London | India has hit back at an Australian attack on its sugar subsidies at the World Trade Organisation, describing Australia's claims as "fallacious" and "hurried".
After Prime Minister Scott Morrison raised the issue with his Indian counterpart Narendra Modi in Singapore earlier this month, Australia lodged a "counter-notification" at the WTO – one step short of a formal dispute. This was debated earlier this week at an agriculture meeting in Geneva, according to trade officials.
Australia claimed India's subsidies for sugarcane were almost 10 times WTO limits in 2016-17, and it had not submitted full disclosures to the WTO. Given India is the world's second-largest sugar producer and fourth-largest exporter, this had helped drive world sugar prices to a decade low.
But India hit back, according to officials. Indian trade diplomats told the meeting its notifications were up to date, and they rejected the claim that its subsidies could distort the world sugar market. They said India was a bit player, accounting for less than 1 per cent of global sugar exports – and thus not a cause of the glut that had depressed prices.
India also argued the technicalities: its officials told the meeting its price subsidies did not count towards WTO limits because they did not involve procurement by the Indian authorities; and because the subsidies' purpose was solely to prevent Indian cane farmers from having to make distressed sales.
Its officials described the Australian claim as "a hurried exercise" based on faulty assumptions and a flawed analysis that had generated false conclusions.
Other countries lined up behind Australia: Guatemala, Thailand, Paraguay, Brazil, Canada, the US and the European Union were reportedly among those voicing concern.
Most backed up Australia's claim that India's actions were driving the slump in world sugar prices. The US also said Australia's argument mirrored Washington's concerns over Indian subsidies to its rice, wheat and cotton farmers.
The dispute is now at an impasse. Trade Minister Simon Birmingham told The Australian Financial Review India Business Summit on Thursday that, "WTO disputes happen between friendly nations, not with great regularity, but they're not uncommon either".
"We stand ready to engage at any moment in terms of working with India to see whether we can come to a resolution," he said.