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Rice row threatens ASEAN-South Korea free-trade deal

Rice row threatens ASEAN-South Korea free-trade deal



A row over Asia’s staple food, rice, is threatening to scuttle a proposed free-trade deal between the Association of Southeast Asian Nations (ASEAN) and South Korea, which wants to protect the key sector from tariff cuts.

Talks hit a snag when Thailand gave notice it would not join the pact as long as it excluded rice from the list of goods facing tariff cuts, according to senior officials preparing for regional summits here next week.

Thailand is the world’s biggest rice exporter, followed by Vietnam.

Under the proposed Free Trade Agreement (FTA), South Korea and ASEAN’s six more advanced countries — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — would abolish tariffs on 80 percent of traded goods by January 1, 2009.

ASEAN’s less developed members — Cambodia, Laos, Myanmar, and Vietnam — would comply by 2017.

The proposed accord specifies that South Korea and each ASEAN country may choose 40 items that can be excluded from tariff reductions, provided the exclusion list does not exceed three percent of total trade.

A senior Southeast Asian trade official told AFP that rice is an "emotional issue" for Asia, the world’s biggest producer and consumer of the commodity.

"In my mind these are all national prerogatives. The beauty of it is Thailand is not saying ’I will smash this deal.’ Thailand is saying ’help me to get on board the deal.’ That’s why we support them," the official said.

Farmers in South Korea typically depend on rice for about half their income, which is well below that of their urban peers. Annually, the government buys up one third of the rice crop as growers produce more than the Asian tiger economy needs.

Thailand reportedly told South Korea it wanted concessions if Seoul stood firm in protecting its rice market.

"Thailand is saying: ’If we let you protect your rice market, give us some concessions,’" said the trade official, who asked not to be named. "That is where the arm-wrestling is. I’ve heard it’s still hard-bargaining."

He said Vietnam had also raised the same problem with South Korea, but this had been settled when Seoul granted some concessions on industrial goods.

"In other words, Vietnam said, ’can you give me something in return so I can pacify my constituents’ ... I think they’re done already."

Lee Tae-ho, deputy director general of South Korea’s FTA bureau, said however that it was unlikely Seoul would change its position.

"We are trying our best. They (ASEAN) have their own concerns, we have our own concerns," he told reporters. "It is up to the negotiators to reach an agreement at the final stage."

Lee said the South Korean trade minister will meet with his Southeast Asian counterparts ahead of the ASEAN and East Asian summits being held from December 12-14 in Malaysia.

ASEAN Secretary General Ong Keng Yong said the regional block was behind Thailand.

"We understand the strong reasons why Korea is doing this. But we also hope to persuade the Koreans to find some ways to give substantive character to the free trade agreement," he said.

"How can we have a free trade agreement when so many things are excluded? The important thing is that both sides are quite positive in trying to find a solution."

Bounsom Phommavihane, director general for Economic Affairs Department of the Laotian foreign ministry, said Thailand had asked for Singapore’s help in talks with South Korea to hammer out a compromise.

"ASEAN countries are mostly rice-producing nations so we have to be careful when we negotiate. Rice is important for us," he said.

ASEAN is also negotiating region-wide FTAs with China, Japan and India which all have large farm sectors.

 source: AFP