INDIA-BRAZIL SUGAR DISPUTE (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     18th September 2023        
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Context: Recently, India and Brazil initiated discussions to amicably address a trade dispute concerning sugar at the World Trade Organisation (WTO), and as a recent development in this resolution effort, the South American nation is considering sharing its ethanol production technology.


Key Points of Dispute

  • 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.
  • 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.

oBrazil is the largest producer and exporter of sugar in the world. India is the world's second-largest producer.

  • Brazil, Australia, and Guatemala, which are members of the WTO, had complained that India's support measures to sugarcane producers exceed the de minimis level of 10 percent of the total value of sugarcane production.
  • According to WTO rules, a WTO member or member can file a case in the Geneva-based multilateral body if they feel that a particular trade measure is against the norms of the WTO.

Ethanol

  • About: Ethanol serves as a fuel additive for vehicles when blended with oil.
  • Derived from: Sugarcane, broken rice, and various agricultural products.
  • Dependency: Its utilization can assist India, the world's third-largest oil consumer and importer, in reducing its dependency on foreign oil supplies, currently standing at 85 percent.
  • Use of Ethanol: using ethanol in fuels contributes to a reduction in carbon emissions.
  • India’s Target:  To achieving a 20 percent ethanol blend in petrol by the year 2025.


World Trade Organization (WTO) 

  • About: It is the only global international organization dealing with international Trade between nations.
  • Set up: In 1995, the GATT under the Marrakesh Agreement.
  • Headquarters: Geneva, Switzerland.
  • Members: 164 members and India is a founding member of WTO.
Samadhaan