13-May-2024-Special-Article

INDIA OFFERED SUGARCANE SOP VASTLY IN EXCESS OF WTO LIMITS: US AND AUSTRALIA 

The Agreement on Agriculture (AoA) is a global treaty instituted by the World Trade Organization (WTO) as part of the Uruguay Round negotiations under the General Agreement on Tariffs and Trade (GATT). 

It aims to remove trade barriers, promote transparent market access, and establish fair and market-oriented agricultural trading systems. 

Objectives of AoA: 

• Encourage openness in market entry and foster the seamless integration of markets worldwide. 
• Establish fair and market-oriented agricultural trading systems. 
• Provide rules applicable to all WTO members for substantial progressive reductions in agricultural support and protection. 

Three Pillars of AoA: 

Domestic Support: 

• Calls for reduction in domestic subsidies that distort free trade and fair prices. 
• Subsidies categorized into Blue Box, Green Box, and Amber Box subsidies. 
• Developed countries to reduce Aggregate Measurement of Support (AMS) by 20% over 6 years and developing countries by 13% over 10 years. 

Market Access: 

• Conditions, tariff, and non-tariff measures agreed by members for entry of specific goods into their markets. 
• Requires progressive tariff cuts, removal of non-tariff barriers, and conversion to tariff duties. 

Export Subsidy: 

• Subsidies on agricultural inputs or incentives for exports. 
• Can result in dumping of subsidized products and damage to domestic agriculture sectors of other countries. 

Allegations Against India Regarding Violating AoA: 

• Background: Previous dispute in 2019 initiated by Brazil, Australia, and Guatemala regarding India’s sugar subsidies. 
• Complaint: US and Australia claim India’s domestic support measures are inconsistent with AoA. 
• India’s Market Price Support exceeded permitted levels, constituting over 90% of sugar production value. 
• Absence of sugarcane derivatives in India’s domestic support notifications since 1995-96. 
• Inactivity of WTO’s Appellate Body: Currently inactive, appeals cannot be decided until operational again. 

India’s Stand: 

• Appeal in 2022: India appealed against a ruling by WTO’s trade dispute settlement panel. 
• Panel ruled India’s domestic support measures for sugar and sugarcane inconsistent with global trade norms. 
• India argued that the panel erred in considering India’s measures as market price support under AoA. 
• Clarification: India highlighted that US-Australia analysis disregards whether sugarcane was delivered to sugar mills under the Sugarcane (Control) Order, 1966. 

World Trade Organisation (WTO): 

• Establishment: Founded in 1995, the WTO has 164 member countries and serves as a platform for global trade regulation and promotion. 
• Functions: It facilitates negotiations, enforces trade agreements, resolves disputes, and fosters economic growth worldwide. 
• Headquarters: Located in Geneva, Switzerland, it operates as a global hub for trade discussions and decisions. 
• Origin: Successor to the General Agreement on Tariffs and Trade (GATT), formed in 1947. The Uruguay Round (1986-94) led to the creation of the WTO. 
• Marrakesh Agreement: Signed in 1994 in Marrakesh, Morocco, it established the legal framework for the WTO. 
• India’s Participation: India, a founding member of GATT in 1947, is also a founding member of the WTO. It actively engages in WTO activities. 

Dispute Redressal Mechanism: 

• Initiation of Dispute: WTO members can file a case with the Dispute Settlement Body (DSB) if they believe a trade measure violates WTO norms. 
• Bilateral Consultation: Initial step involves bilateral consultations between disputing parties to resolve issues amicably. 

Dispute Settlement Body (DSB): 

• Consists of all WTO members and makes decisions on trade disputes. 
• Decisions are made by consensus and include establishing expert panels, accepting/rejecting panel findings, and monitoring implementation. 

Appellate Body (WTOAB): 

• Acts as the appellate body for panel rulings. 
• Currently inactive due to disputes among member countries regarding the appointment of members. 
• Over 20 disputes await resolution, with the US blocking the appointment of members. 

Conclusion: 

The allegations against India concerning its sugar subsidies violating the WTO’s AoA highlight the complexities of international trade agreements. 

While India contests these claims, the inactivity of the WTO’s Appellate Body complicates the resolution process. 

Such disputes underscore the importance of adherence to global trade regulations and the need for effective dispute resolution mechanisms within the WTO. 

Mains Question: 

1. “Discuss the implications of India’s alleged violation of WTO’s Agreement on Agriculture (AoA) and the challenges posed by the inactivity of the WTO’s Appellate Body on global trade governance.” (150 WORDS)