Uruguay to Take Rice Case to WTO

Uruguay will file a World Trade Organization complaint against U.S. rice subsidies, the South American nation’s envoy to the WTO said Wednesday, after a successful case by Brazil against U.S. cotton aid.

Brazil has asked the Geneva-based WTO to authorize $3 billion in sanctions against the U.S. after the global trade arbiter backed a claim that cotton payments to American farmers were illegal because they breached commitments signed in 1994. The cases come amid stalled WTO negotiations over how rich nations should cut subsidies to farmers and open their commodity markets.

“It’s similar” to the cotton case “in that it’s against subsidies and support for this sector,” said Guillermo Valles-Galmes, Uruguay’s ambassador to the WTO. “The political decision to support the request from the private sector has been taken.” He declined to say when Uruguay would file its complaint or to provide further details.

A Uruguayan complaint would probably target the long-grain rice grown in the South. Any WTO action would probably not include the medium-grain rice farmed by California producers because it does not compete with what’s grown in Uruguay, a source familiar with the country’s plan said.

Nonetheless, the idea of a WTO rice dispute sent chills through California’s rice industry. California farmers sell about $300 million in medium-grain rice annually.

“If long-grain is hit on subsidies, expect effects to hit [the] whole rice industry,” said Jeremy Zwinger, who runs the FarmAndTrade.com rice brokering website in Colusa, Calif.

“A reduction in government payments would have a drastic effect on acres planted and grower profitability,” he said.

“In time, consumers should expect this would translate to higher food prices at the grocery store.”

The U.S., the world’s fourth-biggest rice exporter behind Thailand, Vietnam and India, spent $1.5 billion on rice subsidies in 2003, up from $832 million in 1995, according to the Department of Agriculture.

Uruguay is the world’s seventh-largest rice exporter. It shipped 750,000 metric tons of the grain in 2003-04, compared with U.S. exports of 2.9 million tons. Agriculture in Uruguay, with a population of 3.4 million, provides about 10% of gross domestic product.

Bloomberg News was used in compiling this report.