EU vraagt WTO-advies over Indiase regels voor import en export van alcoholische dranken (en)

The European Commission will today request formal consultations with India in the WTO (under the Dispute Settlement Understating) regarding India’s import regime for spirits and wines. This decision follows an investigation carried out in the framework of the European Union’s Trade Barriers Regulation (TBR) at the request of the European Spirits Organisation (CEPS) and the Comité Européen des Entreprises Vins (CEEV). A European Union Trade Barriers Regulation Investigation concluded that access to the potentially large Indian market for spirits and wines is severely restricted due to a high duty burden and restrictions on retail distribution in certain Indian States. The European Union considers that these trade barriers are in clear breach of international trade rules. After having allowed India a considerable period of time to address the problem, the EU now hopes to use the WTO consultation process to arrive at a mutually satisfactory solution with India.

EU spirits and wine producers have for a number of years raised concerns about the excessive duty burden on imports of spirits and wines into India. Despite various efforts by industry representatives, EU Member States Governments and the European Commission, progress on this issue has so far been limited.

The key issue at stake is high Additional Duties levied on imported spirits and wines. The Additional Duties are levied on top of high federal Basic Customs Duties (of 150% for spirits and 100% for wines), raising the cumulative federal duty burden to between 177% and 540% (depending on the import price of the products).

Another issue relates to restrictions on the sale of imported spirits and wines in the Indian State of Tamil Nadu, where only Indian-made spirits and wines may be sold through shops and other retail outlets.

What are WTO consultations?

A request for consultations is the first stage in the WTO dispute settlement process. If the dispute cannot be satisfactorily resolved in consultations, the EU may ask for a WTO Panel to be established to rule on the legality of India's Additional Import system. WTO consultations last for 60 days.

Background

According to industry, the Indian market for spirits is one of the largest in the world amounting to 87 million nine litre cases. The corresponding figure for wine is 667,000 nine litre cases. Moreover, the Indian market holds particular potential for the future. EU spirits exports to India in 2004 amounted to € 23.3 million (Eurostat). EU wine exports to India in 2004 amounted to over € 4 million (Eurostat).

The EU spirits industry, as represented by CEPS, exports spirits to over 150 countries with annual exports amounting to more than € 5 billion. The spirits sector employs about 50,000 people and indirectly a further 250,000 in the EU. According to CEEV, EU wine exports to third countries amount to € 4.5 billion each year. The wine sector employs approx. 560,000 people.

The Commission Decision was adopted on 7 November, but only took legal effect when published in the Official Journal on 18 November. The Commission will make its request to India for WTO consultations (to be held in Geneva) today. The Decision follows an investigation carried out in the framework of the EU Trade Barriers Regulation (report available at

http://trade.ec.europa.eu/doclib/docs/2006/july/tradoc_129462.pdf).

The investigation concluded that India's Additional Duties on imported spirits and wines and restrictions on retail sale of imported spirits and wines in the Indian State of Tamil Nadu are contrary to India's obligations under the WTO (Articles II, III and XI of the GATT 1994).