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India considers cut in import duties on wine, spirits amid mounting pressure from U.S., EU

India considers cut in import duties on wine, spirits amid mounting pressure from U.S., EU

India is considering cutting import duties on wine and spirits to avoid having the issue decided by the World Trade Organization amid heavy pressure from the U.S. and the European Union, a top Indian official said.
"This is being discussed at the highest level in the government," Commerce Minister Kamal Nath said. "India doesn't want to take it to the dispute settlement level" at the WTO.
Nath's comments came after EU Agriculture Commissioner Mariann Fischer Boel pressed the issue at a meeting in New Delhi.
The EU and the United States have filed complaints with the WTO on the Indian tariffs, alleging they were unfair trade barriers that were keeping foreign countries from competing in India's lucrative alcohol market.
India's basic import duties on wine and spirits _ at 100 percent and 150 percent respectively _ are within the WTO limits, but federal surcharges and state-level taxes take the tariff protection up to 540 percent in some cases.
On Tuesday, U.S. Trade Representative Susan Schwab in Washington said that her government had followed the EU and filed a complaint with the WTO.
Her comments came hours after Boel told reporters that she was disappointed India's 2007-2008 budget, unveiled last week, didn't lower the tariffs on wine and spirits.
Nath said the Indian government could announce the duty cuts outside the budget, which currently awaits an approval by Parliament.
"I am hopeful that we will find a solution. I don't the think it will come to a stage where WTO will have settle the dispute," Nath said.
The European Commission had filed its complaint with the Geneva-based WTO on Nov. 20.
Under the WTO rules, the first step in such cases is to encourage consultations between the member nations.
If there is no progress within 60 days, the aggrieved party can ask for a panel to be set up to rule on the dispute whose decision would be binding on both sides.
Although that deadline has passed in the case of the European Union, Boel said she would still favor to resolve the issue through talks rather than turn it into a dispute at the WTO.
"We are discussing within the European Union on what steps to be taken next," Boel said Tuesday. "I am in favor of negotiations rather than litigation."
Schwab also said she would like to resolve the issue through consultations.
India is one of the largest markets for alcohol in the world with a huge potential to grow, but imports account for a meager share in total consumption.