India blocks victory of Brazil in the WTO and keeps sugar subsidies

RIO DE JANEIRO, BRAZIL – Brazil today contested India’s appeal to the Brazilian victory in the sugar dispute at the World Trade Organization (WTO). This case illustrates the damaging consequences of the United States’ blockade of the WTO Appellate Body.

In practice, the Indians have made an “appeal in a vacuum” since there is no judge to handle the case. They stopped the Brazilian victory and will continue giving the subsidies considered illegal by the global entity.

The main point in the dispute that Brazil, Australia, and Guatemala opened against India is a minimum price policy for the mills to pay sugar producers. The price is high and stimulates overproduction, which can flood the global market and bring down international prices of the commodity.

Brazilian exporters have been claiming losses with the policy adopted by the Indians, who have increased their share in the global sugar trade thanks to subsidies.

In early December, the WTO panel issued a decision favoring Brazil, Australia, and Guatemala and ordered the Indians to withdraw the measure. However, on December 24, India filed its appeal with the WTO.

Today, the WTO published India’s five-page, 22-paragraph, detailed petition. New Delhi claims that the panel made errors and asks the Appellate Body to modify or declare the decision without foundation and without legal effect.

Brazil has already challenged the Indian appeal since it had 18 days to react. The Brazilian position is that the panel made the correct decision. But, given the situation that the WTO is going through, the measure favors the Indians in practice.

In the document, India recognizes that currently, there is no member of the Appellate Body to constitute a case. By law, three judges are needed to examine a complaint.

But the Appellate Body, which usually has seven judges, is empty today. It has been inoperative since December 2019, when only the judge of Chinese origin remained. She, in turn, finished her term at the end of 2020.

This situation happened because of the blockade that the US imposed on the Appellate body during Donald Trump’s administration, which Joe Biden did not modify.

As former WTO Director-General Pascal Lamy said, the US feels threatened by China and wants to attack Beijing harder with trade measures contrary to WTO rules, which they prefer paralyzed and weakened.

For this reason, Washington, in practice, left the global entity taking the key to the Appellate Body, a kind of supreme court of world trade – and with this, the country avoids being condemned.

India, unlike Brazil, is not part of the group of 25 countries that agreed to a provisional arbitration arrangement. Thus, disputes between them can be settled. Participants include, among others, the European Union, China, Canada, and Australia.