EU to press ahead with India spirit tariffs dispute

By Chris Mercer

- Last updated on GMT

Related tags: International trade, World trade organization, India

EU officials say they are determined to make India drop its high
import tariffs on wine and spirit drinks, after the country refused
to stand before a dispute panel at the World Trade Organisation.

One Commission source said the EU had expected India to block the first approach for a World Trade Organisation (WTO) dispute panel, which would rule whether or not India's import tariffs on wine and spirits were illegal. Another approach is set to be made within two weeks, and India would be unable to refuse a second time. Wine and spirit producers from Europe and elsewhere have become increasingly frustrated at import tariffs in India, which they see as a lucrative emerging market. The tariffs, which may be up to 550 per cent on some drinks, are a "blatant violation"​ of WTO rules, according to a European Commission report. Commission officials were in India this week for talks. Michael Mann, Commission agriculture spokesperson, said the EU was determined to go all the way. "We don't care how the tariffs go, but they have to go,"​ he told BeverageDaily.com​, although adding the Commission would prefer a voluntary move from India. Rumours have surfaced in India this week that authorities may be willing to lower tariffs without WTO intervention. New legislation could be passed in India before a dispute settlement ruling is delivered, said an unknown source quoted by Press Trust of India​. A WTO panel may take around 12 months to reach a decision, giving India time to play with. But a split between India's commerce and finance ministries is understood to have held up progress, with treasury officials concerned about potential lost tax revenue. Michael Mann warned a new law to lower tariffs would not be enough. "It's not a question of lowering them, they have to be gotten rid of." ​ Drinks firms from the EU have supported and pushed for WTO action to open up the Indian market. "We hope India will take the opportunity to reform the system without WTO interference,"​ said David Williamson, of the Scotch Whisky Association. Scotch whisky exports to India dropped six per cent last year, recent figures show. ​Williamson said there was "growing international pressure"​ on India to reform its tariff system. Both the US and Australia have also opened 'consultation' with India at the WTO, the first stage of the dispute process.

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