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Remove Raw Sugar export subsidy: WTO to India

Agriculture Committee of the WTO has asked India to remove the export subsidy on raw sugar claiming that this action distorts the global trade.

Mar 27, 2014 15:32 IST
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The Agriculture Committee of the World Trade Organization on 26 March 2014 asked India to immediately remove the export subsidy of 3300 rupees per tonne on raw sugar. The removal of the subsidy has been asked with a claim that this action would distort the global trade.
        
This demand of removal was raised in the meet of the Agriculture Committee of WTO in Geneva on 21 March 2014. The meet was held with an agenda, to oversee the present Agricultural Agreement and members’ commitment to agriculture. The regular Agriculture Committee consists of all 159 WTO members.

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Member nations that rose queries and objection in form of comments were Australia, Brazil, Colombia and the European Union. Their demand was seeking a justification on legal basis of extension of the export subsidy under the WTO regime.

Australia in its statement claimed that the announced incentive payment was equivalent to 14 to 16 percent of the world price. As per the official data, the delegations made maximum comments on India’s sugar programme and also on its domestic support for rice and wheat and its food security programme.

Other nations that protested India's export subsidy for sugar include Paraguay, Thailand, El Salvador, Canada, the US, Pakistan and New Zealand.

Indian side in the meeting defended themselves by saying the move by claiming that the policy was designed with an aim to encourage diversification from white sugar to raw sugar. The Indian officials also said that yet the intervention payments had not been made, which will not exceed the equivalent of 80 million dollar.

Background
The Union Government of India earlier notified export subsidy on shipments of raw sugar during the February-March 2014. Since its notification, the announcement has been under criticism.

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Earlier in the past, India in relation to similar questions argued that special provisions are allowed to developing nation. The provisions were based on the 2005 Hong Kong Ministerial Declaration under Article 9.4 of the Agreement on Agriculture says that benefit can be continued for five years after the end-date for elimination of all forms of exports subsidies and these subsidies on exports has yet not been eliminated.  

Comment:
The worst threat for the international fraternity is mainly because India is third largest exporter of sugar in the world.

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