IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Outflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Oct 2011 | Removal date: 31 May 2014
Still in force

Export-related non-tariff measure, nes

The Thai government started the rice pledging scheme during the harvesting season of 2011/2012, that is, state purchase of Thai rice above market prices. The scheme was approved again in October 2012 for the 2012-13 crop season. Until October 2012, the Thai government had spent approximately 300 billion baht in rice purchases and plans to spend 405 billion baht on the scheme in the 2012-13 season.
 
The scheme has been justified on two grounds: 
- to increase the income received by the farmers,
- to raise the stock on hand on account of national food security and to reduce uncertainty of market prices.
 
The US has challenged this rice scheme at the WTO, as Thailand is the world's largest exporter and the subsidy will lead to distortion of world prices. Whereas, the permanent secretary of Commerce in Thailand called the policy an "income support" and not a "subsidy", and clarified that it was in line with WTO rules.
 
This measure is included in the GTA database because of its potentially adverse knock-on effects for foreign buyers of rice. These effects arise from the combination of two circumstances: Thailand supplies a large share of rice to the world market and, therefore, arguably can exploit power in the world market for rice. Large scale Thai government purchases of rice effectively reduce the amount supplied on the world market, raising world prices of rice and improve Thailand's terms of trade. Under these circumstances the state purchases constitute a de facto export restriction, executed through a public procurement scheme.

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

011 Cereals
1006 Rice.
100610 Rice in the husk (paddy or rough)
231 Grain mill products
1006 Rice.
100620 Husked (brown) rice
100630 Semimilled or wholly milled rice, whether or not polished or glazed
100640 Broken rice

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