India used its right on Tuesday under global trade rules temporarily to block a request by the European Union for a WTO investigation into its tariffs on wine and spirits, which Brussels says are too high.
But the probe will automatically be launched by the World Trade Organisation's (WTO) Dispute Settlement Body (DSB) the next time that the EU seeks it, which could be later this month.
In a statement, the 27-state EU said that it was asking for the setting up of an investigating panel because consultations with India had produced no accord. But India said that it was still willing to negotiate and therefore a panel was premature.
The next meeting of the DSB is set for April 24. A report by the European Commission, which has responsibility for trade policy, last year found "clear violations of WTO provisions" in some Indian states.
A combination of import duties and taxes reached as high as 550 percent on imported spirits and 264 percent on imported wines, the report said. Indian trade officials have said the issue is difficult to resolve quickly because state governments are responsible for excise duties on alcohol. However, last month Indian authorities said they expected to resolve the dispute with the EU via a change in legislation on duties.
EU spirits exports to India in 2005 amounted to just 43 million euros ($57.71 million), despite the Asian country being one of the largest markets in the world, and wine exports were 7 million euros, the European Spirits Organisation (CEPS), representing EU producers, has said.
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