Italian wine once again saved from US duties: the Trump government’s decision

No additional duties for Italian wines in the U.S.: this is the outcome, as expected, of the decision of the U.S. government in the review of carousel duties on European products, introduced in October 2019 in the dispute between Airbus and Boing. An expected decision, but not a foregone conclusion, which leaves the “status quo” intact, basically, both on the wine front, and therefore with duties at 25% that affect some productions in France, Germany, Spain, for example, and on the rest of the agri-food made in Italy and made in the EU.
It is not a full haul, given that 160 members of the US Congress, as reported by Federvini in recent days, had written to the U.S. Department of Commerce (Ustr) calling for the removal of duties already applied, but at least a decision that does not aggravate the already complex scenario of the wine economy in the U.S., the first market in the world and the first foreign partner for Italian wine, already compromised by the pandemic.
“Once again, Italy of wine remains out of the Airbus trade dispute. There will be no additional duty in the United States on our country's wines, at least for this new round. In expressing satisfaction and gratitude for what has been done in Italy and in the USA at various levels by the sector, by the allied industries and by the institutions, we consider this a success - fundamental but unfortunately not definitive - of diplomacy in a market that is worth about a quarter of our wine exports in the world”, says Ernesto Abbona, President of Unione Italiana Vini (UIV).
“Now - added Abbona - we are confident that the combined political-diplomatic action that has seen as protagonists, among others, the Undersecretary of Foreign Affairs, Ivan Scalfarotto, and the Italian Ambassador in Washington, Armando Varricchio, and more than 27,0000 anti-duties comments received from countries interested in the American Trade Offices, will focus on the U.S. investigation on the so-called digital tax approved last year by the Italian Government. The aim is to avoid once again a commercial retaliation that would turn out to be a failure for Italy, Europe and the United States. For this reason, it will be necessary to intensify the dialogue by encouraging, also at European and international level, a path of cooperation with the United States on the two open fronts. We must prevent wine from becoming the target of disputes to which it is completely unconnected”.
According to the customs-based calculations of the Wine Observatory of Unione Italiana Vini (UIV), the United States is the world’s leading wine buyer and Italy is once again the leading supplier country, with a sales value in the first half of this year set at almost $ 1 billion, increasing both in volume (+2.9%) and value (+1.8%) over the same period in 2019. France, affected by the additional duties and main competitor overseas, in the same period recorded a loss in value of 25.3%; Spain also paid duty to trade retaliation, with a -12.3%. Among the wines made in Italy, which result is even more significant if we also consider the overall drop in wine imports to the U.S. (-10%, to 2.8 billion dollars), sparkling wines (+4.7%) are better in value than bottled still wines (+1.3%), which remain the best-selling type with a counter value of 742 million dollars.
The French bottled still wines, on the other hand, are in great difficulty and, as a result of the additional duties, close the semester at -37%.
“Unfortunately, once again the European agri-food sector and in particular the Italian one, pay for “faults” that they do not have. Moreover, we are even more sorry for the aperitifs sector, whose sector is already paying a high price as a consequence of the pandemic”, Federvini comments.
Positive, of course, the reaction of the agricultural organizations.
“This is great news because the tightening of duties would have placed an additional obstacle on the way to the full recovery of the Italian agrifood system after the health emergency,” said President Confagricoltura Massimiliano Giansanti, recalling that the United States is the first outlet market for Made in Italy agrifood outside the EU, worth 4.5 billion in 2019, of which 1.5 billion of wine alone.
“It is also important to note that the United States has formally expressed its willingness to negotiate an agreement with the EU that will put an end to the dispute that has lasted more than ten years on public aid to the Airbus and Boeing groups” - adds President Confagricoltura - a willingness that must be seized with the utmost urgency by the European Commission, in order to reach an agreement that will make it possible to eliminate the duties on our products since October of last year”.
A sigh of relief also comes from Coldiretti, which remembers how, however, remain in force the additional tariffs of 25% that came into force last October 18, 2019, and that have already affected Italian specialties such as Parmigiano Reggiano, Grana Padano, Gorgonzola, Asiago, Fontina, Provolone but also salami, mortadella, shellfish, citrus fruits, juices and liqueurs such as bitters and limoncello.
“The new duties would have affected - explains Coldiretti - 3 billion euros of food Made in Italy, equal to 2/3 of the total at a time already made difficult by the impact of the pandemic on global trade. Among other things, the United States is the first non-European market for Italian food products, which in the first 6 months of 2020 recorded a growth of 4.8%, although in June the difficulties caused by the coronavirus showed a reversal of the trend (-0.9%)”.
“It is necessary to use all diplomatic energies to overcome unnecessary conflicts that risk compromising the recovery of the world economy severely affected by the coronavirus emergency,” said President Coldiretti Ettore Prandini in stressing the importance of defending a strategic sector for the EU that is paying a very high bill for trade disputes that have nothing to do with the agricultural sector.