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EXPORT SUBSIDIES- Shanmugam IAS academy in coimbatore city


What’s in news?

The World Trade Organization (WTO) set up panels to rule on complaints by Australia, Brazil and Guatemala against India’s export subsidies for sugar and sugarcane producers which they assert are illegal.


  • The three farm-exporting countries challenged the current system of administered mandatory minimum prices for sugarcane and sugar at the federal and state levels. 
  • Australia, Brazil and Guatemala maintained that India provides trade-distorting production subsidies, including soft loans and subsidies, to maintain stocks of sugar, and tax rebates.

Australia’s claims:

  • India responsible for contributing to oversupply in the international sugar market. 
  • The production of sugar in India has increased from 22 million tonnes in 2016-17 to 34 million tonnes in 2017-18, thereby, contributing to a surplus of 12 million tonnes last year. 
  • Global sugar prices slumped in September 2018 after India announced an Austrlian $1 billion of additional sugar subsidies.
  • the amount of support to sugarcane producers in India exceeds the country’s product-specific de minimis level of 10 per cent for the product

Brazil’s claim:

  • India is providing various support programmes for the sugar sector, including higher minimum prices for sugarcane.
  • Over the past two years, India has increased from 2 million tonnes to 5 million tonnes sugar allocated for mandatory export.
  • India increased the Fair and Remunerative Price for sugarcane from ₹1,391.2 per tonne in 2010-11 to ₹2,750 per tonne in 2018-19.

India’s stand:

  • India, disagreed with the claims made by the three countries, saying that its sugar-support programmes are aimed at assisting over 35 million vulnerable low-income resource-poor farmers to have a just and equitable share in economic development.
  • It maintained that its measures were consistent with global trade rules, and did not create any adverse effect in the global sugar market.
  • New Delhi has consistently argued that its subsidies to sugar producers were in the form of production subsidies that were permissible under the WTO.
  • Moreover, the subsidies to exporters were for transportation and marketing purposes which, were permitted by the WTO at least till 2022.

Dispute settlement body:

  • WTO is an intergovernmental organisation that regulates international trade
  • General council of WTO convenes as DSB to deal with disputes between WTO members.
  • Such disputes may arise with respect to any agreement contained in final act of Uruguay round that is subject to understanding on rules and procedures governing the settlement of disputes.


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