EU & China Tariffs Update

There have been a number of developments on wine tariffs this week. Here is a quick update on the latest Wine Institute activity in several key areas.

European Union (EU)

USTR Comment Process on French Digital Services Tax (DST) & Airbus Disputes

USTR has concluded separate public comment processes on retaliatory tariffs in these two different disputes, which combined propose potential tariffs on virtually all wine imported from the EU. Wine Institute submitted comments on both processes individually (most recent Airbus comments) and with a broader industry coalition, which are very similar to our previous comments on both disputes. Now that the comment processes are completed USTR has the ability to announce new tariffs in either dispute at any point. The timing of implementation of any new tariffs is also at the discretion of USTR.

Administration & Congressional Outreach on Wine Tariffs

Congressional Wine Caucus Co-Chairs Rep. Mike Thompson and Rep. Dan Newhouse, with the support of Wine Institute, initiated a Congressional letter to USTR Lighthizer stating Congress’ strong objection to wine being included on any U.S. retaliation lists and reiterating the industry message on “wine for wine.” The letter had a significant, bipartisan list of signatures from 108 Representatives. Additionally, Wine Institute staff have been actively engaged for some time in communicating our opposition to these tariffs to key Administration and Congressional officials. In the past week, we have participated in meetings with senior officials from USDA, Commerce and USTR as well as Trade Subcommittee staff on the House Ways and Means and Senate Finance Committee.

Hogan / Lighthizer Meeting

The new EU Trade Commissioner, Phil Hogan, is in Washington this week meeting with Administration and Congressional leaders. Commissioner Hogan is meeting with USTR Lighthizer this afternoon, Jan. 16, and we will be watching closely for the tone of any statements at the conclusion of these discussions. In other public appearances yesterday and today, Hogan has reiterated that the EU is unified in its intent to retaliate if either dispute is escalated. He has specifically mentioned the wine tariffs as a part of this conversation.

Zero for Zero Statement

Wine Institute and our EU colleagues at Comite Vin (CEEV) jointly announced the signing of a statement of principle on tariffs that specifically endorses the elimination of all tariffs on wine, both “zero for zero” and “wine for wine.” The statement reinforces the message against wine tariffs and provides a platform for the broader wine sector to show support for the principle. We have begun collecting additional signatories to the statement and will continue to do so in the coming weeks using future USTR announcements and actions on tariffs as an opportunity to publicize opposition to wine tariffs.

China

Phase One Trade Agreement Signed

A Phase One trade agreement with China was formally signed yesterday on Jan. 15. The agreement does not appear to provide any near-term relief from the current tariffs the U.S. wine industry are facing in China. While the agreement appears to remove the possibility of any additional tariffs on U.S. wine, Chinese tariffs on wine were not a part of the Phase One negotiations. As a part of the Phase One agreement, China has committed to purchase an additional $32 billion in agricultural goods (above the 2017 baseline) over the next two years. While wine is included in the broad list of agricultural goods that will be a part of this calculation, it is our understanding that there has been no specific commitment to increase purchases of U.S. wine. The agreement does include some language on geographical indications relating to compound GIs and grape varietal names that could be helpful moving forward. We are continuing to receive briefings from USTR and hope to have clarity on some of these issues in the coming days.

We will continue to keep you informed on USTR’s next steps on tariffs as there are new developments.