A WTO panel says India provided domestic support to its sugarcane producers in excess of the maximum level of 10 per cent permitted by a world agriculture deal.
A World Trade Organisation panel has ruled in favour of Brazil, Australia and Guatemala in their trade disputes with India over sugar subsidies and asked officials in New Delhi to conform with global rules.
In the cases brought before the WTO in 2019, the rival producers alleged that India had broken WTO rules by providing excessive domestic support and export subsidies for sugar and sugarcane. The panel declared:
"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."
Foreign Minister and federal Liberal MP for western Victoria's seat of Wannon, Dan Tehan, said:
"The Australian Government welcomes the decision of the World Trade Organization (WTO) on India’s price support for sugarcane and export subsidies for sugar.
"Australia is committed to working with WTO Members to progress agricultural reform which opens markets and reduces global distortions.
"The Government will continue to defend the interests of Australian producers by using the established system in the WTO to resolve our differences. The Government would like to thank the Australian sugar industry for its constructive engagement on this issue.
Labor shadow minister for trade, Madeleine King, noted the ruling was subject to appeal but noted:
"As a great trading nation, a fair and robust rules-based international trade system is firmly in Australia’s national interest.
"This includes a functional WTO disputes and appellate system.
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
The WTO 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.
It also said that India failed to notify a WTO committee of its sugar export subsidies, violating a separate agreement.
However, the panel did not uphold one of Australia's allegations that India had maintained buffer sugar stocks which 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".
Brazil's sugar industry group Unica said the report recognised the trade distortions caused by India's sugar policies.
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 can take time to have any effect on trade.
But if decisions are upheld after appeals, the winning side could be awarded with retaliatory measures such as applying heavier tariffs on imports from the country found guilty.