The Trump tax costs the French wine industry $500 million, and its patience

Monday September 28 2020 by Vitisphere

“The situation has gone on long enough, we will not just bury the hatchet. We won’t just leave it at that”, said Jérôme Despey on 23 September during a video press conference.“The situation has gone on long enough, we will not just bury the hatchet. We won’t just leave it at that”, said Jérôme Despey on 23 September during a video press conference. - Photo credit : DR

Additional duties have now been charged on French wines in the US since 18 October 2019, and according to Jérôme Despey, chairman of the FranceAgriMer wine board, “the situation is not sustainable in the current climate. We want an answer from our government about setting up a compensation fund”, he said as he left an exceptional meeting on 23 September 2020. As the industry spokesman, he was “asking for an urgent meeting with the Minister of Agriculture in early October.  This is an emergency situation, and a sad anniversary: it is a year since America introduced additional duties of 25 % on French still wines”, explained Despey.

During the meeting, the wine industry aims to raise the issue of a compensation fund once again. The proposal, which has been on the table since January, was based on an estimated economic impact of 300 million euros. More recent estimates by the Federation of Wine and Spirits Exporters (FEVS) claim that figure is now €500 million. Whilst the financial cost of the retaliatory measure targeting the aviation sector continues to spiral, sentiment within the wine industry has reached breaking point. Despite reassuring announcements by the French President last February, “we note that nothing precise is on the table regarding a compensation fund”, summarised Despey. His exasperation at seeing France pass the buck back to the European Commission is obvious: “Whatever the cost, each Member State must take responsibility for the relevant sectors. [...] We are collateral damage in an aviation issue, between Boeing and Airbus, which has nothing to do with us”.

Direct aid

The French wine industry is demanding quick answers and has suggested the State introduce a system of direct aid for companies exporting to the United States that are affected by the 25% additional duties. This would help exporters who have incurred additional costs (“prices have to be cut to access the market”) and lost market shares (“compared to the performance of countries not affected by the duties”).

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