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EU seeks to settle trade row with India amicably

Financial Express, India

EU seeks to settle trade row with India amicably

FE Bureaus

6 September 2009

New Delhi/The European Union on Friday said it would prefer to resolve two commercial disputes with India without engaging in a legal battle at the World Trade Organisation (WTO). The first dispute involves seizure of Indian generic drugs in transit at some EU-based ports, including Amsterdam, which were bound for certain third world countries, on the grounds of patents infringement. The second is related to levy of duties on foreign liquor by some Indian states, which the EU claims does not conform to international trade norms. Both the issues, if not settled by diplomatic channels, could lead to a fullscale court battle at the dispute settlement board under the WTO, which looks into alleged complaints of unfair trade practices among members countries.

Speaking to a select group of media here, European Union trade commissioner Catherine Ashton said the EU would like to settle the issues outside the ambit of any international legal arbitration. When asked about the drug seizures at EU ports, Ashton said, “Till now India has not talked about any complaint to us. There are only rumours. I would prefer to talk without going through that process (in WTO) as we have some ideas on it. My technical people have got some ideas. We are in touch with member states about this too.”

She stressed if India felt that the measures and ideas proposed by the EU to prevent future drug seizures did not work, it could call for establishing a dispute settlement panel at the WTO. Commenting on the Union’s sensitivities over state levies on imported wines and spirits in India, Ashton said, “We are not at the end of it yet but we are talking. We wanted to get the legal team here before I came here. My preferred solution again is to work this out outside the WTO. Countries always have the right to go into the dispute settlement process. It is only at the back of our mind. Actually, I think, we might be able to sort this out.”

Ashton pointed out that India was an important trading partner of the EU and both were working towards deepening economic engagement through a duty-free trade deal involving goods, services and investment.

The drug seizures have been taking place because of the EU’s stringent patent infringement laws, which mandate that products involving intellectual property rights have to be patented in the country of production or the nation for which it is bound. India maintains the drugs were not meant for the EU and were in transit through some ports located in its member nations.

The economic bloc’s problems on state levies on foreign liquor has roots in the high import duties that were charged by India on imported tipple. The EU had been complaining since 1998 against the high import duties charged by India on foreign liquor and threatened to call for setting up of a trade dispute panel at the WTO. To accommodate the EU’s concerns and to avoid an international legal battle, India scrapped the additional duties on foreign liquor. Subsequently, EU did not take its complaint forward and the panel was not set up but the trade bloc then started having problems with the state levies on imported wines and spirits.