US unlikely to withdraw WTO wine case soon

Unlike the EU, the US does not seem to be in a hurry to drop its case against India’s alleged high import duties on wines and spirits at the World Trade Organization (WTO).Although, India brought down import duties on foreign liquor in July this year to levels committed at the WTO, US officials say that the case would be dropped only after the country is satisfied that the local levies that state governments are planning to impose on imported liquor are not discriminatory. India, in the meanwhile, is planning to approach the WTO dispute settlement body with a written submission justifying the measures which the US has complained against.

Speaking to ET, sources from the commerce ministry said that there was no reason for the US to continue with its case against India at the WTO. “The EU and the US had a point when they complained that India’s import levies on liquor is higher than what the country’s commitment is at the WTO. That is why, after much deliberation, India removed all additional customs duties on wines and spirits. There is no reason why the US should continue with the case now,” an official said.

India removed additional Customs duties on wines and spirits in July following disputes filed by the EU and the US against the high duties at the WTO. The EU and the US had claimed that although India had bound its duties on wines and spirits at the WTO at 150%, the aggregate duties were much higher ranging from 177.33% to 264% for wines and from 252.22% to 550% for spirits.

The US, however, seems to be in a mood to wait and watch how things unfold. A US government official, who did not want to be named, told ET that the country had some apprehensions about the local taxes which the state governments were planning to impose on imported liquor.

So far, the local levies imposed by states on foreign liquor was just a fraction of the levies imposed on domestic liquor. However, now that the Centre has removed the ACD, the states have plans of imposing local levies on imported wines and spirits at par with domestic liquor.

Justifying the move, Indian officials say that as long as the state levies on imported and domestic liquor are the same, the criteria of national treatment was being maintained and there was nothing the exporting countries could complain against. US officials, on the other hand, maintain that they would first like to be sure that there is no discrimination against foreign liquor before taking back the case.

India now plans to send a written submission to the WTO, pointing out that the case filed by the US against India was not justified any more. The country is hoping that the WTO would convince the US to drop its case.