US wants WTO probe of Indian duties on wine

Updated on May 26, 2007 02:58 AM IST
India's import duties on US products such as Napa Valley wine and Jack Daniel's whiskey are said to violate global commerce rules.
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AP | By, Geneva

The United States said on Friday it would ask the World Trade Organization to investigate whether India's import duties on US products such as Napa Valley wine and Jack Daniel's whiskey violate global commerce rules.

The announcement by Washington's top trade negotiator comes a month after the WTO established a panel to examine a European complaint against wine and liquor restrictions in a number of Indian states.

"The layers of customs duties India applies to US products, in particular to wine and distilled spirits, are not in line with its WTO commitments," US Trade Representative Susan Schwab said in a statement. "We must ensure a level playing field for US products around the world."

India's basic import duties on wine are 100 per cent, while the tariff on spirits is 150 per cent, both within WTO limits. However, various government surcharges take the tariffs up to levels reaching as high as 550 per cent, depending on the Indian state. The state of Tamil Nadu goes further still, shutting out foreign alcohol and allowing shops to sell only Indian-made spirits and wines.

The United States, the EU and Japan, by contrast, apply no tariffs on nearly all imported spirits. China tacks on only a 10 per cent charge on foreign liquor.

The US statement said additional duties are also applied on other American exports such as dairy products. The fees sometimes exceed maximum levels permitted by the Geneva-based trade organization, it said.

"We are disappointed that WTO consultations failed to resolve our concern with the duties and that we must resort to a WTO panel," Schwab said.

A case can result in punitive sanctions being authorized, but panels take many months, and sometimes years, to reach a decision. Officials at India's WTO mission in Geneva said they could not immediately comment.

India is one of the largest markets for alcohol in the world and has huge potential for growth.

The US said wine sales in India through special duty-free rules, such as at airports and luxury hotels, grew by 350 per cent between 2000 and 2005. The growth was 200 per cent for American liquors.

But it said the high import duties imposed on the vast majority of American wines and spirits means total exports remain low. The Distilled Spirits Council of the United States estimates that foreign liquors account for less than 1 per cent of the Indian market.

The 27-nation EU, in making its complaint, said alcohol exports to India account for only a small percentage of total world sales. India bought euro23.3 million ($31.3 million) worth of European spirits in 2004 _ from Scottish whisky to Finnish vodka _ and euro4 million (US$5.4 million) worth of wine. That compares with global European spirits exports amounting to euro5 billion (US$6.7 billion) and wine exports of euro4.5 billion (US$6.1 billion) each year.

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