Australia Takes India to WTO on Sugar Subsidies

The Australian government has launched formal trade action against India over the massive subsidies it pays its cane farmers, which have caused a glut of sugar on world markets and crashed -global prices to a 10-year low.

After numerous warnings and direct talks with local ambassadors and the Indian government, Australia on 15 November filed a formal “counter notification” order with the World Trade Organisation about why it believes India has breached its trade obligations.

The lodging of formal notification automatically pushes the sensitive issue on to the agenda of high-level WTO agricultural talks in Geneva later this month.

Trade Minister Simon Birmingham said last night the Australian government had been left with little choice, after exhausting all less official avenues directly with India, than to “ramp up” efforts to stand up for the rights of Australia’s 4000 cane farmers and its four major sugar processors.

“It is hoped this step will lead to India immediately reducing its sugar subsidies. We continue to be willing to engage in any and all discussions (with India) that may resolve this issue,” Senator Birmingham said.

New Delhi’s heavy use of generous sugar cane crop incentives, which were boosted by $1 billion in September, comes as India heads towards a general election in April and the government tries to win the votes of the 50 million people who either farm sugar cane in a largely subsistence system or work in its sugar mills, one of the biggest rural voting blocs in the nation.

Australia alleges that the subsidies, which have seen Indian sugar production leap from an average 20 million tonnes to 35 million tonnes this year, far exceed the level of farmer assistance permitted under WTO rules.

(It may be recalled that US has already moved WTO claiming India MSP on cotton is far in excess of the 10% subsidy committed at WTO).