The United States will challenge Thailand over rice subsidies at a World Trade Organisation (WTO) committee meeting next week, fearful that a government-sponsored crop could land up on the world market and depress prices, hurting US exporters.
But Thai authorities are not worried by the move, saying agricultural subsidies have not violated WTO regulations.
The government's rice-pledging scheme, under which rice is purchased from farmers at above market prices, is expected to raise output, but has also been blamed for a slump in rice exports. Thailand now risks being dethroned as the world's top rice 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 rice stocks bought by the government will be released onto the world market at a loss.
The US rice industry group has urged the US Trade Representative to take action against the Thai scheme, alleging that it acts as an export subsidy, which is prohibited by the WTO.
The US has asked Thailand to respond to 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% above world market prices it will be difficult for the Government of Thailand to export any procured rice without incurring a loss," the US 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 also asks for details of the rice pledging scheme and Thai government rice stocks and sales, and questions why the Thai Board of Trade has stopped publishing daily data on the scheme.
The US submission 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 national budget.
The United States said concerned WTO members had invited Thailand to discuss the policy at an informal meeting before the committee convenes on Wednesday.
Thailand's Trade Negotiations Department director-general Piramol Charoenpao said yesterday that the department was not surprised by the US move. She said the WTO meeting next week was just a regular session where any country can raise issues and objections.
Thailand has not breached WTO regulations because the pledging scheme subsidy figure does not exceed the cap set by the WTO, Ms Piramol said.
"The US government has paid far higher subsidy amounts to its farmers than Thailand," she said, adding that the US has more non-tariff barriers to protect their farm products than Thailand.
Ms Piramol said Thailand would submit farm subsidy figures to the WTO, as is standard practice at the end of each year./.