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Info Service on WTO and Trade Issues (Sep25/17) WTO:
Farm tensions rise over India's sugar policies, EU's EUDR, US beef This move appears to be a "naming and shaming" exercise targeting India's sugar policies, according to people familiar with the development. Unlike previous counter-notifications filed by several countries regarding alleged breaches in India's market price support for rice, wheat, cotton, and pulses, Australia's latest action introduces a new dimension: India's alleged failure to notify its domestic support for sugar, said a farm trade analyst who requested anonymity. In its 19-page counter-notification (G/AG/W/262) submitted on 9 September, Australia stated that it continues "to have a significant interest in ensuring a transparent and predictable global trading system, underpinned by a shared understanding of Members' obligations under WTO rules." Citing Article 18.7 of the Agreement on Agriculture (AoA), Australia said it seeks "further clarification from India on its domestic sugarcane and sugar policies", noting that "historically, as the world's second-largest sugar producer and third-largest exporter, dynamics in India's sugar market have significant implications for both prices and trade in the global market." Over the past few weeks, India has faced a sugar crisis marked by surging domestic prices and potential shortages. According to media reports, the government has intervened by allowing duty-free imports and restricting storage limits to manage the tight market. Against this backdrop, the Australian counter-notification appears to be another attempt at "naming and shaming" India's farm trade policies at the WTO in recent years, the analyst said. India has previously pointed out that it does not procure sugar from the market, noting that all procurement is handled by private sugar companies. Consequently, there is little or no basis for any domestic support for sugarcane and its derived products, argued an India-based analyst. However, Australia countered that "each sugar season, the Government of India sets the Fair and Remunerative Price (FRP) for sugarcane," pointing out that the FRP "is an administered price that effectively acts as a floor price for sugar mills to pay farmers for sugarcane." In addition, Australia claimed that Indian "farmers are paid premiums for increased production efficiency, and farmers in some states are eligible for additional payments by sugar mills under specific state level support, known as State-Advised Prices (SAPs)." To bolster its arguments, Canberra highlighted that the "WTO Panel in the India - Sugar and Sugarcane dispute found on 14 December 2021 that India's sugar support regime was inconsistent with its WTO obligations and confirmed India's subsidies were vastly in excess of levels permitted under WTO rules." Australia argued that "the Panel's report also provided a refined method for calculating India's level of support for sugar by accounting for state-level subsidy schemes as well as the varying levels of efficiency (of extracting sugar from sugarcane) across India's sugarcane-growing states." India voided the panel's rulings by appealing to the dysfunctional Appellate Body in December 2021. Nevertheless, Australia stated, "while the status of the Panel Report is not final, the methods outlined in the report provide the most up-to-date guidance from a WTO panel on calculating market price support for sugar." Arguing that the counter-notification "implements the Panel's method for calculating India's market price support and Aggregate Measurement of Support (AMS) for sugarcane," Australia charged that "India has not included sugarcane, or its derived products, in any of its domestic support notifications since 1995-96." "Therefore, there is no information provided to the WTO from the Government of India to compare with the findings of this paper," Australia pointed out. Using the latest publicly available information, Australia claimed that India's market price support for sugarcane over the period 2018-19 to 2024-25 ran into billions of dollars. Australia explained that "market price support has been calculated in accordance with the domestic support provisions of Annex 3 of the AoA. Under Article 6, paragraph 4 of the AoA, India is limited to providing a product-specific AMS for sugarcane no greater than 10% of the total value of production of sugarcane. This follows from the fact that India has no Total AMS (or reduction commitments) in Part IV of its Schedule (XII)." In short, according to Australia, "it appears that over the seven years from 2018-19 to 2024-25, India provided sugarcane AMS vastly in excess of the limits set out in Article 6, paragraph 4 of the AoA (10% of the total value of production of sugarcane)." EU'S EUDR The controversial European Union Deforestation Regulation (EUDR), which has triggered massive pushback from several developing countries over the past few years, has again come under scrutiny from Brazil. Brazil has quizzed the EU over the EUDR - widely viewed by developing countries as a major non-tariff barrier - seeking granular details on the treatment accorded to its members compared to other countries. In its questions (AG-IMS ID 116061) to be addressed at the CoA meeting on 24 September, Brazil pointed out that "since the end of 2025, the EU has introduced amendments to the EUDR and proposed simplification measures relating to this legislation." "Some of these measures", according to Brazil, "alleviate the burden on SMEs (small and medium-sized enterprises) from countries classified as "low risk" that place relevant products on the EU market or export products, which they themselves have grown, harvested, obtained from, or raised on relevant plots of land." Consequently, the EU's amended "measures appear to afford more favourable treatment in the EU market to products originating from EU producers, who are often also SME operators, as compared to imports originating from third countries." This questionable classification "appears to result from the fact that all EU member States are classified as low-risk under the EUDR benchmarking system and from the fact that only EU operators seem able to place products directly on the EU market ("or products that this operator itself has grown, harvested, etc.")." Brazil raised a volley of questions, including: 1. Why has the EU not extended these simplification measures to imports of like products originating from third countries outside the EU, irrespective of the size of the operator? 2. Under what circumstances can a non-EU micro or small operator qualify for simplified treatment under the EUDR or, put differently, under what circumstances can a non-EU operator be considered to be placing its products directly on the EU market? 3. Would the EU consider extending treatment no less favourable than that afforded to micro and small operators from "low-risk countries" to products originating from smallholders or small-scale producers from third countries? 4. Could the European Union clarify how the implementation of the EU Deforestation Regulation (EUDR) ensures treatment no less favourable for imported agricultural products and operators from third countries, particularly in light of simplification measures reportedly available to certain domestic small and medium-sized enterprises (SMEs)? 5. Could the European Union explain how distinctions in compliance obligations, due diligence requirements or administrative procedures between EU-based SMEs and non-EU operators are considered consistent with the WTO principle of non-discrimination? US LEAN BEEF Another item slated for the CoA meeting on 24 September concerns US lean beef trimmings prices under the increased TRQ (tariff rate quota). Taking note of "President Trump's proclamation for the calendar year 2026 to increase the aggregate in-quota quantity for certain products described in Additional United States Note 3 of Chapter 2 of the HTSUS by 300,000 mt," the EU (AG-IMS ID 116071) stated that "the additional 300,000 mt described in clause (1) of the aforementioned proclamation is applied only to lean beef trimmings classifiable under HTSUS statistical reporting numbers 0201.30.5091, 0201.30.5097, 0202.30.5091, and 0202.30.5097." The EU noted, "according to the same text, the Secretary of Agriculture and the Trade Representative, in consultation with any other senior executive branch official they deem appropriate, shall monitor whether the imports of lean beef trimmings entered under the increased in-quota quantity established in this proclamation are being sold at a price 25% below the market price for lean beef trimmings." The EU sought clarity and asked the US to address two specific issues: 1. Could the US clarify how it intends to ensure that imported lean beef trimmings under this increased TRQ will be sold at a price 25% below the market price for lean beef trimmings? 2. Could the US explain how the monitoring works in practice and indicate which market prices for lean beef trimmings are used as reference? US FARM PROGRAM In a question submitted by India (AG-IMS ID 116013), New Delhi noted that "the US Department of Agriculture (USDA) announced an expanded partnership with the Export Import Bank of the United States (EXIM) to increase domestic agricultural production and exports, while reducing the agricultural trade deficit." "Alongside this partnership," India stated, "USDA is formally launching the Financial Assurance to Revitalize Markets, or FARM, Initiative, a comprehensive effort to strengthen and modernize its export credit guarantee programme in support of US agricultural competitiveness." India noted that the "FARM Initiative serves as the umbrella for a series of programme improvements and activities designed to enhance access to emerging markets, increase certainty for exporters and lenders, and ensure that US agriculture remains a reliable and resilient partner in global trade." India sought information from the US on the following issues: a. Could the United States provide the following details on the FARM Initiative: i. The objectives and operational guidelines envisioned to be achieved; ii. List of all the programmes and activities under the Initiative; and iii. The budgetary outlay and commodities covered. b. Does the United States intend to notify the FARM Initiative under its export competition notification to the WTO? +
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