–Reverses Earlier Panel Decision–

The Distilled Spirits Council today hailed a World Trade Organization (WTO) Appellate Body decision in favor of the United States in its challenge against India’s additional and extra-additional duties on wine, spirits and other agricultural and manufactured products.

According to the Office of the U.S. Trade Representative, India imposed these duties on U.S. imports in addition to and on top of its basic customs duty, resulting in combined duties on imports of alcoholic beverages (beer, wine and spirits) of up to 550 percent.  India argued that the duties were permitted because they simply offset certain internal taxes (such as value-added taxes).

The Appellate Body reversed the original WTO  panel, which had found that any import charge offsetting an internal tax need only “serve the same function” as the internal tax and need not be equivalent in amount to that internal tax, USTR said.  In reversing the panel, the Appellate Body agreed with the United States that any import charges aimed at offsetting internal taxes cannot result in a higher amount being charged on imports than on like domestic products.

“This is an important decision for all WTO Members, particularly at a time when they are negotiating tariff commitments,” said Ambassador Schwab.  “The Appellate Body reversed a deeply flawed panel report and reaffirmed a fundamental WTO rule that Members cannot impose duties on imports that exceed their tariff commitments.”

Commenting on the decision, DISCUS Senior Vice President for International Issues and Trade Debbie Lamb said, “The Appellate Body ruling establishes that India’s additional and ‘extra additional’ customs duties on imported spirits and wines are discriminatory and illegal under WTO rules.”

She added, “The Council welcomed India’s decision in July 2007 to eliminate the additional customs duties and today’s ruling makes it clear that there can be no justification for re-imposing them. India should now eliminate the extra-additional duties, which still apply to imported spirits, wines and other products.

“We commend USTR for pursuing this case through to the end,” Lamb concluded.