India has strongly refuted the findings of the panel report concerning the dispute filed by Guatemala and Brazil against the policy measures in the sugarcane and sugar sector at the WTO. It said the findings of the reports are unacceptable to India alleging that there are many loopholes in the panel’s analysis of the measures and findings.
“The Panel’s findings that FRP and SAP measure constitute as market price support is unsupported by treaty text and unreasoned. The Panel has not only ignored India’s arguments but has also evaded key questions that it was obliged to determine,” the Indian government said. With respect to the panel’s findings on export subsidies, India said they are regressive and undermine logic and rationale. The government said its measures are consistent with its obligations under the WTO agreements.
Rejecting the panel report, India said it will continue government support to sugarcane farmers and sugar industries. It claimed that New Delhi has doubled the fair and remunerative price for sugarcane, which is the minimum price that domestic sugar factories, must pay to sugarcane producers.
It is worth noting that India’s current predicament with respect to the sugar dispute in WTO has its roots in the agreement signed by the Congress government at the Centre in 1994. The PV Narasimha Rao-led central government had then signed agreements during the Uruguay round of the WTO in April 1994, which brought agricultural trade more fully under the General Agreement on Tariff and Trade (GATT). It provided for converting quantitative restrictions to tariffs and for a phased reduction of tariffs. The agreement brought India under the ambit of rules and disciplines on agricultural export subsidies, domestic subsidies inter alia, making it party to the penalties imposed on the country for violating the modalities of the accord.
Introduction of the disputes and the establishment of the Panel
The dispute pertains to a complaint filed by Australia, Brazil and Guatemala in 2019 wherein they challenged some of India’s policy measures in the sugarcane and sugar sector at the WTO. The challenged measures included Fair and Remunerative Price (FRP) and State Advised Price (SAP) programmes and certain export assistance measures such as Buffer Stock Schemes, Minimum Indicative Export Quota (MIEQ)/ Maximum Admissible Export Quantity (MAEQ) Scheme and Duty-Free Import Authorisation (DFIA) for sugar sector.
The complainants claimed that domestic support provided by India to sugarcane producers through FRP/SAP schemes is in excess of the limit allowed by the WTO. The complainants also claimed that India provides prohibited export subsidies to sugar mills.
Based on the complainants’ requests, three separate panels were established by the WTO Dispute Settlement Body on 15 August 2019. The timetable for these three Panels was harmonised as if there were a single Panel (hereinafter, “the Panel”). After almost 28 months from its establishment, the Panel circulated its final report to the public on 14 December 2021.
Findings and recommendations of the Panel
As per the report released by the WTO panel, India provided domestic support to sugarcane producers in excess of the permitted level for sugar seasons 2014-15 to 2018-19. It also accused India of providing prohibited export subsidies to the sugar cane and sugar sector through various schemes like Buffer Stock Schemes, MIEQ/ MAEQ, DFIA. It recommended India bring its WTO-inconsistent measures and withdraw its prohibited subsidies.
The panel further noted that India is obliged to bring its domestic support measures within the acceptable level of 10 per cent of the total value of sugarcane production as allowed under the Agreement on Agriculture. Apropos of the alleged prohibited export subsidies, the panel has asked India to withdraw its prohibited subsidies under the DFIA scheme within 120 days from the adoption of the Final Report.
The Indian government has assured that there will not be any impact or effect of the panel’s findings or recommendations on India’s sugarcane and sugar policy measures as it will be filing a request for the appellate review of the findings and recommendations of the panel.
Appellate review procedures
After rejecting the findings of the panel, the way forward for India is the Dispute Settlement Understanding (DSU), which provides for two-stage dispute settlement procedures. Members who are aggrieved by the panel findings can decide to appeal the report of the panel, then Dispute Settlement Body cannot adopt the panel report until the completion of the appeal by the Appellate Body.
For filing an appeal India has to make appellate submissions and notify the Dispute Settlement Body before the panel report is adopted by the Dispute Settlement Body. It is likely that the complainants will request for adoption of the panel report concerning the alleged export subsidies after 10 days of the circulation of the report and within 30 days of the circulation of the panel report. Regarding the other inconsistent measures, the complainants will request for adoption of the panel report after 20 days and within 60 days of the circulation of the panel report.
Additionally, for filing an appeal, India will have to make appellate submissions and notify the Dispute Settlement Body before the panel report is adopted by the Dispute Settlement Body. The complainants might request for adoption of the panel report concerning the alleged export subsidies after 10 days of the circulation of the report and within 30 days of the circulation of the panel report. As per other inconsistent measures, the complainants will request for adoption of the panel report after 20 days and within 60 days of the circulation of the panel report.
Impact of the panel’s findings and recommendations
As of now, there are no members in the Appellate Body to listen to appeals as the process of selection of Appellate Body members has been continuously blocked by the United States of America since July 2017. So far, there are 21 appeals filed by the WTO Members and are pending appellate review. The appeal which India will be filing will be also added to the list of appeals pending appellate review. Accordingly, till the appellate review is completed there will not be any impact or effect of the panel’s findings or the recommendations.
Furthermore, as the demand in the international market for sugar is steep this year, DFPD has declared that they are not providing any export subsidies.
As far as concern for the domestic support provided to sugarcane farmers in the form of FRP/SAP, the overall permitted level of domestic support is 10% of the total value of sugarcane production, and thus, may have wider implications for India’s domestic support and is in line with the arguments put forth by the USA in agriculture-related discussions.
