International Trade Barriers
Report for U.S. Wines
2012
Table of Contents
Wine Institute: About Us ............................................................................................... 3
Introduction
ntroduction and Executive Summary .......................................................................... 4
2011 – A Year in Review ................................................................................................. 5
Regions of the World
rld ..................................................................................................... 8
North America.................................................................
America.............................................................................................................
................................... 8
Latin America .............................................................................................................
..........................................................................
........................... 8
Caribbean .........................................................................................
....................................................................................................................
.................. 9
European Union ................................................................................................
......................................................................................................... 10
Non-EU
EU Europe and Eurasia ...........................................................................
.................................................................................... 10
Asia and Pacific Rim .............................................................................................
................................................................................................. 10
Middle East .............................................................
...............................................................................................................
......................................... 12
1
Sub Saharan Africa
ca ...........................................................
....................................................................................................
............................... 12
The Global Wine Market ..............................................................................................
....................... ...................................................................... 116
Global Trade Barriers .......................................................
.................................................................................................
........................................... 117
Opportunities for the Resolution of Barriers................................................................
Barriers............. .................................................. 20
Specific Countries ........................................................................................................
....................
......................................... 224
Glossary of International Trade Terms ....................................................................... 51
Acknowledgements...................................
Acknowledgements.......................................................................................................
.......................................... 54
2
Wine Institute: About Us
Wine Institute is the voice for California wine representing 1,000 wineries and affiliated
businesses from across California’s beautiful and diverse wine regions. As the largest U.S.
advocacy and public policy association for wine, and the premiere group representing the
industry at the state, federal and international levels, Wine Institute's Officers, Board of
Directors and professional staff work to initiate and advocate public policy that enhances the
ability to responsibly produce, promote and enjoy wine.
Wine Institute established its first international office in Canada in the 1980’s and now has a
network of 16 representatives managing programs in 25 countries, assisting vintners with
promotional efforts and critical market information. Our export program also focuses on:
•
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Advocating to protect the industry’s interests regarding international trade barriers;
Organizing California’s participation in international wine trade shows and leading trade
missions to key export markets with trade and media;
Promoting California wine by bringing in key wine buyers and media from throughout the world
– Europe, Canada, Asia, Latin America – to experience the state’s unique wine regions;
Working to expand opportunities in China through trade representation, the hosting of Chinese
trade and media visits in California, and a variety of promotions, including our first California
wine advertising and awareness program in China; and
Overseeing the USDA’s Market Access Program for California wine exports.
Wine Institute established the award-winning California Sustainable Winegrowing Alliance
(CSWA) with the California growers to promote environmental stewardship and social
responsibility in the industry. CSWA offers a self-assessment program for vintners and
growers providing practical information on conserving natural resources, protecting the
environment and enhancing relationships with employees, neighbors, and local communities.
Wine Institute membership represents 95 percent of California production and 85 percent of
U.S. production. The state's wine industry produces USD 61.5 billion in economic value for
California and generates USD 121.8 billion for the U.S. economy. It creates 330,000 jobs in
California and a total of 820,000 jobs nationwide. California ships 212 million cases of wine
throughout the U.S., accounting for three of every five bottles sold in the U.S.
Wine Institute's home office is in San Francisco, with offices in Sacramento, Washington D.C.,
six regions of the U.S. that oversee the work of 45 state advocates, and 16 foreign
representatives working to increase international exports. Eighty California vintners provide
guidance as members and alternates of the Board of Directors. To further global recognition of
California’s world-class wines, Wine Institute’s international program provides support and
guidance to wineries exporting to overseas markets.
3
Introduction and Executive Summary
About the International Trade Barriers to U.S. Wine Report
Welcome to the 2012 edition of the International Trade Barriers for U.S. Wine report, the 24rd
annual publication in which Wine Institute reviews developments in the international wine
trade and U.S. wine sales throughout the world. This report, covering the year 2011, includes
evaluations of both regional and country-specific export performance, as well as analysis of
current trade barriers facing wine exports. In addition, the report identifies opportunities that
enable the Administration, Congress and the industry to develop strategies to respond to
barriers that restrict the growth of international sales of U.S. wines.
The 2012 report continues a series that began as a study of the Wine Equity Act of 1984, which
was designed to focus attention on, and facilitate the elimination of, trade barriers that impede
the sale of U.S. wine throughout the world. While the U.S. government and industry have
successfully eliminated many wine trade barriers, allowing export sales to grow to over USD
1.4 billion in 2011, numerous obstacles remain and new ones are being established that impede
continued growth and even threaten maintenance of existing markets. This report highlights
these barriers and offers ways in which, working together, the U.S. government and industry
can eliminate them.
4
2011 – A Year in Review
United States wine exports in 2011 continued to rebound from the 2008-2009 worldwide
recession. Wine exports, 90 percent from California, reached a record high USD 1.39 billion,
growing 22 percent in value from 2010. Volume shipments increased by 5.8 percent to 455.7
million liters, which illustrates the potential for increasing exports if barriers can be reduced or
eliminated. Because California exports approximately 20 percent of its wine production, foreign
markets are an important portion of the industry’s business to preserve and develop further.
U.S. wineries produce approximately 10 percent of the World’s wine, making the U.S. the
fourth largest producer behind France at 18.6 percent, Italy at 16 percent and Spain at 13
percent. In 2011, the United States became the largest wine consumption market in the World
by volume at 3.28 billion liters, replacing France.
That growth in domestic market resulted in an
increase in imports to over USD 4.46 billion giving
imports a current market share of just over 30
percent. The U.S. is the second largest import
market by value after the United Kingdom.
As exporters, European Union wine producers enjoy
over 65 percent of the world’s wine exports
compared to the U.S.’s four percent share. Even
though it is the fourth largest wine producer, the
U.S. remains the seventh largest wine exporter. The
opportunity for growth of U.S. exports is significant.
Nearly 34 percent of U.S. wine
exports are shipped to the
The issue is how to keep California and U.S. wine priceEuropean Union (EU) even
competitive when faced with highly subsidized
with a tariff double and triple
that of the U.S. The EU market
European and other countries’ wines, preferential tariffs
accounted for $478 million of
in key markets for competitors’ wine, costly
the total export revenues in
government standards conformance testing and
2011. Volume shipments to the
European Union increased 14
certification and higher import tariffs in key markets
percent in 2011 compared to
such as Japan, Europe, China, Russia and Brazil.
2010. The outlook in the
Wine Institute works closely with the Office of the U.S.
Trade Representative on tariff and trade barrier
reduction, free trade agreements and negotiations with
other nations. This report provides a more detailed
update on the international trade barrier issues that have
been and are currently being addressed by Wine
Institute and its members. During the year, the U.S.
Government actively addressed many of those issues
including efforts in the Trans-Pacific Partnership
Agreement trade negotiations to reduce tariffs and
eliminate technical barriers to trade; monitoring and
world’s emerging wine markets
remains positive, with Hong
Kong up 39 percent growth,
and China up 42 percent.
Vietnam had the strongest
year-over-year gains of 266
percent. Mexico with the 20
percent surtax repeal and
South
Korea
with
the
implementation of Korea/ U.S.
Free Trade Agreement were
both up. The top markets by
value were: Canada, $379
million; Hong Kong, $163
million; Japan, $105 million;
and China, $62 million.
5
providing support in preparing comments on new wine standards regulations in Brazil, China,
Thailand, Kenya, Canada, Russia, Vietnam and other countries; and supporting the wine
industry in addressing European Community trade challenges.
Wine Institute works with the U.S. government and key international organizations, leading to
valuable impact in facilitating trade. Wine export growth in 2011 reinforces the need to
continue eliminating trade barriers and duplicative regulations. 2011 was also a positive year in
working with our colleagues in the World Wine Trade Group (WWTG) in collaborative efforts
to remove trade barriers, open new markets,
and increase sales in both developed and
The 2012 – 2013 Trade Agenda
emerging markets. With new barriers and the
continued prevalence of international trade
Going forward, Wine Institute supports
barriers to U.S. wine exports there is always
the Administration’s National Export
Initiative (NEI) to double exports in five
more to do in alleviating such barriers and
years, beginning in January 2010. The
opening markets. Over this past year, some of
challenge is to encourage more small
and
medium-sized
wineries
&
the most significant policy initiatives and
Enterprises (SMEs) that make up the
achievements in reducing trade barriers
vast majority of the industry to develop
include:
their export programs. Providing those
winemakers detailed information about
Continued efforts through the bilateral
export markets through Emerging
2006 U.S./European Union Wine Agreement
Market Studies supported by the USDA
Foreign Agriculture Service has assisted
to respond to issues concerning intellectual
them in being more confident in selling
property rights of U.S. wine producers
into foreign markets.
worldwide; to resist the efforts of the EU to
Continuing to participate in bilateral
expand
the restrictive nature of their
and plurilateral talks to achieve mutual
geographic indication and traditional terms
recognition of U.S.
winemaking
standards and to reduce tariffs,
regimes; and to support the industry request
particularly to establish the Transfor the use of traditional terms on U.S. wine
Pacific Trade Partnership is critical to
opening new market opportunities.
exported to EU markets;
Other initiatives include protecting wine
Worked in the WWTG to implement the
intellectual property, seeking more
harmonized standards conformance
Labeling Agreement and assist the U.S.
certification for wine compositional
Government in finalizing the Labeling
elements and responding to labeling
Agreement Protocol that will facilitate trade in
technical barriers.
wine among the Parties to minimize any
unnecessary labeling-related barriers by
establishing parameters for acceptable labeling
for alcohol tolerance, varietal claims, region of production and vintage date and by
further developing mutual confidence in the labeling regimes of the Parties; drafting and
signing a MOU on Certification; increasing membership and expanding the WWTG
Wine Regulators Forum.
With the U.S. Government, organized and hosted the Asia-Pacific Economic Conference
(APEC) Wine Regulators Forum seminar in San Francisco in September 2011 and assisted
the New Zealand government in hosting the successful November 5-7, 2012 APEC Wine
Regulators Forum meeting that resulted in specific outcomes including agreement to
continue the meetings;
6
Continued efforts to eliminate Mexico’s imposition of the surtax U.S. wine imports;
Provided information and materials through comments to U.S. government agencies such
as the International Trade Commission and United States Trade Representative on the
President’s National Export Initiative, U.S./South South Korea Free Trade Agreement,
and China;
Received a Technical Assistance for Specialty Crops grant from the U.S. Department of
Agriculture to seek approval from Japan for ten substances commonly used in
international winemaking; and
Continued to monitor the status of the WTO DOHA round of trade negotiations.
The success achieved by these and other efforts is attributable to the strong support of the U.S.
Trade Representative (USTR), the U.S. Department of Commerce, the U.S. Department of
Agriculture (USDA) including the Foreign Agricultural Service (FAS) Market Access and
Emerging Markets Programs, the U.S. Treasury Department Alcohol and Tobacco Tax and
Trade Bureau (TTB) and other members of the Wine Interagency Committee in collaborating
with Wine Institute to eliminate or reduce trade barriers.
Regions of the World
North America
Canada remains the U.S.’s largest single export market with 2011 sales of USD 357 million, an
increase of 20.5 percent from 2010. After
Mexico reduced its 20 percent punitive import
tariff on wine to 10 percent in July 2011, the
second half of 2011 provided a better
environment for U.S. wine sales of USD 11.5
million, almost triple of those in the first half of
2011, USD 4.8 million. However, a full
recovery of markets is not expected to develop
until 2012 after the tariff is eliminated. Even
though NAFTA removed many trade barriers,
some do remain such as the Canadian
Provincial liquor controls systems.
7
Latin America (excluding Mexico and the Caribbean)
Total U.S. wine exports to Central and South America in 2011 were USD 15.9 million. Panama,
with USD 4.3 million, is the largest importer of U.S. wine in Central America while Brazil is the
largest importer of U.S. wine in South America at USD 3.28 million. The Panama Trade
Promotion Agreement was signed into law in the U.S. in 2011, which should result in a gradual
increase of U.S. sales upon implementation. The Colombia – U.S. Free Trade Agreement entered
into force on May 15, 2012, reducing import duty for wine to zero. This FTA offers a significant
benefit for U.S. wine exports and allows U.S. to be more competitive entering the market.
However, even with the Panama, Columbia and
the CAFTA-DR, Chile and Peru FTAs, wine
sales in Central and South America are limited
for several reasons. One is that both Argentina
and Chile are significant wine producers, fifth
and tenth in production with strong cultural ties
to those producers. Also, European producers
such as Spain and Italy have similar ties to those
markets and their exports are subsidized by the
EU and its member countries. Another reason
is the plethora of government import
restrictions as well as existing preferential
trading arrangements among those countries.
U.S. wine imported to Argentina declined significantly, to 8.3 million liters in 2011, because of
the government import restrictions. Brazil, Venezuela and Ecuador all impose various import
restrictions such as testing and certification, registration and licensing and the application of
revenue stamps. Brazil is the most populous country in South America, an important emerging
market for U.S. wine exports and a member of the Mercosur FTA. Their membership in
Mercosur provides a competitive advantage to Argentina and Chile (under a free trade agreement
with Mercosur) whose wine imports enjoy a zero import tariff. Even though U.S. wine exports
to Brazil in 2011 were USD 3.28 million, an increase of 101 percent compared to year 2010, U.S.
captured only one percent of the market share. There is still a long way to go for U.S. wine
exports in Latin America.
The Caribbean
This year’s report separates this region from Latin America because of its growing importance as
a target market for exports. Total exports to the region were USD 30.6 million in 2011 almost
double that of Central and South America and an increase of 5.8 percent over 2010. Bahamas
was the largest importer at USD 5.8 million. Cayman Islands imported USD 3 million, followed
by Bermuda with USD 2.7 million. The market is primarily based on local tourism. This region
has been difficult for small and medium sized wineries to develop markets because of the
fragmented nature of the small market individual countries.
European Union
8
The European Union with its single internal market is the largest importer of U.S. wines as a region.
Even with a common external tariff, many of the 27 member countries import little U.S
U.S. wine
directly (see chart). USD 464 million exports were shipped in 2011
201 with the UK, Germany and
Italy being the principal targets for U.S. winemakers.
The exports to Italy reflect the growing business
practice of shipping bulk wine for bottling and
distribution
tribution in Europe to save cost and reduce the
carbon footprint. There were increases over 2010
20 in
Netherlands, Spain, and Sweden but Ireland, Italy,
and Finland had either a small increase or in some
cases a decrease in imports of U.S. wine. The
subsidies for European wine grape farmers and
winemakers and the low cost of distribution provide
a significant comparative advantage for EU wine
producers. Added to this increasingly competitive market is the general decline in wine
consumption in a number of thee larger European markets.
By comparison, EU producers export almost USD 3 billion of wines into the U.S., six and a half
times moree than the U.S. wine exports into the EU.
