India to challenge WTO ruling on sugar export subsidies; Everything you need to know

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

The Indian government said it would appeal the ruling because the report’s findings were “wrong.”

“The panel published its report on December 14, 2021 in which it made some incorrect conclusions about our support programs for sugar cane producers and exports. The panel’s conclusions are totally unacceptable to India. The conclusions of the panel are not reasoned and are not supported by WTO rules. The panel also sidestepped key issues it was forced to decide. Likewise, the panel’s conclusions on the alleged export subsidies undermine logic and rationale, ”said an official statement issued by the Commerce Department.

What was the dispute about?

Australia, Brazil and Guatemala brought India to the dispute settlement panel over disagreements over India’s large and continuing domestic support to the sugar and cane industry . The countries said in 2019 that India’s support to domestic producers exceeded the limit set by the world trade body and that India’s export subsidies on sweets were also banned.

The dispute settlement body’s report found that India’s subsidies to sugarcane producers exceeded the 10 percent limit set by the WTO under the Agriculture Articles (AoA), between 2014-15 and 2018-19. In addition, India was found to be in violation of the SCM Agreement and other AsA articles, through its various export programs and sugar subsidies such as production aid, buffer stock and marketing and transportation programs.

What does the decision mean?

While India has largely supported domestic sugar cane and sugar producers in recent years, the increase in sugar prices in the world market due to declining production and supply problems has meant that the government had no plans to expand aid during the current season (October 2021-September 2022).

As such, the WTO ruling does not significantly affect India at this time.

India will challenge the findings before the WTO dispute settlement panel’s appellate body, but this may take longer than expected. The United States has blocked the appointment of judges to the appeals body, which is the final body where such matters are considered, for three years. Without its judges, the appeal body could not take up the cases pending before it.

(Edited by : Thomas abraham)

Rachel J. Bradford