Australia takes action against India's sugar subsidies

Monday, 04 March, 2019

Australia takes action against India's sugar subsidies

Australia has joined Brazil to launch a formal dispute action against India in the World Trade Organization (WTO) concerning its continuing use of sugar subsidies.

These subsidies have supposedly led to a sugar glut which is depressing world prices and impacting the local sugar industry, explained Minister for Trade, Tourism and Investment Simon Birmingham. “This glut is hurting Australia’s canegrowers and millers, and is threatening our $1.8 billion sugar export industry by dragging down prices to unsustainable lows.”

Birmingham also said they are inconsistent with WTO rules, and although he notes Australia maintains a good economic and strategic relationship with India, their failure to address these concerns has forced the country to ramp up its efforts.

“While Australia respects the rights of WTO members to support their farmers and agricultural industries, this support must be consistent with WTO rules and provide a level playing field.

“Australia always seeks to resolve its concerns outside of the WTO’s dispute system, and our numerous representations to India at the highest levels and in the WTO have been consistent with this approach.

“Unfortunately, our representations, and those of other sugar exporting countries, have so far been unsuccessful. This has left us with no other choice but to initiate formal WTO dispute action, together with Brazil.”

He said it is “perfectly normal” for even close friends to use global trading rules to resolve trade issues.

Canegrowers and the Australian Sugar Milling Council (ASMC) have worked with the federal government to launch this WTO action. Paul Schembri, Canegrowers Chairman, described it as “a rare and significant escalation” towards resolving these ongoing issues.

“We believe the high volumes of Indian sugar produced in recent years are embedded and structural, meaning their industry will continue to flood the global market unless the subsidies and associated support mechanisms are fundamentally reformed,” said ASMC CEO David Pietsch.

“Other ways need to be found to support the wellbeing of India’s sugarcane growers, so that the global market can function efficiently and reward unsubsidised and efficient sugar producers including growers and millers in Australia,” he said.

About 85% of Australia’s raw sugar is exported into the world market, and Assistant Minister Coulton highlighted the importance of government support for the sugar industry’s contribution to jobs and the economy in regional Australia.

“This action being taken by the government demonstrates our commitment to protecting the interests of our hard-working canegrowers and sugar millers, and to the rules-based international trading system that underpins the viability of our vital export industries,” Coulton said.

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