EU Those imports account for more than 60
he EU continues to restrict U.S. winemakers’
percent of all wine imports into the U.S. market. The
use of common production terms on labels such ruby, clos, chateau and tawny
tawny, requires
unnecessary certification documentation and imposes burdensome labeling and technical
standards such as that for organic
rganic wine. (On February 15, 2012, the U.S. – EU Organic
Equivalence Arrangement was signed stating that ‘Most products certified in either
her the U.S. or
EU can be marketed as organic in both places starting June 1, eliminating the need to get a
second set of certifications1’ but the agreement,
agreement as of now, does not include wine.)
In collaboration with the Comité Européen des Entreprises Vins (CEEV), the European
association of wine companies, Wine Institute has been able to effectively respond to the EU’s
technical regulatory issues such as maximum residue limits, allergen labeling and additives for
non-alcohol wine. The continuation of the U.S. wine industry’s close working relationship with
CEEV and WWTG governments and industry will assist in further international coordination to
bring greater coherence in wine regulations.
Non-EU Europe and Eurasia
Non-EU
EU Europe and Eurasia includes
Switzerland, Norway, the Balkans, Turkey,
Russia and other former Soviet States. The
region has both traditional wine
wine-consuming
Norway)
and emerging
nations (Switzerland,
markets (Russia, Kazakhstan, and Balkans).
1
Switzerland
Russia
Norway
Latvia
Other
http://www.winespectator.com/webfeature/show/id/46432/
9
Wine sales in this region in 2011 totaled USD 34.7 million, the majority to Switzerland, Russia,
and Norway.
After joining WTO in late 2011, the wine tariff entering the Russian market will decrease over
time. Congress, however, must first pass Permanent Normal Trade Relations legislation before
U.S. wine producers can benefit from those reductions. In addition, USDA and TTB are
working with the Russian authorities to mitigate the impact of the new regulation on wine
imports that significantly restricts U.S. wine imports.
High tariff rates and an assortment of non-tariff barriers continue to be the biggest obstacles for
U.S. wineries looking to expand into this region, particularly Russia where product certification
and customs procedures remain formidable impediments.
The Free Trade Agreement of the Commonwealth of Independent States (CIS FTA) was signed
on October 18, 2011 by eight CIS members, including Russia, Ukraine, Belarus, Kazakhstan,
Armenia, Kyrgyzstan, Moldova and Tajikistan. However, the agreement did not simplify the
overregulation of wine market. Each wine bottle entering the CIS of Russia, Belarus, and
Kazakhstan must bear a special certificate and be registered in the special regulating system
called EGAIS.
Asian and Pacific Rim
As illustrated by the increased exports, wine trade in Asia has grown dramatically in importance
for U.S. wine producers. Wine consumption is rising in the region and the forecasts estimate
continued wine consumption growth as opposed to the European countries where consumption
is declining. U.S. exports to this region of USD 364 million made it the third largest regional
market after the European Union and North America. This was an increase of 50 percent over
2010, driven largely by exports to China, Hong Kong and Japan, increases of 78 percent, 44
percent, and 40 percent, respectively. Bulk wine exports were a large component of those
exports, particularly to Japan.
U.S. wine exports to South Korea as a
share of the import market have been
declining as a result of the Chile and EU
FTAs. The Korea Free Trade Agreement
(KORUS) that entered into force in March
2012 eliminates the import duties on U.S.
origin wine and should help to reverse that
trend. Also, the removal of the import
duty in 2008 in Hong Kong and Macao
continues to stimulate U.S. wine exports.
Nonetheless, there are still several factors standing in the way of increasing U.S. wine exports to
Asia. Import duties are the most formidable constraint in the region. The U.S. does not have a
10
free trade agreement with the large population economies in the region, such as Japan, China and
Indonesia. Chile, New Zealand, Australia and the EU all have preferential agreements that
reduce their tariff burden in many of the Asian markets, making U.S. wine less competitive. U.S.
producers find it very difficult to absorb those tariffs when pricing in the retail market in
competition with other wine producing countries that are exempt from that import tariff.
Japan’s high tariff and non-tariff barriers and import substitution policies continue to protect
Japanese wine production. Chinese domestic wine brands account for a large majority of the
wine market, with only 5 percent market share available for import. The ‘12th Five-Year’ Plan,
which was released on July 6, 2012, also focuses on domestic wine products. The negotiation of
the Trans-Pacific Partnership Agreement has become critical to U.S. wine producers to remain
competitive in many of these markets besides China.
Another impediment for expanding U.S. wine market share in Asia and Pacific Rim is the
regulation of winemaking. Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary
(SPS) issues restrict sales and significantly increase costs for testing and labeling. Both Japan and
China have promulgated wine regulations that do not allow the use of common additives and
processing aids. In addition, those compositional and residue limit standards vary from country
to country and the number of new regulations increases each year. There is little harmonization
within the region, which adds to the difficulty for exporters to comply with the many different
requirements. The U.S. industry, with assistance from FAS, is in the process of petitioning those
countries to approve the use of additives and processing aids that were excluded from the new
regulations. This will facilitate the export of more U.S. wine into those markets.
Middle East
Other than the United Arab Emirates and Israel, very little wine is sold in the Middle East. For
the Muslim countries most do not allow the import of
alcohol beverages or, if they do, it is to the tourist and
hospitality sector only. Since most of the tourists are
European that market is dominated by subsidized EU
wines. U.S. exports for 2011 totaled USD 4.9 million, an
increase of 36 percent over 2010. The implementation of
FTAs with Israel (that has not complied with tariff
elimination for wine), Jordan, Oman and Bahrain has not
yet benefitted the industry. Unfortunately, most of the
FTAs provide for a long-term phase-out of high import
tariffs.
Sub-Saharan Africa
U.S. exports to Sub-Saharan Africa were USD 4.9 million in 2011, a slight increase over 2010.
The three largest markets remain Nigeria, South Africa and Ghana. The more stable economies
such as the East African Community (Kenya, Tanzania, Uganda, Burundi and Rwanda), Senegal,
Benin and Angola are promising markets if barriers can be reduced and the subsidized
11
competition from European producers abates.
Sub-Saharan
Saharan Africa is becoming a more important
market for several California exporters but the
markets are very competitive. The “association” or
“partnership” agreements made by the EU with
their former colonies are forcing many African
countries to purchase only European wine if they
wish to have access to the European market for
their own agriculture goods. South Africa, also a
significant wine producer, is supplying many of
those markets in the region. The U.S. imported
USD 45.4 million from South Africa in 2011. By comparison U.S. wine exports to South Africa
increased to only USD 1 million.
12
The Global Wine Market
Global wine production peaked at 33.35 billion liters during the
1981 to 1985 production years. The low point was 2008 at
25.92 billion liters. Production in 2011 was 26.65 billion liters,
an increase of 2.1 percent compared to 2010. Wine
consumption also remained steady at 24.37 billion liters,
increasing by 4.08 percent over 2010. In 2011, the U.S. became
the World’s largest wine consumption market by volume at 3.28
billion liters, replacing France where consumption was 2.99
billion liters. Each country represents just over 12 percent of
World consumption. Italy, Germany, the United Kingdom, Russia, Spain, Argentina, China and
Romania rounded out the top ten markets. (Romania becomes number ten, replacing Australia.)
Eight countries accounted for 75 percent of the wine production market share in 2011. These
included France at 18.62 percent, Italy at 15.97 percent and Spain at 13.12 percent. The top ten
world wine exporters in 2011 were France, Italy, Spain, Australia, Chile, Germany, the U.S., the
United Kingdom, New Zealand and Portugal. In 2011, using assumptions related to the average
unit value, logistics and distribution costs, government tariffs and taxes, it is estimated that the
World consumer value and government revenue from wine totaled USD 233 billion and USD
55.56 billion, respectively.2
Wine Institute’s July 2012 press release on the 2011 wine export numbers reported:
U.S. Wine Exports, 90 Percent from California, Reach New Record of $1.4 Billion
SAN FRANCISCO – U.S. wine exports, 90% from California, reached a new
record of $1.39 billion in winery revenues in 2011, an increase of 21.7% compared
to 2010. Volume shipments were up 5.8% to 455.7 million liters or 50.6 million
nine-liter cases.
“The quality, diversity and value of California wines have propelled us to another
record year for wine exports,” said Robert P. (Bobby) Koch, Wine Institute President
and CEO. “Our success in removing trade barriers and opening new markets as well
as significant marketing investments by our wineries will allow us to reach our goal of
$2 billion in exports by 2020.”
“Our global Discover California Wines campaign with its link to California’s iconic
and aspirational lifestyle resonates with consumers, media and trade throughout the
world,” said Linsey Gallagher, Wine Institute’s International Marketing Director.
“We have significantly increased our focus on and investment in the China market
over the past year in this top priority market. Our goal is to connect the lifestyle that is associated with our state with the
understanding of California as a world class wine producing region.”
2
World Vineyard Grape and Wine Report 2011, June 2012
13
“Wine Institute’s work with the U.S. government and key international organizations such as the World Wine Trade
Group, the Asia-Pacific Economic Cooperation and FIVS continues to have a valuable impact in facilitating trade. Export
growth in 2011, however, reinforces the need to continue eliminating unreasonable trade barriers, particularly in the Pacific
Rim where wineries are burdened by protectionist tariffs and duplicative regulations costing Asia-Pacific economies close to $1
billion per year,” said Wine Institute’s International Trade Policy Director Tom LaFaille.
Thirty-four percent of U.S. wine exports by value were shipped to the 27-member countries of the European Union,
accounting for $478 million of the revenues, up 10% from 2010. Volume shipments to the EU reached 28 million cases in
2011, edging up 1.4% from the previous year. Other top markets were: Canada, $379 million, up 23%; Hong Kong,
$163 million, up 39%; Japan, $105 million, up 39%; and China, $62 million, up 42%.
“California wines continue to grow in popularity with both trade and consumers in the Canadian market,” according to
Rick Slomka, Wine Institute Trade Director for Canada. “Some of the recent growth comes from new brands with eyecatching labels and clever names. Also contributing to this growth is the ongoing strength of the Canadian dollar which has
made California wines more competitive compared to wines from other major wine regions. Our continued success with
premium wines in the Quebec market and in LCBO VINTAGES, indicates that Canadian consumers see good value in
California at all price points,” said Slomka.
“In a challenging economy, the UK wine market does not stand still, and new sectors and opportunities have arisen.
California has been responsive to these, and has built on the bedrock of its major branded wines with successes in the
independent retail sector and on-trade outlets. Growth in these areas introduces our wines to new audiences, and enables
California to demonstrate its diversity at higher price points. This growth is by no means exhausted, and augurs well for the
future here,” said John McLaren, Wine Institute Trade Director for the United Kingdom.
"California wines fared well in most European countries. In Sweden for instance, sales growth of California wines were the
highest of all wine supplying countries in Sweden. The story was similar in Germany, where California again experienced the
highest growth rate of all wine exporting countries. However, a
significant portion of California wine imported into Germany
is re-exported and actually sold in other European markets.
Additionally, as a word of caution, the 10% change in the
Euro/Dollar exchange rate of the past few months may have
an effect on exports to Europe in early 2012,” said Paul
Molleman, Wine Institute’s Trade Director for Continental
Europe.
“The outlook in the world’s emerging wine markets remains
positive as most markets continued to post strong gains in
2011. Hong Kong remained California’s third largest export market by value, although growth slowed to 39% from 150%
in 2010 compared to 2009. China’s growth remained buoyant at 42% compared to 2010 and is now the fifth largest
export market by value, up two places from last year. Vietnam posted the strongest year-over-year gains (+266%) among
the top 25 markets. Elsewhere, there is significant optimism in South Korea due to the recent ratification of the Korea-U.S.
Free Trade Agreement and in Mexico where the 20% import tax on California wines was repealed in late October 2011,"
commented Eric Pope, Wine Institute’s Regional Director, Emerging Markets.
14
“U.S. bulk wine exports to Japan have been growing as major Japanese importers are now importing popular-priced
California wine brands in bulk and bottling in Japan. This reduces the burdensome import duty to a certain extent and
makes inventory control easier. As per bottled U.S. wine, Japan is now importing more expensive California wines than in
the past. Unlike other new world wine exporting countries, California wine is well represented at high-end restaurants
because of our successful annual restaurant promotion,” reported Wine Institute Trade Director in Japan, Ken-ichi Hori.
Since 1985, Wine Institute has served as the administrator of the Market Access Program, an export promotion program
managed by the USDA’s Foreign Agricultural Service. For more information, see: www.wineinstitute.org.
15
Global Trade Barriers
Trade barriers are government laws, regulations, policies or practices that restrict both the
imports from and exports to other countries. Examples include tariffs, taxes, domestic and
export subsidies, embargoes, standards, conformance testing and certification, import quotas,
unnecessary sanitary restrictions, warehousing requirements, customs clearance, distribution
services and domestic licensing, among others. The following are descriptions and examples of
trade barriers that remain the most restrictive to the U.S. wine industry’s ability to increase
exports. This information is complemented by “Opportunities for the Resolution of Barriers” in
the following section.
Protective Tariffs
According to the World Bank, the average simple
applied import tariff including all preferential rates
for all goods world-wide is 3.4 percent.3 Without
including the preferential rates the average is 7.1
percent. Other than Canada, virtually all U.S. wine
exports to the major markets face tariffs double or
triple those rates. For example, the EU import
tariff ad valorem equivalent (AVE) is approximately 9
percent, Japan’s is 15 percent and Switzerland’s
AVE is 90 percent on red wine and 106 percent on
white. By comparison, the U.S. import AVE is 1.4 percent. Over the last 30 years of multilateral
wine negotiations through the General Agreement on Tariff and Trade (now the World Trade
Organization), the U.S. import tariff for wine has been reduced from the specific rate of 31.5
cents (about 10 percent AVE at the time) to 6.3 cents per liter (AVE 1.4 percent). Unfortunately,
other countries’ import tariffs on wine were only slightly reduced, if at all. For some of the major
and emerging markets those rates are still high with Japan at 15 percent; China 14 percent; Russia
20 percent; Brazil 27 percent; Vietnam 50 percent; and India 150 percent. High tariff rates
constitute the single most restrictive barrier to U.S. wine exports.
Wine Subsidies
While some of the most trade distorting wine subsidies such as the European Union’s export
refunds are being slowly phased out, significant direct payments to grape growers and
winemakers persist. These subsidies are intended to encourage, support and finance foreign
winemakers giving them a competitive advantage in the marketplace. For example, one of the
support measures being used by the EU specifically states the intention ‘is to increase the
competitiveness of wine producers.”4 For 2011, total subsidy allocations by the European
3
http://info.worldbank.org/etools/wti/3b.asp?pillarID=1&indList=66&indList=118&indList=152&indList=161&i
ndList=190&average=0&regionID=0&periodID=16
4
EC 479 Article 11 Restructuring and conversion of vineyards
16
Community for wine amounted to approximately USD 2 billion. EU member countries added
additional support, e.g. France, Spain and Italy, USD 155 million.5
The EC Rural Development (RD) measures are jointly funded between the EU and national
authorities. The rate of EU co-financing varies between 50 and 80 percent depending on the
purpose for funding and the region. The member countries or local authorities pay the reminder.
