Last month, the Japanese government told merchant seamen returning from California ports that they could not come back with a delicacy, bags of California rice. To the United States rice growers, this action was symbolic of a trade problem: The Japanese have closed their markets to imports of rice, their national staple, to protect their own growers.
Now, the US Rice Millers' Association has begun a ``rice war,'' charging the Japanese government with unfair trade practices by not allowing US imports, while greatly subsidizing their own industry. The millers are demanding that the Japanese government allow its consumers to fill their bowls with US rice or face tariffs, quotas, or other actions equal to the $1.7 billion in rice they claim the US could sell if the markets were open.
The millers' actions, taken under Section 301 of the US Trade Act of 1974, was politically well timed. On Wednesday, the Commerce Department reported the US trade deficit for the second quarter was $36.46 billion, down only 1.2 percent from the earlier quarter. The trade deficit is still running at a $145 billion rate. Even more significantly, sales of US agricultural exports dropped 13 percent, to $6.2 billion, the lowest level since 1977. Most of this decrease was in sales to Western Europe where farm sales were off by 33 percent and Eastern Europe where they fell 54 percent.
At the same time, the US is preparing to launch crucial trade talks concerning the General Agreement on Tariffs and Trade in Punta del Este, Uruguay. On Wednesday, US Trade Representative Clayton Yeutter repeated earlier warnings that the next GATT round must address what he termed the ``chaos'' in agricultural trade. In a prepared text, Mr. Yeutter commented, ``Export subsidies and endless barriers to imports have created massive disruption in farm trade and brought world agriculture to the brink of crisis. . . . Farmers are no longer competing against each other but against national treasuries.'' This is particularly true of France, which greatly subsidizes its farmers and agricultural exports.
The rice millers claim this is also the case with Japan. Through the Japan Food Agency, the Japanese government regulates trade in rice. The Japanese Food Agency, claim the millers, buys rice from Japanese growers at $2,033 per metric ton, or 10 times the world price. ``The rice industry in Japan is totally divorced from the realities of the marketplace,'' says Barton S. Fisher, counsel to the millers.
The price of rice in Japan is high, because farmers grow rice on small plots of land, averaging just 2.89 acres in size. Nearly two-thirds of Japanese farmers grow rice as a part-time job. The US rice growers claim to be efficient, although Stephen Gabbert, executive vice-president of the Rice Millers' Association, admits many of the growers cannot afford to sell rice at the current world price of about $215 per metric ton. The US government is gradually easing subsidies to its own rice farmers. ``We are shifting from government to market-oriented,'' says Mr. Gabbert, noting that US farmers cut acreage by 35 percent this year.
For the Japanese, the rice issue is a sticky political problem. The rice growers are a potent political force. To reinforce their views, Japanese rice farmers last year put up posters showing citrus and beef coming into the country. ``The message,'' Mr. Fisher says, ``was that if you let foreign rice into the country, foreign citrus and beef would be next.''
In fact, Fisher believes rice presents a symbolic case for the US government to act on. ``We have the opportunity to cross the agricultural Rubicon here,'' he claims. ``Rice exports could pave the way for other US agricultural exports.''
In the past, the Japanese have claimed US products do not appeal to the Japanese consumer. As the rice producers point out, however, the Japanese ban on allowing their own merchant seamen to bring the rice back proves the appeal of the short-grain rice. ``We have the ultimate taste test,'' Fisher notes.