EU suspends WTO dispute panel on liquor duties

The European Union (EU) has suspended a dispute settlement panel that had been set up at its request by the World Trade Organisation (WTO) to examine complaints of high incidence of import duties on imported wines and spirits levied by India.

The move comes after India scrapped additional customs duties on imported liquor on July 3. The United States, which had also formed a panel in the WTO on the same issue, is likely to follow suit.

"The European Union has suspended its panel for a period of 12 months. A dispute settlement panel is dissolved, if the complainant party does not request for its revival during that period," said a commerce ministry official. The European Union will, however, keep a strict watch on the state levies, which will soon be imposed on imported liquor.

Essentially, this means that the issue has been sorted out between India and EU, after the former scrapped additional customs duty on spirits (25% to 150%) as well as wines (20% to 75%), which was the cause of the dispute.

According to EU estimates, the total incidence of import duties levied by India on wines was 264%, while on spirits it was  550%, which is the highest in the world.

However, EU is not happy with India's decision to raise the basic customs duty on wines from 100% to 150%, which is the WTO bound rate.

There is one more dispute settlement panel in the WTO on the same issue against India, which was formed at the United States behest. "We feel that United States will also withdraw its complaint from WTO very soon as the additional customs duties have been scrapped," added the official.