As part of the dispute between Boeing and Airbus, new US taxes came into force Tuesday on certain European products. Among them, French wines, targeted by an increase in customs duties of 25%. Jean-Marie Fabre, president of the Independent Winegrowers of France, explains to France 24 the future consequences of these new taxes, and calls on the European Union to react.
Since Tuesday, January 12, US tariffs on all non-sparkling wines, grape must and French cognacs have increased by 25%, in accordance with the Trump administration’s decision, announced on December 31. A new blow for French viticulture, already targeted by taxes imposed in October 2019 on European imports such as wine, as part of the commercial standoff between the European Union (EU) and the United States on public aid to aeronautics.
Officials in the wine sector estimate the impact of all US taxes on French wines at 1 billion euros in lost turnover.
For its part, the French government, which should soon grant aid to support the sector, urged the European Commission on Tuesday to respond quickly to its request for the creation of a support fund for winegrowers. “I regret the slowness with which the European Commission responds to our requests for a compensation fund. These sectors are very hard hit, they need European support”, lamented Tuesday, the Minister of the Economy, Bruno Le Maire. , during a press conference.
To understand the challenges and expected consequences of these new taxes on the sector, a key sector of the French economy, France 24 interviewed Jean-Marie Fabre, president of the Independent Winegrowers of France, himself a winegrower in Fitou, in Occitanie.
France 24 : Can you remind us of the importance of the American market for French winegrowers?
Jean-Marie Fabre: The French wine sector is a sector that exports a lot, and in its exports the American market ranks first in terms of value. For example, independent winegrowers account for more than 40% of their turnover on the American market. The United States is now the world’s largest consumer country, and the only one where consumption has remained the same during the health crisis – which is important in the current period of economic slowdown linked to Covid-19.
The new tax comes in an international and French economic context which is already very difficult for our sector. This is a new blow to all French wine production, after the 25% tariffs imposed by the Trump administration since October 2019 and applied only to French dry wines of less than 14 degrees. Over the last fourteen months, the losses recorded on exports amount to more than 600 million euros in turnover, of which 150 million for the independent winegrowers. With the new tax, the base of the products concerned will be widened, and concern all wines over 14 degrees, as well as some spirits and sparkling wines excluding Champagne. In 2021, it is estimated that future losses will reach 1 billion euros.
Don’t French wine growers also risk losing ground compared to their competitors?
Each time the French wines of our companies and our estates leave the American shelves, because they are considered less competitive because of taxes, they are replaced by products from competing countries. I am thinking of Chile, Argentina and Australia, but also European productions. Italy, which is not affected by the 2019 taxes, thus recovered almost all of the market share that we lost: in 2020, France fell from 32% to 19% of market share, while that the Italians, who were behind us with a 31% market share, at the same time increased to 40%. These shares will be permanently lost for our companies. To resume them, it will require very long and very expensive work. Because, as you can imagine, you can’t establish yourself in the American market by snapping your fingers. It had required a lot of work and colossal investments, which are being lost. We will therefore have to reinvest without having any guarantee of results.
With a change of administration in the United States, is a solution possible? What are you asking of the European Union?
It is a total injustice that the French wine sector is paying cash for a trade dispute between the European Union and the United States concerning another sector, namely aeronautics. I do not want French winegrowers, estates and exporters to be sacrificed on the altar of European aeronautical performance, this is unacceptable. The EU must assume the consequences of its policy which it is not for me to comment on.
The resolution of this problem can only be European. Therefore, we are waiting for two things: the first is an urgent diplomatic issue. We must quickly seek de-escalation and obtain that the customs taxes that apply to our products are canceled. Secondly, we are waiting for the European Commission to release a compensation fund for the collateral damage that has affected the French wine sector. This is for the benefit of a direct competitor within the European market, specifically Italian production, which enjoys a direct competitive advantage on the American market. Failure to respond to a European compensation claim amounts to maintaining unfair competition in the same export sector. So the EU must compensate for the taxes imposed on our companies so that they can keep their market share. Trade competition between European producers on the American market must be made fair.
The French government is putting pressure on Brussels for a support fund for winegrowers. So far in vain.
I do not think that one can doubt for a single moment that the French government is not attentive to the application of this tax and to the difficulties it generates. But even if the dispute concerns the EU and the United States, we ask France to obtain compensation very quickly for our sector, which is inevitably weakened. In a context already very difficult because of the health crisis, it has not escaped the government that viticulture is a strategic sector since it represents 700,000 jobs spread over the 66 French wine-growing departments and generates between 55 and 60 billion dollars. € turnover per year. It is a sector which is the second surplus item of foreign trade and which weighs enormously, with almost 10 billion euros of VAT. Obviously the French state is listening to us, but it must bang its fist even harder on the table.