US joins row over India's spirit tariffs

By Chris Mercer

- Last updated on GMT

Related tags International trade India

The US this week followed the EU in filing a complaint with the
World Trade Organisation over India's import tariffs on wine and
spirit drinks.

Both blocs have spent months attempting to persuade India to lower the tariffs, and force open a lucrative emerging market for US and EU-based wine and spirit firms. The US said exports to India remained low because drinks firms must pay duty tax in imports at rates ranging from 150 to 550 per cent. "With its fast-growing middle class, India could be an important export market for American wines and distilled sprits if not for these layers of duties,"​ said US trade representative Susan Schwab. "We have raised this issue with the Government of India on several occasions over a number of years." ​ The dispute will now go to a 60-day consultation period at the World Trade Organisation (WTO). If differences remain after this period, a WTO dispute panel will have to step in. The US has filed its own complaint after India denied its request to join a consultation already started by the EU. The European Commission lost patience with India last November, after a study it commissioned found India's spirit tariffs were in "blatant violation"​ of WTO rules. "Alongside China, India has the potential to become the world's largest wine consumer, even beating the US, within the next 10 years,"​ a European Commission spokesperson told The Scotch Whisky Association, which also describes India as a key emerging market, has been particularly vocal in its opposition to India's tariff system. Last month the association said WTO consultation was not working and urged the European Commission to escalate the case by starting dispute settlement proceedings against India. It is understood debate in the Indian government on whether to reduce tariffs has hinged on treasury concerns over potential lost revenue.

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