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Guatemala files complaint over India’s sugar subsidies at WTO

Date: 26 March 2019 Tags: World Economy, Agriculture

Guatemala has initiated new dispute complaint against India over sugar subsidies provided to farmers at World Trade Organization (WTO), alleging that it is inconsistent with global trade rules. Brazil and Australia also have lodged their separate complaints at WTO on this matter. All these countries have alleged that continued sugar subsidies to farmers by India, world's second-largest sugar producer has led to "glut" and "depressed" global sugar prices.

Guatemala’s complaint

Guatemala has sought consultations with India under rules and procedures governing settlement of disputes of WTO with respect to domestic support measures maintained by India in favour of producers of sugarcane and sugar, and export subsidies for sugarcane and sugar.

It claims that domestic support measures are inconsistent with India’s obligations under WTO’s Agreement on Agriculture (AoA). It also claims that export subsidies are inconsistent with India’s obligations under the AoA and Agreement on Subsidies and Countervailing Measures (SCM Agreement).

India’s response

India has defended its position at WTO in informal discussions by explaining that most of its subsidies to sugar producers were in form of production subsidies that was permissible under the WTO. Besides, subsidies to exporters given for exports was for marketing and transportation purposes which, too are permitted by the WTO,

Consultations Mechanism

Seeking consultation is first step of dispute settlement process in WTO. If the two nations are not able to reach mutually agreed solution through consultation, either country may request for WTO dispute settlement panel to review the matter.

Under this dispute settlement mechanism, India now has to hold separate consultations with Australia, Brazil and Guatemala to listen to their concerns and explain its position.

EU, Thailand and Costa Rica also have expressed their interest in participating in the consultations requested by Australia and Brazil with India as they were interested parties.

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