The world rice market is characterized by the relatively small share of production traded compared with other major grains and substantial price variability. These characteristics are primarily due to the uncertainties associated with the timing of the Asian monsoon, concentration of production in South Asia and Southeast Asia, and domestic and trade policies conducted by most Asian countries that ban or restrict imports and support production. In addition, developed exporters and some developing exporters support domestic producers and/or assist exports. The combination of policies conducted by major producers and traders, especially Japan's and South Korea's complete ban on imports of rice, have lowered trading prices and reduced trade volumes. If all trade-distorting policies were eliminated, world price and trade would increase, while production and consumption would decline. The United States could lose some of its lower quality indica markets to Asian producers, but would likely expand japonica trade with Japan and South_Korea and higher quality indica trade with the EC and the Middle East. This report describes world rice production and trade, catalogs the trade and domestic policies of the major producing, consuming, and trading countries, and examines the potential effects of a liberalized trade environment on the world and domestic rice markets.