The European Union has threatened to approach the World Trade Organisation (WTO) again if India does not remove the inter-state tariff disparities. ?We want India to get rid of its taxes on wines and spirits in different states to allow easier access to European wines, failing which we will approach the WTO again,” Michael Mann, spokesperson for the EU Commissioner for Agriculture and Rural Development said Wednesday.
Some of the Indian states impose very high tariffs on imported wines and spirits and EU feels that duties imposed by Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu on foreign liquor do not conform to ?National Treatment’, which is a critical to WTO norm that mandates that a country has to treat imported products at par with those produced domestically. According to EU, these four states accounts for consumption of half of the imported liquor. The issue was discussed at a bilateral meeting between commerce minister Anand Sharma and EU trade commissioner Catherine Ashton at the sidelines of an informal meeting of trade ministers on the Doha Round of talks held in Delhi during the first week of September.
Mann said although India has taken some steps to cut down its import tariffs on wines and spirits at the national level – which has earlier avoided a face-off between India and EU at the WTO – but still much more needs to done to bring down the duties and taxes in different states.
Talking to FE in September, Ashton had said that EU was in favour of sorting the issue out without getting involved in any litigation at the Geneva based headquarters of the World Trade Organisation. ?My preferred solution again is to work this out outside WTO. Countries always have the right to go into the dispute settlement process. It is only at the back of our mind. Actually, I think, we might be able to sort this out,” Ashton had said.EU has long been complaining about high tariffs for imported wines and spirits in India, saying that they are not compliant with WTO rules. It has asked the WTO for a setting up an investigation panel, following which India had lowered additional tariffs on wines and spirit. Later, EU dropped out of the investigations after an assurance from India that it will take steps to lower duties at the state level as well.
Mann said EU has offered to 70% cut on trade distorting domestic subsidies, 60% reduction on average agriculture import tariff and complete elimination of agriculture export subsidies by 2013.
?We have offered these concessions to the WTO and are willing to slowdown the pace of some in case of developing countries like India,” Mann added.