DISPUTE SETTLEMENT

DS: India — Measures Concerning Sugar and Sugarcane

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Brazil (See also DS580 and DS581)

On 27 February 2019, Brazil requested consultations with India concerning domestic support allegedly provided by India in favour of agricultural producers of sugarcane and sugar (domestic support measures), as well as all export subsidies that India allegedly provides for sugar and sugarcane (export subsidy measures).

Brazil claimed that the domestic support measures appear to be inconsistent with:

  • Articles 3.2, 6.3 and 7.2(b) of the Agreement on Agriculture.

Brazil claimed that the export subsidy measures appear to be inconsistent with:

  • Articles 3.3, 8, 9.1 and 10.1 of the Agreement on Agriculture.

On 11 March 2019, Guatemala requested to join the consultations. On 12 March 2019, Costa Rica and the European Union requested to join the consultations. On 13 March 2019, Australia requested to join the consultations. On 14 March 2019, Thailand requested to join the consultations.

 

Panel and Appellate Body proceedings

On 11 July 2019, Brazil requested the establishment of a Panel. At its meeting on 22 July 2019, the DSB deferred the establishment of a panel.

At its meeting on 15 August 2019, the DSB established a panel. Australia, Canada, China, Colombia, Costa Rica, El Salvador, the European Union, Guatemala, Honduras, Indonesia, Japan, Panama, the Russian Federation, Thailand and the United States reserved their third-party rights.

On 16 October 2019, Brazil requested the Director-General to compose the panel. On 28 October 2019, the Director-General composed the panel.

On 27 April 2020, the Chair of the panels in DS579, DS580 and DS581 informed the DSB that, due to the complex procedural and factual nature of the disputes and in light of the harmonized timetables adopted to that date, the panels estimated to issue their final reports to the parties not before the second quarter of 2021. The Chair apprised the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depends on completion of translation.

On 14 December 2021, the panel report was circulated to Members.

This dispute concerns India's domestic support to sugarcane producers and export subsidies for sugar. Brazil challenged:

  • India's mandatory minimum prices for sugarcane (the Fair and Remunerative Price (FRP) and State-Advised Prices (SAPs)), as market price support within the meaning of the Agreement on Agriculture, as well as other payments and policies in favour of sugarcane producers, as non-exempt direct payments or other non-exempt policies within the meaning of the Agreement on Agriculture, and
  • three assistance schemes, as WTO-inconsistent export subsidies, that operate in conjunction with India's Minimum Indicative Export Quotas (MIEQs) or Maximum Admissible Export Quantity (MAEQ). Brazil claimed that India's schemes constitute subsidies within the meaning of the Agreement on Agriculture.

Domestic support

Regarding India's alleged domestic support to sugarcane producers, the Panel found that, for five consecutive sugar seasons, from 2014-15 to 2018-19, India provided non-exempt product-specific domestic support to sugarcane producers in excess of the permitted level of 10% of the total value of sugarcane production. Therefore, the Panel found that India is acting inconsistently with its obligations under Article 7.2(b) of the Agreement on Agriculture.

The threshold issue before the Panel was whether “market price support” within the meaning of the Agreement on Agriculture only exists when the government pays for or procures the relevant agricultural product. India argued that its mandatory minimum prices are not paid by the Central or State Governments but by sugar mills, and hence do not constitute market price support. The Panel found, however, that market price support does not require governments to purchase or procure the relevant agricultural product, and thus rejected India's argument.

Export subsidies

Regarding India's alleged export subsidies for sugar, the Panel found that the challenged schemes are export subsidies within the meaning of Article 9.1(a) of the Agreement on Agriculture. Since India's WTO Schedule does not specify export subsidy reduction commitments with respect to sugar, the Panel found that such export subsidies are inconsistent with Articles 3.3 and 8 of the Agreement on Agriculture.

On 24 December 2021, India notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.

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