From Europe to the States: all the professionals against the new tariffs on wine. Diplomats at work

The Department of American Commerce launched a public survey against new duties on European and Italian wine, up to 100%, that the Trump administration could trigger on the continent's wine production, making wine producers tremble and the Unione Italiana Vini (the Italian wine union) report has revealed the poll collected 24.000 signatures from American suppliers, importers, distributors, small companies and consumers. producers tremble. This result sends a very strong message, which could play a decisive role in the final decision of the United States of America. There have been many other initiatives on the issue recently as well, like the one in Italy, that is, the letter from the Minister of Agriculture Teresa Bellanova, soliciting the utmost attention on the issue to the European Union Commissioner for Commerce Phil Hogan (former Commissioner for Agriculture) who is now on a diplomatic mission in Washington. In addition, the Minister of Economic Development Luigi Di Maio replied to the letter sent by the sector supply chain organizations (Federvini, Unione Vini Italiana, Federdoc, Assoenologi, Alliance of Cooperatives, Confagricoltura, Cia-Agricoltori Italiani, Copagri) around mid-December, stressing that “we are making every possible effort to ensure the efficacious and timely protection of our sector exports, in view of its significant contribution to our national GDP”. He continued by further explaining how through the Italian Embassy in Washington, diplomatic actions have moved steadily forward for quite some time, adding, also, “that starting in 2020, the Italian trade agency, ICE, will launch a promotional awareness campaign in the United States large-scale distribution sector”, and that the agri-food sector has been included as one of the decision making room's priority sectors of promotional activities for internationalization in 2020.
On the other hand, the numbers of the Vinitaly Nomisma Wine Monitor Observatory explain how the new heavier duties would impact the sector. “One must consider that, thanks to the stocks accumulated in previous months, French still wines subjected to the extra duty of 25%, recorded a 36% drop in sales in value in the United States in November alone, compared to the same month in 2018”, said the director of Veronafiere Giovanni Mantovani, emphasizing that, according to the Observatory,” Italy (up until now safe from duties, ed.) closed the month at a growth of almost 10%. Now, with the disaster of possible additional taxes, domestic production will not be able to meet demands and Europe will therefore risk losing market shares that will be difficult to recover in the future, thus benefiting of the New World production. As far as we are concerned”, concluded the Veronafiere CEO, “we will continue our activity of supporting the sector on the main world market, using also an operational task force capable of increasing participation of United States guest professionals by 20%, starting at the Italian wine fair, Vinitaly 2020. At the same time we will intensify the new commercial frontiers of a sector still too tied to traditional outlets".
According to the Vinitaly Nomisma Wine Monitor Observatory (estimates on customs data), in 2019, Italy will close sales to the United States at a 5% growth, achieving a record that will touch 1.8 billion euros. This translates to almost 28% on the global export of Made in Italy wines, much more than its French competitor (although France is the main value supplier), whose share is under 20%, due to the effect of a wider and more organic grid of its reference markets. Lastly, over the past five years, the United States has recorded the largest increase among the top 5 world markets for Italian wine, at + 38.6% in value. These data confirm, once again, how decisive the US market is for European wine, and especially for Italian wine.
In the meantime, however, the representatives of not only European but also American wineries have taken more steps. The Comité Européen des Entreprises Vins (CEEV) and the Wine Institute, the two primary organizations of the wine sector in the European Union and in the United States, have signed a joint document that raises the bar even higher, asking to reach an agreement that would provide “zero duties” on wine imports for both of them. On the other hand, the document notes, the United States and the European Union are the main wine market to each other, and the wine exchange on the two sides of the Atlantic, in 2018, yielded over 4.6 billion euros.
“Free trade is an essential condition to defend and preserve the numerous efforts and investments supported by wine producers”, underlined Jean Marie Barillère, President of the Comitè Vins. “We are asking the authorities to protect the wine sector that has been caught in a crossfire, generated by a commercial dispute with which it has no relation whatsoever”.
“Export markets are a key growth factor for United States wineries, and tariffs of any kind create obstacles. The time has come for all governments to recognize the unique benefits of the wine trade and eliminate tariffs once and for all”, said Robert P. Koch, president and CEO of the Wine Institute.
Italian supply chain completely agrees with this position, too. “We are quite satisfied by the agreement signed between the European Comité Européen des Entreprises Vins (CEEV) and the American Wine Institute, which today brought about signing the joint document that recognizes the importance of the transatlantic wine trade”, underlined the President of UIV, Ernesto Abbona, who has requested an intervention from Prime Minister Giuseppe Conte, as well – and has called for the immediate elimination of all tariffs on wine, with the “zero for zero” agreement. The massive participation of the main European and United States wine stakeholders that took part in drafting the document, the positive responses from the web to the many petitions launched on change.org (including one launched by several Italian producers, based on the initiative of Marilena Barbera, Gianluca Morino, Paolo Carlo Ghislandi and Michele Antonio Fino, which has collected over 17.000 signatures, ed.), and the social campaign the Italian Wine Union (UIV) launched in the United States of America, represent an important message from the European and American production world which together are asking to protect trade and jobs in the supply chain in view of the imminent decision that the American government will have to take, within February 15th, on duties for some European export products, including Italian wine”.
“We fully support the agreement between Comité Vins and Wine Institute, in which it recognizes the importance of wine trade between two fundamental markets, for which free and open exchange is an indispensable condition. The information that we have gathered from the market shows that the tariffs the United States has decided upon have already determined the first effects and increases on French and Spanish wines in quantifiable price increases between 10 and 35%, and this difference is largely due to the absorption of higher tax by producers or importers. The picture is extremely troubling because increases higher than 35% could not be absorbed and in the event of 100% duties, as expected, prices of the bottles would double. There is more, since it is also necessary to stress that the repercussions of this situation would damage not only the producers, but the entire US wine chain. Taking into consideration that 100 is the increase in the bottles of wine determined by potential duties, only 25% belongs to the Italian wine producer, while the remaining 75% goes to the United States for costs pertaining to taxes, distribution services and logistics”, added Sandro Boscaini, president of Federvini.
In other words, diplomacy has finally put itself in a clear and massive way to avoid a measure that would be catastrophic for the sector. According to various estimates, it would cost the US trade more than 10 billion dollars in revenues, and from the first estimates, such as those of the Italian Wine Union, would cost Italian wine producers no less than 200 million euros.