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Posted August 19, 2005 (Dow Jones via CropChoice, July 27, 2005):
Uruguay is making plans to file a case against U.S.
rice subsidies at the World Trade Organization, Hugo
Manini, president of the Uruguayan Rice Growers Association,
said late Tuesday.
"The Uruguayan government will file the claim
for us," Manini said in a telephone interview with
Dow Jones Newswires. "We've consulted three major
U.S. law firms about this, and each one assured us that
we will win the case."
Uruguay, a tiny South American nation of just 3 million
people, is the world's seventh-leading rice exporter,
according to Manini. Rice accounts for almost 10% of
all Uruguayan exports, he said.
"Rice is vital to our economy," he said.
"We don't have the option of producing other crops
because this is a country where it rains a great deal.
So we have to defend rice production."
Manini said U.S. subsidies are harmful because they
artificially lower the price of rice in the world market,
making it hard for Uruguayan farmers to compete.
The U.S. is the world's No. 3 rice exporter, but critics,
including Uruguay and a host of other developing nations
and trade groups, say U.S. farmers have an unfair advantage.
It costs U.S. farmers twice as much to produce rice
as it does for farmers in developing countries like
Thailand and Vietnam, the world's top rice exporters,
according to Oxfam, a U.K.-based nonprofit group that
works to end poverty.
"In 2003 the U.S. government plowed $1.3 billion
into rice sector subsidies, supporting farmers to produce
a crop that cost them $1.8 billion to grow, effectively
footing the bill for 72% of the cost of production,"
according to Oxfam.
Manini said those subsidies make it impossible for
farmers outside the U.S. to compete fairly in a highly
competitive global market.
"U.S. farmers sell rice at below-market prices
and we can't compete with farmers whose products are
subsidized," he said.
Manini said the subsidies have always been bad for
Uruguay, but they are even more damaging now that Brazil,
which normally buys the vast bulk of Uruguay's rice
exports, is producing more of its own rice.
"There have been years in which 90% of our rice
went to Brazil," Manini said. "But thanks
to Brazil's aggressive rice policies, Brazil is becoming
self-sufficient. It will no longer need to import rice."
Between March 2004 and February 2005, Uruguay exported
855,812 tons of rice to 26 countries, according to the
growers association. But most of that is heavily concentrated
in a few markets.
About 56% of exports went to Brazil, while almost 20%
went to Iran and 12% went to Peru.
"To avoid problems we need to open new markets,"
Manini said. "We have no animosity toward the U.S.
We just don't want our export revenue to disappear.
We can't stop producing rice and just put in casinos
and live off of that. Producing rice creates a lot of
jobs."
Manini said Uruguay was inspired by Brazil's success
at the WTO, where it won a ruling against U.S. cotton
subsidies. He said Brazil might even back Uruguay's
case.
Brazilian analysts say that recent failures to make
global trade rules more fair mean that Uruguay's case
is one of many that are likely to hit the WTO in the
future.
"The stalled progress of the Doha round (of WTO
trade talks) will fatally lead to more disputes at the
WTO," said to Pedro Camargo Neto, an adviser to
Brazil's Rural Society, who is also the ex-Agriculture
Ministry secretary that brought the cotton case against
the U.S.
Interestingly enough, many of the rice producers in
Uruguay are Brazilians, or descendants of Brazilians,
who populated border regions in the 1950s.
Uruguay's trade troubles are not limited to its complaint
with the U.S.
Rice farmers on the Brazilian side of the border have
protested imports from Uruguay since the formation of
the South American trade bloc known as Mercosur, whose
permanent members include Argentina, Brazil, Paraguay
and Uruguay.
Brazilian farmers blocked the border in June to protest
cheap Uruguayan imports.
Meanwhile, Oxfam has warned that subsidies in the U.S.,
Japan and the European Union can have a negative impact
on agricultural production and rural employment in developing
nations.
"In 1995 the International Monetary Fund forced
the Haitian government to cut its rice tariffs from
35% to just 3%," according to Oxfam. "As a
result, imports increased 150% in nine years and today
three out of every four plates of rice eaten in Haiti
comes from the U.S."
Oxfam says Haiti's rice-producing regions now suffer
from high levels of unemployment, malnutrition and poverty.
In Uruguay, exports - which account for about 95% of
rice production - bring in about $200 million annually
and provide work to thousands of farmers.
Manini is confident this will not change.
"We're looking to the future, looking forward
to competing on a level playing field," he said.
"We're one of the countries that most efficiently
produces rice and we can compete with anyone in fair
conditions. We're not filing this case to distance ourselves
from the world of trade but rather to make sure that
it is fair."
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