Three countries (the largest wine producers) have an allocated budget for using RD funds in the
wine sector: Spain, France and Italy. The total budget for these countries increased from $58
million in 2009 to $115 million in 2010 and $173 million annually for 2011 and onwards. The
largest part of this money is used “to improve the quality of the wine.”
Under international agreements, subsidies are considered unfair if they are trade distorting. In
WTO terminology resulting from the Uruguay Round Agriculture Agreement, agriculture
subsidies are identified by “boxes,” divided into three colors: amber, blue and green:
Amber Box Subsidies – Domestic support measures considered to distort production and
trade (with some exceptions). These include measures to support prices and/or subsidies
directly related to production quantities.
Blue Box Subsidies – Support measures that in most industries would be in the amber box,
but with agriculture are not. An example would be a measure that requires farmers to limit
production in return for direct payments.
Green Box Subsidies – In order to qualify, green box subsidies must not distort trade, or at
most cause minimal distortion. They have to be government-funded (not by charging
consumers higher prices) and must not involve price support.
Although the EU unilaterally classifies their wine subsidies under the “Blue Box” or “Green
Box” (i.e., allowed for agriculture or not trade distorting), Wine Institute has consistently
objected to this classification, indicating that these subsidies are direct supports that allow
European producers to be more price competitive in both their domestic markets and in third
country markets. With government support to buy the grape vines for planting more
competitive varieties, pay 50 percent of the wine’s promotion, buy the excess product through
distillation and providing compensation to producers while their vineyards are being
restructured, European winemakers are relieved of the majority of their overhead costs. Those
programs are clearly trade distorting to U.S. producers.6
Outside the EU, South Africa and Australia provide joint government-industry funded
promotional boards and industry research. Canadian provincial governments give both financial
aid and preferential treatment to Canadian wines in the provincial monopoly liquor stores.
Argentina provides export tax refunds and significant marketing data and other research for the
benefit of their wine producers. Australia provides a “Producer Rebate Scheme” that entitles
domestic producers to a tax rebate of 29% of the wholesale value of eligible domestic sales.
5
6
USDA GAIN Report Number: IT1105; EU-27 March 2011
USDA GAIN Report Number IT1014 EU-27 Date: 3/1/2010
17
These subsidy programs continue to permit foreign producers to undercut U.S. exporters’
pricing decisions in domestic and third-country markets.
Preferential Market Access
Market Access is defined as the ability of foreign firms to compete in a country's consumer markets for given
products. It reflects both the extent of formal trade barriers (tariffs and non-tariff obstacles) and the government's
willingness to tolerate unimpeded foreign competition with domestic firms.
As a result of the stalled WTO DOHA Round of multilateral trade negotiations, export-driven
countries are pursuing more bilateral Preferential Trade Agreements (PTAs). The WTO’s 2011
World Trade Report identifies more than 300 such PTAs.7 These Agreements are double-edged
swords: While they can be used to negotiate tariff and non-tariff barrier reduction to gain
market access for U.S. producers,, they can also be employed by other countries to create
competitive advantages for their exports against U.S. goods and services. This development in
trade policy has resulted in a veritable race to negotiate PTAs; countries that do not actively
pursue trade agreements are left on the outside of a market while those who have negotiated
successful deals enjoy preferential access.
Example: EU Preferential Trade Agreements – The EU is the largest wine producer in the world
and relies heavily on exports to sustain its wine economy. As reported above, EU exports
represent about 60 percent of the World’s wine exports. Nevertheless, the EU is accelerating the
number of PTAs that will provide a competitive advantage for wine in those markets. With more
than 33 agreements and those in the process of being negotiated covering more than 100
countries, it is easier to indicate that only the U.S., Japan, China and Australia do not have a PTA
with the EU rather than list those that do.8 The most recent EU PTAs with South Korea,
Central America and the Andean countries also contain provisions that disadvantage U.S. wine in
the use of geographic and wine descriptive terms. PTAs today are much more than tariff related.
As stated in the WTO Report, “They include a wide range of issues beyond tariffs, such as
services, investment, intellectual property protection, and competition policy. These policy areas
involve domestic regulations (or behind-the-border measures).”
Incompatible Wine Composition Standards
Testing and Certification Requirements – Canada, Russia, China, South Korea, Brazil, Colombia,
Malaysia, the EU and other authorities require testing of compounds in wine and mandates the
certification of each, resulting in increased costs to winemakers. Often the wine composition
rules differ from U.S. rules making it difficult for U.S. exporters to comply. Processing aids,
additives and residue limits can be even more burdensome than tariffs since they can embargo
imports at any price. In working with U.S. authorities, efforts are being made to seek more
regulatory coherence and, if at all possible, agreements for mutual acceptance of the other party’s
regulatory scheme.
7
8
http://www.wto.org/english/res_e/reser_e/wtr_e.htm
Europe’s Preferential Trade Agreements: Status, Content, and Implications; Congressional Research Service, March 2011
18
Miscellaneous Non-Tariff Barriers (NTB)
Government Monopolies – Canada, Finland, Norway and Sweden maintain state or provincial
monopolies that restrict the import and sale of U.S. wine. Many of these monopolies are
designed to collect additional revenues for the government in addition to tax revenue, protect
domestic wine industries and/or control alcohol consumption. The objective of social alcohol
control makes it difficult to seek elimination of these barriers.
Import Licensing and Port of Entry for Customs Clearance – Many governments, including the
U.S., require import licensing. The issue is the criteria and ability to obtain those licenses.
Indonesia is a recent example where import licenses were granted only if there was no domestic
production. For customs clearance, Vietnam restricts the import of wine to three specific
marine ports, not air freight, which limits providing samples for new customers.
Wine Labeling Regulations – New labeling requirements are of growing concern because of the
lack of consistency in the standards between countries. From varying health-warning labels to
ingredient labels, producing a label unique to that country adds significant additional cost
without adding any real value to the consumer or to the government’s enforcement ability if
those standards were harmonized. Wine producers accept reasonable health warnings but some
of the proposals such as from Thailand, Kenya and Russia that require those warnings to cover a
large percent of the label surface become unduly burdensome.
Other NTBs include antiquated customs procedures, import quotas, bribery and corruption,
product classifications, foreign currency controls, intellectual property laws, over-elaborate or
inadequate infrastructure and protection of local non-wine beverage alcohol producers.
19
Opportunities for the Resolution of Barriers
Preferential Trade Agreements
Preferential trade agreements can be subdivided into
three categories:
Multilateral – An agreement among a number of states
that is binding on all signing participants, for example
the World Trade Organization (WTO);
Plurilateral – An agreement among several countries
that are sometimes, but less and less, geographically near each other that is aimed at fostering
closer economic linkages. Examples are: EU, NAFTA, MERCOSUR, CAFTA-DR; and
Bilateral – A two-country agreement for the exchange of a given volume of specific products
during a specified period of time. Examples are: U.S. – Israel Free Trade Agreement (FTA).
Multilateral - WTO – Doha Development Agenda
Over the past few years, negotiations of the Doha Development Agenda (DDA) of the WTO
have slowly come to a standstill. In July of 2011, negotiators agreed that a smaller version of an
agreement was not possible by the end of the year and suggested the talks continue. Despite
these difficulties with the DDA, Wine Institute continues to pursue both offensive and defensive
objectives regarding WTO negotiations. These include:
1. Offensive
a. Reduce tariffs in foreign markets
b. Eliminate wine subsidies throughout Europe and in other countries
c. Liberalize services to allow for greater participation in distribution and retail sale
d. Support trade facilitation to improve import processes and reduce supply chain costs
2. Defensive
a. Protect U.S. wine import tariffs
b. Protect continued use of semi generic geographic and traditional terms by:
i. Oppose the reopening of TRIPS to eliminate protection for wine and spirits
and enlarging special protection to all agricultural products
ii. Oppose the request of the EU to negotiate a new geographic indications
agreement as part of agriculture talks
iii. Support the U.S. and other countries’ position on the TRIPS wine register that
the system be voluntary, not mandatory
Regarding foreign market import tariffs, Wine Institute continues pressing for 55 to 90 percent
reduction in wine tariffs from the EU, Japan, India, China, Nigeria, Taiwan and Brazil to bring
their rates to the U.S. level (which is currently between 1 and 3 percent AVE). Furthermore, any
other countries identified by Wine Institute as target countries for tariff reductions will also be
pressed for similar cuts.
20
COMPREHENSIVE AGREEMENTS
Preferential Agreements
After adopting NAFTA, the United States entered into the CAFTA-DR FTA, a
plurilateral/regional agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua
and the Dominican Republic. This agreement is providing greater access to Latin American
markets that have previously been restricted. In 2006, the U.S. successfully negotiated
agreements with South Korea, Panama, Peru and Colombia. The U.S. – South Korea FTA is
especially significant as the economic impact of this agreement is equivalent to 70 percent of all
the other U.S. FTAs combined. Congress approved the agreements and Korea and Colombia are
now in force. Panama should soon come into force. The U.S. received immediate duty-free
access for wine and grape juice concentrate in Korea. Negotiations continue with the TransPacific Partnership Agreement (TPP) that offers a significant benefit to U.S. wine exports by
opening markets in Vietnam and Malaysia. The agreement should also provide for protection for
the use of wine production descriptors and establish a more coherent regulatory environment.
WINE AGREEMENTS
World Wine Trade Group (WWTG)
The WWTG consists of government and industry representatives from Argentina, Australia
Canada, Chile, Georgia, New Zealand, South Africa and the U.S. The two agreements, the
Mutual Acceptance Agreement (MAA) on Oenological Practices, whereby signatories agreed to
recognize the winemaking practices of the other parties, and the Agreement on the Requirements
for Wine Labeling are the hallmarks of the Group. Additionally, in 2011, WWTG concluded a
Memorandum of Understanding (MOU) on certification requirements. The MOU states that
while the parties hope to eliminate all certification, if certificates are necessary they should follow
the Codex Alimentarius Guidelines for Design, Production, Issuance and Use of Generic
Official Certificates (CAC/GL 38-2001). Work is now underway on a second phase labeling
agreement to seek harmonization of label requirements on alcohol tolerance, vintage date, single
and multiple regions and single and multiple grape varietals. These far-reaching Agreements
allow a more coherent regulatory environment and the use of a universal wine label between
WWTG countries, thus reducing the complexities and costs of wine trade between the parties.
The efforts of the WWTG to expand these concepts to other markets are achieving some
success. On September 18-19, 2011, the U.S. government and Wine Institute hosted an AsiaPacific Economic Cooperation Wine Regulatory Forum (WRF) seminar in San Francisco to
discuss creating more coherent standards for wine composition and labeling in the region. The
WRF was endorsed by APEC Leaders and another WRF meeting will be held on November 5-7,
2012 in Auckland, New Zealand. From developing strategies to assist in moving the WTO
Doha negotiations towards a positive conclusion, to developing alliances for the removal of
trade barriers in promising markets, there is much to be done by the WWTG in the coming
months and years.
21
U.S. – EU Agreement on Trade in Wine
The 2006 Agreement remains in the management stage with various issues being raised by both
parties. Phase II negotiations never materialized because the EU would not offer compensation
for further concessions from the U.S. One of the pending issues is the EU requirement that the
U.S. have definitions of wine descriptors (EU Traditional Terms) such as “chateau” and “ruby”
before they can be used on labels in the EU other than those trademarked in an EU member
country prior to 2006. The U.S. industry petitioned for the use of 13 such descriptors in 2010
but as of October 2012, only two, “cream” and “classic,” have been approved for use. The EU
still requires the VI-1 certification document for all imported wine from the U.S. while the U.S.
does not require similar certification for EU wine. This remains a significant barrier resulting in
additional cost to U.S. producers.
The EU continues to adopt new wine making practices without prior notification and approval
by the U.S. as required by the agreement. For example, they developed a new standard for
organic wine without any notice to TTB or USTR in advance of notice to the WTO and
adoption. This raised the question about mutual acceptance of future winemaking practices. The
EU regulations now provide that the EU adopt the OIV standards (a type of mutual acceptance)
for new practices but even that is not consistently applied. It was the EU that refused to accept a
mutual acceptance provision in the bilateral and insisted on the requirement for advance
approval by either party. Their inability to comply with their own requirement suggests that
adoption of full mutual acceptance is now appropriate.
REGIONAL COOPERATION
Asia-Pacific Economic Cooperation (APEC)
Asia-Pacific Economic Cooperation (APEC) Leaders in Bangor, Indonesia in 1994 established
the year 2020 for the removal of all tariffs within the 18 member countries (2010 for developed
countries). In 1996, the organization adopted a
Common Action Plan (CAP) for further
liberalization in the region. This initiative provided
an opportunity for the wine industry to seek
further tariff cuts in the Asia-Pacific region. Wine
Institute supports the efforts of the U.S.
government to reduce tariffs on wine in the APEC
region, particularly through the negotiation of the
Trans-Pacific Partnership and to reduce non-tariff
barriers to allow wine markets to develop.
APEC also offers an opportunity to address regulatory barriers for wine through its
Subcommittee on Standards and Conformance. The U.S.-hosted Wine Regulatory Forum
(WRF) meeting is such an example. The 2011 APEC “Seminar on Key Issues in Wine
Regulation” brought together 110 wine regulators and stakeholders from 18 countries in the
Pacific Rim region to discuss ways of improving regulatory coherence and cooperation among
22
regulators. Forum participants included officials from
Canada, China, Chinese Taipei, Hong Kong, Indonesia,
Japan, South Korea, Mexico, Papua New Guinea, The
Philippines, Russia, Thailand and Vietnam.
USTR, TTB, USDA, the Commerce Department and
Wine Institute organized the Seminar, with assistance
from co-sponsors Australia, Chile, New Zealand and
Peru. As Bobby Koch, President and CEO of Wine
Institute said, “This historic meeting brought wine
regulators from key Asia markets together for the first time to focus on ways to reduce the time,
cost and uncertainty of moving goods throughout the region. We applaud APEC’s efforts to
strengthen regional economic integration and to expand trade.” At the end of the Seminar,
participants agreed to continue the dialogue and efforts toward regulatory coherence. The
APEC WRF is the type of public-private partnership needed to reduce and eliminate trade
barriers in the region. It was endorsed by the 2011 APEC Leaders Summit and the next meeting
will be held in Auckland New Zealand in November 2012.
The Role of the U.S. Congress
It was the passage by Congress of the Wine Equity Act in 1984 that launched Wine Institute’s
international program to reduce foreign barriers to U.S. wine exports. Congressional action
remains a vital element in that program and to the successful implementation of Wine Institute’s
international strategy. The Wine Equity Act remains the statement of policy and direction to the
Administration concerning the international wine trade. Congress continues to monitor and
assist the work of the Administration and the industry by addressing wine issues in hearings and
legislation; writing letters of support to government officials; and by raising wine barrier issues
with foreign officials during Congressional visits. This support is critical to the growth and
continued success of U.S. wine sales overseas.
