Australia says will drag India to WTO over sugar subsidies
NEW DELHI: Australia on Friday threatened to drag India to the World Trade Organization (WTO) for contributing to “a significant downturn in world sugar prices” through its domestic subsidies.
An official statement issued in Canberra said the government was “standing up” for the Australian sugar industry’s right to a competitive environment by taking action at the WTO on India’s sugar subsidies. Trade minister Simon Birmingham said the downturn in world sugar prices had impacted the local sugar industry.
“We will support the right of our sugar industry to compete on equal terms and will utilize well established global trading rules to defend the interests of our farmers,” he said.
The commerce ministry in New Delhi declined to comment.
Birmingham said Australia had “raised our industry’s deeply held concerns on numerous occasions with senior levels of the Indian government” and was disappointed its concerns “haven’t been addressed”.
He added, “We will now engage in formal discussions with India and other WTO members regarding this issue at the upcoming WTO Committee of Agriculture meeting later this month. We continue to be willing to engage in any and all discussions that may resolve this issue.”
According to data from the International Sugar Organization, an intergovernmental body devoted to improving conditions on the world’s sugar market, world sugar prices have fallen by around 9% in the past one month. The global sugar prices have been declining for a long time now.
The Indian government had announced incentives to promote sugar exports in the beginning of October. This had two components—assistance for internal transport to facilitate sugar exports worth ₹1,375 crore, and a flat payment of ₹13.88 per quintal of crushed sugar cane in the 2018-19 season worth ₹4,163 crore.
To be sure, these measures were another step in a series of actions by the government to resolve the deep crisis in India’s sugar economy, which includes sugarcane farmers.
According to estimates from the Indian Sugar Mills Association, sugar production in India could exceed domestic consumption by more than 10 million tonnes in the current season. This glut has led to unsold inventories with sugar mills, which in turn has resulted in farmers not being paid for their sugarcane crops.
Biswajit Dhar, professor of economics at Jawaharlal Nehru University, said it is normal for countries to use subsidies as a market clearing mechanism when prices fall. India should have explained its situation in a better way to its partner countries, he added.