The U.S. rice industry is exploring avenues to secure tariff protection from imported products after a report last month found extensive support from foreign governments is distorting the global market.
USA Rice Federation, which represents the sector, is aiming to use a fact-finding report published by the International Trade Commission as a springboard for import relief, Peter Bachmann, the group’s president and CEO, told Agri-Pulse.
“We certainly hope that there are next steps after this ITC report starts to sit out there for a little while and everyone digs in,” Bachmann said. “We are having conversations with, or planning to have conversations with, [the Office of the U.S. Trade Representative] and Commerce and others in Congress about next steps.”
Those next steps, Bachmann said, could come in the form of a countervailing duty probe – which investigates whether tariffs are needed to offset the effects of foreign subsidies.
U.S. industries can request countervailing duty investigations, but Bachmann says he is hoping Commerce will decide to self-initiate. If Commerce launches the probe, the industry won’t have to foot the bill for the legal costs involved and it would be a strong indication of a positive outcome, Bachmann said.
“They are only going to self-initiate cases that they feel like are going to ultimately benefit the U.S. producers,” Bachmann said.
Bachmann also sees recent changes to countervailing duty regulations published in December as potentially smoothing the path to import relief for the industry.
Only subsidies applied to specific sectors can be countervailed under international trade rules. Commerce had previously determined that government support applied to the entire agricultural sector was not sufficiently targeted to meet the specificity requirement. But in December, Commerce axed that carve out for the agricultural sector.
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Commerce will now determine whether an agricultural subsidy is specific enough to warrant countervailing duties under U.S. law on a case-by-case basis.
“The carveout made it very difficult to target subsidies in the ag sector,” Michael Kaye, a partner at law firm Squire Patton Boggs, told Agri-Pulse.
Foreign governments, Kaye said, could cloak themselves in the specificity carveout to avoid their industries being hit with U.S. tariffs. He gave the example of a government subsidizing cold storage to the benefit of fresh produce exporters. The government could argue that, at least in theory, any company in the agricultural sector is eligible to use the storage facilities, even though only exporters of perishable items would need to.
With the specificity carveout gone, Kaye said, “it is going to make it easier” for ag sectors to bring countervailing duty cases. The rule change also applies to antidumping cases.
Bachmann sees particular opportunities for the U.S. rice industry.
“A lot of governments around the world have disguised their subsidies as available to everyone,” Bachmann said. “And so now, with this specificity rule for agriculture, I think that helps us in the long run.”
Even with the specificity carveout gone and the ITC report finding evidence of extensive foreign subsidies in countries like India, countervailing duties are not a guaranteed outcome from a countervailing duty probe. Commerce or the domestic industry would still have to demonstrate imports are harming their producers.
“Basmati rice coming into the U.S. is not necessarily damaging or displacing U.S. rice producers,” Bachmann pointed out, “but jasmine rice from Thailand, for example, we do grow a significant amount of that.”
Bachmann wouldn’t say whether the domestic industry would file a countervailing duty petition if Commerce doesn’t self-initiate. He argued that USA Rice would need to do further economic analysis to ensure they would secure a favorable ruling before launching anything.
But Bachmann also said the industry is also looking at other potential policy levers.
“USTR appears to be very open to creativity and utilizing whatever levers they have,” he said. “We’re very encouraged by their optimism.”
USTR has multiple tools at its disposal to address foreign subsidies. It can lodge a complaint at the World Trade Organization – although the dispute settlement appeals system has been paralyzed since 2019. It can also investigate unfair trade practices under Section 301 of the Trade Act of 1974. These investigations can also lead to tariffs and the adoption of other trade restrictions.
“Frankly, our industry would take whatever help we can get with that regard,” Bachmann said.
President Donald Trump unveiled sweeping new duties last week on a raft of U.S. trade partners, including a 27% tariff on imports from India, 46% from Vietnam and 36% from Thailand. But the new duties won’t be sufficient to offset foreign subsidies in the rice sector, Bachmann said.
“We feel like the tariffs didn't go far enough this week in what came out for the bad actors,” Bachmann said. “We're feeling a lot of pinch here at home.”
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