Wine Institute strongly supports continued funding
for the Market Access Program (MAP), an export
program initiative financed by the United States
Department of Agriculture (USDA). Jointly with U.S.
agriculture, MAP uses funds appropriated by
Congress and matched by industry to encourage the
development, maintenance and expansion of
commercial agricultural export markets, stimulate and
increase interest of small companies in exporting,
open new markets, counter unfair foreign competition and increase commercial sales of U.S.
agricultural products. MAP enables the U.S. wine industry to compete with the USD 66 million
provided by the EU to its winemakers for promotion and to develop new foreign markets. MAP
needs to be reauthorized as part of the 2013 Farm Bill.
23
Specific Country Profiles
EU and Selected Member Countries
Collectively, the EU is the world’s largest producer, importer, exporter and consumer of wine. It
maintains almost 50 percent of the world’s total vineyards and produces 60 percent of the
world’s wine volume. The EU’s 27 member countries also have some of the highest per capita
wine consumption figures in the world.9
The European Union was the largest importer of U.S. wines in 2011. Despite large high import
tariffs and direct subsidization of European grape farmers and wineries, U.S. wine sales in the
EU totaled USD 463.9 million. The large wine trade deficit between the U.S. and the EU (the
EU exports approximately USD 2.9 billion to the U.S.) continues to exist because of the
asymmetry in tariff rates, (EU three to four times the rate of that in the U.S.) large subsidies
provided to grape farmers and winemakers, and various non-tariff barriers. The EU and the U.S.
continue to discuss possible reductions of these protectionist policies but without much success.
However, in 2006 the U.S. and the EU signed an Agreement on Trade in Wine, which facilitates the
mutual acceptance of oenological practices and simplified some import procedures.
In past years, this report has made a point of classifying U.S. export statistics by individual EU
member countries. As the EU continues to evolve into a single market, however, these export
statistics do not accurately represent U.S. wine sales to individual countries. For example, total
U.S. wine exports to Italy do not reflect that virtually all of those exports are bulk wine that is
bottled and distributed to other EU member states, primarily the UK. Exports to the United
Kingdom – USD 234 million in 2011 – did not translate to USD 234 million in actual retail sales.
Instead, the U.K. often functions as a point of entry for U.S. wines, which are destined for retail
sales in other EU countries. As such, a better indicator of country-specific consumption of U.S.
wine is retail sales (unfortunately those numbers are not available to us). With the U.S. wine
export statistics for this report sourced from customs figures, we alert the reader to the potential
for variations between the listed import statistics and the actual retail sales of U.S. wines in those
countries of import.
Tariffs and Taxes
The European Union is a customs union with a common external tariff that is imposed by all
member states. The average EU common external tariff on wine ranges from Euro 13.1- 32
9
USDA GAIN Report Number: IT1105, March 2011
24
(USD 18.7-45.7) per hectoliter of wine (1 hectoliter = 100 liters). The Import tariffs calculated,
for a hectoliter, as follows:
For still wines, if the actual alcoholic strength by volume:
Is not exceeding 13 % volume - Euro 13.1-14.8 (USD 16.8- 19);
Is between 13 % -15 % volume - Euro 15.4–15.8 (USD 19.8-20.3);
Is between 15 % - 18 % volume - Euro 14.8-18.6 (USD 19-23.9);
Is between 18 % - 22 % volume - Euro 15.8-20.9 (USD 20.3-26.8);
Is exceeding 22% volume - Euro 1.75 (USD 2.25) per percentage of alcohol by volume per
hectoliter.
For sparkling wines:
The Import tariff is Euro 32 (USD 41.14) per hectoliter.
The EU’s higher tariffs make U.S. wine less competitive in the European market, while U.S.
import tariffs for EU wines entering the U.S. market do not have the same effect. For example,
using a 750 ml bottle of still wine under 13% alcohol for comparison, that bottle priced at USD
10 faces an import tariff of USD 1.45 when exported into the EU. That same bottle sent from
the EU faces a USD 0.05 import tariff. The landed cost in the EU is USD 11.45 while the landed
cost in the U.S. is USD 10.05. The excise, VAT and other taxes are then calculated on that
landed cost thus compounding the difference in the landed cost.
In addition to the import tariff, each EU country is allowed to impose its own excise and Value
Added Taxes to wine imports. Although the EU is attempting to harmonize import
requirements, these excise taxes – along with additional taxes and handling charges assessed by
individual countries – make it difficult and expensive to export wine to many EU countries. For
each of the following the tariff is as described above. These profiles list the excise, VAT and
other taxes where applicable.
Belgium
Belgium, officially the Kingdom of Belgium, is a founding member of the European Union and
hosts the EU's headquarters, and those of several other major international organisations such as
NATO. It is an international capital city with multiple diplomats from virtually every country in
the World. For example, the U.S. has three Embassies and Ambassadors in Brussels, one for
Belgium, one for the EU and one for NATO. With its major port of Antwerp, Belgium is also
an entrepôt for all of Europe. It is the 12th largest export market for U.S. wine with sales of
almost USD 20 million in 2011.
Taxes
The VAT is 21 percent and there are no excise taxes on still or sparkling wine.
Denmark
Denmark is famous for its modern economy and widespread welfare system. Even though
25
joining the EU in 1973, Denmark rejected the Euro as the
national currency in September 2011 and has kept outside
the Euro zone until now. High dependence on foreign trade
is another feature of this high-tech agricultural country. In
2011, U.S. wine exports were USD 22.3 million, a 27.8
percent increase from 2010.
Taxes
The VAT on all wine is 25 percent. The excise taxes vary based upon level of alcohol. For still
wine 6%-15% by vol the rate is Euro 142.70 per hectoliter. For sparkling wine 6%-15% by vol
the rate is Euro 183.81 per hectoliter. For still wine 15%-22% by vol the rate is Euro 191.07 per
hectoliter and for sparkling wine, 15%-22% by vol Euro 232.19 per hectoliter. Certain
packaging, disposable tableware, etc. are also charged an environmental tax. Check with the
importer as to applicable rates for wine bottles.
Finland
Finland has a highly industrialized; largely free-market economy with per capita output roughly
that of the UK and Germany. Trade is important, and exports equal two-fifths of GDP.
Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic
products. Retail sales of wine and liquor are restricted to Alko, a government monopoly. A
license from the National Product Control Agency (STTV) is required for importers of wine.
Import certificates are needed for imports of wine products from non-EU countries. Most of
Finland’s imported wine comes from within the EU where it is imported duty free. In 2011, U.S.
wine sales to Finland totaled USD 2.56 million.
Taxes
Wine is subject to a 23 percent VAT. The excise tax is Euro 312 per hectoliter for both still and
sparkling wine. The government also collects revenue from the profit mark-up of the wine sold
at retail.
France
U.S. wine sales to France totaled USD 27 million, resulting in a steadily increase from 2010,
when the sales were USD 25.5 million. Also, in 2010, French sales of U.S. wine were USD 36
million projected at USD 46 million in 2011. This is a 15 percent increase in comparison with
2010, and represents a 6 percent of the total French imports. The U.S. ranks fourth in French
imports after Spain, Portugal and Italy, and ahead of Chile, South Africa and Australia.
California wines face strong competition from Spain, Portugal, Italy and as well as from new
world producers such as Australia, South Africa and Chile.
Taxes
France levies a VAT of 19.6 percent of the import price for all wines. There is also an excise duty
for the 2012 budget year of Euro 3.6 per hectoliter on still wine and an excise duty of Euro 8.91
per hectoliter on sparkling wine.
26
Germany
Wine consumption in Germany has been growing during recent years. In particular, the demand
for red wine is strong. Good prospects exist for ‘new world’ wines, including those from the
United States. Germany wine imports account for about one-half of domestic consumption.
Seventy percent of U.S. wine imported into Germany is shipped as bulk wine, bottled locally,
and sold in the leading German supermarkets. In 2011, U.S. exports of wine to Germany totaled
USD 54 million.
Taxes
Germany levies a 19 percent VAT on wine imports. There is no excise tax on still wine but the
tax on sparkling wine is Euro 136 per hectoliter.
Ireland
Ireland is a small, modern, trade-dependent economy. Ireland was among the initial group of 12
EU nations that began circulating the Euro in 2002. GDP growth averaged 6% in 1995-2007,
but economic activity has dropped sharply since the onset of the world financial crisis, with
GDP falling by over 3% in 2008, nearly 8% in 2009, and 1% in 2010, and with GDP growing by
0.7% in 2011. U.S. wine exports in 2011 were only USD 1.9 million while exports in 2010 were
USD 3.8 million.
Taxes
The VAT is 23 percent. The excise tax is Ireland is also based upon alcohol content. For still
wine 5 to 15% by vol the rate is Euro 262.24 per hectoliter. For wine over 15% by vol it is Euro
380.52 per hectoliter. For sparkling wine the rate is Euro 524.48 per hectoliter for all over 5.5%
by vol.
Italy
Italy has a diversified industrial economy with roughly the same total and per capita output as
France and the UK. In 2011, U.S. wine exports to Italy totaled USD 49.23 million. The majority
of this wine was bulk that is bottled in Italy for distribution throughout the EU. The U.S. wine
industry is looking to continue increasing its market share of bottled wine consumption
throughout Italy and to solidify the good reputation of U.S. wine.
Taxes
Italy imposes a 21 percent VAT and no excise tax on wine.
Latvia
Latvia has developed a diverse market-oriented economy with the potential to serve as an EastWest service and trade hub. Latvia’s real economic growth averaged a steady 5.5% between 1994
and 2005 following the introduction of reforms and the establishment of the country’s national
currency, the lat, in 1993. Real per capita income nearly doubled over the course of the decade
27
and the prospects for Latvia’s economy seemed bright as the country joined the EU in May 2004
and set its sights on adopting the Euro as its national currency. Initially, it seemed like there was
cause to celebrate as the next 3 years (2005-2007) brought on average economic growth of nearly
11% per year. When the credit boom went bust in 2008, the economy fell into a recession,
shrinking by 4.6% in 2008 and by 18% in 2009. It has not joined the Euro zone. Latvia has
been a member of the World Trade Organization since 1999, and Latvia and the United States
have signed treaties on investment, trade, intellectual property protection, and avoidance of
double taxation. U.S. wine exports increased from USD 400, 000 in 2009 to over USD 2.2
million 2011, more than to Spain, Ireland and Austria.
Taxes
The VAT is 21 percent. The excise tax for both still and sparkling wine is Euro 63.45 per
hectoliter.
Netherlands
The Netherlands economy is noted for stable industrial relations, moderate unemployment and
inflation, a sizable current account surplus and an important role as a European transportation
hub. While the Netherlands may be a small country geographically, with 17 million inhabitants
and no domestic viticulture of any significance, it is a significant wine importer. At 420 million
liters, it is the 6th largest wine import market in the world. As in many northern European
countries, wine consumption in Holland was insignificant in the early sixties, but the Dutch now
drink as much wine as the English per capita. The Dutch affection for wine is still growing, from
14.5 liters per capita in 1990 to about 22 liters in 2011. U.S. exports in 2011 were USD 17.64
million. Wine sales in the Netherlands slightly decreased in volume in 2011, but the turnover
remained about the same. France is the number one supplier for the Dutch market with 31
percent of market share.
Taxes
The VAT is 19 percent. The excise tax is Euro 70.56 per hectoliter on still wine and Euro
240.58 on sparkling wine.
Poland
U.S. wine exports were USD 16.26 million in 2011, an increase of 15 percent of 2010.
Taxes
Poland levies VAT of 23 percent. The excise tax is Euro 36.06 per hectoliter on still and
sparkling wine.
Spain
U.S. wine exports were USD 1.2 million to Spain in 2011, an increase of 16 percent from 2010.
The majority of the Spanish wine import market continues to be dominated by France and Italy.
Spanish wine consumption has decreased per capita and can be attributed to the economic
28
downturn, the high rate of unemployment as well as strong advocacy for no-alcohol traffic
campaigns. Surveys show a change in younger consumer preferences now more in favor of beer
and liquor.
Taxes
The VAT is 18 percent. There are no excise taxes on wine.
Sweden
Sweden imposes high taxes on alcohol for public health reasons. Nevertheless, in 2011 the
U.S. exported USD 14.34 million of wine to Sweden, up 27 percent from 2010. France and Italy
enjoy the leading shares in the Swedish market; South Africa a close third, proving New World
wine potential in the Swedish market. Sweden maintains a state monopoly, Systembolaget. All
wine retail sales must go through the monopoly.
Taxes
The VAT for wine is 25 percent. The excise tax is Euro 235.61 per hectoliter for both still and
sparkling wine.
United Kingdom
The U.K. is the second largest single country importer of U.S. wine after Canada. Wine Institute
carries out the extensive program for U.S. wine promotion, with support from the MAP
program, focusing on the quality and breadth of California wines. The U.K. continues to be the
most important export market for the Napa Valley Vintners trade association, which heavily
promotes through trade events and consumer education programs. NVV focuses on moving
consumers from lower priced wines into mid and upper tier wines. However, trade barriers
remain which reduce the amount of U.S. wine sales potential in the U.K.
In 2011, U.S. wine exports to the U.K. totaled USD 234 million, a 10 percent increase over 2010.
It is predicted that there will be slow growth in the U.K. wine market in the future, and
competition for market share will become increasingly intense. New World suppliers are
becoming exceedingly popular with U.K. consumers and European wine producers are currently
losing market share.
Taxes
The VAT is 20 percent, an increase of 2.5 percent
from 2010. The excise tax on still wine is Euro
294.88 per hectoliter and the rate for sparkling
wine is Euro 377.57 per hectoliter.
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Selected Other Countries
Argentina
Argentina is one of the world’s largest wine producers and exporters with 17 of its 24 provinces
producing wine. Because of its high import tariff to protect the domestic production, it is
difficult to expand U.S. imports into the country. Even during times when the Argentina import
market was open, the U.S. market share was hard to expand due to lack of promotion and the
price sensitiveness. In 2011, all Argentina imports continue to be small and Chile accounted for
87 percent of the import market share. Imports declined dramatically to 8.3 million liters due to
government import restrictions and only USD 179,078 worth of U.S. wine was exported to
Argentina. However, it is almost double the 2010 total.
As a member of the World Wine Trade Group, Argentina has signed the Mutual Acceptance
Agreement and the Labeling Agreement with other participating countries, including Australia,
Canada, Chile, New Zealand, United States and South Africa. These two Agreements provide for
the acceptance of winemaking practices and the harmonization of labeling regulations between
trading partners. However, Argentina’s market access issues of tariffs and licensing restrict any
real growth in exports.
Tariffs and Taxes
The import tariff is 20 percent and the VAT is 21 percent. The excise tax is 20 percent. There is
a three percent import tax and a statistical tax of 0.5 percent all applied to the CIF value plus the
tariffs and taxes. Argentine wine exporters are granted a six percent rebate by the Argentine
government on the excise tax payments they make.
