Set up dispute panel in case against India on sugar subsidy: Guatemala to WTO

Central American country Guatemala has sought the establishment of a dispute panel under the aegis of the World Trade Organization (WTO) in a case against India's sugar subsidies to farmers. In February, Guatemala and several other countries including Australia and Brazil dragged India into the WTO's dispute settlement mechanism alleging that New Delhi's sugar subsidies to farmers are inconsistent with global trade rules.

Guatemala is a major agricultural exporter in the world and it exports 70 per cent of its total sugar production. The country has sought to set up the panel as India and Guatemala have failed to resolve the dispute through the consultation process, which is the first steps towards the resolution of a dispute under WTO norms.

The Geneva-based WTO is a 164-member body which frame rules for exports and imports. India and all these countries are members of this multilateral organisation. If a member country feels that another nation is infringing some norm of the WTO, it can file a dispute case and seek resolution.

"Consultations were held on 22 May 2019 with a view to reaching a mutually satisfactory solution. These consultations, however, failed to resolve the dispute. Accordingly...Guatemala requests that the dispute settlement body establish a panel to examine this matter," a communication of the WTO said. Guatemala has alleged that India maintains various domestic support measures in favour of sugarcane producers and sugar producers, such as a system of administered prices for sugarcane, that operates at the federal level through the fair and remunerative price, in the case of certain states, at the state level through the state advised price.

It has also alleged that each of the support measures provided by India is inconsistent with certain global trade norms. The dispute was filed under certain articles of WTO's Agreement on Agriculture, Agreement on Subsidies and Countervailing Measures and the General Agreement on Tariffs and Trade 1994.

Seeking consultation is the first step of the dispute settlement process. If the two nations are not able to reach a mutually agreed solution through consultation, complainant requests for a WTO dispute settlement panel to review the matter. If the panel rules against India's sugar subsidies, India can approach the appellate body of the WTO's dispute settlement mechanism, which has the final say.