The U.S. Wine Industry and Selected Trade Issues with the European Union

Global wine production totaled roughly 28 billion liters in 2014. The European Union (EU) dominates world production, accounting for nearly 60% of all wine produced each year. France, Italy, and Spain are among the principal EU wine-producing countries. The United States is the world’s second-largest wine-producing region, accounting for about 10% of global production. The value of world trade in wine totaled more than $21 billion in 2013. The EU accounted for nearly 60% of the world’s export market for wine, valued at $12 billion in 2013. Other exporting nations include Australia, Chile, the United States, New Zealand, Argentina, and South Africa. The United States is a major exporter of wine with about 7% of global exports in 2013. The U.S. wine industry has identified a range of international barriers to trade that may be limiting U.S. wine exports abroad. These include import tariffs; foreign wine producer subsidies and support; preferential market access, such as free trade agreements between the EU and other countries; incompatible foreign wine composition standards; and a range of miscellaneous non-tariff barriers, such as state or provincial government monopolies, import licensing and customs clearance requirements, and wine labeling regulations. An annual report by the Wine Institute, an advocacy group representing the California wine industry, highlights a range of trade concerns with several EU countries and other countries worldwide. To address trade concerns with the EU, the United States and the EU signed the U.S.-EU Agreement on Trade in Wine (“2006 Agreement”) in March 2006. The 2006 Agreement addressed a range of issues regarding wine production, labeling, and import requirements and was intended to establish predictable conditions for bilateral wine trade. Among the key provisions in the 2006 Agreement were measures regarding the U.S. industry’s use of 16 “semi-generic” names of wine that originate in the EU (including Sherry, Chablis, and Chianti) as well as the use of certain traditional labeling terms (such as Chateau and Vintage). The EU also agreed to accept all current U.S. winemaking practices and to establish a process to approve new practices. Despite this agreement, ongoing trade concerns include geographical indications (GIs) and “semi-generic” terms; market access issues regarding “traditional” terms; new winemaking practices, and related technical issues; and issues related to “regulatory coherence” (especially testing and certification). GIs refer to geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to wines, spirits, and agricultural products. Discussion of these and related trade issues continues to be an issue within ongoing U.S. trade negotiations in both the proposed Trans-Pacific Partnership (TPP) and the proposed Transatlantic Trade and Investment Partnership (T-TIP). One of the principal goals of the U.S. wine industry is to maintain the 2006 Agreement. There are two views within the U.S. wine industry: wineries represented by American Viticulture Areas (AVAs) would like to see additional protection for regional names, including the 16 semi-generic terms, while certain brand owners and the Wine Institute are concerned that such a move would end the legal use of terms that are associated with certain brands today. Recently concluded trade agreements between the EU and other third countries, such as Canada and South Korea, also have complicated the debate because provisions in these agreements will provide full protection of GIs and not defer to a country’s independent assessment of generic status for key product names. Such protections for GIs could require U.S. food and wine exports to these non-EU countries to not use certain “semi-generic” or “traditional” terms. These and other issues continue to influence discussion in both the T-TIP and TPP negotiations.