Europe strikes back at Trump taxes, and causes concern for French wines

Monday November 16 2020 by Vitisphere

 In 2019, French wines held a 32% market share in the United States, which has now fallen to 19%, while Italian wines have surged from 33% to 41%. In 2019, French wines held a 32% market share in the United States, which has now fallen to 19%, while Italian wines have surged from 33% to 41%. - Photo credit : César Giron (Fondation Martell)

Starting 10 November, the European Commission introduced 4 billion dollars’ worth of additional duties on American products following a ruling by the World Trade Organisation (WTO). The ruling is part of the issue over subsidies to aircraft manufacturer Boeing and echoes sanctions imposed since 18 October 2019 by the United States due to European aid to Airbus. US tariffs amount to 7.5 billion dollars, with still French wines, among others, on the receiving end of the 25% increase in duties.

The countermeasures have been agreed by EU Member States since the US has not yet provided the basis for a negotiated settlement, which would include an immediate removal of US tariffs on EU exports in the Airbus WTO case”, said a European Commission press statement. Designed as a ‘mirror’ sanction to the additional duties introduced by the US over a year ago, the European retaliatory measures target the aviation industry (+15%) and agricultural goods, with 25% duties on brandy, vermouth, vodka and rum.

The American and European wine industries had been calling for peaceful negotiations to avoid an escalation of sanctions, but this latest decision by Europe rekindles fears of renewed pressure on international trade. “We are already losing more than a million euros a day in the United States simply because of the ‘Airbus’ taxes”, warns César Giron, chairman of the Federation of Wine and Spirits Exporters (FEVS), who believes that “through this decision, the European Union is further increasing the risk of heavier sanctions for our already hard-hit industry, particularly against the backdrop of the current electoral transition in the United States”. Giron believes that “the government must finally introduce a support mechanism for wine exporters. [...] Or at the very least, allow these customs duties to provide compensation for the companies that have fallen foul of this dispute, which is not of their making”.

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