WTO Sugar Subsidy Issue – UPSC Prelims

WTO Sugar Subsidy Issue:
  • India has lost the dispute over subsidies of sugar exports at the World Trade Organization (WTO).
  • The dispute settlement panel has ruled against India on a complaint filed by Brazil, Australia, and Guatemala.
  • In 2019, Brazil, Australia and Guatemala had filed parallel complaints at the WTO alleging that India has exceeded its WTO commitments on domestic support and export subsidies to sugar.
  • Under WTO Agreement on Agriculture, India can provide product and non-product specific domestic support to its sugarcane growers up to 10% of the total value of production (the de minimis obligation).
  • The countries have also argued that India has exceeded its de minimis obligations on numerous occasions over the past number of years. One program alone, the Fair & Remunerative Price (FRP) provides up to 93% support.
  • Moreover, India also provides prohibited export subsidies by incentivizing sugar exports through financial support to the sector.
What did the WTO Dispute Panel rule?
The WTO Dispute Panel ruled in favour of Brazil, Australia and Guatemala. It has asked India to withdraw its prohibited subsidies within 120 days from the adoption of its report.
How has India responded?
India has said that the support was largely given to small and marginal farmers and was in accordance with its commitments at the WTO.
Will this ruling impact India?
There would be no immediate impact of WTO Panel’s findings on Sugar on any of India’s existing and ongoing policy measures in the sugar sector.
This is because India is set to file an appeal against the WTO Dispute panel decision at the WTO Appellate Body, and lack of a functional appellate body at the WTO means a final decision on the matter is unlikely anytime soon.