Guatemala drags India to WTO’s dispute mechanism over sugar subsidies

Guatemala drags India to WTO’s dispute mechanism over sugar subsidies

Details :

The News

  • Guatemala has dragged India into the World Trade Organisation (WTO) dispute settlement mechanism.
  • The dispute has been filed against the domestic support measures maintained by India in favour of producers of sugarcane and sugar, and export subsidies for sugarcane and sugar.


Where is Guatemala?

  • Guatemala is a country in Central America, south of Mexico.

  • It is bounded to the north and west by Mexico, to the northeast by Belize and by the Gulf of Honduras (Caribbean Sea), to the east by Honduras, to the southeast by El Salvador, and to the south by the Pacific Ocean.


News Summary

  • As per Guatemala, India maintains various domestic support measures in favour of sugarcane and sugar producers, such as:
    • System of administered prices for sugar cane operating through the Fair and Remunerative Price;
    • Minimum selling price for sugar;
    • Financial assistance to sugarcane producers, for example: production subsidies to mills to offset sugarcane price arrears, and
    • Subsidies to maintain buffer stocks.
  • India provides export subsidies for sugarcane and sugar,such as:
    • Subsidies provided to sugar mills contingent on compliance with minimum indicative export quotas,
    • Subsidies to sugar mills for internal transport, freight, handling and other charges to facilitate export freight support for exports.
  • Guatemala claims that the domestic support measures are inconsistent with India’s obligations under the WTO’s Agreement on Agriculture (AoA), while the alleged export subsidies are inconsistent with India’s obligations under the AoA and the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

Note: Brazil and Australia also have lodged a formal complaint against India with the WTO alleging that India’s continued sugar subsidies to farmers have led to a “glut” and “depressed” global prices.


About Dispute Settlement Process of WTO

  • The first step of dispute settlement process is seeking consultation.
  • Thus, India will now have to hold separate consultations with Australia, Brazil and Guatemala to listen to their concerns and explain its position.
  • If the nations are not able to reach a mutually agreed solution through consultation, India may request for a WTO dispute settlement panel to review the matter.




Section : Economics