Ag Trade: USA Rice Supports Retaliatory Duties on Indian Rice Imports

    Photo courtesy of US Rice Producers Association

    Last month, the Office of the U.S. Trade Representative (USTR) announced that the U.S. government is planning to address longstanding concerns with digital services taxes that are imposed on U.S. technology companies overseas by six countries: Austria, India, Italy, Spain, Turkey, and the United Kingdom.

    As part of that announcement, USTR is proposing a 25 percent retaliatory duty on a number of imported products from those six countries, including Indian brown basmati rice.

    The USTR requested comments from stakeholders in support or opposition of the tariffs, prior to holding hearings for companies and industries most impacted by the proposed tariffs in early and mid-May. Earlier this week, USA Rice submitted comments in support of the proposed tariffs on imported brown basmati rice.

    “During the last decade, rice imports to the U.S. have grown significantly, primarily due to major world exporters, India and Thailand. From India alone, the world’s largest rice exporter, imports jumped 159 percent from 2011 to 2020,” said Bobby Hanks, a Louisiana rice miller who chairs the USA Rice International Trade Committee that submitted the comments on behalf of the organization. “During that same period, the value of rice imports from India more than doubled from $125 million to $283 million, annually.”

    The majority of the imports from India are milled and brown (husked) basmati rice, a fragrant variety, but also other long grain rice varieties that more directly compete with the U.S.-grown indica rice varieties in the market. The U.S. produces many of these specialty varieties, but the domestic cost of production and subsequent retail prices are often higher than what the Indian exporters are offering, despite hefty freight charges.

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    India admitted to the World Trade Organization that it has exceeded its de minimis limits for rice subsidies but claims to be sheltered from dispute settlement challenge by the Bali Decision’s “peace clause,” which protects developing countries that exceed their de minimis limits for public stockholding so long as these programs do not distort trade and meet other transparency criteria.

    “India makes up about a quarter of global rice trade and much of its exported rice benefits from the government’s floor price,” said Hanks. “It’s highly unlikely that India has managed to administer this program in a way that does not distort trade.”

    USA Rice acknowledges that USTR is currently contemplating assessment of a 25 percent retaliatory duty on brown basmati rice only, but the USA Rice Board of Directors recently voted to support submitting comments calling for the expansion of that proposed retaliatory duty beyond just brown basmati and instead apply to all $283 million of rice and rice products imported from India.

    Following the planned industry hearings in May, the USTR and the Biden Administration will determine what, when, or if any, of the proposed retaliatory duties will be implemented.

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