Tariff Hikes Could Hit All EU Wines

I am not trying to be a buzz kill or a conspiracy theorist- but these are real things that affect our industry... thankfully prices in Burgundy have never been more affordable…

https://www.wine-searcher.com/m/2019/12/tariff-hikes-could-hit-all-eu-wines

Tariff Hikes Could Hit All EU Wines

The gloves are coming off in the trade war, as more European wines face the 100-percent tariff.

By Don Kavanagh | Posted Wednesday, 11-Dec-2019

The ugly trade war between the United States and the European Union looks like worsening, after US trade authorities suggested increasing tariffs and broadening their scope to take in all wines from the EU.

The Office of the US Trade Representative (USTR) updated its online registry of tariffs and suggested it could increase the number of products subject to tariffs as well as increasing the tariff rates – rates that could be as high as 100 percent, according to the way the USTR is talking this week.

The dispute arose after the US took the EU to the World Trade Organization over claims of unfair funding of the Airbus aeronautical giant to the detriment of Boeing. Those claims have been repeatedly upheld by the WTO, most recently on December 2.

The existing tariffs are mostly aimed at FranceGermany, the United Kingdom and Spain

"On October 18, the United States imposed tariffs of 10 percent on large civil aircraft and 25 percent on agricultural and other products, with the bulk of these tariffs being applied to imports from France, Germany, Spain, and the United Kingdom – the four countries responsible for the illegal subsidies," the USTR said in a press release posted on its site last week. "In light of today’s [December 2] report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs."

Yesterday, it added an inline link to that press release leading to a document that outlined a beefed-up tariff regime. It did not release an accompanying statement.

"Annex II contains a list of products, originally published in the April 2019 and July 2019 notices for this investigation, under consideration for the imposition of additional ad valorem duties of up to 100 percent," the document said.

It went on to say that interested parties had until January 13 to make submissions on the proposals.

"The Office of the United States Trade Representative (USTR) requests comments with respect to whether products listed in Annex I should be removed from the list or remain on the list; whether the rate of additional duty on specific products should be increased up to a level of 100 percent; whether additional duties should be imposed on specific products listed in Annex II; and on the rate of additional duty to be applied to products drawn from Annex II."

Annex II contains two sections and the second section is where the pain lies for wine lovers. A list of products from the 28 EU nations includes – among a range of foodstuffs – the following: sparkling wine, TokajMarsala, grape wines with more than 14 percent alcohol, wine in containers of more than 10 liters, grape must capable of being fermented into wine, grape brandy, and "whiskies, other than Irish and Scotch whiskies".

The previous tariffs had affected wines up to 14 percent alcohol, and excluded Tokaj and any Irish whiskey not produced in the UK (i.e., whiskey produced in the Irish republic, rather than Northern Ireland).

The news that all EU wine and whiskey production could be subject to tariffs will be a brutal blow to producers in Europe, but also to US retailers who sell such products. Many are already struggling to deal with the 25-percent tariff already liable on some wines, particularly French wines.

The new tariff regime would also extend the additional rates to Italian wines, which were exempt under the October tariffs

Some trade sources had suggested ways of getting around the original tariffs, such as bottling the wine in the US, or beefing up wines so that they exceeded the 14-percent limit, but these new measures would kill those ideas.

Retailers are unlikely to be able to sway the USTR with submissions alone, however. Even the big hitters of the distribution tier – who employ large lobbying teams – have been unsuccessful so far in arguing against extended tariffs, Wine-Searcher understands.

To make a submission on the tariffs, visit www.regulations.gov enter docket number USTR-2019-0003 on the home page and click search. Then go to the "comment now" link. Submissions can only be made online.