On Tuesday, the World Trade Organization panel decided in favor of Brazil, Australia, and Guatemala in their trade disputes with India over sugar subsidies, ordering New Delhi to follow global norms.
In the WTO complaints filed in 2019, competing producers claimed that India violated WTO rules by offering excessive domestic support and export subsidies for sugar and sugarcane.
“We propose that India bring its WTO-inconsistent measures in line with its responsibilities under the Agriculture Agreement and the SCM (Subsidies and Countervailing Measures) Agreement,” the panel concluded.
India, the world’s second-largest sugar producer after Brazil, announced later Tuesday that it would challenge the panel’s 115-page report’s findings.
However, the appeal will be rendered ineffective since the WTO’s top chamber, the Appellate Body, lacks sufficient judges to function.
According to the WTO report, India offered local support to its sugarcane producers in excess of the maximum level of 10% permitted by a global agriculture agreement for five sugar seasons between 2014-15 and 2018-19.
It also claimed that India violated a separate agreement by failing to notify a WTO committee of its sugar export subsidies.
The panel rejected one of Australia’s claims that India kept buffer sugar supplies that it should have revealed to the WTO in the 1990s.
In a statement, India’s Ministry of Commerce and Industry said the panel finding was “unacceptable” and would have no effect on current sugar regulations. It called the WTO’s rulings “erroneous” and “unreasonable.”
The Australian government applauded the WTO decision. “Australia’s use of the World Trade Organization in this matter is consistent with its previous use of the WTO and corresponds with our support for the rules-based trading system,” Trade Minister Dan Tehan said in a statement.
According to Unica, Brazil’s sugar industry lobby, the research acknowledged the trade distortions produced by India’s sugar regulations.
It stated that Brazil and India have been cooperating on matters such as cane-based ethanol use and that both countries hope they will find a “collaborative solution” to the problem.
WTO judgments might take a long time to have an effect on trade. However, if rulings are affirmed on appeal, the winning party may be awarded retaliatory measures such as higher tariffs on imports from the country found guilty.