The Hindu Business Line

WTO likely to set up panel to de­cide on In­dia’s sugar sops

Brazil, Gu­atemala, Aus­tralia com­plain again; dis­pute set­tle­ment board to meet on Aug 15

- AMITI SEN India News · World Trade Organization · India · Brazil · Australia · Guatemala · Austria · Belarus · Belgium · New Delhi

Brazil, Aus­tralia and Gu­atemala have re­quested the World Trade Or­gan­i­sa­tion (WTO) to set up dis­pute pan­els to rule on In­dia’s sugar sub­si­dies the sec­ond time round af­ter In­dia re­jected the re­quest at the last meet­ing of the Dis­pute Set­tle­ment Body (DSB) last month.

The re­quest for dis­pute set­tle­ment pan­els put in by the three coun­tries will be taken up at the DSB meet­ing sched­uled on Au­gust 15. Since the sec­ond re­quest made to the DSB can­not be re­jected, pan­els are now likely to be formed at the WTO which will de­cide whether In­dia’s sugar sub­si­dies are valid or not.

“In­dia tried to rea­son with the three com­plainants point­ing out that all sub­si­dies ex­tended by the gov­ern­ment to sugar pro­duc­ers were per­mis­si­ble un­der the WTO rules. How­ever, the dis­cus­sions were not suc­cess­ful,” a gov­ern­ment of­fi­cial told Busi­nessLine.

Once the DSB con­sid­ers the Aus­tralia feels In­dia has ex­ceeded its de min­imis level of 10% for its sug­ar­cane farm­ers

Brazil has frowned on the hike in the re­mu­ner­a­tive price for sug­ar­cane

In­dia has ar­gued that its sub­si­dies are for sug­ar­cane pro­duc­tion and are WTO-compliant

sec­ond time re­quests and sets up three sep­a­rate pan­els, all sides will put for­ward their ar­gu­ments.

Ac­cord­ing to Aus­tralia, the amount of sup­port to sug­ar­cane pro­duc­ers in In­dia ex­ceeds the coun­try’s prod­uct­spe­cific de min­imis level of 10 per cent for the prod­uct

. It added that sev­eral sub­si­dies such as the State-level ex­port sub­sidy for sugar, fed­eral-level as­sis­tance and ex­port in­cen­tives (raw sugar ex­port in­cen­tive scheme), and freight as­sis­tance were in­con­sis­tent with the Agree­ment on Agri­cul­ture (AoA) as they ap­peared to be ex­port sub­si­dies.

In­dia’s de­ci­sion to in­crease the Fair and Re­mu­ner­a­tive Price for sug­ar­cane from ₹1,391.2 per tonne in 2010-11 to ₹2,750 per tonne in 2018-19 was the main rea­son for Brazil’s concern which also be­lieved that mak­ing it com­pul­sory for mills to ex­port 5 mil­lion tonnes of sugar in 2018-19 had dis­torted prices in

the global mar­ket.

Gu­atemala also had sim­i­lar com­plaints and al­leged that In­dia’s do­mes­tic sup­port mea­sures for sugar are in­con­sis­tent with obli­ga­tions un­der the WTO’s AoA, while the al­leged ex­port sub­si­dies are in­con­sis­tent with In­dia’s obli­ga­tions un­der the AoA and the Agree­ment on Sub­si­dies and Coun­ter­vail­ing Mea­sures (SCM Agree­ment).

New Delhi’s stand

New Delhi has con­sis­tently ar­gued that its sub­si­dies to sugar pro­duc­ers were in the form of pro­duc­tion sub­si­dies that were per­mis­si­ble un­der the WTO. More­over, the sub­si­dies to ex­porters were for transporta­tion and mar­ket­ing pur­poses which, were per­mit­ted by the WTO at least till 2022.

“We are hope­ful that once the pan­els are set up our ar­gu­ments would be ap­pre­ci­ated and we would get a favourable judge­ment,” the of­fi­cial said.

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