A World Trade Organisation panel made the determination that India had export subsidies in place that were prohibited under global trade rules and recommended their removal.
The rival producer nations had alleged that India had broken WTO rules by providing excessive domestic support and export subsidies for sugar and sugarcane. The cases were brought before the WTO in 2019.
“We recommend that India bring its WTO-inconsistent measures into conformity with its obligations under the Agreement on Agriculture and the SCM (Subsidies and Countervailing Measures) Agreement,” the WTO panel said.
India, the world’s second largest sugar producer after Brazil, said later on Tuesday that it would appeal the findings of the panel’s 115-page report.
However, the appeal will go into a legal void since the WTO’s top chamber the Appellate Body does not have enough judges to function.
The WTO report said that for five sugar seasons between 2014-15 and 2018-19, India provided domestic support to its sugarcane producers in excess of the maximum level of 10 per cent permitted by a global agriculture deal.
Australia has notched up a win against India at the WTO on sugar subsidies (not that it will help farmers any time soon- India will appeal and the WTO is still paralysed) but barely a peep from the Government about it. One brief press release, no doorstop 1/
— Stephen Dziedzic (@stephendziedzic) December 15, 2021
It also said India failed to notify a WTO committee of its sugar export subsidies, violating a separate agreement.
The panel did not uphold one of Australia’s allegations that India had maintained buffer sugar stocks that it should have reported to the WTO in the 1990s.
India’s Ministry of Commerce and Industry said in a statement the panel report was “unacceptable” and would have no impact on ongoing sugar policies. It said the WTO’s findings were “erroneous” and “unreasoned”.
The Australian government welcomed the WTO ruling. “Australia’s use of the WTO in this matter is consistent with its previous use of the WTO and aligns with our support for the rules-based trading system,” Trade Minister Dan Tehan said in a statement.
It said Brazil and India have been collaborating in issues such as cane-based ethanol use and believes both countries will find a “collaborative solution” to the issue.
WTO decisions typically take time to implement and are unlikely to have any immediate impact on trade. But if India loses its appeals, the winning sides could be awarded with retaliatory measures such as applying heavier tariffs on imports from the country found guilty.