Australia
United States wine exports to Australia totaled USD 2.77 million in 2011, an increase of 1.07
million from 2010. Australia exported USD 557.16 million of wine to the U.S. in 2011.
Tariffs and Taxes
In 2004, the U.S. and Australia signed a bilateral Free Trade Agreement. As a provision of the
agreement, U.S. wine exports to Australia face a zero percent import duty. However, wine is
subject to the Wine Equalization Tax (WET). In order to calculate WET, wineries must work out
the taxable value of their wholesale/distributor sales, taxable retail sales (for example, cellar door
sales), wine for own use, non-arm’s length sales, and/or some imports. There is no excise tax
when paying the WET. The current rate for the WET is 29 percent. There is a 10 percent
Goods and Services Tax applied on FOB + duty + WET.
As a WWTG member, Australia has signed the WWTG Mutual Acceptance Agreement and the
Labeling Agreement with other participating countries, including Argentina, Canada, Chile, New
Zealand, United States and South Africa. These two Agreements provide for the acceptance of
winemaking practices and the harmonization of labeling regulations between trading partners.
The combination of these provisions assists in facilitating trade flows between participating
countries.
30
Barbados
Tourism is the most important sector of the Barbados’ economy and therefore it is an important
market for U.S. wine producers. In 2011, USD 1.37 million of U.S. wine was exported to
Barbados.
Tariffs and Taxes
The tariff and tax rates on U.S. wines in Barbados are significant. The customs duty for table
wine is BBD 2.64 (USD 1.32) per liter; and the Value Added Tax (VAT) is 7.5 percent, applied
on CIF + duty. Stamp duty, excise tax and environmental levy no longer apply.
Bermuda
The United States is Bermuda’s primary trading partner. Bermuda imported USD 2.74 million
of U.S. wine in 2011. U.S. goods are shipped to the island year round and facilitate the country’s
large hospitality market. One hundred percent of Bermuda’s wine market is imported. Major
factors in the success of U.S. wines are the availability, abundance and quality of the products
imported as well as the knowledge of the U.S. and U.K. tourists about that quality of California
wine.
Tariff and Taxes
Wine is charged a USD 2.63 per liter tariff. The only other government related fee is a “duty in
lieu of wharfage” (port tax) of 1.25 percent on the value of the goods.
Brazil
In 2011, U.S. wine sales to Brazil totaled USD 3.28 million; 101 percent more than 2010 sales.
However, this represented a miniscule percentage of the Brazilian wine import market, about
one percent. In 2011, 72.60 million liters of wine, at a value of USD 262.06 million, were
imported from the world. Although Brazil’s population is approximately 205.7 million, wine
consumption per capita for 2011 was less than 2 liters. This small figure offers room for growth
as new wine distribution companies enter the market to win the more affluent consumers and
gradually bring new consumers to change their drinking preferences. FAS prepared a list of best
import prospects based on Brazilian consumption patterns. According to the FAS market trend
evaluation, wine ranks second on the list of potential increase.
Tariffs and Taxes
Imported U.S. wine is subject to the 27 percent import duty applied on CIF for bottles
containing two liters or less. Other wine categories (over two liters), like most other imported
goods have only a 20 percent tariff. Since Brazil is a member of the Mercusol FTA, other South
American wine producing countries that are parties to this agreement or have an agreement with
Mercusol (Argentina and Chile) are exempt from that import tariff. In addition to its free trade
partners, Brazil receives imports from Italy, Portugal and France where their producers are
subsidized to meet the high import costs.
31
There is an Industrial Product Tax (IPI) of 10 percent applied on CIF + duty. There is an
automated system clearance fee (SISCOMEX) of BRL 30 per entry as basic charge. Over this
basic fee an additional charge will be collected depending on the number items inside the import
declaration. A maximum of BRL 40 per entry is applied. In addition, there is a 7.6 percent
social security tax (COFINS) and a 1.65 percent Social Security Tax (PIS). A Customs Broker’s
Union Contribution Tax of 2.2 percent is applied with a maximum of USD 160 and a minimum
of USD 71. There is a 17 percent Merchandise Circulation Tax (ICMS) applied on CIF + duty.
Non-Tariff Barriers
Certification and documentation is required for all wine imports into Brazil. A certificate of
origin and a certificate of analysis must accompany all wines exported to Brazil. In recent
regulations, the Ministry of Agriculture, Livestock and Food Supply (MAPA) requires exporting
countries to provide a formal list of government accredited entities eligible to issue certificates of
origin and analysis. The U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) is the U.S.
agency that accredits those entities.
For a product whose label is not in the Portuguese language, an adhesive sticker can be placed
on the original label containing all the required information. Labels on wines exported to Brazil
are required to list the net contents (in metric units), Importer’s name, address and corporate ID
number, MAPA Registration number of importer, lot identification code, gluten declaration (e.g.,
does not contain gluten), period of validity (if applicable), etc. These label requirements are in
addition to the U.S. wine labeling standards. The exporter should forward a sample of the
package to the importer in order to confirm label compliance.
In the spring of 2012, the Brazilian Government undertook a safeguard measure requested by
Brazilian wine producers to impose higher tariffs or quotas to restrict wine imports. This action
is still pending.
Canada
U.S. wine sales to Canada totaled USD 356.97 million in 2011; up from USD 296 million in
2010. Canada is the largest export market for U.S. wine.
Tariffs and Taxes
U.S. wines enter the Canadian market duty-free in accordance with the U.S.-Canada Free Trade
Agreement and NAFTA. Canada imposes an excise tax depending on alcohol content. For still
wine between 1.2 percent and 7 percent alcohol, the excise tax is CAD 0.295 per liter applying
on FOB + duty; for still wine between 7 percent and 13.7 percent alcohol, the excise tax is CAD
0.62 per liter; for still wine not exceeding 1.2 percent alcohol, the excise tax is CAD 0.0205 per
liter. Additionally, there is a 5 percent Harmonized Services Tax (HST – Federal) and a 10
percent Harmonized Services Tax (HST – Provincial GST). The excise tax is waived for
domestic wines made from 100 percent Canadian-grown agricultural products.
Additional taxes and fees are levied by the provinces and include mark-ups, sales taxes, bottle
taxes, warehouse and handling and environmental fees. The markup formula in most provinces
32
includes a provision for cost-of-service charges. Changes concerning the Goods and Services
Tax (GST) and a new Harmonized Services Tax (HST) combined both the GST and the
Provincial Services Tax (PST) into one tax. In 2010, the Provinces of Ontario and British
Columbia began harmonizing their respective provincial taxes with the federal Goods and
Services Tax, making it the HST.
Non-Tariff Barriers
Canada operates under a system of government-controlled liquor board monopolies (LCBs).
The operation of these monopolies and their restrictions on U.S. exports differ from province to
province. For example, in Alberta, wine is imported and controlled by the liquor board but can
be sold through private stores. The LCB has retained a monopoly on the wholesaling of
imported wine but distribution is handled by the private sector. There are few restrictions on
what can be imported and retailed by these private stores. In Quebec, wine can be sold in
grocery and private retail stores so long as it is bottled in Quebec by a company that includes the
SAQ (LCB) as a joint partner. These LCBs frequently provide direct and indirect subsidies to
Canadian producers when needed. Additionally, the LCB of Ontario (LCBO) often waives retail
sales markups and freight costs for local producers, offers domestic producers exclusive
merchandising and marketing programs and gives store support such as preferential shelf space.
Further barriers that restrict the sale of foreign wine in Canada include redundant testing and
certification requirements, domestic rebate subsidy programs, discriminatory consignment sales
and warehousing and delivery charges. Many of these “extra” charges are higher for U.S. wine
than other foreign wine. These barriers reduce the competitiveness of U.S. wine within Canada.
As a WWTG member, Canada has signed the WWTG Mutual Acceptance Agreement and the
Labeling Agreement with other participating countries, including Australia, Argentina, Chile,
New Zealand, United States and South Africa. These two Agreements provide for the
acceptance of winemaking practices and the harmonization of labeling regulations between
trading partners.
Cayman Islands
United States wine sales to the Cayman Islands were USD 3.07 million in 2011. Seventy percent
of the Cayman Island’s economy comes from tourism revenue. The tourism industry is aimed at
the luxury market, catering mainly to visitors from Europe and North America. About 90
percent of the islands' consumer goods (including wine) must be imported. The Caymans enjoy
one of the highest per capita incomes and one of the highest standards of living in the region.
Tariffs and Taxes
Although there is an absence of income and business taxes throughout the Cayman Islands,
there is an import tariff on wine. A license to import issued by the Cayman Islands Government
is needed if importing more than 2 liters of wine. Table red, white or rose wines are faced with a
tariff of USD 3.30 per liter; dessert wines are charged USD 4.95 per liter; champagne, USD 10.50
per liter; and all other sparkling wines, USD 7.50 per liter. A package tax and a warehouse fee
also apply to air shipments. The package tax is USD 5 per package for every 100 lbs. imported
as airfreight. The warehouse fee is applied at the airports and is 5 Cayman dollars per package.
33
Chile
Chile is an internationally renowned wineproducing country with a population of 17 million.
U.S. imports face strong domestic competition in a
relatively small market. While the 2004 U.S.-Chile
FTA was an important step in liberalizing Chile’s
markets for increased imports of U.S. goods, it did
little to increase the import of wine. In 2010, U.S.
wine sales to Chile totaled USD 445,044. In 2011,
U.S. wine sales decreased to USD 134,895.
Tariffs and Taxes
There is currently a residual tariff rate of 6 percent ad valorem on wines imported into Chile
(phasing down under the FTA), a 15 percent excise tax and a 19 percent Value Added Tax. In
2016, U.S. wine exports will enter Chile duty-free.
As a WWTG member, Chile has signed the WWTG Mutual Acceptance Agreement and the
Labeling Agreement with other participating countries, including Australia, Argentina, Canada,
New Zealand, United States and South Africa. These two Agreements provide for the
acceptance of winemaking practices and the harmonization of labeling regulations between
trading partners. Chile is also an important ally in the work within APEC to seek broader
implementation of the concepts of mutual acceptance and regulatory coherance.
People’s Republic of China
The People’s Republic of China’s (PRC) economy during the last quarter century has changed
from a centrally regulated system that was largely closed to international trade to a more marketoriented economy that has a rapidly growing private sector and is a major player in the global
economy. As a component of that market-oriented economy the Chinese have embraced wine
production and consumption. Production is now ranked fifth in the world and total
consumption is ranked ninth. Domestic wine brands account for the majority of the Chinese
wine market. Imports have a 20 percent market share. Wine sales from the U.S. to the PRC in
2011 totaled USD 61.3 million, up from USD 34.4 million in 2010.
Tariffs and Taxes
Inconsistent treatment of wine imports by customs on accepting the declared value for duty
calculation as well as frequency of testing have made import duties the most formidable
constraint in the region. The tax structure in China lacks transparency and discrepancies appear
regularly between the official rate published by China’s Customs and the rate actually assessed.
Taxes are imposed on an arbitrary customs value basis varying with the port of entry. Imported
wines from the U.S. face a tariff rate of 20 percent for bulk wine and 14 percent for bottled wine
with a CNY 21 (USD 3.34) per 750 ml import tax. There is a consumption tax of 10 percent and
a Value Added Tax of 17 percent applied on CIF + duty.
34
Non-Tariff Barriers
Problems with IPR infringement remain a constant threat. California wine is openly
counterfeited. Internet ads falsely claim California origin. In addition, China has introduced new
wine composition regulations that restrict many U.S. produced wines. Wine Institute and other
international industry groups are faced with petitioning the Chinese authorities to obtain
approval for the use of additives and processing aids currently accepted in many wine-producing
countries. Multiple Importer registration and licensing requirements have become burdensome,
particularly for the small and medium sized wineries. Inspection includes on-site hygienic
inspection, labeling inspection, organoleptic inspection and laboratory tests. Documents
required for every shipment include
o Commercial Invoice (product type, quantity, value)
o Packing List (net/gross weight)
o Freight insurance certificate
o Customs value declaration
o Certificate of Origin (often prepared by freight forwarder)
o Sanitary Certificate/Certificate of Free Sale (confirming that shipment meets U.S.
standards --- must be certified by TTB).
o Bill of Lading/Airway Bill often prepared by forwarder
Colombia
In 2011, U.S. wine sales to Colombia totaled USD 2.0 million. The leading wine exporters to
Colombia are Chile, Argentina, Spain and France. The success of introducing high-quality U.S.
wines into the Colombian market is limited because of the 15 percent tariffs. Chile’s leading
market share is due largely to a preferential trade agreement with Colombia, and Argentina’s
substantial share is due to a trade agreement between the Andean countries and MERCOSUR.
The Colombia – U.S. FTA, which entered into force on May 15, 2012, reduces import duty for
wine from 15 percent to zero and helps to make U.S. wine more price competitive.
Tariffs and Taxes
Per implementation of the Colombia -- U.S. FTA, all U.S. wine imports to Colombia are subject
to a zero percent tariff rate. The excise tax is 20 percent on wines with 2.5 to 15 percent alcohol
applied on CIF + duty. For wines with 15 to 20 percent alcohol, the excise tax is 25 percent; a
Customs Fee of 1.2 percent applies on the customs value plus a 35 percent markup, to a specific
levy based on the degree of alcohol. There is also a Value Added Tax of 16 percent applied on
CIF + duty. Columbia has established mandatory electronic filing and payment for major
taxes.10
Non-Tariff Barriers
Colombia proposed new wine production regulations that could create restrictions on many U.S.
wines. Either the exporter or importer must register the wine with the National Institute for the
Surveillance of Food and Medicines, INVIMA. Wine must be labeled in Spanish and contain the
name of the product, name and address of the importer, place of production, percentage of
10
http://www.doingbusiness.org/reforms/overview/economy/colombia
35
alcohol, net contents and a health warning statement indicating that excessive consumption of
alcohol is harmful to health. The warning is required to occupy 10 percent of the total label. All
imported bottled wines are acceptable in containers no larger than two litters.
Ghana
With a population of approximately 27 million, Ghana is one of the more stable sub-Saharan
economies. The vast majority of the alcohol beverages consumed are locally produced. These
are Palm Wine 7% Alc; Pito (Millet Wine) 5% Alc; and Akpeteshie (Local Gin) 40% Alc. Grape
wine drinking is not common in Ghana except among tourists and business visitors and is 100
percent from imports. The leading wine suppliers are from Chile, Argentina, Europe and South
Africa. U.S. wine exports to Ghana totaled USD 515,120 in 2011, about 5 percent share of the
import market.
Tariffs and Taxes
The import duty for wine is 20 percent. The VAT is 12.5 percent applied on CIF + duty.
Hong Kong
Hong Kong has become the third largest wine market for the United States in 2011 with imports
of almost USD 114.4 million. Hong Kong has a free market economy that is highly dependent
on international trade. Even before Hong Kong reverted to Chinese administration on 1 July
1997, it had extensive trade and investment ties with China. Hong Kong currently hosts the
second largest wine auction center in the world and serves as a valuable access point to other
Asian markets.
