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May 31, 2008

Proposed Japanese plan to export rice meets mixed reactions

Japan is preparing to send at least 220,000 tons of rice to the Philippines, and possibly Africa. The Japanese government says the plan is meant to ease the suffering of poor nations punished by rising rice prices.

But critics, including some in Washington, worry that it could set a precedent for Japan to dump foreign rice it was obligated to import but had never wanted. They say that the Japanese plan risks setting off a trade dispute with the United States — and may barely dent the price of rice.

Yet opposing the Japanese plan could put the United States in a delicate diplomatic position. The price of rice, the most important staple food of the world’s poor, has risen faster than any other cereal, nearly tripling this year alone, according to rice traders. The high prices have caused protests in many countries and, according to World Bank officials, pushed 100 million people back into poverty.

“It is a fact that people around the world regard the situation as one in which the United States is systematically obstructing Japanese efforts to use its minimum access rice reserve usefully — we have to exchange opinions with each other,” said Tatsuya Kajishima, the director of the food trading division of Japan’s ministry of agriculture, fisheries and forestry.

The Japanese shipments could damp slightly the rise in global rice prices. The effect would be more pronounced if Japan followed it with further sales or donations from the 1.7 million tons of imported rice now sitting in Japanese warehouses. Roughly 30 million tons of rice are traded globally each year.

Mr. Kajishima said no decision had been reached yet on how much of the 220,000 tons for the Philippines would be sold and how much might be donated. Japan’s cabinet is also preparing to approve $50 million worth of food aid for Africa, part of which may be rice, he said.

The plan is controversial among trade experts because the rice earmarked for shipment is rice that Japan reluctantly imported from other countries under an agreement to provide at least a minimum level of access to its largely protected rice market each year.

Separately, experts in international development warn that shipments of free or subsidized food hurt farmers in developing countries, robbing them of their customer base and making the country dependent on foreign food.

The United States led an international effort by rice-exporting nations in the 1980s and early 1990s to insist that Japan begin allowing rice imports. Japan finally agreed to buy nearly 700,000 tons a year, as part of the 1993 global pact that created the World Trade Organization.

But Japan has put much of the imported rice in warehouses at an annual cost to the government of $144 million, according to the United States Department of Agriculture.

Each year, Japan also donates limited quantities of rice to countries, including Tanzania, sends some to rice cracker makers and other food processors and even uses some rice as animal feed.

Only a small amount of the imported rice has been sold to Japanese consumers, allowing rice prices in Japan to remain four times higher than the world average. “We look forward to having discussions with the Japanese on Friday to discuss this issue further and learn exactly what they plan on doing with the rice,” said Gretchen Hamel, a spokeswoman for the United States Trade Representative’s office, adding that the Americans would be supportive of any “food price crisis efforts.”

Blocking the shipment through diplomatic appeals to the Japanese government or through litigation at the W.T.O. could make the United States appear indifferent to hunger and poverty.

Protesting that the shipments will hurt local farmers could be difficult because the United States is already one of the world’s largest donors of free food to poor countries. President Bush is trying to shift part of these donations to cash instead for the purchase of food from local farmers, but American farm and shipping lobbyists have urged Congress to prevent such a shift.

Under world trading rules, the United States could have tried to block the re-export of rice that had already been imported from the United States. Almost two-thirds of the imported rice in Japanese government warehouses came from the United States.

“We recognize these are extraordinary times,” said an American official. “We don’t have a problem with using it for humanitarian purposes.” The official agreed to speak only if his name was not used, because of the delicate nature of the issue.

Bob Cummings, the senior vice president of the USA Rice Federation, a trade association, said American producers wanted to see if Japan would donate any rice from its reserves of rice grown in Japan. “We would be very concerned if Japan donated only imported rice,” Mr. Cummings said.

Mr. Kajishima said that no rice grown in Japan would be sold or donated because this rice was needed for Japan’s own domestic reserves.

Consumers in many African countries have developed a taste for imported bread and other food that has left these countries dependent on costly imports when food aid is halted, said Supachai Panitchpakdi, a former director general of the World Trade Organization who is now the secretary general of the United Nations Conference on Trade and Development.

He declined to comment on the details of the Japanese initiative.

A draft text for the slow-moving Doha Round of global trade talks would ban countries from exporting free food if it displaced commercial purchases.

Selling the imported rice instead of donating it would address the food aid issue, and might comply with the letter of Japan’s pledges to the W.T.O.

South Korea and Taiwan have both accepted deals under W.T.O. auspices that require them to allow some rice imports and explicitly bar them from re-exporting the rice. But the text of Japan’s agreement to allow minimum access to imported rice does not mention the prohibition on re-exports.

Lawyers at the W.T.O.’s headquarters have been arguing strenuously this week over whether Japan can re-export rice, and have not come to a consensus. The W.T.O. declined to comment on the Japanese plan.


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