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India To Challenge Wto Decision On Sugar Export Subsidies; All You Need To Know

India will challenge the World Trade Organisation’s (WTO) decision on the matter of sugar export subsidies. The WTO dispute settlement panel in December ruled that India’s domestic support measures for the production of sugar and sugarcane were inconsistent with international agreements governing trade and agriculture.

The Indian government said that it would be appealing the decision as the findings made in the report were “erroneous”.

“The panel issued its report on December 14, 2021 in which it has made certain erroneous findings about our schemes to support sugarcane producers and exports. The findings of the panel are completely unacceptable to India. The panel’s findings are unreasoned and not supported by the WTO rules. The panel has also evaded key issues which it was obliged to determine. Similarly, the panel’s findings on alleged export subsidies undermine logic and rationale,” stated an official release issued by the Commerce Department.

What was the dispute about?

Australia, Brazil and Guatemala had taken India to the dispute settlement panel over disagreements over India’s continuing extensive domestic support to the sugar and sugarcane industry. The countries had stated in 2019, that India’s support to domestic producers was in excess of the limit that was set by the global trade body and that India’s export subsidies to sugar mills were also prohibited.

The report from the dispute settlement body found that India’s subsidies to sugarcane producers exceeded the 10 percent limit as set by the WTO under the Articles on Agriculture (AoA), between 2014-15 and 2018-19. Additionally, India was found to be in contravention of the SCM Agreement and other articles within the AoA, through its various export schemes and subsidies for sugar mills like the Production Assistance, the Buffer Stock, and the Marketing and Transportation Schemes.

What does the ruling mean?

While India has been extensively supporting domestic sugarcane and sugar producers over the past few years, the increasing prices of sugar at the global market due to lower production and supply issues has meant that the government had not planned on extending any assistance in the current season (October 2021-September 2022).

As such, the WTO ruling does not affect India much currently.

India will dispute the findings in the appellate body of the WTO dispute settlement panel, but that may take longer than expected. The US has been blocking the appointment of judges to the appellate body, which is the final body where such matters are taken up, for the previous three years. Without its judges, the appellate body has not been able to take up any cases that are pending before it.

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