Trade protectionism in agriculture has become a topical issue the importance of which has been highlighted by the Uruguay Round multi-trade negotiations, which started in Punta del Este, Uruguay in September, 1986 and has been concluded in December, 1993, after a prolonged delay. The Round has placed heavy emphasis on agriculture out of the recognition that pervasive state intervention in agriculture and restrictions on agricultural trade have imposed enormous costs on national economies and on the world trading system. Unless reforms are instituted urgently and multilaterally, these would culminate in more serious trade and subsidy wars especially between the major trading blocks. Malaysia is no exception to the practice of intervention in agriculture, particularly in the rice sector. However, its involvement in the Round has indicated its preparedness, in principle, to undertake reform in relation to some of its most trade-distorting policies in this sector. The main purpose of this study is to evaluate the effects and implications of liberalising current price intervention policies in the production and consumption of rice. The approach adopted is one of policy simulation analysis based on a partial equilibrium framework. Evaluations of liberalisation effects were carried out against the political economy of government intervention in the sector, by employing an econometric approach, which is based on a simple, conventional commodity model. This model comprises a set of behavioral relationships to explain supply, demand, price, and imports of rice, together with a market-clearing identity. Using the model a historical simulation was conducted for the sample period (1961-1990) in order to quantify the extent and the effects of past intervention. The post-sample (1991-2000) policy simulations were then undertaken to assess the effects and implications of the "liberalised" policy variables. Altogether, five trade liberalisation scenarios were considered. The results obtained highlight the major benefits of trade liberalisation to consumers, substantial losses to producers, lower income of farmers, budgetary savings to government, higher costs of foreign exchange in the importation of rice, and lower self-sufficiency levels in local rice production. As rice fanners would continue to represent a potent political force, the Government could face a difficult policy decision to phase out its intervention measures in the sector, in compliance with the Uruguay Round agreement, unless present forms of intervention are replaced by a direct income support programme to rice producers which is allowed under the agreement.