Australia's WTO sugar win

Australia's WTO sugar win - what happens now?

The Australian sugar industry’s complaints about Indian sugar subsidies pushing down global prices have been vindicated by an emphatic ruling of the World Trade Organization.

A WTO Panel has found that India’s price supports for growers and export subsidies for millers have been in breach of international trade rules and must be wound back or stopped.

The three countries which took the case to the WTO, Australia, Brazil and Guatemala, are now waiting to see if India lodges a formal appeal. CANEGROWERS and the Australian Sugar Milling Council (ASMC), which lobbied the Australian Government to take the action in 2019, have called on the Indian Government to embrace the WTO's findings and comply with the decision.

The case

Australia, Brazil and Guatemala challenged a range of Indian federal and state government measures arguing that they were inconsistent with India’s obligations under two WTO agreements - the Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures. In its ruling, the WTO Panel agreed and found:

• For five consecutive sugar seasons (2014-15 to 2018-19), India’s domestic price supports for growers were in excess of the permitted level (10% of the value of the season’s sugarcane production). The Panel found that India had consistently provided support close to 100%. The Panel recommended India reduce the measures to comply.

• India’s export-contingent payments to sugar mills to assist with exports constitute prohibited subsidies. The Panel recommended India withdraw the subsidies within 120 days from the adoption of the Report by the WTO Dispute Settlement Body.

“The trade umpire has now spoken. In the past three or four years, the world sugar price has been at or below the cost of production and that has exacted enormous economic damage to the Australian sugar industry.”

The reaction

The Australian Government welcomed the WTO ruling with Trade Minister, Dan Tehan, saying he was hopeful of a resolution without India lodging an appeal.

“This is a significant win in that what this finding shows is that support that the Indian Government has been providing has been harming our sugar growers here in Australia,” he told ABC Radio.

“This has been a long, three-year road but it’s been worth the fight. I am proud that CANEGROWERS and ASMC, on behalf of all growers and millers in the Australian industry, stood up for a rules-based world trading regime.”

“Now obviously, what we now need to work on is how we can resolve this dispute and we've begun discussions with the Indian Government.”

Brazil’s sugar industry group, Unica, said the report recognised the trade distortions caused by India’s sugar policies and it believed both countries could find a “collaborative solution” to the issue.

India’s Ministry of Commerce and Industry however said in a statement, “The findings of the Panel are completely unacceptable to India.”

The statement said the findings were “unreasoned” and “undermine logic and rationale”.

“India believes that its measures are consistent with its obligations under the WTO agreements,” it said.

What’s next

The Panel report will be considered at the 25 January 2022 meeting of the WTO Dispute Settlement Body and, unless appealed by India, will be adopted at that meeting.