WTO to deal with India

BREAKING NEWS...

The Scotch Whisky Association (SWA) announced that today the EU will be officially requesting the World Trade Organization (WTO) to address India’s failure to reform its discriminatory tax treatment of imported spirits and wines.

A recent EU investigation into the situation found ‘blatant violations’ of WTO rules. The system unfairly distorts competition by subjecting Scotch Whisky and other imported spirits to a much higher tax burden - of up to 550% - than faced by Indian distillers.

The EU report, delivered in July 2006, concluded that several aspects of the Indian fiscal regime are contrary to WTO rules, including an ‘Additional duty’ (25%-150%) on imported spirits and wine which
distorts competition by unfairly exceeding the taxation of local products.

The EU report concluded that 'the Indian market has remained essentially closed for imported
wines and spirits'. This followed a complaint in 2005 by EU spirits and wine producers, including
the SWA.

Following further talks between the SWA and Indian Government officials in Delhi last week, Gavin Hewitt, the SWA Chief Executive, said:

“The EU’s determination to ensure a level playing field for spirits and wines in India will be
warmly welcomed by Scotch Whisky distillers, who continue to face a long-standing discriminatory tariff and tax regime that has been found to be in clear violation of WTO rules.
It is time for India to implement its international commitments and allow fair access for Scotch Whisky, just as Indian spirit drinks have free access to the European market. We fully support referral of the matter to the WTO for formal consultations and hope that India will take this last opportunity to agree reform to its discriminatory duty arrangements for whisky, without the need for a dispute settlement panel being set up.

Of course, WTO sanctions are not a "done deal". Once an issue is referred to the WTO for a consultation, there is a formal 60 day dialogue between the parties - with hopes that the dispute can be resolved. If agreement cannot be reached, a Dispute Settlement Panel may be established, consisting  of a body of trade experts who consider and rule on the merits of the case, making recommendations as to how a disputed measure can be made to conform with WTO rules.

In the past, WTO Dispute Panels have considered three cases in relation to the discriminatory taxation of spirit drinks. On each occasion - in Japan, Chile, and South Korea - the WTO ruled in favor of the industry’s.