Remove raw sugar export subsidy, WTO tells India

Last Updated 26 March 2014, 17:38 IST

A few WTO members, including Australia, have asked India to remove immediately the export subsidy of Rs 3,300 per tonne on raw sugar saying it distorts the global trade.

This demand was raised in the recent meeting of the Agriculture Committee of the World Trade Organisation (WTO) in Geneva.

“India’s new support programme for sugar sparked comment among a number of delegations with some urging India to remove immediately what they described as export subsidies that will potentially impact world trade,” WTO said.

On March 3, the central government notified export subsidy of Rs 3,300 per tonne on raw sugar shipments undertaken during the February-March of this year.

The WTO said that discussion was about one of 31 sets of questions and answers, a key part of the agenda of the committee, whose major responsibility was to oversee the present Agriculture Agreement and members’ commitment to agriculture.

“The largest number of comments from delegations was on India’s sugar programme. The topics that also aroused interest included...India’s domestic support for rice and wheat and its food security programme,” it added.

Australia, Colombia, Brazil and the EU asked India about a new policy announced in February involving incentive payments to Indian sugar exporters.

Members sought to know the legal basis for extending the export subsidy under the WTO regime.

Several of the members also pointed out that India has agreed not to subsidise its exports.

In its reply, India said the policy is designed to encourage diversification away from white sugar to raw sugar and that no intervention payments have been paid yet.“Export subsidies will be notified to the WTO,” India said.

Australia claimed that the Rs 3,300 per tonne incentive payment is the equivalent of 14–16 per cent of the world price.

Since India is the third largest exporter of sugar, “this threatens to seriously distort trade”, Australia said and asked India to “remove the export subsidies immediately”. 

Under the Agriculture Agreement of the WTO, developing countries can subsidise marketing costs and internal transportation costs.

“Brazil asked how India could justify the subsidies since there has been no consensus to extend these special provisions for developing countries,” the WTO said.

India had been arguing that developing countries could use special provisions for giving subsidies under the 2005 Hong Kong Ministerial Declaration.

Paraguay, Thailand, El Salvador, Canada, the US, Pakistan and New Zealand also raised concerns on the matter.

One of the key responsibilities of the Agriculture Committee, which consists of all 159 WTO members was to see how countries are complying with their commitments on subsidies and market access and to discuss issues that arise.

It monitors whether members are keeping the promises they have made in the WTO.

India, the world’s second-biggest sugar producer, is sitting on huge stock of the sweetener.

This year, output is likely to be 25 million tonne, higher than the domestic demand of 23.5 million tonnes.

On this, India replied that it is preparing the notifications. 

(Published 26 March 2014, 17:38 IST)

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