Economy

Sugar MSP: India refutes Australia’s charge of flouting WTO cap

Amiti Sen New Delhi | Updated on November 29, 2018 Published on November 29, 2018

India has refuted Australia’s allegation that its minimum support price (MSP) for sugar exceeded limits set by the WTO. Its argument is that sugar does not fall within the ambit of prescribed limits, as the commodity is not procured by the government.

New Delhi also faced complaints on its policies related to cotton, pulses imports and dairy exports at the WTO’s Committee on Agriculture meeting on Monday, according to a Geneva-based trade official.

“The entire Australian counter-notification is based on a fallacious approach in which it determines that the MSP for sugar qualifies as domestic support, which must be included in India’s ‘amber box’ limit. In fact, MSP for sugar does not qualify as domestic support as there is no procurement by the government,” India’s representative submitted at the meeting.

Amber box

The ‘amber’ box refers to farm subsidies that are considered price-distorting by the WTO and are subject to a 10 per cent cap of total production value in developing countries.

In its representation, Australia had alleged that India had provided support for sugarcane for six years vastly in excess of its WTO spending limits, topping ₹747 billion in the 2016-17 market year, or nearly 100 per cent of total value of production, far above its 10 per cent cap.

India clarified that the MSP was intended to prevent distress sale of sugarcane by farmers. There was zero support, and therefore it was not included in its notification, it added. “India is a marginal player in the international market for sugar and accounts for less than 1 per cent of global sugar exports; it has made no contribution to the glut that is currently depressing prices,” it said. Australia’s “hurried” exercise is based on “faulty assumptions and a flawed analysis,” it added.

The EU added its voice to Australia’s, saying it did not agree with India’s justification on many counts.

US’ allegation

In a similar allegation, the US said India was providing MSP for cotton well in excess of its WTO limits. It accused India of substantially under-reporting the value of its MSP for cotton.

In 2015-16, India reported ₹1.2 billion in MSP for cotton; the US has estimated the support at over ₹504 billion.

Justifying its calculation that was made in US dollars, India said WTO rules do not mandate the reporting of support in any particular currency or the use of any specific reporting methodology. “India has been using a consistent reporting approach since 1995. India also uses a more robust methodology than the US in its calculation of the support,” it said.

Published on November 29, 2018
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