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
"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
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
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
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
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