California Winemakers Cheer Agreement That Expands Opportunities For U.S. Producers In Europe
Historic Agreement Caps More Than 20 Years of Wine Trade Talks
SAN FRANCISCO September 14, 2005 - California winemakers cheered today's announcement by U.S. Trade Representative Rob Portman that an agreement has been reached with European Community (EC) negotiators on key provisions of wine trade talks that began in 1983. The Wine Institute, whose members export 95 percent of U.S. wine, issued a letter to James Murphy, Assistant U.S. Trade Representative who led the negotiations on behalf of the U.S. government, acknowledging "outstanding progress on wine trade issues of critical importance to the growth of our industry." The agreement addresses key wine trade issues including recognition of winemaking practices, recognition of U.S. place names in Europe and the use of semi-generic names. It is the first phase of a broader agreement intended to promote trade between the United States and the European Community which are major growth markets for one another's exports.
"The United States has the most open wine market in the world," said Robert P. 'Bobby' Koch, President and CEO of the Wine Institute, "and European winemakers have long enjoyed unfettered access to U.S. consumers. This agreement promises U.S. wineries a level of certainty that our wines will have long-term access to European markets such as the United Kingdom where consumers have embraced wines from California and other states."
Total U.S. wine exports reached a record $736 million in revenues in 2004. Sixty-six percent of U.S. wine exports ($487 million) were shipped to countries in the European Community, the largest market for American wines.
For European wine producers, who exported $2.3 billion worth of wine to the U.S. market last year, the agreement ensures continued access to its top destination and a major growth market - the U.S. is on course to become the world's largest wine consumer by 2008.
Among the key provisions of the new agreement of interest to California wine exporters is full recognition of U.S. winemaking practices which previously required renewed approval or "derogations" on a regular basis in order for U.S. producers to ship to Europe. Winemaking practices around the world differ somewhat based on climate, history and culture. Most of the practices covered by this agreement are currently permitted in Europe for wines from countries such as Australia and South Africa that currently have trade agreements with the European Community.
Also of importance to U.S. producers is a provision in the agreement that calls for a new system to recognize U.S. wine place names. While the U.S. has a stringent label approval process through the Department of the Treasury's Tax and Trade Bureau (TTB) that ensures recognition of foreign names for wines imported here, Europe has no central system to recognize U.S. place names. The agreement calls for the EC to recognize the names of states, AVA's (American Viticultural Areas) and counties with AVA's.
Finally, the agreement addresses a long-running discussion about the use of place names of concern to some European producers. Names, such as chablis, burgundy, port and champagne, called semi-generics, have been in use on wine labels in the U.S. since the 1800s. U.S. winemakers have been legally permitted to use a group of 16 specific semi-generic terms on labels if accompanied by an adjacent appellation of origin. The new agreement allows for the continued use of these terms on existing brands but not new brands, thereby addressing European concerns without diminishing the rights and investments that current U.S. brand owners have made in these terms over many decades.
Exports of U.S. wines have grown dramatically in the past 10 years, increasing 300 percent in value since 1994. The United Kingdom remains the top European market for U.S. wine exports and the Netherlands, Germany, France, Ireland and Denmark, all EC nations, are top 10 markets for U.S. wine exports. Europeans are clearly embracing California wines as part of the attraction to the state's lifestyle and natural beauty.
"This agreement provides American wine producers with assured long-term access to our top export markets and removes a major impediment to future growth," said Eric Wente, Chairman of Wente Vineyards, who is also Chairman of the Wine Institute and long-time head of its International Committee. "It is a welcome first step in leveling the playing field for our industry."
Wine Institute is a public policy advocacy and export marketing association of 862 California wineries and affiliated businesses. It was established in 1934.