French spirits and wines relieved after US customs duties cancelled
French spirits and wine producers are breathing a sigh of relief after the European Union and the United States reached an agreement to suspend custom duties for five years.
Following the intensified trade dispute involving aviation companies such as Boeing and Aribus, completely unrelated sectors such as wine and spirits were hit with additional charges. That is, 25% added charges on spirits and wines by the end of December 2020.
On Tuesday, French spirits and wine producers received the news of the suspension for five years of customs duties resulting from the litigation between Washington and Brussels. These duties mainly affected exports of French wines and certain spirits to the United States. This concerns non-fermented spirits of less than 14 degrees alcohol exported in containers of less than two liters.
It also targets all wines in bottles or in bulk, regardless of alcohol content. Besides affecting wine-based spirits such as cognac or armagnac. Other alcohols, such as calvados, fine de bretagne and Cointreau, are exempt because they are not wine-based.
In addition, other European products such as Italian cheeses, olive oil from Spain, etc, were also affected by the tariffs.
Since October 2019, Donald Trump imposed these tariffs on non-fermented French wines and certain wine spirit-based spirits, such as cognac and armagnac. The same duties were extended through January 2021.
In response, the European Union added tariffs in October 2020 on certain U.S.-origin products, including spirits such as American whiskey and bourbon. As a result of the dispute, U.S. whiskey exports to the EU fell by 37%. The impact is measured in hundreds of millions in lost revenue over two years according to the Council. For example, whiskey exports to the UK fell 53% from 2018.
With the arrival of the new U.S. administration under Joe Biden, the U.S. and the European Union suspended all tariffs in March in connection with the dispute in aeronautics. The measure was due to end on July 11. In the end, the two countries were able to agree on a five-year armistice.
French spirits and wine professionals react
“We are relieved because this gives visibility to the companies,” Nicolas Ozanam, general delegate of the Federation of Wine and Spirits Exporters (FEVS), told AFP. “From this point of view, we are satisfied with this decision in the short term.”
“It is great news. The horizon is not entirely clear, but five years gives us some perspective. Economic operators will be able to work with much more stability,” Bernard Farges, president of the Bordeaux Wine Trade Committee (CIVB), told AFP.
Meanwhile, wine and spirits exporters have done their sums. The sanctions have led to a drop in US imports of French wines of €450 million between October 18, 2019 and December 2020, according to the FEVS.
“The American market is a huge market for French wines,” Bernard Farges of the CIVB stresses for his part. He mentions a loss of turnover of €500 million between October 2019 and the announcement of the moratorium on surcharges in February.
The French wine and spirits industry “has paid a heavy price” in this dispute, notes Jérôme Despey. “We have lost market share to Italy and third countries such as New Zealand and South Africa,” he said.
“We had asked for a compensation fund” from the European Union “but we didn’t get it.” “A big disappointment,” he said.
Don’t drink and drive. Enjoy responsibly.
Join the community on Reddit
Spirits Hunters is a community dedicated to spirits and the world of mixology. Feel free to talk about the world of mixology and bartending here!Join