EU concerned over India's wine taxation

The European Union on Thursday raised concern over its trade with India on two areas, differing tax rates in states and entry barriers for processed food items. Both, it said, are major concerns.

The European commissioner for agriculture and rural development, Mariann Fischer Boel, said the state variations in taxes was unacceptable to them. She had come to attend the ministerial meeting of the World Trade Organization here. Speaking to reporters at a breakfast meeting, Boel said: "We want to secure access to Asian, especially the Indian, market for our refined products."

She expressed disappointment that in areas where Europe has huge potential, like wine and spirits, there were taxation problems. "This is not acceptable," she added.

With regard to an India-Europe free trade agreement, she said there was a balance but a look at the agriculture trade shows that while Europe agri exports to India were about ¤250 million, India exported products worth ¤2 billion. "We would like to see dynamism," she said, adding that edible oil was one of the products that the European Union could export to India.

At larger level, Boel said the region had been changing and modernising its agriculture policy from 2003 and had offered unprecedented terms for negotiations, despite protests from farmers. "While we lose in agriculture, there should be something for us in non-agriculture market access (Nama) and services."

On the Delhi meeting and the change in approach since last year, Boel said India, through the Delhi ministerial, wanted to signal that 'they are in the ball game'.

She emphasised that the meeting should adopt a 'bottoms-up' approach. Besides, confidence building among members was of paramount importance. "We can finalise (Doha Round) negotiations before the end of the year. The sooner the better, because of the fact that we are in a situation in the economy and financial (sector) where we do not want to see the ugly head of protectionism popping up here and there."

Making a strong case for multilateral discussions over a bilateral forum, Boel said it was difficult to discipline domestic support in bilateral agreements. "You cannot substitute multilateral with bilateral," she said.

Once modalities in Nama and agriculture were complete and scheduling takes place, a bilateral approach could be adopted, though in the case of services, Boel felt the bilateral route could be an option.

She said dealing with modalities on agriculture was more complicated and technical, though services and rules could also be negotiated parallel. "There needs to be a strong statement from chief negotiators that they will continue to solve outstanding problems."