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France hopeful of resolving dispute on wine duties amicably

Press Trust of India  |  New Delhi 

France today said the dispute with India over import duty on wine and spirits would be sorted out through discussions without approaching the WTO.

"We hope very much that the discussions under process will go on and that solutions can be found without having to (approach) the WTO," the visiting Foreign Trade Minister France Anne Marie Idrac told reporters here at a CII function.

Recently the European Union (EU) had warned India of dragging to the WTO if taxes on wines and spirits imported from Europe are not slashed.

"We are sure that arrangements can be found between Indian producers and Europeans, especially French producers," she said.

India had in 2007 slashed the additional customs duty it charged on imported spirits (which were up to 150 per cent of value of imports depending on the spirits), but simultaneously hiked the basic customs duties to 150 per cent from 100 per cent.

The European Commission had earlier taken India to WTO in 2007 seeking redressal of its grievances which included what it called denial of 'national treatment' to liquor imported from Europe.

Under the national treatment rules, the imported products have to be treated at par with domestic items. The WTO consultation process on the issue was suspended following some corrective actions by New Delhi in 2007.

However, the 27-nation bloc, which produces some of the finest wines and Scotch whiskey in the world, is not completely satisfied because of the increase in basic duty.

Over and above the import levies, states like Goa, Tamil Nadu and Maharashtra which are the major consumers of imported wines and spirits in India impose special fee on these items.

As per the estimates, in 2007, EU exports of spirits to India amounted to about 57 million euros, while EU exports of wine totalled about 11 million euros.

Replying on a question about the conclusion of India-EU free trade agreement, Idrac said the ongoing discussions are "hard".

"I must say that this time the discussions are a little hard...France is pushing very much but it seems to be difficult to obtain a good level of reciprocity," Idrac said.

She hoped that the forthcoming summit of India and EU in November here will give a new direction to the FTA talks.

The negotiations for India-EU free trade pact was launched in 2007, aimed at removing duty and other barriers on the trade which aggregated USD 73 billion in 2007-08.

With increasing pressure on European Union (EU) to stick to a rigid stand on linking climate change and social disparity with trade, the conclusion of talks on India-EU Free Trade Agreement may get delayed.

However, India’s Commerce Ministry has been strongly opposing linking trade with social and climate change issues, arguing these are better left to the United Nations.

First Published: Mon, October 26 2009. 16:51 IST