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Protectionism Works Both Ways: Background Factors for Understanding Wine Tariffs
By Panos Kakaviatos
Jan 1, 2020
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During a tasting in Greece last year, as part of my WSET diploma studies, Konstantinos Lazarakis MW served dry, crisp and terroir-driven Chardonnays and floral, red fruit and elegant Pinot Noirs from California, specifically from the Santa Rita Hills AVA.

As Matthew Luczy wrote in August 2019 for Decanter in, “Santa Rita Hills AVA and Must Try Wines,” Rita Hills is situated at the western edge of the greater Santa Ynez Valley, with silica-based fossilized algae:  “A more porous corollary to the famous limestone and chalk of Champagne and Chablis.”  Winemakers there are “hopeful that over time, the appellation will be further subdivided to better organize the impressive diversity of soils, sites and exposures.”  Indeed, fog and coastal breezes from the nearby Pacific Ocean that enter the valley makes it a cool microclimate.

These are the kinds of wines I will try to get tasted by French wine buyers next month in a tasting of American wines.  But it is not such an easy prospect.  I have been living in France for the better part of the last 22 years, and I adore French wine as reflecting some of the very best vineyards – and terroirs – in the world, from Bordeaux and Burgundy, to the Rhône Valley and Champagne.  But what has always struck me – even in 2020 – is persistent bias among the French against non-French wines, whether Greek, Hungarian, Chilean or American.

In a 27 December 2019 interview with the French daily Le Figaro – “Le Vin n’est pas Juste un Alcool, C’est un Élément Culturel” – Bordeaux winemaker Jean-Pierre Amoreau stresses the importance of terroir, especially limestone.  “In the Napa Valley, there is not one gram of limestone: these wines are varietal and without character.”  Never mind the fact that the Napa Valley has many different microclimates and soils that yield different expressions.  Or that older Cabernets from the Napa Valley develop complex and fascinating profiles.  Indeed, wines made in other U.S. states – from Oregon to New York – exude original expressions based on microclimate and soil differences.

Such pomposity reflects ignorance to wines from abroad, displayed for example at a recent event I attended as media relations manager for the Council of Europe, where member state Cyprus had organized a buffet for its Independence Day (1 October).  As a French server poured Cypriot Xynisteri (a popular white variety), I remarked how Cyprus is not yet at the level of Greece, when it comes to wine quality, but he rather scoffed at the notion that Greece has any good wines.

Sadly, we are experiencing a trade war situation that affects wine, with much of the news obsessing over President Donald Trump’s threat of 100% wine tariffs after having introduced 25% tariffs on some wines from Europe.  But Trump’s tariffs did not come out of a vacuum.  EU trade policy has created an un-level trade playing field that buttresses such ignorance.

In her trade analysis (There Are Nuggets of Truth to What Trump Says About Trade, 18 June 2018) for The Washington Post (hardly a pro-Trump outlet), Heather Long acknowledged how President Trump managed to, “enrage most of America's closest allies by hitting them with name-calling, Twitter outbursts and steep tariffs on their steel and aluminum.”  But, she continued: “Setting aside his harsh and bullying approach, there's some truth to what he's saying.  Trade barriers remain, even among allies.”

For the California Wine Institute, European countries have long abused GIs or Geographical indications, meant to identify a good as originating in the territory of a member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.

The Wine Institute stresses the following on its website:

“While reasonable rules to protect terms of geographic significance have important benefits, the EU’s GI system claiming exclusive use of semi-generic, descriptive and other common names has significantly expanded into a scheme that establishes inappropriate GIs, restricts competition and consumer choice, and confiscates private property rights for the benefit of a limited number of EU producers.  In addition, the EU is spreading their exclusive use of names globally, most recently with draft agreements with Australia, China, Japan and Mexico.”

Another unfair policy is the EU’s persistence with subsidies to grape growers and winemakers, which, according to the Wine Institute, “encourage, support and finance European winemakers, giving them an unreasonable competitive advantage in the global marketplace.”  It is rather logical to see that such programs distort trade, as they remove much risk of doing business for EU producers.  Together with what were (until Trump) higher tariffs on U.S. wines, the EU and member state wine subsidies to the wine industry ensure the exact opposite of a "level playing field."

What is tragic about this trade war situation is that a growing number of professional French wine buyers are indeed becoming more open to non-French wines.  Jason Haas, General Manager of Tablas Creek Vineyard in Paso Robles California, posted on the winery’s blog in December 2019 as follows:  “While export markets aren’t a huge piece of our business, they've been growing in recent years, and European countries like Germany, Denmark, Sweden, and France have been leading that growth.”

Indeed, a tasting of Assyrtiko from Greece that I had organized for French sommeliers in Strasbourg last year left a positive impression.  One wine bar owner ordered his first Greek wine as a result.

One two previous occasions, I organized tastings of American wines for consumers in Strasbourg.  But for this year’s tasting, working with the U.S. Consulate in Strasbourg, the idea is to get U.S. wines on restaurant and wine bar lists.  Despite Trump’s rough tariff talk, merchants are proving surprisingly open.  After some research, local retailers are particularly interested in wines made in an eco-friendly approach by independent producers, not too high in alcohol, with bottle prices not surpassing 30 Euros ($33).

It is a pity that in answer to unfair EU trade practices, President Trump is threatening the sledgehammer of 100% tariffs.  Tablas Creek’s Haas furthermore noted, “I think there's every likelihood that European countries would retaliate with tariffs on American goods, including wines.  I would expect that piece of our market to disappear, as has our Chinese market since that particular trade war began a few years ago.”

I hope that this U.S. wine tasting for Strasbourg-based merchants will happen.  Wine Review Online readers and fellow contributors are welcome to contact me for any producer recommendations, fitting the guidelines above, so that this tasting can become a reality, and to promote the right idea that terroir is not just applicable to French wines.