Bridges Weekly Trade News Digest • Volume 12 • Number 31 • 25th September 2008

EU Revives Case against Indian Wine and Spirits Tariffs

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The EU has re-opened a WTO challenge to India’s import duties on wine and spirits, putting an end to a 14-month suspension of the dispute.

Brussels lifted its complaint in July 2007 after New Delhi promised to cut its drinks tariffs, which the EU claimed unfairly discriminated against its exports (see BRIDGES Weekly, 25 July 2007, http://ictsd.net/i/news/bridgesweekly/7616/).

But on Monday, more than a year after the promise for changes was made, the EU claimed that state-level taxes in Indian states such as Goa, Maharashtra and Tamil Nadu continue to discriminate against European wines and spirits.

“Despite recent amendments to legislation, there are no clear indications that the restrictive retail and wholesale practices in Tamil Nadu have ceased,” the EU said in a statement released on Monday. It also alleged that in the states of Goa and Maharashtra “internal taxes are applied only to imported wines and spirits, or at a much higher rate for imports than domestic goods.”

“This is a breach of the WTO’s national treatment principle, which requires that WTO Members treat imports and domestic goods the same,” the EU said.

India’s large and growing population represents a huge potential market for goods such as French wine and Scottish whisky, but so far European alcohol exports to the country have yet to take off.

EU exports of wine and spirits to India amounted to 68 million euros in 2007, which represented roughly half of one percent of the 13 billion euros’ worth of alcohol that the 27-country bloc exported worldwide that year, according to statistics released by the EU.

On Monday, Brussels requested consultations with India on the matter - a step that formally initiates a WTO dispute between the two parties. If those consultations fail to produce a resolution within 60 days, the EU may request that the dispute be presented before a panel of WTO arbiters.

ICTSD reporting.