HEADLINE: EU DRAGS INDIA TO WTO OVER WINES

Based on this Indian news headline, we’re guessing the government isn’t too happy although not too surprised. The European Union has finally asked the World Trade Organization to get involved in its duty row with India after lodging complaints for years. After India failed to meet last Friday’s deadline, given by the EU, to relax its strict tax structure on wine and spirits, the EU is taking it to the next level. (Earlier this year, the European Commission concluded an eight-month investigation after hearing complaints given by EU wine and spirits producers.)

The key issues for EU wine and spirits producers are the Additional Duty of 25% to 150% and an Extra Additional Duty of 4% for both wines and spirits. These two duties, in combination with the basic customs duty of 150% for spirits and 100% for wines, leads to an overall duty burden of up to 550% for spirits and 264% for wines.

The EU considers the Indian taxes on imports of wines and spirits illegal under international law and believes they unfairly protects Indian rum, whiskey and gin distillers. The Indian government says that these taxes on imports are designed to even out competition between domestic and foreign producers.

The WTO’s procedures include a 60-day dialogue between the two parties – but if it does not resolve the disagreement, a Dispute Settlement Panel will make recommendations on how to solve the issue.