U.S. challenges Thailand to explain rice subsidies

The United States will challengeThailand over its rice subsidies at a World Trade Organization committee meeting next week, fearful that a government-sponsored crop could land up on the world market and depress prices, hurting U.S. exporters.

Thailand's purchases of rice at high prices are expected to raise output but they have also been blamed for a slump in rice exports, threatening to dethrone Thailand as the top exporter in favour of India or Vietnam.

Thailand has said it is determined to remain the top exporter, causing the USA Rice Federation to worry that the stocks bought by the government will be released onto the world market at a loss.

The U.S. rice industry group has urged the U.S. Trade Representative to take action against the Thai scheme, alleging that it acts as an export subsidy prohibited by the WTO.

The United States has asked Thailand to give answers at the WTO's agriculture committee on Nov 14, according to an advance copy of questions seen by Reuters.

"The United States remains concerned that with government procurement of rice at rates as much as 40 per cent above world market prices it will be difficult for the Government of Thailand to export any procured rice without incurring a loss," the U.S. submission to the committee says.

"What steps is the Government of Thailand taking to ensure rice procured by the government under the programme is not being sold for export at prices below acquisition cost?" it asks.

It also asks for details of the rice purchasing scheme and Thai government rice stocks and sales, and asks why the Thai Board of Trade has stopped publishing daily data on the scheme.

It says the Thai government uses loans from the Bank for Agriculture and Agricultural Cooperatives and other specialised institutions to fund the purchases, then repays the loans by selling the procured rice, with some operational costs reimbursed from the fiscal budget.

The United States said WTO members with an interest had invited Thailand to discuss its policies at an informal meeting before the committee convenes on Wednesday. (Reuters)