EU takes Canada to WTO over beer, wine tax

BRUSSELS (Reuters) - The European Commission said on Wednesday it was taking Canada to the World Trade Organization (WTO) over what it said was tax discrimination against imports of wine and beer.

"The EU plans to ask Canada to explain measures which provide tax relief to Canadian wine and beer but not to that imported from the EU," the Commission said in a statement.

The Commission made a similar move against India a week ago over its high tariffs and taxes on wine and spirits imports.

Canadian International Trade Minister David Emerson said he was "a little surprised" by the EU's actions because Ottawa felt the taxes were consistent with those imposed on foreign alcohol by countries such as Germany and France.

"We're going to persevere. We believe in our domestic beer and wine industries and we're going to do what we can to make sure they're successful," he told reporters in Ottawa.

"We're not in a world of complete free trade and we can't be a boy scout about it ... we (will) not allow ourselves to be upstaged by other countries that are undertaking various initiatives that are similar."

The European Union will seek consultations with Canada on WTO rules after Canada cut excise taxes on Canadian wine and beer but left higher taxes intact on EU wine and beer imports.

"These measures are contrary to the letter and spirit of the WTO rules," EU Trade Commissioner Peter Mandelson said in a statement. "I hope we will be able to use the WTO consultation process to agree an amicable resolution to the problem."

Canada proposed the tax on May 2 and imposed it despite the fact that the EU had "expressed its concerns," the EU executive said in a statement.

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