WTO rules against India’s sugar export subsidy

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WTO rules against India’s sugar export subsidy

Recently the World Trade Organization (WTO) Disputes Committee has ruled against the sugar export subsidy provided by India.

Australia, Brazil and Guatemala had complained that the domestic assistance provided by India to sugarcane growers exceeded the limits allowed by the World Trade Organization (WTO). At the same time, India also provides prohibited export subsidies to sugar mills.

As a result, the Committee in its conclusion found that India was acting inconsistently with its obligations under the Agreement on Agriculture (AOA).

It should be noted that the AOA provides a specific commitment to reduce government-provided support and protection in the areas of domestic support, export subsidies and market access.

Domestic Support, Fair and Remunerative Price (FRP) to sugarcane growers:

  • This is provided through measures like State Advisory Prices (SAPs), State Level Incentives etc.
  • FRP requires sugarcane growers to pay a mandatory minimum price. Whereas, there is a state specific mandatory minimum price for SAPs producers.
  • India’s export subsidies for sugarcane growers include a production assistance scheme, a buffer-stock scheme, and a marketing and transport scheme.
  • India has responded to the WTO that the support was largely extended to small and marginal farmers and was in line with its commitments in the WTO.
  • According to the AOA, the domestic support should not exceed the minimum level.
  • The minimum level is up to 5% of the value of output for developed countries and up to 10% for developing countries like India.
  • In addition, under the AOA and the Agreement on Subsidies and Countervailing Measures, export subsidies from WTO members are restricted to many agricultural products.

Source – The Hindu

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