Dec 12, 1987


GENEVA DECEMBER 9 (IFDA) -- The United States, supported by a number of rice-exporting countries, as well as other agricultural exporters, charged the European Community Wednesday with trying to improve its negotiating position in the Uruguay Round by introducing new support measures to increase long-grain rice production within the community.

The U.S. complaint was one of the two formal complaints that came up before the surveillance body at its meeting here Wednesday, the second complaint was by Sweden against the U.S. imposition of discriminatory tariffs on certain Swedish special steel exports to the U.S. market.

On this Swedish complaint, according to third world participants, the U.S. made an astonishing plea that it had been forced to impose these tariffs because Sweden had not agreed to impose "Voluntary Export Restraints" (VERS) on these exports to the U.S. market, as demanded by the Administration.

The U.S. in effect appeared to be saying that it had a right to expect others to take VERS or other grey-area measures (which the U.S. and others contend are not violative of GATT) it demands, or failing that to take unilateral tariff and other restrictions violative of GATT.

On the rice issue, the U.S. delegate, Charles Blum, complained that the EEC rice subsidy programme, effective from September 1, would encourage production of long-grain rice, which was the type of rice now imported by the EEC from the U.S. and other suppliers.

The EEC had now established a subsidy of 330 ECU per hectare for the 1987/88 marketing year, and this was intended to artificially stimulate production of long-grain or indica-type rice in areas traditionally growing short-grain or japonica types.

The EEC action, the U.S. contended, was a violation of the standstill in that it would improve the EEC’s negotiating position in the agriculture negotiations.

The EEC’s John Beck however argued that the action was fully consistent with the Punta del Este commitments.

It was neither inconsistent with a GATT provision nor was it a trade-restrictive or distorting measure. It was a programme for only three to five years, and thus would not affect the Uruguay round negotiations and agreements in agriculture.

The complained measure, the EEC has said, would result in an overall reduction in its global rice output. This was because the indica-type it was encouraging would have lower yields in production and processing, as compared to the japonica-type.

As a result, there would be a more rational deployment of the community resources without affecting the current import flows, and it would substantially reduce the quantities exported on the world market.

The EEC argued that the U.S., which was undergoing "a similar varietal conversion" was moving in the opposite direction – reducing its share of long-grain rice acreage in favour of medium and short-grains.

This process in the U.S. was being stimulated by narrowing the differential between the loan rates for long grain and medium/short grain rice. The differential was now only one cent a pound as against the previous two to three cents.

Given the higher crop yield for the medium/shorter varieties, the U.S. action in narrowing the loan rate in fact corresponded to a substantial increase of subsidies to varieties which were in direct competition with the community’s own traditional production, Beck argued.

This EEC view was however rejected by a number of participants.

Mrs. Apiradi Tantraporn of Thailand, which exports long-grain rice to the community, noted that as a rice-grower it was a victim of the policies of the industrialised countries. She recalled in this connection its complaint against the U.S. And its export enhancement scheme (for subsidised rice exports) at the last meeting of the surveillance body.

Tantraporn underscored her country’s substantial supplier interest in long-grain exports to the community, and the millions of farmers dependent on the rice crop and availability of export markets.

Chile, Pakistan, New Zealand, Uruguay, Argentina, Australia and China were among the others who supported the complaint against the EEC.