India, Brazil Start Discussions To Resolve Sugar-Related Trade Dispute At WTO

The official revealed that some discussion rounds have already been held, and now Brazil has put forward it’s intention of sharing ethanol production technology with India.

Brazil, Australia, and Guatemala registered complaints against India in 2019 at the WTO alleging that the country’s sugar subsidies to it’s farmers violated the WTO's Agreement on Agriculture.

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India and Brazil have begun negotiations to mutually resolve a sugar-related trade dispute at the World Trade Organisation, an official stated. As part of the solution for the conflict, it is being considered that Brazil should share the ethanol production technology with India, the official revealed. 

In addition to being the largest producer of sugarcane and ethanol globally, Brazil is also a leader in ethanol production technology. The official revealed that some discussion rounds have already been held, and now Brazil has put forward it’s intention of sharing ethanol production technology with India, reported PTI. 

Ethanol is used to power vehicles after blending it with oil. It could help India reduce it’s carbon emissions and also cut down it’s dependence on imports for fuel needs. Currently, India is reliant on imports to fulfill 85 per cent of it’s fuel requirements. Further, India also has a target to use 20 per cent ethanol blended petrol by 2025, the report added. Notably, trade between India and Brazil increased to $16.6 billion in 2022-23, against $12.2 billion in 2021-22. The trade gap is in India’s favour.

Like the recent agreements between India and the US to resolve their trade disputes, the country is now trying to follow the same process to resolve it’s sugar related trade disputes with other countries at the WTO. 

Notably, Brazil, Australia, and Guatemala registered complaints against India in 2019 at the WTO alleging that the country’s sugar subsidies to it’s farmers exceed the ‘de minimis’ level of 10 per cent of the total value of sugarcane production, which the countries stated violated the WTO's Agreement on Agriculture. A WTO dispute settlement panel in December 2021 ruled that support measures followed by India to support it’s domestic sugar industry are inconsistent with global rules. 

India appealed against the decision in January 2022 at the WTO’s final decision-making authority, it’s appellate body. However, the trade organisation’s appellate body has been dysfunctional due to the differences in countries regarding the appointment process of the members of the body.

According to the rules of the WTO, it’s member(s) can file a case in the trade body if they find a particular trade measure against the rules of the organisation. The first step in finding a solution to the dispute is bilateral consultation. If both parties are unable to solve the issue through consultation, either of them can take the matter forward to a dispute settlement panel. The panel’s decision can be challenged at the World Trade Organisation's Appellate Body, which will have the final say on the matter.

However, this appellate body has been dysfunctional due to differences of opinion among the WTO’s member countries about the appointment process of the members. Multiple disputes are pending with the appellate body and the US has been blocking the appointment of members, the report added.