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United States Requests WTO Panel in Challenge of India's Duties on Wine and Spirits and Other Imports from the United States

05/25/2007

 

 

WASHINGTON, DC – The
United States today requested the World Trade Organization (WTO) to establish a
dispute settlement panel regarding customs duties that India imposes on alcoholic beverages and other
imports from the United
States.


“India
is an important export market for U.S. products and the United States and India have
successfully worked on a number of important trade issues. However, we believe
the layers of customs duties India applies to U.S. products,
in particular to wine and distilled spirits, are not in line with its WTO
commitments,” said U.S. Trade Representative Susan C. Schwab. “We are
disappointed that WTO consultations failed to resolve our concern with the
duties and that we must resort to a WTO panel.  The United States will continue to work toward a
resolution of this issue with India but we must ensure a level playing field
for U.S. products around the
world.”


On top of its basic customs duties, India imposes an
“additional duty” of 20 to 75 percent ad valorem on imports of beer and wine and
from 25 to 150 percent ad valorem on imports of distilled spirits.  In
addition, India applies an “extra additional
duty” of four percent, resulting in aggregated duties on these imports that
range from approximately 150 to 550 percent.  In the WTO,
India committed that its tariffs on
beer, wine and spirits would not exceed 150 percent. The additional duty and
extra additional duty also apply to other imports from the United States such as dairy products and, in some
cases, also result in customs duties that exceed India’s WTO
bound rates.


In cases where wine and distilled spirits may enter India
under special duty-free rules, such as for airport duty-free and use at luxury
hotels, U.S. exports of these products to India have grown by 350 percent and
200 percent, respectively, between 2000 and 2005.  However, because of the
high duties imposed on the vast majority of American wines and spirits, total
exports to India remain low.   


Between 2000 and 2005, U.S. exports of wine and spirits world-wide
averaged approximately $630 million and $633 million, respectively, making the
United
States the world’s sixth largest exporter of
wine and third largest exporter of spirits.


Background:


Under WTO rules, parties that do not resolve an issue
through consultations may refer the matter to a WTO dispute settlement
panel.  The United
States and India held WTO consultations on the
duties on April 13, 2007, which the European Communities (EC) also joined. 
These consultations unfortunately failed to resolve the dispute.


The specific WTO obligations concerned are Articles II and
III of the General Agreement on Tariffs and Trade 1994 (GATT 1994). 
Article II prohibits WTO Members from applying ordinary customs duties or other
duties or charges in excess of those specified in their WTO tariff schedules;
whereas Article III prohibits WTO Members from affording less favorable
treatment to imports than to like domestic products in terms of internal taxes
or other measures affecting imports’ internal sale.



The EC has also requested a WTO dispute settlement panel
on India’s duties on wine and distilled
spirits, which the WTO established on April 24, 2007.  The
United States,
Chile, Australia and Japan will
participate in that dispute as third parties.