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US requests WTO panel on Turkish limits on rice imports

WASHINGTON, DC - 02/25/06 - The US has officially requested a dispute settlement panel in its World Trade Organization (WTO) case against Turkey's unfair restrictions on US rice exports.

The case was sparked by Turkey's import licensing system for rice, which Washington sees as "unfair" to American rice farmers and has resulted in a dramatic decline in Turkish imports of US rice in recent years.

According to a recent statement issued by the Office of the US Trade Representative (USTR), US rice farmers "are being denied access to Turkey's rice market because of that country's unfair import restrictions."

Despite the request for a dispute settlement panel, the US, it said, still hopes "that a negotiated solution can be reached and that Turkey will allow US producers to compete fairly in the Turkish market."

Dispute settlement panels usually comprise three trade officials who meet behind closed doors under the authority of the WTO, the multilateral international organization responsible for the rules governing world trade. If a nation does not comply with its obligations at the end of the dispute settlement process, trade actions including sanctions can be authorized in retaliation.

Turkey re-instituted a domestic purchase requirement last November 1 allowing limited imports of the commodity at reduced duty rates, but only if an importer also purchases significant quantities of domestic rice.

The US "believes the domestic purchase requirement to be inconsistent with several WTO agreements, including the Agreement on Trade-Related Investment Measures, the General Agreement on Tariffs and Trade 1994, the Agreement on Agriculture, and the Agreement on Import Licensing Procedures, according to USTR," the statement said.

According to sources, Washington has been seeking a non-litigative solution to the issue for the past three years and has expressed its concerns regarding Turkey's import restrictions on rice on several occasions. 

In reponse, Turkey has consistently denied that a problem exists.

With 70 million potential consumers, Turkey's domestic rice market is forecast to be worth more than $200 million in 2006.

The rice issue has a major impact on California's agricultural sector as the state is the second largest rice producer in the country, growing more than 18% of the US crop and boasting the its highest yields.

Rice ranks as the state's 9th most important export commodity, just behind walnuts and ahead of beef and beef products.
 
In 2002 (the last year for which figures are available), Turkey and Jordan combined to receive about 15% of California rice exports. 

Currently, about 40% of the rice grown in the state is exported with about 595,000 acres - mostly in the Sacramento Valley - utilized mainly for the cultivation of the medium grain variety of rice that forms the bulk of California's rice crop and accounts for more than a fourth of total US production and

The state grows more than two-thirds of the US medium grain crop, while Arkansas and Louisiana account for almost all southern medium grain production.

Short grain rice is grown mostly in California and accounts for about 2% of total US production.

California's crop is planted from late April through mid-May. California typically begins harvest at the end of September and finishes by early November.

Although the US produces less than 1.5% of the world's rice crop, it contributes 18% to 20% of the rice moving in world trade, according to the US Department of Agriculture's Foreign Agricultural Service (FAS).

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