Australia goes to WTO over India's sugar subsidy

Canberra, Nov 16  Australian Trade Minister Simon Birmingham on Friday announced that his country was taking legal action against India at the World Trade Organisation (WTO) over its sugar subsidy scheme which he said has the global market in a spin and risks pushing many Australian growers beyond the financial point of no return.

Despite efforts to negotiate with Indian Minister of Commerce and Industry Suresh Prabhu, Birmingham said he was left with no option but to resort to the WTO when Prabhu refused to budge, Farm Online News reported.

The report said that the row kicked off on September 27 when the Indian government announced a $1 billion subsidy scheme in addition to a previous round of domestic industry assistance.

Australia's Aus$2 billion ($1.46 billion) sugar industry, which has 4,000 cane farms and 24 sugar mills, was suffering losses as a result of the India subsidies, producers said.

India, the world's second-largest sugar producer, has been giving help to its cane growers, who reported record production last season.

Birmingham said he was disappointed that India had left him with no choice but to "stand up for the rights" of Australian farmers and millers.

"We have raised our industry's deeply held concerns on numerous occasions with senior levels of the Indian government.

"Whilst we support efforts by countries to develop their agricultural industries, these efforts need to be consistent with their WTO obligations and applied in a manner that doesn't distort global trade," he said.

Australia has submitted a "counter-notification" to the WTO which will be discussed by the Committee on Agriculture on November 26 in Geneva. If that fails, the next step would be a formal dispute action, the report said.

The subsidies, which boost domestic returns and hurt international prices, could push up to 5 million tonnes onto the global market, according to Farm Online.

Birmingham told ABC News he hoped the WTO action would be supported by the other countries.

"Our bilateral trade with India is worth $21 billion, with 23 per cent of imports into Australia and 77 per cent into India," he said.

Australia wants a free trade agreement which could boost farmer returns along with financial and educational exports, but agriculture was a key sticking point.