India Appeals Against WTO Verdict Over Sugar Export Subsidies

According to an official, India has filed an appeal against a World Trade Organization (WTO) trade dispute settlement panel judgment that the country's domestic support measures for sugar and sugarcane are inconsistent with global trade principles. 

India filed the appeal with the WTO's Appellate Body, which is the final authority on such trade disputes. According to India, the WTO's dispute panel conclusion found several "erroneous" findings concerning domestic initiatives to boost sugarcane growers and exports, and the panel's findings are utterly "unacceptable." 

The panel, in its judgment on December 14, 2021, recommended that India withdraw its claimed prohibited subsidies under the Production Assistance, Buffer Stock, and the Marketing and Transportation Schemes within 120 days from the adoption of this report. 

The WTO panel ruled in favor of Brazil, Australia, and Guatemala in their trade dispute with India over New Delhi's sugar subsidies, stating that the support measures are inconsistent with WTO trade rules. 

 The official stated that the dispute panel's findings are irrational and not supported by WTO standards and also evaded key issues which it was obliged to determine. 

"The panel's conclusions on alleged export subsidies contradict logic and rationale.  India has filed an appeal with the World Trade Organization's Appellate Body against the panel's ruling,” the official stated. 

In 2019, Brazil, Australia, and Guatemala dragged India into the World Trade Organization's dispute settlement mechanism, alleging that New Delhi's domestic support measures for sugarcane and sugar producers, as well as export subsidies, are in violation of global trade rules, including various provisions of the WTO's Agreement on Agriculture, Agreement on Subsidies and Countervailing Measures, and the General Agreement on Trade and Tariffs (GATT). 

Brazil is the world's top producer and exporter of sugar. After Brazil, India is the world's second largest producer of sugar. In December 2020, the government authorized subsidy of Rs.3500 crore to sugar mills for the export of 60 lakh tonnes of sweetener during the current marketing year 2020-21 as part of its efforts to assist them in clearing outstanding dues to sugarcane farmers. 

The government offered a lump sum export subsidy of Rs.10448 per tonne in the preceding marketing year 2019-20 (October-September). According to official data, mills exported 5.7 million tonnes of sugar, compared to the mandatory quota of 6 million tonnes established for the 2019-20 season (October-September). 

These three WTO members had complained that India's assistance measures for sugarcane growers exceeded the de minimis level of 10% of total sugarcane production, which they said was in violation of the Agreement on Agriculture. 

They had also raised concerns about India's alleged export subsidies, production assistance and buffer stock schemes, as well as the marketing and transportation scheme. 

According to WTO rules, a WTO member or members may submit a dispute with the Geneva-based multilateral body if they believe that a specific trade measure violates WTO norms. 

The first step in resolving a problem is bilateral consultation. If neither party is able to resolve the matter through consultation, any party may request the formation of a dispute settlement panel. The verdict or report of the panel can be appealed to the World Trade Organization's Appellate Body. 

Surprisingly, the WTO's appellate body is not in operation due to discrepancies in how member nations nominate members to this body. Over 20 cases have already been filed with the appellate authority. The appointment of the members has been stymied by the United States. 

Even if the organization, which is the final arbitrator in such trade disputes, begins operations immediately, it will take more than a year to consider India's appeal. 

According to trade experts, if the appeal body rules against India's assistance measures, New Delhi must comply and make suitable modifications in how such measures are provided.