No one wins in a wine war between U.S. and EU

Written by on in Champagne, French wines, General Wine, Italian, Red wines, Uncategorized, White Wines
All European Union wines exported to the U.S. would likely double in price if a proposed 100 percent tariff goes into effect.

When wine and cheese become part of a U.S.-European Union trade war, you know world leaders on both sides of the dispute have a corkscrew loose.

This is not a political opinion column so I will refrain from positing blame. However, there are facts you should know as a wine consumer.

If the Office of U.S. Trade Representative (USTR) imposes a 100 percent tariff on all EU wines entering the country, it will open the door to retaliatory measures against the American wine industry and punish people who have nothing to do with the real reason for the trade dispute – illegal EU government subsidies paid to France-based Airbus which competes with U.S.-based Boeing for global aerospace orders.

The U.S. wine industry is a $68.1 billion enterprise which employs 1.7 million workers. About one-third of its economic output is attributed to sales of EU wines from France, Italy, Spain, Germany, and Portugal.

These totals do not include the economic output provided by U.S. truck drivers, bottlers, restaurant waiters and waitresses, box makers and packers, marketing people, and others related to the broader wine business.

The proposed tariff would be in addition to a 25 percent penalty put in place in December, which impacted only EU countries that paid the Airbus subsidies – France, Germany, Spain and the United Kingdom. The new 100% tariff would expand the penalty to all EU wine exporters, including Italy and Portugal.

While U.S. importers absorbed the earlier tariff to keep the cost of contracted orders in check, the higher tariff is financially unfeasible. A $20 EU wine would jump to $40, and the tariff must be paid in cash to U.S. customs officials at port of entry. Even the biggest importers can’t lay out that amount of cash, nor can they expect to sell a product at double its known price to consumers. Eventually, new EU shipments will slow or cease, store shelves will run bare, sales will drop, businesses will fold, and workers will lose jobs on both sides of the Atlantic.

While all U.S. wine outlets will suffer, family-run specialty shops that import unique EU wines – Vino Italiano in Waltham, Cynthia Hurley French Wines in Needham, Gordon’s Fine Wines & Liquors, Concord Cheese Shop, etc. – would be hit the hardest.

This issue isn’t about nationalism; wine is a global industry with widening connections. Consider that nearly 30 percent of France’s annual $11 billion in wine exports lands in the U.S. Likewise, California is the largest single wine exporter to EU countries. What if France decides to retaliate against U.S. wines? California winemakers, already affected by a glut of bulk domestic wine and flat sales, would face another untimely revenue squeeze if their EU export sales are derailed.

I am not naïve. The trade dispute is serious. For years, the USTR has criticized illegal EU government subsidies to Airbus as unfair to competition. The World Trade Organization (WTO) has agreed, saying damages to the U.S. amounts to $7.5 billion. Resolution talks between the Trump administration and the EU have gone no where, leading to the first tariff’s imposition and now talk of a harsher one.

The way I see it, no one wins in a wine war. It even sounds foolish. Wine lovers have until Jan. 13 to voice their concerns to the USTR at https://www.regulations.gov/document?D=USTR-2019-0003-2518. I urge all do to so. U.S. and EU leaders must find a better way to reach an agreement than to hold hostage La Bella Vita, which includes the enjoyment of drinking iconic French Champagne and Bordeaux, Italian Barolo and Chianti Classico, Spanish Rioja and German Riesling among other wonderful wines.

Read more about wine on Jim Campanini’s blog at www.grapefullyyours.live.