17 Jan India appeals WTO against its ruling on domestic sugar and sugarcane subsidies
India appeals WTO against its ruling on domestic sugar and sugarcane subsidies- Today Current Affairs
(GS Paper-III,Economic Development)
Source: The Economics Times
Why in news?
- India recently appealed the trade dispute settlement panel of WTO against its ruling on the domestic sugar and sugarcane subsidies stating that the panel has committed “certain errors of law”.
What is the issue? The Hindu Analysis
- Countries like Australia, Guatemala and Brazil claimed that India’s export and domestic subsidies are against and inconsistent with the WTO articles – Agreement on Agriculture and Agreement on subsidies and countervailing Measures ( SCM) and GATT( General Agreement on Trade and Tariffs) article XVI , which relates to subsidies.
- Countries complained that the domestic support to sugarcane producers by Indian government are inconsistent with the Agreement on Agriculture because the support exceeds the de Minimis level of 10% of the total value of sugarcane production.
- At the same time the three countries also alleged India’s export subsidies under marketing and transportation scheme , production assistance and buffer stock scheme are inconsistent with the WTO provisions.
- India was also accused of failing to notify its annual domestic support for sugarcane and sugar, subsequent to 1995- 96 and its export subsidies since 2009-10. Australia maintained that these were in contravention and inconsistent with the SCM Agreement.
India’s stand: The Hindu Analysis
- The provisions of the Article 3 of SCM agreement are not yet applicable on India and the country has eight years phase out period to eliminate export subsidies, argued India.
- India took stand by stating that the countries complaining against the domestic support for sugarcane have failed to meet their “burden of showing” how Indian domestic support violates the various provisions of the agreement on agriculture.
- India said that it is the mill owner and not a government who pays the mandatory minimum price therefore it does not constitute market price support.
Panels Ruling: The Hindu Analysis
- It upheld India’s domestic support and export subsidy measures to be in violation of the international trade rules.
- The panel recommends India to bring its various support mechanism measures into conformity with WTO rules and obligations under the Agreement on Agriculture and SCM Agreement.
WTO and Dispute Redressal: The Hindu Analysis
- In 1995 the World Trade Organization was established. It replaced the General Agreement on Trade and Tariffs( GATT). It is the only Global International Organisation that deals with the rules of trade between Nations.
- WTO is guided by five principles:
- A) Trade without discrimination
- B) To promote free trade through negotiations.
- C) To ensure productivity through binding and transparency
- D) Promote fair competition
- E) To encourage development and economic reforms
- WTO has 164 members along with 23 observer governments. If any member feels that a particular trade measure is against the norms of WTO, then according to the rules of WTO the country has the right to file a case.
- Initially in order to resolve the dispute a bilateral consultation is undertaken but if in case it does not resolve , either party can approach the dispute settlement panel.
- Rulings of the panel can be challenged in WTO’s Appellate Body. It was established in 1995 and it has its seat in Geneva Switzerland. It has the final authority over the dispute settlement.