India appeals against WTO dispute panel ruling

India appeals against WTO dispute panel ruling

Subject – Economy

Context – India appeals against WTO dispute panel ruling on sugar export subsidies at appellate body

Concept –

• India has appealed against a ruling of the World Trade Organization’s (WTO) trade dispute settlement panel which ruled that the country’s domestic support measures for sugar and sugarcane are inconsistent with global trade norms.
• The appeal was filed by India in the WTO’s Appellate Body, which is the final authority on such trade disputes.
• The panel in its ruling on December 14, 2021 recommended India to withdraw its alleged prohibited subsidies under the Production Assistance, the Buffer Stock, and the Marketing and Transportation Schemes within 120 days from the adoption of this report.
• Ruling in favour of Brazil, Australia and Guatemala in their trade dispute against India over New Delhi’s sugar subsidies, the WTO panel has stated that the support measures are inconsistent with WTO trade rules.
  • In 2019, Brazil, Australia and Guatemala dragged India into the WTO’s dispute settlement mechanism alleging that New Delhi’s domestic support measures to producers of sugarcane and sugar and export subsidies are inconsistent with global trade rules including various provisions of the WTO’s Agreement on Agriculture, Agreement on Subsidies and Countervailing Measures, and the General Agreement on Trade and Tariffs (GATT).
• Brazil is the largest producer and exporter of sugar in the world. India is the world’s second largest sugar producer after Brazil.
• According to WTO rules, a WTO member or members can file a case in the Geneva-based multilateral body if they feel that a particular trade measure is against the norms of the WTO. Bilateral consultation is the first step to resolve a dispute.
  • If both the sides are not able to resolve the matter through consultation, either can approach for the establishment of a dispute settlement panel.
  • The panel’s ruling or report can be challenged at the World Trade Organization’s Appellate Body.

To know about Agreement on Agriculture at WTO, please refer September 2021 DPN.

WTO Dispute Settlement

• WTO is an international body that also deals in Dispute Settlements.
• The member country will approach the WTO’s dispute settlement body when a country fails to comply with WTO rules.
• All the members are encouraged to settle the disputes through consultation or a panel if the consultation fails.
• The constituted panel will circulate the verdict of the dispute settlement amongst WTO members who can decide to reject the ruling.
• If the ruling is approved, the member country that violated the rules must change rules in line with the WTO Agreement.
• In the case of failure to do so, the complaining country and the violating country may determine a mutually-acceptable compensation, failing which, the complaining country may retaliate suitably.

WTO’s Appellate Body

• Appeals against the orders of DSB is taken to WTO Appellate Body.
• The Appellate Body, set up in 1995, is a standing committee of seven members that presides over appeals against judgments passed in trade-related disputes brought by WTO members.
• Countries involved in a dispute over measures purported to break a WTO agreement or obligation can approach the Appellate Body if they feel the report of the panel set up to examine the issue needs to be reviewed on points of law.
• However, existing evidence is not re-examined but legal interpretations are reviewed.
• The Appellate Body can uphold, modify, or reverse the legal findings of the panel that heard the dispute. Countries on either or both sides of the dispute can appeal.
• The Appellate Body has so far issued 152 reports. The reports, once adopted by the WTO’s dispute settlement body, are final and binding on the parties.