India, Brazil begin talks to resolve trade dispute

Trade Dispute on Sugar

• India was dragged into WTO dispute settlement in 2019 alleging inconsistent sugar subsidies

• A WTO panel in 2021, ruled that India’s support measures for the sugar sector inconsistent

• In January 2022, India appealed against the panel’s ruling at the WTO’s appellate body

• The appellate body, however, is not functioning due to differences in countries

New Delhi: India and Brazil have started talks to mutually resolve a sugar related trade dispute at the World Trade Organisation (WTO) and as part of the solution the South American nation may share ethanol production technology with New Delhi, an official said.

Brazil is the largest producer of sugarcane and ethanol in the world. It is also a leader in the technology used for ethanol production. “Few rounds of talks have been held as part of our efforts to resolve the dispute. We have also held inter-ministerial meetings here. Brazil is saying that they will share with us technology for ethanol (production). It is a positive thing,” the official said. Ethanol is used to blend with oil to power vehicles. Use of ethanol, extracted from sugarcane as well as broken rice and other agri produce, will help the world’s third largest oil consumer and importing country cut its reliance on overseas shipments. India currently is 85 per cent dependent on imports for meeting its oil needs. Also, it cuts carbon emissions. There is a target of 20 per cent ethanol blended petrol by 2025. India would also have to offer something as part of the mutually agreed solution (MAS) to resolve the dispute at the Geneva-based multi-lateral body. Recently India and the US have ended six trade disputes and have also agreed to terminate the seventh case. As part of the solution, while New Delhi removed retaliatory duties on 8 American products like apples and walnuts, the US is providing market access to Indian steel and aluminium products without levying extra duties. The official said that India is also following a similar process for other complainants of the sugar dispute at the WTO.

In 2019, Brazil, Australia and Guatemala dragged India into the WTO’s dispute settlement mechanism alleging that New Delhi’s sugar subsidies to farmers are inconsistent with global trade rules. A WTO dispute settlement panel on December 14, 2021, ruled that India’s support measures for the sugar sector are inconsistent with the global trade norms. In January 2022, India appealed against the panel’s ruling at the WTO’s appellate body, which is the final authority to pass rulings against such disputes.

The appellate body, however, is not functioning due to differences in the countries on appointments of members of the body. Brazil is the largest producer and exporter of sugar in the world. India is the world’s second-largest producer.