Tariffs and Taxes
In 2008, the import tax was eliminated. The government’s decision to abolish the tax was driven
by a number of factors, including a budget surplus, coordinated lobbying efforts and a
pronounced lack of consumer group objections. This action to eliminate the tax on wine is
expected to continue yielding major increases for U.S. wine exports to Hong Kong.
India
India is one of the emerging BRIC (Brazil, Russia, India and China) markets of real interest to
the U.S. wine industry. Of the four countries, India has been the most difficult in seeking better
market access. In addition to the prohibitive tariff of 150 percent, several of the provincial states
impose taxes on wine imports to protect their domestic winemaking industry. India has also
developed new winemaking regulations that, similar to China and others, excludes the use of
certain internationally accepted additives and processing aids used by U.S. winemakers. In 2010,
U.S. wine sales to India were USD 1 million, up significantly after a major WTO dispute case and
the completion of the USDA Emerging Markets market study. U.S. exports data for 2011
indicate a drop in exports to USD 864,000 but the Indian import data indicates an increase to
USD 1.3 million. The difference illustrates the globalization of the wine supply chain. Indian
imports of U.S. wine could come from Europe or even China that imported USD 1.6 million of
its own wine into India in 2011.
36
Tariff and Taxes
There is a 150 percent duty on all wines imported into the country, as well as a 1 percent
Landing Fee applied on CIF + duty. There exists a Special CVD tax of 4 percent charged on
CIF + duty + landing fee and is refundable in the case of wine, but it is reportedly very time
consuming to obtain and few importers seek a refund. State-level taxes and fees are complex
and add significantly to the retail price of a bottle of imported wine. Additional taxes added by
provincial/state authorities range from 22-200%. All of the taxes are applied on CIF + duty +
landing charge.
Indonesia
Indonesia, with the largest Islamic population, has a history of low wine consumption among its
local population. However, the tourism sector has developed significantly over the past decades,
leading to an increased demand in wine sales. In 2011, USD 98,720 U.S. wine was exported to
Indonesia. A quantitative barrier limits the imported wines and distilled spirits. There are only
eight registered importers approved by the Ministry of Trade authorized to import alcoholic
beverages. The Ministries of Trade and Industry sets an annual quota with the majority of the
quota going to European and Australian wine.
Tariff and Taxes
The Indonesian Ministry of Finance eliminated the luxury tax on alcoholic beverages and
increased the excise tax because of a Regulation issued in 2010. Now, imported wine faces an
import duty of 150 percent and is also subject to a 10 percent Value Added Tax (VAT). In
replacing the luxury tax, the excise tax classifies into three categories: IDR 11,000 (USD 1.15) per
liter for ethyl alcohol content up to 5 percent; IDR 30,000 (USD 3.14) per liter for ethyl content
between 5 percent and 20 percent; IDR 75,000 (USD 7.84) per liter for ethyl alcohol content
higher than 20 percent.
Israel
Israel is an interesting case in trade relations. It was the first U.S. free trade agreement, which
was implemented in 1995. The provisions of that agreement eliminated U.S. import tariffs
immediately for Israeli imports of wine into the U.S. while the Israeli tariff was to phase out over
10 years. At the end of the 10-year period, Israel claimed that the Uruguay Round Agriculture
Agreement changed its tariff circumstance and it did not have to comply with its obligations for
wine. To address the differing views between the two countries over how the FTA applies to
trade in agricultural products, in 1996 the United States and Israel signed an Agreement on Trade
in Agricultural Products (ATAP), establishing a program of gradual and steady market access
liberalization for food and agricultural products effective through December 31, 2001.
Negotiation and implementation of a successor ATAP was successfully completed in 2004. This
agreement was effective through December 31, 2008, and granted improved access for select
U.S. agricultural products. The ATAP agreement has been extended four times, most recently
through December 31, 2012, to allow time for the negotiation of a successor agreement. The
ATAP provides U.S. food and agricultural products access to the Israeli market under one of
37
three different categories: unlimited duty-free access, duty-free tariff-rate quotas (TRQs), or
preferential tariffs, which are set at least 10 percent below Israel’s most favored nation rates.
The ATAP for wine provides for the duty-free tariff-rate quota of 200,000 liters and the MFN
rate after that. The sale of U.S. wine to Israel in 2011 totaled USD 1.84 million. Israel is
protecting an “infant” winemaking industry that is growing to the point that it is now an
exporter to the World including the United States. In 2011, Israel wine exports to the U.S.
reached USD 6.88 million and over USD 7 million to the EU.
Tariffs and Taxes
There is a duty-free tariff rate quota of 200,000 liters. All wine imported in excess of the quota is
subject to the MFN rate of 12 percent + NIS 1.47 (USD 0.37) per liter. The renewal of the
ATAP beyond December 2012 is still being negotiated. The 16 percent of Value Added Tax
(VAT) is imposed on wine here, imported as well as locally produced.
Japan
Japan is one of the most developed and competitive wine markets in Asia, and represented the
fourth largest wine export market for U.S. wine in 2011, up almost 40 percent from 2010. Wine
consumption per capita has remained static over the last 5 years at just under 2 liters. The United
States exported USD 104.2 million worth of wine in 2011, representing a 28.4 million increase
from 2010. In 2011, U.S. held a 7.5 percent value share of imported bottled wine market, which
decreased 0.3 percent from 2010. Shares for Italy, Chile, and Spain rose 1.0 percent, 0.8 percent,
and 0.7 percent respectively, dropping U.S. to the fifth largest exporter, with Chile and Spain
moving ahead. The FTA between Japan and Chile gradually reduces tariffs on Chilean agriculture
and food exports including wine. Japan is the second largest market for U.S. wines in Asia,
following Hong Kong. However, Japan’s high tariff (higher than China) and non-tariff barriers
and import substitution policies continue to restrict growth. The tariff is structured so that bulk
wine has a significantly lower rate allowing Japanese producers to import, blend and bottle wine
as Japanese wine, which can be far more price competitive than U.S. bottled wine.
Tariffs and Taxes
The current tariff on wine is a compound tariff with minimums and maximums that provide
protection for domestic wine and a preference for imported French and other high-value wine.
The rate is 15 percent ad valorem or a maximum of Yen 125 (USD 1.60) per liter (whichever
amount is less) subject to a minimum customs duty of Yen 67 (USD 0.86) per liter for bottled
wine. The bulk wine import tariff is Yen 45 (USD 0.58). Fortified wines and sparkling wines are
subject to a tax of Yen 112 (USD 1.41) per liter and Yen 182 (USD 2.28) per liter respectively. In
addition, there is a consumption tax of 5 percent on CIF + Duty.
Non-Tariff Barriers
Japan’s regulatory system for additives, processing aids and maximum residue limits is difficult to
manage. The process is not transparent for seeking changes or updates in the standards. As a
result, when new winemaking processes are approved in various other international forums such
as CODEX, OIV or the WWTG, Japan’s regulators are reluctant to adopt those changes. In
2011, Wine Institute received a USDA Technical Assistance for Specialty Crops (TASC) grant
38
over 5 years to prepare and submit 10 petitions to the Ministry of Health and to the National
Tax Agency that controls alcoholic beverages. It is estimated that each petition takes over three
years or more to be processed through the Japanese system. The current petition for the use of
copper sulfate has been almost 7 years in the system.
Jordan
In 2011, U.S. wine exports were USD 140 thousand, a 400 percent increase from 2010. The
U.S.-Jordan Free Trade Agreement was fully implemented on January 1, 2010, which decreased
the tariff from 200 percent to zero.
Tariffs and Taxes
The tariff is zero. The GST (VAT) tax is 16 percent. Specific special sales taxes of 2 percent and
youth support duty of 0.1 percent are also applied based on CIF + duty. There is an additional
bill of lading, 2 percent per shipment and a JOR 10 (USD 14.11) per clearance customs
declaration fee.
South Korea
South Korea is a modern democracy pursuing a policy of global engagement highlighted by
Seoul's hosting of the G-20 summit in November 2010, the Nuclear Security Summit in March
2012, as well as the forthcoming 2018 Winter Olympic Games. Korea has free trade agreements
with Chile and the EU that have provided a competitive price advantage for Chilean and
European wines. U.S. exports in 2011 were USD 12.6 million. These FTAs resulted in a drop in
the U.S.’s percentage of import market share from 2 percent in 2007 to less that 1 percent in
2011. The passage by Congress and implementation of the U.S.-Korea Free Trade Agreement
(KORUS) eliminated the duties on U.S. wine as of March 2012, which should facilitate an
increase in U.S. exports to South Korea. The U.S. wine industry applauds the U.S.
Government’s work on KORUS, as illustrating the type of action that will remove trade barriers
and increase exports.
Tariffs and Taxes
The import tariff for U.S. wines into South Korea is zero. Exports to South Korea face a liquor
excise tax of 30 percent and an education tax that is 10 percent of the liquor tax. The VAT is 10
percent and applies to CIF + duty and all the other taxes. Wine imports are also subject to an 8
percent fee from various handling and transport services. Some local wine marketing companies
offer Internet based product databases that track information including retail price of thousands
of imported wines currently marketed in South Korea. The most notable ones are
www.winesearcher.co.kr and www.wineok.com11.
Non-Tariff Barriers
The South Korean government requires companies exporting wine to submit one bottle of each
type of wine for testing. The significant increase in required food safety tests on imported wine
have become an added barrier to trade. The South Korean government does not accept test
results from foreign test institutions. Current list of tests (and costs) required on imported wine
11
USDA GAIN Report, KS1241
39
include: Methanol (KRW 64,000, USD 56.20); Preservatives (KRW 75,000, USD 65.86);
Ocatoxin A (KRW 140,000, USD 122.94) – newly added on July 1, 2010 and Lead (KRW
60,000, USD 52.69) – newly added on July 1, 2010. The South Korean government is
considering adding Sulfur Dioxide, Cyclamate, Melamine and Ethanol to the required test list. In
addition, South Korean Customs requires a Korean label in the form of a sticker to be attached
to the imported wine. The label is often attached to the back of the bottle by the importer. This
is generally done in the duty-free warehouse before reaching customs.
Macau
Macau has attracted tens of billions of dollars in foreign investments since opening up its locallycontrolled casino industry to foreign competition in 2001, transforming Macau into one of the
world’s largest gaming centers. Macau’s gaming and tourism businesses have stimulated the
demand of wine imports from the world. However, only Macao companies registered with the
Economic Services Bureau are eligible to import wine. Importers are required to submit a copy
of the shipment invoice when applying for a license. In 2011, USD 9.7 million U.S. wines were
exported to Macau, about 58 percent increase over 2010.
Tariffs and Taxes
In 2008, Macau terminated its 15 percent CIF consumption tax on wine and beer with zero
import tariffs and no other duty for wine. Labeling requirements are exempted from alcoholic
drinks with alcoholic strength greater than 5 percent. No health certificates are required for the
importation of alcoholic beverages to Macao.
Since June 2010, importers are not required to apply for any licenses or permits if they are
importing alcoholic drinks with an alcoholic content less than 30 percent by volume. For those
alcoholic drinks with an alcoholic content greater than 30 percent, Macao’s consumption tax of
10 percent of CIF + MOP 20 (USD 2.5) per liter still applies.
Malaysia
Even though it is a predominately Muslim country, Malaysia has a multi-racial society that
includes 24 percent Chinese, 8 percent Indians and 10 percent natives. As a result, the market
for wines in Malaysia is focused on the non-Muslim community, mainly Chinese and Indians as
well as expatriates and tourists. Malaysia imported USD 2.32 million worth of U.S. wine in 2011.
The consumption of wine has become more affordable and is perceived as a healthier choice and
Malaysians are becoming increasingly aware and appreciative of wines. The increase in wine
imports can also greatly be attributed to the influx of tourists over the last year with most of
those sales going to the tourist centers.
The participation of Malaysia in the Trans-Pacific Partnership Agreement (TPP) talks will be
beneficial to the U.S. industry. The elimination over time of the import tariffs and the disciplines
on TBT, IPR and SPS regulations will provide a more predictable environment for wine sales,
particularly for small wineries.
40
Tariffs and Taxes
Although non-Muslims in the country are not subject to Islamic laws and are allowed to
consume alcohol, the Government continues to impose barriers to discourage consumption. A
“sin tax” is imposed on all imports of alcohol. The excise and other various taxes levied upon
alcohol beverages are adjusted each year according to the fiscal budget.
Wine is subject to a tariff of MYR 7 (USD 2.20) per liter for non-sparkling wine and MYR 23
(USD 7.23) per liter for sparkling wine. Taxes are also dependent on the carbonation of the
product; non-sparkling wine is subject to an excise tax of MYR12 (USD 3.77) per liter plus 15
percent and sparkling wine to a tax of MYR 34 (USD 10.69) per liter plus 15 percent. There is a
sales tax of 5 percent for all products under HS code 2204. It is applied on CIF + duty.
The U.S. wine industry does not object to the non-discriminatory application of excise taxes on
imported and domestic wine. However, adjustments made to those taxes each year with the
release of the Malaysian Government’s fiscal budget make it difficult for importers to develop
strategic long term marketing plans. Supply contracts of more than one tax year are virtually
impossible to negotiate.
Mexico
Wine trade with Mexico, one of the NAFTA partners, has been disrupted three times since the
free trade agreement was implemented. In each case, punitive import tariffs of 20 percent were
imposed on wine from the U.S. even though wine was not a party to the unrelated trade dispute.
Those tariffs stayed in place each time for 2 years or more. Those disruptions made it very
difficult to develop long-term business relationships in Mexico, particularly for small wineries
that want to ship to our neighbor to the South. In 2011, U.S. wine exports to Mexico totaled
almost USD 19 million in spite of the Mexico imposed 20 percent surtax on the imports.
Fortunately, the Mexican Government revoked the retaliatory import tariffs on October 21,
2011. Shipments to Mexico have increased 21 percent in the first half of 2012 demonstrating
that U.S. winemakers want to ship to Mexico and the Mexican consumer enjoys U.S. wine when
it is available at a competitive price.
Tariffs and Taxes
Under NAFTA, the tariff rate on U.S. wine into Mexico is zero. Mexico does impose various
other taxes, including a customs fee of .008% percent; a treasury tax stamp of USD 0.11, which
is paid on every bottle of alcoholic beverage sold in Mexico. A special tax (IEPS) for alcohol
beverages ranges from 25 percent to 53 percent depending on the alcohol volume. Beverages
with alcohol content between 14 percent and 20 percent apply an excise tax of 30 percent. For
beverages with alcohol content not exceeding 14 percent, an excise tax of 25 percent is applied.
A Value Added Tax of 11 percent in the northern Mexico border regions and 16 percent
elsewhere is applied on wine imports as well.
