers and Food Sovereignty

Angry farmers delivered rice plants along with chicken heads to the ruling Saenuri party office in South Gyeongsang Province on Tuesday to protest the Park Geun-hye government’s decision to open South Korea’s rice market starting next year.

The government is incapable of calculating what is in its national interest, and President Park seems to have forgotten her past vows,” they said to explain their use of the fowl noggins.

The Park Geun-hye government informed the World Trade Organization (WTO) on Tuesday of its decision to opt for rice tariffication – converting non-tariff barriers to trade (such as import quotas) into bound tariffs and reducing the tariffs over time.

The eventual aim of tariffication is to eliminate all barriers to foreign imports, which can have devastating consequences for the nation’s small farmers.

Where did the issue of tariffication originate?  And what will it mean long-term for South Korea’s food self-sufficiency?  The following is based on a special report by Voice of People.

WTO and the Fate of Rice

The issue of rice tariffication originated 20 years ago in 1994 during multilateral trade negotiations called the Uruguay Round, which gave birth to the WTO, which in turn began to exert pressure on member countries to open their agricultural markets.

The Uruguay Round allowed developing countries to opt for rice import quotas (versus full liberalization) in order to protect domestic rice production.  South Korea, recognized then as a developing country, was able to delay adoption of rice tariffication until 2004.  In late 2003, right before the deadline, South Korea agreed to increase its rice import quota in exchange for delaying rice tariffication until the end of 2014.  Ahead of the upcoming deadline, the South Korean government decided this week to completely liberalize its rice market starting in 2015.

Can high tariffs protect domestic rice?

The government says it will protect domestically-produced rice and keep foreign imports in check through high tariffs.

But there is no guarantee that rice exporters will simply accept South Korea’s 500% tariff on rice.  The aim of all free trade agreements is the complete elimination of all barriers to trade. South Korea’s high tariffs will likely be the subject of repeated negotiations in future trade deals and the tariff will inevitably decline over time.

Furthermore, agricultural powerhouses, such as the United States, Canada, Australia, European Union, and China opt to export rice even if it means paying high tariffs initially.  That’s because an influx of foreign imports will devastate domestic farmers and eventually destroy the importing country’s capacity to produce rice.  The price of rice will then naturally rise and the country will inevitably be forced to lower its import tariff.

Does tariffication mean no more rice import quotas ?

Rice import quotas are mandatory import amounts a WTO member country is required to import in exchange for delaying the liberalization of its agricultural market.

The South Korean government has been advocating tariffication by saying there will be ‘no burden of additional import quota increase’ and misleading the public to believe that tariffication will mean no more import quotas.

But even if South Korea adopts tariffication and immediate market opening, import quotas will not disappear.

Annex 5, paragraph 2 of the Uruguay Round Agreement on Agriculture states that if a member-country ceases to apply special treatment (e.g. exemption on tariffication), it “shall maintain the minimum access opportunities [i.e. import quotas] already in effect at such time.”  In other words, even if South Korea carries out rice tariffication starting in 2015, its import quotas will be fixed at the previous year’s amount, which is 407,700 tons per year.

Declining Rice Production and Food Self-Sufficiency

South Korea’s current rice self-sufficiency is 80% while that of the United States, Canada, and France are 120-180%.  Farmland dedicated to food production is shrinking steadily every year.  An influx of foreign rice will collapse the infrastructural foundation of rice production and is akin to a death sentence for rural farming communities.

South Korea’s declining rice production

1995

2013

Per capita rice consumption

106.5 kg

67.2kg

Annual rice production

4.69 million tons

4.23 million tons

Rice as a portion of total farming income

18.3%

11.8%

The collapse of agriculture means a decline in food self-sufficiency and increased dependence on food imports.  The Korean Peasants League (KPL) warns that next year’s rice market opening will eventually allow multinational corporate giants like Cargill Agri Purina to dominate South Korea’s rice market.

Already, Cargill Agri Purina, which first entered South Korea in 1967, has the highest share of Korea’s grain and animal feed markets.  Most pet food sold in South Korea is produced by Nutrena or Purina, subsidiaries of Cargil Agri Purina, the world’s largest grain corporation.

Rice tariffication means our rice jar will no longer be in our backyard but in the United States or China,” warns KPL Chair Kim Young-ho.

In the event of a global food crisis, such a dependency on foreign imports can be a gravely destabilizing factor.

Rice market liberalization can also lead to an influx of GMO (genetically-modified organism) products.  In 1998, Cargill and Monsanto jointly created Renessen, which uses biotechnology to create GMO grains and animal feeds.  It may not be long before they do the same with rice.

Currently, imported rice is required go through a Food and Drug Administration-administered quality examination and can only be distributed after obtaining a certificate of verification to confirm that it is not a GMO product.  But in the case of Japan, the United States is pressing Japan to abolish its GMO inspection requirement in their TPP negotiations.

Free Trade, a Deathtrap for Farmers

The central focus of the draft declaration of the last WTO ministerial meeting was tariff reduction, import quota expansion, elimination of export subsidies, and discontinuation of government rice-procurement programs.  Such policies are a deathtrap for small farmers and producers around the world.

If the currently-stalled Doha Development Agenda negotiations of the WTO resume in the future, it’s unlikely that South Korea will still be given ‘developing country’ designation.  This will mean an increased obligation to reduce its tariffs as well as raise its import quota.

Furthermore, South Korea has formally expressed a desire to join the US-led Trans Pacific Partnership (TPP), which aims for tariff elimination on all products, including rice.  Rice tariff reduction may very well be a precondition for South Korea to join the TPP.

South Korean farmers are known for their militancy and resilience.  They, along with peasants and small farmers from around the world, were at the forefront of mass protests from Cancun to Hong Kong to shut down the WTO.  Even after this week’s government announcement, farmers nationwide seem poised to escalate their fight.  They are unlikely to relent until their chicken head government understands that to protect rice is to defend the nation’s food sovereignty.