The Hindu Business Line : Tariff row over imported liquor: EU asks WTO to set up dispute panel

The request by the EU follows its investigation that found the Indian fiscal regime for imported spirits and wines to be in `blatant violation' of WTO rules.

Bangalore March 27 The tariff row over imported liquor is set to snowball with the European Union (EU) asking the World Trade Organisation (WTO) to set up a dispute panel to resolve the issue.

The EU now wants the dispute over India's refusal to reduce tariffs on imported liquor as per WTO norms to be considered by a WTO dispute settlement panel when it meets on April 11.

WTO Panel

The EU Trade Commissioner, Mr Peter Mandelson, in a statement said: "India has maintained extremely high duties on imported spirits and wines for many years. They restrict European exports and are in clear breach of WTO rules. As we could not resolve our dispute in consultations, the EU sees no other way than to request the establishment of a WTO panel. We are of course not closing the door to an amicable solution, but the ball is now in India's court."

The Scotch Whisky Association based out of UK, which had sought EU's intervention, welcomed the move. "The EU's decision is welcome and sends a clear message to India that it must act now to reform its tax regime or face a dispute panel. We hope the Government of India will seize the opportunity and move to reform the system in the coming days in line with international rules," the SWA Chief Executive, Mr Gavin Hewitt, said.

Blatant Violation

Once the matter is referred to the WTO disputes' panel, the affected parties will get a chance to put forward their arguments before the panel. The ruling is usually given at the end of six months after which the parties involved in the dispute get another chance to make a representation within three months.

Based on these representations, the final ruling is delivered and it has to be implemented within 15 months of the ruling. The request by the EU follows its investigation that found the Indian fiscal regime for imported spirits and wines to be in `blatant violation' of WTO rules and unfairly distorting competition.

Mr Hewitt said their main concern was the levy of additional duty on imports in a discriminatory manner to protect domestic producers contrary to WTO rules. "When the high `basic customs duty' is added, imported spirits face an overall tariff burden of up to 550 per cent," he said.

The US lobby too earlier this month joined the chorus for reduced tariffs and its government petitioned to the WTO to resolve the issue.