| The EU alleges that the additional Customs duty on foreign liquor in the form of countervailing duty (CVD) was in violation of the 'Principle of National Treatment' under the WTO. |
| The duty, imposed in 2001, is in the range of 20-75 per cent for foreign wines and 25-150 per cent for whiskies. |
| "I was very disappointed to see that the cut in the additional Customs duty was not brought about. The existing Indian duty structure on foreign liquor is not acceptable and is not WTO-compliant. Due to the existing structure, the effective duty is 525 per cent on foreign whiskies and 264 per cent on imported wines. The EU will press for formation of a dispute settlement panel in the WTO if the cuts are not brought about," said Marion Fisher Boel, European commissioner for trade and rural development. |
| Speaking on the sidelines of a Ficci meeting, she added the EU was willing to negotiate. "I am desperately in favour of a negotiation rather than taking the litigation route," said Boel, who is leading a 28-member business delegation from EU countries. "The Indian customer should be allowed to make a choice in buying his favourite brand of liquor," she said. |
| The Budget has also disappointed the commerce ministry on this count. "We are equally disappointed and hope that the finance ministry will reduce the import duties," said Commerce Secretary GK Pillai. |
| On being asked if the EU would drag India to the WTO, he said, "That won't be necessary. The finance ministry, at least at the official level, has agreed to keep the duties within the bound rates. We will try to resolve the matter within the next few weeks." |
| EU officials said if the matter reached the WTO, India would have no option but to cut the duties. "We had been wanting to reform the sugar sector for years but it was not possible until Brazil, Australia and Thailand took the matter to the WTO," said a visiting EU official. |
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