If Australia and India fail to settle the sugar trade dispute during consultations, Canberra can call for establishing a dispute settlement panel. (Reuters)
If Australia and India fail to settle the sugar trade dispute during consultations, Canberra can call for establishing a dispute settlement panel. (Reuters)

India, Australia locked in sugar trade dispute at WTO

  • Australia tells WTO that MSP and export subsidy provided to cane and sugar producers by India violates global trade norms
  • India has to enter into consultations and answer all the specific issues raised by Australia within 30 days

Geneva: India has to enter into consultations and answer all the specific issues within 30 days after Australia told the World Trade Organization (WTO) that the minimum support prices (MSP) and export subsidies provided to sugarcane and sugar producers by the Narendra Modi government and several state governments violate global trade rules.

If Australia and India fail to settle the dispute during the consultations, which is the first step towards resolving the trade dispute on sugar, Canberra can call for establishing a dispute settlement panel, experts said.

Australia’s 1 March allegation comes even as the centre faces accusations of failing to spend enough to resolve the woes of farmers.

Over the past two years, a group of industrialized countries, including the US, Canada, Australia, and the European Union, have launched a sustained campaign against agricultural support programmes of the centre and several state governments for cotton, cereals, pulses and sugar.

India has provided domestic subsidies to its sugarcane growers through the minimum support price (MSP) mechanism and other measures well above 10% of the value of sugar production, according to Australia, which has spearheaded the legal challenge to the subsidies. Under global trade regulations, India is allowed to provide up to 10% as domestic subsidies.

Australia has also challenged the subsidies provided by the governments of Andhra Pradesh, Bihar, Haryana, Karnataka, Maharashtra, Tamil Nadu, Uttarakhand and Uttar Pradesh to their sugarcane growers through the “state advised price" that sugar mills in these states are required to pay.

India has also violated trade regulations by providing export subsidies to enable sugar producers to sell sugar below its cost price in the international market, Australia contended.

New Delhi had already dismissed the charge about sugar subsidies when the issue was raised at the meetings of the WTO’s committee on agriculture, saying India’s sugar exports are insignificant and will not cause any ripple in the international sugar market.

India has been targeted over its farm subsidy programmes under regulations crafted more than 30 years ago under the Uruguay Round of trade negotiations.

The dispute comes at a time when the future of world trade body’s highest adjudicating body, the Appellate Body, hangs in the balance because of American opposition to filling vacancies.

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