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WTO’s sugar report on India

Date: 18 December 2021 Tags: Miscellaneous

Issue

The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) has ruled against India’s sugar subsidies.

 

Background

The body has asked India to withdraw the Production Assistance, the Buffer Stock, and the Marketing and Transportation Schemes within 120 days.

 

Details

The report is yet to be adopted or rejected by the WTO’s full membership. It can do so only based on consensus of its members.

 

The development

  • Brazil, Guatemala and Australia had complained to the WTO that India was giving support to producers of sugarcane and sugar (domestic support measures), as well as all export subsidies.

  • There were efforts to resolve the issue during February-March 2019 through discussions, which failed to resolve the dispute.

  • Three panels were set up to study the relevant provisions of the covered agreements cited by the disputing countries. The committees were expected to help DSB in making the recommendations.

 

Complaints against India

  • Certain parties allege that India’s subsides were violation of WTO’s Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures (SCM), and Article XVI of the General Agreement on Trade and Tariffs (GATT).

  • There was also a complaint that India provides domestic support to sugarcane producers that exceeds the de minimis level of 10% of the total value of sugarcane production.

  • India’s alleged export subsidies, under the production assistance and buffer stock schemes, and the marketing and transportation scheme were also termed illegal.

 

India’s arguments

  • India argues that the requirements of Article 3 of the SCM Agreement are not yet applicable to India and that it has a phase-out period of 8 years to eliminate export subsidies.

  • There was also the argument that mandatory minimum prices are not paid by the central or state governments but by sugar mills, and hence do not constitute market price support.

 

Findings

The report found that India gave non-exempt product-specific domestic support to sugarcane producers in excess of the permitted level of 10% of the total value of sugarcane production.

 

Recommendations

 India should bring its WTO-inconsistent measures into conformity with its obligations under the Agreement on Agriculture and the SCM Agreement.