Non-Tariff Barriers
There are various non-tariff barriers to wine imports, including Mexican Official Norm labeling
requirements, registration of the importer in official importer databases, access only to specific
41
customs facilities, and additional identification markings on each product. Documents include a
sanitary import notice (to be done on company letterhead, and which should contain the name
of the product, quantity, name and address of the producer, name and address of the importer,
the port of entry, and the applicable import tariff numbers. The letter should be addressed to
the Secretaria de Salud (Ministry of Health) and include the NAFTA Certificate of Origin and a
Certificate of Free Sale.
In addition, all importers of wine must be licensed. Importers of beverage alcohol products
must first register in the Registro Federal de Contribuyentes (Federal Taxpayers Registry or
RFC), before commencing business. This process is to be completed with the Servicio de
Administración Tributaria (SAT). Importers must subsequently enroll in the “Padrón de
Importadores” (or Registry of Importers) and also in the “Padrón de Importadores de Sectores
Específicos” (Registry of Importers in Specific Sectors). This last requirement is applicable to
importers of various products, including wines, spirits, beer, cigarettes and denatured alcohol
products.
For enrollment in the “Padrón de Importadores,” importers must apply online, at
http://www.aduanas.gob.mx, filling out the application titled “Solicitud de Inscripción al Padrón
de Importadores.” In order to complete this process, the importer is required to have an
advanced electronic signature issued by SAT and an active RFC. The importer will also be
required to register all of the Customs brokers that will clear shipments on their behalf.
Importers are required to retain the services of a Customs broker or in-house Customs agent.
After enrollment in the “Padrón de Importadores,” the importer should proceed to register in
the “Padrón de Importadores de Sectores Específicos” by filling out the SAT registration form
as well as submitting company documents attesting to the company’s establishment (e.g. act of
incorporation), a copy of the requestor’s ID, and a power of attorney, if applicable.12
New Zealand
Only USD 146,541 worth of U.S. wine was exported to New Zealand in 2011. New Zealand’s
economy is heavily dependent on international trade, particularly in agricultural products. New
Zealand is another renowned wine producing country and as a WWTG member, has signed the
Mutual Acceptance Agreement and the Labeling Agreement with other participating countries,
including Australia, Argentina, Canada, Chile, United States and South Africa. These two
Agreements provide for the acceptance of winemaking practices and the harmonization of
labeling regulations between trading partners. It also provides a commonality of interest in
seeking mutual acceptance of regulatory practices from other countries. Participation in the TPP
will result in the eventual elimination of the import tariff.
Tariffs and Taxes
There is currently a 5 percent tariff on imported wine. There is a Goods and Services Tax (VAT)
of 15 percent as well as an Import Entry Transaction Fee (IETF) of 22 percent levied on all
12
http://www.ttb.gov/itd/mexico.shtml
42
types of wine (or NZD 25.30) is payable on every import entry and import declaration for goods.
A bio-security risk-screening levy of NZD 12.77 is also collected by Customs on behalf of MAF
Bio-security New Zealand. The total NZD 38.07 is collected at the time goods are cleared and
any duty and/or GST payable is collected. Additionally, there is an excise equivalent charged to
the importer or wholesaler when the product is sold to the retailer. For sparkling wine or wine
of fresh grapes, a USD 2.7206 per liter is applied.
Nigeria
With an estimated 150 million inhabitants and increasing economic development, Nigeria is
quickly becoming a grape wine market. Wine sales in the country stand at USD 300 million
annually and should hit USD 370 million by 2015, according to figures released by market
research group Aranca at a Wines of South Africa (WoSA). In 2009, the U.S. sold just USD
205,000 worth of wine and by 2011 the figure reached USD 2.8 million. A local wine producing
industry does exist however processing is underdeveloped and Nigeria is almost entirely supplied
by foreign producers. The current leading suppliers include the EU and South Africa. Average
wine consumption per capita increased from 0.1 liters in 2004 to more than 0.4 liters in 2010.
The dramatic change can also be attributed to a shift from beer to wine consumers as wine is
generally perceived to be a healthier alcohol choice. However, due to instability and corruption
within the Nigerian government, tariff rates often fluctuate for wine and other alcoholic
beverages entering the country. Export opportunities still exist for U.S. wine suppliers
Tariffs and Taxes
The wine import tariff is currently 30 percent and the excise tax is 20 percent, both applied on
CIF value. Other various taxes and fees applied often increase the import burden to more than
80 percent.
Non-tariff Barriers
All food, wine and spirits products exported to Nigeria must be registered with NAFDAC
(Nigeria’s FDA equivalent) in order to be legally exported and sold for consumption in Nigeria.
For a complete list of requirements see http://www.ttb.gov/itd/nigeria.shtml.
Norway
Norway has continually opted to stay out of the EU but is part of the European Free Trade
Association. As members of the EFTA, all EU wine producers enjoy duty free entry into the
Norwegian market. A Norwegian government agency, Vinmonopolet has the import and retail
sales monopoly on alcoholic beverages in the country. Vinmonopolet has been given the
political responsibility to keep alcohol consumption at moderate levels and to minimize alcohol
related illness in Norway. The monopoly determines what wine and how much to import
regardless of consumer demand. U.S. wine sales to Norway totaled USD 1.75 in 2011, a 0.65
million decrease from 2010.
Tariffs and Taxes
The import tariff is NOK 4.31 (USD 0.79) per percent volume of alcohol per liter. There is an
excise tax based on alcohol content. If percentage of alcohol is no more than 2.7, then NOK
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2.76 (USD 0.48) per liter is applied. If percentage of alcohol is more than 2.7 and is no more
than 3.7, then NOK 10.41 (USD 1.82) per liter is applied. If percentage of alcohol is more than
3.7 and is no more than 4.7, then NOK 18.04 (USD 3.15) per liter is applied. If percentage of
alcohol is more than 4.7 and is no more than 22, then NOK 4.03 (USD 0.70) per liter plus NOK
4.03 (USD 0.70) per percentage of alcohol is applied.
An environmental excise tax must be paid on beverage packaging. For cardboard containers, a
fee of NOK 1.28 (USD 0.22) is applied on each unit of packaging. For all glass and all metal,
NOK 5.14 (USD 0.89) is applied on each packaging unit. A basic fee shall be paid for
disposable or non-returnable glass containers at a price of NOK 1.06 (USD 0.17) for each unit
of packaging. Reduced rates could be applicable for containers with recycled content. There is a
Value Added Tax of 25 percent added to wine imports, applied to CIF + duty. Reduced Value
Added Tax of 15 percent can be applicable.
Panama
In 2011, U.S. wine sales to Panama totaled USD 4.3 million, an increase of 1.5 million from
2010. The U.S.--Panama Free Trade Agreement provides that on implementation:
• Wine covered under the Harmonized Tariff Heading 2204.21.99 (“Other”) will
receive the immediate elimination of applicable tariffs;
• There will be a five-year phase out of all other wine tariffs.
Congress approved the FTA in on October 21, 2011; it is expected to come into force this year.
Tariffs and Taxes
The current import tariff on wine is 15 percent. There is a selective consumption tax (ISC) on
wine and other alcoholic beverages with low alcohol content (not less than 7 percent or more
than 20 percent) of PAB 0.5 (USD 0.5) per liter. The ITBMS (VAT) is 10 percent.
Peru
On April 12, 2006, the U.S.–Peru Trade Promotion Agreement was signed. In 2007, Congress
ratified the Agreement, which eliminates tariffs and other barriers to goods and services between
the two countries. In 2011, sales of U.S. wine sales were USD 691,837.
Tariffs and Taxes
Wine exports to Peru are import tariff free but are subject to a 6 percent VAT, a 2 percent
municipal promotion tax, a 20 percent excise tax, a 16 percent general sales tax and an insurance
fee of 1.75 percent.
Philippines
As Asia-Pacific Economic Cooperation (APEC) members, the U.S. and the Philippines, along
with 19 other member countries, form a regional trading group to increase trade among the
associated nations by lowering trade barriers. Philippines is one of the largest markets in
Southeast Asia for U.S. imports with USD 8.1 million in 2011, up about 4 percent from 2010.
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Tariffs and Taxes
Wine imports to the Philippines are subject to a 7 percent tariff, an excise tax of PhP 18.87
(USD 0.45) per liter applied on still wines under 14 percent alcohol strength and a VAT of 12
percent of Total Landed Cost. There is an additional Bureau of Internal Revenue Stamps of PhP
3.75 (USD 0.09) per case. In 2009, the Philippine Department of Finance agreed to defer the
adoption of a new tax structure on alcohol and tobacco products to 2012 after consultation with
industry players and in consideration of the worldwide economic downturn.
Russia
In 2011, U.S. wine sales to Russia totaled USD 8.62 million, up 26 percent from 2010. A few
California wine exporters have made inroads into the Russian market; it is reported that
California wines are now present in every major Russian city. There were setbacks in 2010 and
2011, however, as a result of the creation of the Customs Union between Belarus, Kazakhstan,
and Russia, changes in obtaining the revenue stamps,
licensing and customs regulations. USDA and TTB
are also working with the Russian authorities to
mitigate the impact of the new regulation on wine
imports that significantly restricts U.S. wine imports.
Russia does have a grape wine production industry
that produces quality wine including champagne.
Subsidized European Union wines dominate the
Russian import market. Eight of the top 14 wines are
from the EU with the other 5 being from Ukraine,
Chile, Argentina, South Africa and Moldova.
Tariffs and Taxes
With Russia joining WTO, the wine tariff entering the Russian market will decrease over time to
12.5 percent. Congress must pass Permanent Normal Trade Relations legislation before U.S.
wine producers can benefit from those reductions.
The current Russian and Customs Union external tariff applied to U.S. wine is 20 percent ad
valorem.
A customs clearance fee is applied levied on the value of the total shipment. If CIF + duty is no
more than RUB 200,000 (USD 6,410), then RUB 2,000 (USD 64.1) is applied; if CIF + duty is
no more than RUB 2,500,000 (USD 80,125), then RUB 5,500 (USD 176.28) is applied; if CIF +
duty is no more than RUB 5,000,000 (USD 160,250), then RUB 7,500 (USD 240.38) is applied; if
CIF + duty is no more than RUB 10,000,000 (USD 320,500), then RUB 20,000 (USD 641) is
applied; if CIF + duty is no more than RUB 30,000,000 (USD 961,500), then RUB 50,000 (USD
1,602.50) is applied; else, RUB 100,000 (USD 3,205) is applied. The VAT is 18 percent.
Non-tariff Barriers
Alcoholic products, including wine, enter the Customs Union only if the importer has a license
to procure, store and import such products. Importers must have an import license issued by
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the Ministry of Industry and Trade. This general import license may need to be renewed every
year. The Federal Service for Regulation of the Alcohol Market also issues wholesale license for
a maximum of five years with RUB 500,000 paid for the issuance. The importer is also
responsible for marking imported alcohol products with excise stamps before the products enter
the Russian Federation. All documents, labels, and markings must be translated into the Russian
language and copies and their translations must be certified in accordance with established
procedures.
Russia’s standards bureau and the new alcohol agency each have testing and certification
requirements for imported wine, sanitation and wine standards conformance respectively. These
tests are to be conducted by private companies contracted by the Russian authorities and can
cost as much as USD 1,000 per shipment. Last year, the alcohol agency proposed new
production and labeling regulations that would severely restrict U.S. wine imports. Wine
Institute submitted comments through USDA that encouraged meetings in Moscow between
TTB, USDA and the Federal Service for the Regulation of the Alcohol Market (FSR). The new
regulations that went into effect July 1, 2012 have created a significant trade barrier for U.S.
wine. The definition of wine, the use of additives and processing aids, and multiple testing and
certification requirements pose restrictions and additional costs that will prohibit small and
medium sized wineries from exporting to Russia.
Singapore
Singapore has the third highest per capita income in the world. There are slightly over 5 million
people in Singapore, of which 2.91 million were born locally. The population is highly diverse;
the majority is Chinese, with Malays and Indians forming significant minorities. Singapore has a
highly developed market-based economy, based historically on extended entrepôt trade. It is the
14th largest exporter and the 15th largest importer in the world. U.S. wine sales to Singapore for
2011 totaled USD 10.8 million, a 3.7 million increase from 2010. Although the U.S. and
Singapore signed a Free Trade Agreement in 2003 that required the “import duty” for wine to be
zero percent, the independent taxes on wine were not lowered. The government of Singapore
claimed that the taxes were local taxes, applied to all beverage alcohol in Singapore, and as such
were not an “import duty” and thus not subject to the requirements of the Free Trade
Agreement.
Tariffs and Taxes
In February 2008, Singapore changed its tax structure on alcohol. Wines are now taxed based on
alcoholic content rather than a flat rate of S$9.50 (USD 7.43) per liter. Wines are taxed with
S$70 (USD 57.03) per liter of alcohol. For a 750 ml bottle of wine with alcoholic strength of
13.5 percent, the excise tax payable will be S$7.09 (USD 5.78) at the current exchange rates. This
is in addition to a 7 percent Goods and Service Tax based on CIF. In addition, all new to the
market wines must submit to the Singapore import authorities a bottle for alcoholic strength
testing. Wines that have previously been imported are not subject to the same testing
requirement again.
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South Africa
South Africa has a mixed economy with a high rate of poverty and low GDP per capita.
Principal international trading partners of South Africa -- besides other African countries -include Germany, the United States, China, Japan, the United Kingdom and Spain. South Africa
is one of the “new world” wine producing countries and is a WWTG member. It has signed the
Mutual Acceptance and the Labeling Agreement with other participating countries. In 2011,
U.S. wine exports to South Africa totaled USD 1.06 million, down about 5 percent.
Tariffs and Taxes
South Africa imposes an import duty of 25 percent on wine. South African excise tax on
imported wine ranges from Rand 2.50 to R 4.59 per liter. The VAT is 14 percent.
Switzerland
As part of EFTA and being surrounded by EU member states, the Swiss have adopted many of
the wine regulations. As a result, U.S. winemakers find it similar to shipping into the EU.
Switzerland has a significant winemaking industry that has been protected over the years with
high tariffs and quotas. The U.S. exported USD 25 million in wine to the Swiss in 2011, up
about 5 percent from 2010. Switzerland is a priority market for the wine industry as it represents
a leading European market for premium wines.
Tariffs and Taxes
There is a tariff-rated import quota of 1,700,000 hectoliters per year for red and white wines with
HTS codes 2204.2121, 2131, 2141, and codes 2204.2921, 2922, 2931 and 2932. Wine imported
under the quota is subject to a different tariff rate than wine imported out of the quota. Within
the quota, the tariff on wine is based upon gross weight. Gross weight is comprised of the
effective weight of the goods (net weight of wine), packaging, filling material and any supports
on which the goods may be displayed (bottles and boxes). For bottled red and white wines
holding 2 liters or less, the rate is CHF 50 per 100 kilograms gross plus an additional 10 percent
of the “tare” weight. The “tare” is the net weight of the wine without the bottle and all forms of
packaging. Outside the tariff quota, red and white wines in containers holding 2 liters or less
face a duty rate of CHF 2.45 per liter for red wine, and CHF 3 per liter for white wine.
