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Wine duty: US takes India to WTO
March 07, 2007 10:45 IST
Last Updated: March 07, 2007 18:54 IST
The United States has approached the World Trade Organisation against India over the high customs duty it imposes on import of wine and distilled spirits.
"We have raised this issue with the Government of India on several occasions over a number of years. We hope the matter can be successfully resolved in WTO consultations," US Trade Representative Susan C Schwab said in a statement.
India, however, said it wants the issue to be resolved before the matter goes to the dispute settlement mechanism at the multi-lateral body.
"India wants to avoid that the matter goes to the WTO's dispute settlement body. I hope a solution could be found as the matter is being discussed at the highest level," Commerce and Industry Minister Kamal Nath said.
He said the US had informed of its decision to go to WTO with a complaint against India two days back. The European Union has already filed a complaint and has threatened to press for a dispute settlement panel to begin litigations.
Nath said they (US and EU) were entitled to complain against India but discussions were on within the government and solution would be found out.
On top of its basic customs duties, India imposes an 'additional duty' and an 'extra additional duty' on imports of wine and distilled spirits, resulting in aggregated duties on these imports ranging from approximately 150 to 550 per cent.
In WTO, India had committed that its tariffs on wine and spirits would not exceed 150 per cent.
Under WTO rules, parties that do not resolve an issue through consultations may refer the matter to a WTO disputes settlement panel.
"With its fast-growing middle class, India could be an important export market for American wines and distilled spirits if not for these layers of duties," Schwab added.
The European Union had also requested WTO dispute settlement consultations on India's duties on wine and distilled spirits. The US had requested to join these consultations but India had denied this request.
India applies an additional duty ranging from 20 to 75 per cent ad valorem on wine and 25 to 150 per cent ad valorem on distilled spirits. The extra additional duty is four per cent ad valorem.
In cases where wine and distilled spirits may enter India under special duty-free rules, such as for airport duty free and use in luxury hotels, US exports of these products to India have gone up by 350 per cent and 200 per cent respectively between 2000 and 2005.
However, because of the high duties imposed on the vast majority of American wines and spirits, total exports to India remain low.