US steps up challenge of Indian wine, spirit duties

WASHINGTON, May 25 (Reuters) The United States wants a World Trade Organization panel to arbitrate a dispute with India over its wine and spirit import tariffs, the U.S. trade representative said on Friday.

U.S. officials complain that India's import tariffs can add up to 550 percent to the cost of U.S. goods and unfairly restrict the U.S. beverage industry's growth in a lucrative market.

''We believe the layers of customs duties India applies to U.S. products, in particular wine and distilled spirits, are not in line with its WTO commitments,'' U.S. Trade Representative Susan Schwab said in a statement.

Schwab said she was ''disappointed'' that preliminary talks in April were unable to resolve the matter.

The U.S. beverage industry is angling for greater access to India, a growing Asian market where sales of U.S. wine and spirit exports in duty-free zones, like airport shops, have grown rapidly in recent years.

''India's exorbitant tariffs have made it nearly impossible for U.S. products -- primarily Bourbon and Tennessee Whiskey -- to break into this market, one of the largest spirit markets in the world,'' said Deborah Lamb, a trade official at the Distilled Spirits Council of the United States.

The United States is the world's third largest exporter of spirits and the sixth largest exporter of wine.

The WTO challenge comes as Washington courts greater trade ties with India. A number of Bush administration officials have visited India in the past year, and officials hope to double bilateral trade by next year to an annual billion.

But tension has also crept into the relationship as the two countries wrangle over farm tariffs and subsidies in the Doha round in world trade talks.

India has spearheaded a developing-country campaign for lower farm subsidies in the United States and Europe. The United States, meanwhile, insists that India and other emerging market nations scale back ambitions to protect certain goods from tariff reductions.

REUTERS SBA KP2034