Australia takes India to WTO over sugar subsidies

Australia has launched action against India in the World Trade Organisation.

Foreign minister Marise Payne. Picture: Kym Smith

Australia has launched action against India in the World Trade Organisation, alongside Brazil, after complaints from Nationals MPs in Queensland sugar seats.

The move comes as Australia desperately attempts to build a better relationship with India amid China’s rise.

Foreign Minister Marise Payne this week backed a number of India’s argument’s about Pakistan harbouring terror groups in a statement on the ongoing violence between the two nations.

Violence has broken out between India and Pakistan after a terror attack in Kashmir and the decision by India to launch strikes on terrorist camps in Pakistan.

The Australian sugar industry employs about 16,000 workers and Indian subsidies could amount to $360 million in losses for Australian industry over the 2017-18 and 2018-19 financial years, according to the Australian Sugar Milling Council.

Trade Minister Simon Birmingham and Agriculture Minister David Littleproud said the subsidies were against WTO rules and accused India of creating a “glut” in the world market.

“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,” the two ministers said in a statement.

“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.”

Mr Littleproud said the industry exported 80 per cent of its product, so was vulnerable to changes in global prices.

“These subsidies are hitting our farmers. We’re exercising our WTO rights and asking for an even playing field,” he said.

The government has been under pressure from MPs representing sugar-growing regions to act against India’s policies, and has already circulated a paper on India’s subsidies in the agricultural committee of the WTO.

The Australian Sugar Milling Council and Canegrowers lobby group thanked the government for taking the step: “A WTO dispute is a rare and significant escalation towards resolving a situation that’s been depressing the global sugar price and the earnings of Australian sugarcane growers and sugar millers.

“The analysis we jointly developed with government paints a strong case against Indian sugar support mechanisms. India’s sugar subsidies are a clear breach of its WTO obligations.”

Negotiations on a trade deal between Australia and India have stalled because the Coalition felt there was no chance of a substantial outcome.

The Turnbull government commissioned former DFAT secretary Peter Varghese to explore the issue and he has ­delivered a report, An India Economic Strategy to 2035, which the government has responded to.