A farmer works in his sugarcane field on the outskirts of Ahmedabad (Photo: Reuters)
A farmer works in his sugarcane field on the outskirts of Ahmedabad (Photo: Reuters)

WTO sets up adjudicatory panel over India's sugar subsidies

  • Australia, Brazil and Guatemala say New Delhi's addiction to sugar subsidies is causing a global glut, depressing prices and in breach of trade rules
  • India rejected requests from the three countries for a single panel to oversee their complaints jointly on grounds that their claims are similar

Geneva: The fate of India’s subsidy programmes for sugarcane and sugar producers, including administered mandatory minimum prices, is going to be decided by dispute settlement panels at the World Trade Organization. Australia, Brazil, and Guatemala today secured the green signal for establishing the panel to adjudicate over their complaints that New Delhi’s support programmes for the sugar sector allegedly violated global trade rules.

India, however, rejected requests from the three countries for a single panel to oversee their complaints jointly on grounds that their claims are similar. India said each case was distinct and therefore, ruled out a single panel to decide the case.

The three farm-exporting countries challenged the current system of administered mandatory minimum prices for sugarcane and sugar at the federal and state levels. Australia, Brazil and Guatemala maintained that India provides trade-distorting production subsidies, including soft loans and subsidies, to maintain stocks of sugar, and tax rebates.

Last month, India had blocked the first-time request from Australia, Brazil and Guatemala, which are members of the Cairns group of farm-exporting countries, for establishing the panel. But the three complainants made a second request for establishing the dispute settlement panel that was duly approved on 15 August. Under the WTO rules, a second request is automatically approved.

The three complainants charged New Delhi with providing export subsidies for sugarcane and sugar that are contingent on export through “minimum indicative export quotas" (MIEQ) or other sugar export incentives.

Australia, which is the main spokesperson for the Cairns group of farm-exporting countries, held India responsible for contributing to oversupply in the international sugar market. The production of sugar in India, according to Australia, has increased from 22 million tonnes in 2016-17 to 34 million tonnes in 2017-18, thereby, contributing to a surplus of 12 million tonnes last year. Global sugar prices slumped in September 2018 after India announced an additional Austrlian $1 billion of additional sugar subsidies, Australia charged.

Brazil charged India with intensifying various support programmes for the sugar sector, including higher minimum prices for sugarcane. Over the past two years, India has increased from 2 million tonnes to 5 million tonnes sugar allocated for mandatory export, Brazil maintained.

India, however, disagreed with the claims made by the three countries, saying that its sugar-support programmes are aimed at assisting over 35 million vulnerable low-income resource-poor farmers to have a just and equitable share in economic development. It maintained that its measures were consistent with global trade rules, and did not create any adverse effect in the global sugar market.

India also expressed disappointment that the issues raised by New Delhi about the difficulties faced by resource-poor farmers in the Doha agriculture negotiations had not been addressed until now, said a person familiar with the dispute.

In all likelihood, there would be one panel that would separately hold the proceedings to address the claims raised by each member.

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