No import quota exists on sweet or sparkling wines. However, sparkling wines are subject to a
duty rate of CHF 91 per 100 kilograms gross. Any sweet wines, with a natural alcoholic strength
by volume (no added alcohol) exceeding 18 percent, but not exceeding 22 percent, face a charge
of CHF 14.5 per liter of pure alcohol (alcohol tax), and a duty rate of CHF 25 for 100 kilograms
gross. Imports are also a subject to an 8 percent Value Added Tax.
Non-Tariff Barriers
Wine imports must be accompanied by a certificate of origin recognized by the country of origin
and must conform to Swiss winemaking practices, which are nearly identical to those of the EU.
The Swiss Health Ministry requires labeling of wine imports to include alcoholic strength, batch
number as well as the name and address of the responsible person (producer, bottler, winemaker,
47
etc.). For wines where an alcohol tax is due, the name of the importer must be mentioned on
the label. Beginning in 2006, allergen labeling for wines containing sulfites is required. Labels
must state “contains sulfite” when the concentration exceeds 10 mg/l expressed in total SO2..
Furthermore, wine labels must include geographical indications in line with that of the EU.
Taiwan
Taiwan has a dynamic, capitalist, export-driven economy with gradually decreasing state
involvement in investment and foreign trade. In 2010, economic growth reached 10%, the
highest rate in almost 30 years. As one of the orginal Wine Equity Act target countries, Taiwan
continues to represent an expanding opportunity for U.S. wine exporters, especially in light of
changing consumer taste. Taiwanese consumers are increasingly purchasing wine for personal
use, rather than gift-giving. In 2011, exports to Taiwan were USD 9.3 million, up 21 percent
over 2010.
Tariffs and Taxes
All imported wine is subject to a 10 percent tariff, which is consistent with Taiwan’s WTO
accession agreement. Sparkling wines and champagne are subject to a 20 percent tariff. There is
also an alcohol tax of NT$7 (USD 0.24) for every percentage of alcohol per liter (ex. 14 percent
alcohol per liter = 7(14)), and a Harbor Construction fee of 0.5 percent. The VAT is 5 percent
of the formula [CIF*10% wine tariff + alcohol vol. degree of NT$7 per degree] total.
Non-Tariff Barriers
The previous Government monopoly that has now become independent still enjoys the majority
share of the grape and rice wine market. The monopoly controls a large percentage of the
distribution channels and enjoys preferential treatment from the Government. Recently, the
Government proposed reducing the excise tax on rice wine, indicating it was used mostly for
cooking. After objections from the U.S. and other countries, that proposal was withdrawn.
Thailand
Thailand is an emerging economy and considered a newly industrialized country. The instability
surrounding the recent coup and the military rule has slowed the GDP growth of Thailand,
which has settled at around 4–5% from previous highs of 5–7% under the previous civilian
administration. Investor and consumer confidence has been degraded somewhat due to the
political uncertainty. Approximately 10 percent of Thailand’s estimated 66.7 million people are
wine drinkers. In 2011, U.S. wine sales to Thailand accounted for USD 5.7, an increase of 40
percent over 2010. Consumers are becoming enthusiastic about wine education and view wine
as a healthier alcohol beverage choice.
Free Trade Agreement
Thailand has pursued preferential trade agreements with a variety of partners in an effort to
boost exports and to maintain high economic growth. Wines from Australia and New Zealand
are enjoying significant advantages as a result of these Free Trade Agreements. In 2004, Thailand
and the U.S. began negotiations on a Free Trade Agreement; however, the trade deal has been
48
delayed since 2006 due to domestic political issues.
Tariffs and Taxes
The taxation on imported wines consists of import tariff rate of 54 percent, an excise tax of 60
percent or THB 100 (USD 3.24) per liter (which ever is higher), a local tax or municipality tax of
10 percent of excise tax value, a health tax of 2 percent of excise tax value, Thai Public
Broadcasting Service tax of 1.5 percent of excise tax value, and the VAT of 7 percent. Thus, the
burden of Import tax and other duties per bottle is about 380 percent in total.
Non-Tariff Barriers
In 2010, new food safety regulations were proposed as well as new health warnings in pictures to
be included on wine labels; however, the proposed regulation is still on hold. Because of the
efforts of the USDA Foreign Agriculture Service, Thai regulators visited the U.S. for an
informational mission to learn more from U.S. officials, Wine Institute and other organizations
about the U.S. regulatory process and alternatives to addressing the harmful use of alcohol. As a
result, the Thai government is reconsidering the proposed regulations.
United Arab Emirates
The UAE has an open economy with a high per capita income and a sizable
annual trade surplus. In 2011, UAE ranked as the 14th best nation in the
world for doing business based on its economy and regulatory environment
(by the Doing Business 2011 Report, published by the World Bank Group).
In 2011, U.S. wine sales to the UAE totaled USD 2.2 million, up 38 percent
from 2010. Alcoholic beverages are controlled by the Criminal Investigation
Department of the police force. Of the seven Emirates forming the UAE,
Sharjah is the only Emirate that prohibits imports of alcohol.
Over the last few years, the UAE economy was aided by an energetic tourism industry and
government investments. The increasing number of hotels, casinos and tourist attractions are
expected to spur the demand for alcoholic beverages (including wine). U.S. wines, especially
medium priced wines, are well positioned to compete with wines from other countries.
Tariffs and Taxes
The import tariff on wine is 30 percent. An additional sales tax of 50 percent is levied on all
alcoholic products sold in Dubai. Furthermore, the UAE only permits licensed companies to
import and sell beverage alcohol (including wine).
Vietnam
Vietnam with an estimated 87.8 million inhabitants as of 2011, it is the world's 13th-mostpopulous country and the eighth-most-populous Asian country. Since the early 2000s, Vietnam
has undertaken trade liberalization on a two-track approach, opening some sectors of the
economy to international markets while protecting others. In July 2006, Vietnam updated its
intellectual property legislation to comply with TRIPS and in 2007 became a member of the
WTO. Vietnam is now one of Asia's most open economies: two-way trade was valued at 160%
49
of GDP in 2006, more than twice the contemporary ratio for China and over four times the ratio
for India. Vietnam's chief trading partners include China, Japan, Australia, the ASEAN
countries, the United States and Western Europe. U.S. wine exports to Vietnam were USD
21.16 million in 2011, four times the amount exported in 2010. It is an expanding market with
high potential for growth. Exports for the first quarter of 2012 are up another 315 percent to
USD 10.22 million. Vietnam is a party to the Trans-Pacific Partnership (TPP) Agreement trade
talks to create a free trade area in the region. The TPP agreement should eliminate the import
tariff for U.S. wine that will accelerate growth.
Tariffs and Taxes
Currently, tariffs on wine are 50 percent. There is a Special Consumption Tax of 20 percent
applied to CIF + duty, as well as the VAT of 10 percent.
Non-Tariff Barriers
Recently, the Ministry of Trade imposed a new restriction on the import of wine. Wine can only
be imported by sea and cleared at three specific ports. This precludes the airfreight of samples
and small shipments and also limits supply chain logistic flexibility. The Ministry of Health,
Vietnam Food Administration requires significant documentation of wine imports, including a
certificate of analysis, two sets of product labels and a certificate of origin. New regulations are
pending that will further restrict wine imports.
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Glossary of International Trade Terms
AD VALOREM TAX – A tax assessed as a percentage of the value of the goods cleared
through customs.
AD VALOREM EQUIVALENT – A specific duty expressed in terms of a percentage of the
value of the product in question. For example, a duty of USD 5 per ton on a product valued at
USD 50 per ton has an ad valorem equivalent of 10 percent.
ALADI – Association of Latin American Integrated States. Preferential trade bloc comprised of
Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Mexico, Paraguay, Peru, Uruguay and
Venezuela
APEC – Asia-Pacific Economic Cooperation. An economic forum composed of 21 nations
including Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia,
Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea,
Chinese Taipei, Thailand, the United States and Vietnam. These nations form a regional trading
group whose goal is to increase trade among the associated nations by lowering trade barriers.
ASEAN – Association of South East Asian Nations. A trade bloc consists of Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
CAFTA-DR – Central America and Dominican Republic Free Trade Agreement. Includes El
Salvador, Honduras, Costa Rica, Guatemala, Nicaragua the Dominican Republic and the United
States.
CAP – Common Agriculture Policy. The European Community’s comprehensive system of
production targets and marketing mechanisms designed to manage agricultural trade within the
EU.
CET – Common External Tariff. A tariff adopted by a trade bloc for imports of products from
non-bloc countries.
DDA – Doha Develop Agenda. Created in November 2001 after WTO members launched a
new Round of global trade negotiations, named after the Gulf city where the talks took place.
Development related commitments are mentioned under virtually every issue.
EU/EC – European Union or European Community. A common single market, free trade bloc
comprised of Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia,
France, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the
United Kingdom.
EU/U.S. Wine Agreement – The 2006 Bilateral Agreement between the U.S. and the EU that
provides for acceptance of U.S. winemaking practices and prohibits any new use of EU
geographic wine terms. The Agreement “grandfathers” the continued use in the U.S. of those
terms, often referred to as “semi-generic terms,” as legal under international rules.
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EFTA - European Free Trade Association. A trade bloc formed in 1960, comprised originally of
Austria, Iceland, Norway, Sweden, Switzerland and Finland (an associate member). Member
countries now are Switzerland, Norway, Liechtenstein and Iceland.
FTA – Free Trade Agreement (also known as preferential trade agreement) between two or
more states. Involves the parties granting tariff preference to each other's suppliers, along with
other benefits in areas such as government procurement and non-tariff measures.
GATT - General Agreement on Tariffs and Trade. – An agreement signed in 1947 as an interim
agreement, the GATT is now a formal multilateral agreement aimed at expanding and
liberalizing world trade. The rules of the GATT provide specific discipline over the use of trade
barriers and help reduce confusion and uncertainty in the international trade arena. The GATT
also provides a forum in which countries can resolve trade disputes and negotiate progressive
liberalization of tariff and non-tariff trade barriers.
GSP – Generalized System of Preferences. A program that grants developing nations duty- free
treatment for certain products.
GST – Goods and Service Tax is a multi-level value added tax introduced in Canada on January
1, 1991. It operates as a turnover tax similar to a VAT.
HTS - Harmonized Tariff Schedule. An organized listing of goods and their duty rates which is
used as the basis for classifying imported products and identifying the rates of duty to be
charged on them.
IPR – Intellectual Property Rights. An umbrella term for various legal entitlements that attach to
certain names, written and recorded media, inventions, and brand labels.
MAP – Market Access Program. A U.S. government program providing matching funds to
promote U.S. agricultural goods internationally.
MERCUSOL – The Southern Cone Common Market. Consists of Argentina, Brazil, Paraguay
and Uruguay. This agreement creased a customs union between member countries that provided
for the elimination of trade barriers at the end of 1995. A common external tariff has been
implemented upon all products coming in from outside the region. The mutual tariffs set for
wine by the states’ trade agencies were placed at 20 percent.
NAFTA – North American Free Trade Agreement. Trade area consisting of Canada, Mexico
and the United States.
OECD – Organization for Economic Co-operation and Development
PTA – Preferential Trade Agreement is another term for an FTA.
SEMI-GENERIC TERMS – Names used to describe a “type” or style of wine that may or may
not relate to an identified geographic region; for example Champagne. The name has been
declared “semi-generic” by the U.S. government, which requires some additional geographic
indication in conjunction with the term so as not to confuse the consumer; for example
California Champagne.
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TPP – Trans-Pacific Partnership Agreement negotiations for a free trade area of 11 Pacific Rim
countries, Singapore, New Zealand, Peru, Chile, Australia, Brunei, Vietnam, Malaysia, Mexico,
Canada and the United States.
TRIPS – Trade Related Aspects of Intellectual Property Agreement. A WTO Agreement
governing intellectual property including geographical indications.
TT – Traditional Terms are those wine descriptor adjectives the European Union is protecting
as exclusive use for certain wines and wine regions as part of their Geographic Origin regime.
TTB – Alcohol and Tobacco Tax and Trade Bureau of the United States Department of
Treasury. A bureau of the Treasury Department that develops regulations governing the labeling
and marketing of alcohol, tobacco, firearms, and ammunition, and that collects excise taxes
from the production and import of these products.
URUGUAY ROUND – The most recently concluded GATT round. The rounds are cycles of
multilateral trade negotiations conducted under the auspices of GATT. Seven rounds have been
completed since the GATT was established in 1947. In 1995, the World Trade Organization
(WTO) took over GATT.
USDA, FAS – The Foreign Agricultural Service of the United States Department of Agriculture.
A federal agency that works to improve market access for U.S. products, builds new markets,
and improves the competitive position of U.S. agriculture in the global marketplace.
USTR – United States Trade Representative. The branch of the U.S. government that is
responsible for trade negotiations with other countries.
VAT – Value Added Tax. A tax that is assessed at each stage of production on the amount of
value contributed at each stage of the final product.
VQA – Vintners’ Quality Alliance. An alliance of winemakers in various Canadian provinces.
WEA – Wine Equity Act. U.S. legislation passed in 1984 mandating increased efforts on the
part of the Administration to negotiate for the removal of barriers facing U.S. wines on the
world market. Target countries included Japan, Canada, South Korea, Taiwan, Mexico and
Trinidad and Tobago.
WINE ACCORDS – An agreement signed in 1983 with the EU to resolve issues of mutual
concern in the wine sector mainly focused on winemaking practices.
WTO – World Trade Organization. Embodies an agreement whereby nations agree to trade
with one another on a most-favored nation basis.
WWTG – The World Wine Trade Group is an informal group of government and industry
representatives with a mutual interest in facilitating the international trade in wine and avoiding
the application of obstacles to international trade in wine.
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Acknowledgements
The facts and information presented in this report were retrieved from a variety of sources
including:
Wine Institute California Wine Export Program, U.S. Wine Export Report, 2011
Wine Institute World Vineyard, Grape and Wine Report, 2011
Department of Commerce, Bureau of Census Trade Statistics, 2011
Global Data Mining, LLC
Global Trade Atlas
Gomberg, Fredrikson & Associates
CIA World Fact Book (Online at http://www.cia.gov/cia/publications/factbook/)
European Commission; Directorate General for Agriculture and Rural Development
United States Department of Agriculture
Foreign Agriculture Service: GAIN Reports
Global Agricultural Trade System
Foreign Agriculture Service Agriculture Trade Offices
Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury
Excise Tax Tables, European Commission, Directorate-General Taxation And Customs Union
Indirect Taxation and Tax administration Environment and other indirect taxes REF 1.035; July
2012
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1776 I Street, NW Suite 916
Washington, DC 20006
Phone 202.463.8493
Contact: Jim Clawson
[email protected]
Editors: Amy (Yuhan) Wang
Jessica Burns
November 2012
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