Assessing the Impact of Tariffication on the Korean Rice Market

Abstract

The Korean rice import has increased steadily under an import quota called the Minimum Market Access (MMA) since the implementation of the Uruguay Round Agreement of Agriculture in 1995. As a result of the WTO negotiation on rice imports in 2004, the special treatment of rice imports has been extended to 2014. However, the import expansion has influenced all areas related to rice, such as production, consumption, prices, income, marketing, producer subsidies, and policies. This study analyzes the economic impact of an early tariffication in 2010 and tariffication after the MMA quota (the special treatment of rice imports) in 2015. This study proposes a dynamic ex-anti partial equilibrium simulation model and presents deterministic and stochastic simulations to measure the effects of the tariff reduction and the TRQ expansion on the Korean rice sector with scenarios constructed by the revised drafts of the DDA agricultural negotiations of the WTO. The results imply that Korea should maintain the developing country status and procure rice as a special product in the DDA negotiation to protect its domestic rice sector. Food security cannot be guaranteed without rice being classified as a special product under the developing country status. This study suggests that Korea should take measures to improve the competitiveness of its rice sector and to prepare for tariffication.