Thailand eliminates domestic sugar price controls to settle Brazil's WTO challenge

BANGKOK, Jan 16 (Reuters) - Thailand's military government has eliminated control of domestic sugar prices and sales administration, the industry minister said on Tuesday, as part of a regulatory overhaul to avoid a trade dispute with Brazil.

The moves were outlined in a series of government documents, including an executive order by Prime Minister Prayuth Chan-ocha suspending a price control clause in the country's Cane and Sugar Act of 1984 while the law is still being amended well past an initial December 2017 due date.

"From now on sugar prices will move according to market prices," Minister of Industry Uttama Savanayana told reporters at a news conference on Tuesday.

These were two of the steps necessary to completely deregulate the Thai domestic sugar market after Brazil challenged Thailand at the World Trade Organization (WTO) in 2016, arguing that Thailand's subsidies for cane farmers were increasing production and dragging down global prices.

Thailand, the world's second-largest sugar producer after Brazil, previously provided domestic price subsidies of 160 baht ($5.00) per tonne to cane growers, set domestic sugar prices at between 19 to 22.50 baht ($0.6-0.7) per kilogram, and allocated a certain amount of sugar for domestic consumption while exporting the rest.

Thailand already stopped its direct subsidy program in 2016, according to Warawan Chitaroon, a deputy secretary-general of the Office of Cane and Sugar Board.

($1 = 31.99 baht) (Reporting by Patpicha Tanakasempipat and Panarat Thepgumpanat; Editing by Louise Heavens)