MEETING ON JAPAN'S RICE STOCKS

UNCLAS STATE 051535

SENSITIVE
SIPDIS
DEPT PASS USTR FOR ASTEPHENS

E.O. 12958: N/A
TAGS: ETRD EAGR EAID JA
SUBJECT: MEETING ON JAPAN'S RICE STOCKS

REF: STATE 50792


1. (SBU) This is an action request. Please see para 4. This
cable supersedes guidance provided in reftel.


2. (SBU) U.S. Department of Agriculture (USDA) Foreign
Agricultural Service (FAS) Administrator Yost met with
Embassy of Japan Economic Minister and Acting DCM Yokoi on
May 14, 2008 to discuss the global food crisis and steps that
Japan could take to address it. Yost noted that the position
of the U.S. Government (USG) has traditionally been that the
rice which Japan imports under its Uruguay Round Minimum
Market Access (MMA) obligations is intended for domestic
consumption in Japan and should not be stored in warehouses
or given away as food aid. However, due to the unprecedented
increases in rice prices around the world, Yost said that the
USG was prepared to discuss options that could include a
release of Japan's rice stocks as an extraordinary measure in
the current fiscal year. He said that these discussions
should take place in the context of technical discussions
between USG and GOJ experts. Yokoi agreed that the first of
these discussions could take place on May 23 when GOJ rice
stock expert Sato visits Washington.


3. (SBU) USDA and USTR have fielded a significant number of
press inquiries regarding the position of the USG with
respect to the release of Japan's rice stocks as food aid.
In the meeting, Yost shared the following formulation of USG
press points with Yokoi (this press release has been used
with Japanese media in Washington):

BEGIN PRESS POINTS:

The United States places a great deal of importance on
responding to the current food price crisis. President Bush
recently announced approximately USD 200 million in emergency
food aid and has also asked Congress to provide an additional
USD 770 million to support food aid and development programs.
Together, this amounts to nearly USD 1 billion in funding to
bolster global food security.

The current conditions in the global rice market are very
unusual. Even though aggregate supply, demand, and stocks
have not significantly changed over recent years, we've seen
unprecedented sudden price increases. Export controls,
hoarding, and panic buying have all contributed greatly to
market conditions.

These market conditions have created increased risk of
hunger, while these high prices have significantly impacted
the budgets of the World Food Program and other food aid
donors.

In light of the food price crisis, some have called upon
Japan to release its rice stocks onto the international
market. A significant portion of Japan's rice stocks is made
up of foreign rice imported under Japan's World Trade
Organization (WTO) obligations.

Because the rice is imported under the terms of the WTO
Uruguay Round Agreement to provide access to Japan's domestic
market, the view of the United States has been that, rather
than go into government stocks, this rice should be consumed
in Japan's domestic market.

However, the unique conditions in the rice market this year,
coupled with the growing humanitarian and political
dimensions of recent food price increases in developing
countries, warrant considering extraordinary measures on this
occasion to calm the international rice market.

U.S. officials will be conveying these views to the
Government of Japan, and we hope to coordinate our food aid
donor efforts in the coming weeks to address the urgent needs
around the world.

END PRESS POINTS.


4. (SBU) ACTION REQUESTED: Embassy is no longer requested to
seek meetings with GOJ officials to discuss the disposition
of Japan's rice stocks. In communications with the
Government of Japan, Embassy should flag this press release
to the attention of officials at the Ministries of Foreign
Affairs and Agriculture and request that they provide a
response to the message delivered in the Yost-Yokoi meeting.
Embassy may draw from the language provided in this cable.
If asked, Embassy may also draw from the following Qs and As:

Question: Would Japan be breaking its WTO obligations if it
exported its rice stocks?

Answer: This is a complicated question because Japan does
have international commitments. But, again, the conditions
of the current rice market are unique and warrant food aid
donors talking with each other.

Question: How much rice does Japan hold in its stocks?

Answer: Japan currently has stocks of 2.4 million MT of
rice, of which 1.5 million MT was imported to fulfill their
WTO obligations. Under its WTO obligations, Japan is
obligated to purchase imported rice annually. About half of
the imported rice stocks are from the United States, with the
remainder primarily from Thailand and Vietnam.

Question: Japan fell 65,000 MT short of fulfilling its MMA
commitments in FY 2007/08, citing high prices and the global
supply situation. What is the position of the U.S. Government
with respect to Japan,s outstanding MMA commitments?

Answer: We are committed to working closely with the
Government of Japan to identify a way for Japan to fulfill
its international obligations without negatively impacting
world markets.
RICE