EU taking India to WTO in row over wines, spirits

BRUSSELS, Nov 20 (Reuters) The European Commission said on Monday it was taking India to the World Trade Organisation (WTO) in a dispute over India's high tariffs and taxes on wine and spirits imports.

The European Union's executive will send a letter to Indian officials later on Monday, saying it was requesting formal consultations at the WTO.

''We will always respect genuine sensitivities in India's development but this is out-and-out protectionism which even the Indian government has not been able to justify in the past,'' said Peter Power, a Commission spokesman for trade issues.

''That is why there must be change and why we have no alternative but to pursue the matter in this way,'' Power said in a statement.

Consultations at the WTO are a first, 60-day stage in a process that could eventually lead to retaliatory tariffs being imposed by the EU on Indian exports.

EU Trade Commissioner Peter Mandelson had warned India he would turn to the WTO if there was no move to address the EU's concerns during his visit to the country last week.

A Commission report this year, prompted by complaints from European producers of whisky and other spirits and wines, found ''clear violations of WTO provisions'' in some Indian states.

The combination of duties and taxes were as high as 550 percent on imported spirits and 264 percent on imported wines, the report said.

In the Indian state of Tamil Nadu, only Indian-made spirits and wines may be sold through shops and other retail outlets, the Commission said.

Indian trade officials have said the issue is difficult to resolve quickly because state-level governments are responsible for excise duties on alcohol.

''All we are asking for is a level playing field for international producers seeking access to the Indian market and we would prefer that recourse to a WTO dispute panel decision could be avoided,'' said Jamie Fortescue, head of the European Spirits Organisation (CEPS) in Brussels.

EU spirits exports to India in 2005 amounted to 43 million euros ( million), a tiny amount given the country represents one of the largest markets in the world, and wine exports were 7 million euros, CEPS said.

Mandelson has said he will adopt a more ''hard-headed'' approach to trade issues than his predecessors as he tries to open up new markets for European companies, especially in Asia.

The EU, in coordination with the United States and Canada, launched WTO proceedings against China in a dispute over Chinese tariffs for auto parts earlier this year.

REUTERS SBA BD1931