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WTO Members Consider Requests for Panels to Review Indian Sugar Sector

File photo of PSA Chennai facility

New Delhi:

Port Wings News Network:

At a meeting of the Dispute Settlement Body (DSB) on 22 July, WTO members considered a request from China for a dispute panel to review a US safeguard measure on imports of crystalline silicon photovoltaic products. Members also considered three separate requests from Brazil, Australia and Guatemala for panels to review India’s support measures for the sugar sector.

Measures Concerning Sugar and Sugarcane

Australia, Brazil and Guatemala presented their first requests for the establishment of panels to determine whether measures in India supporting the domestic sugar and sugarcane sector are compatible with WTO rules.  The three initiated separate dispute complaints challenging India’s domestic support that includes a system of administered prices for sugarcane, a minimum selling price for sugar and the setting of prices for sugar such as stockholding requirements and subsidies to maintain buffer stocks as well as additional measures that provide financial assistance to sugarcane producers, both at the federal and state levels. The three also charge that India provides subsidies contingent on export through “Minimum Indicative Export Quotas” (MIEQ) or other sugar export incentives.

Brazil, Australia and Guatemala said that, as a result of the domestic support measures, India is in violation of its obligations under the WTO’s Agreement on Agriculture as the resulting sugar support exceeds India’s “de minimis” level of 10% of the value of production, while the export subsidies are prohibited subsidies under the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

Australia said the subsidies have led to a sharp jump in India’s sugar production which has contributed to significant oversupply on the global market, while Brazil said that India’s big increase in sugar allocated for its mandatory export quota has depreciated the international price of sugar, harming Brazilian exporters.  Guatemala also cited harm to its sugar industry resulting from overproduction in India and a subsequent fall in global sugar prices. Consultations between the three complainants and India aimed at resolving the dispute were not successful, prompting each of the three to request WTO dispute panels to rule on their complaints.

India responded that its measures are aimed at preventing exploitation of over 35 million vulnerable low-income, resource-poor farmers and enabling them to have a just and equitable share in economic development, a goal that all WTO members solemnly took upon themselves during the Uruguay Round and reaffirmed in the Doha Ministerial Declaration. The measures identified by the three do not violate India’s WTO obligations and do not have any trade-distorting effect on the global sugar trade, nor do they adversely affect the three’s commercial interests, it said.

In fact, India said, the measures have resulted in increasing the domestic price of sugar within India, thereby making imports of sugar into India more lucrative and making exports from India uneconomical. India said it was surprised by the decisions of the three to request panels despite its offer to continue engagement to resolve any issues and was not in a position to agree to any of the three panel requests. The DSB agreed to revert to the matter.

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