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European wine and spirits makers urge 0% tariffs as EU-U.S. deal leaves sector in the dark

European Wine and Spirits Producers Push for Zero Tariffs Amid Uncertainty from Latest EU-US Trade Deal

In a fervent call to action, European wine and spirits manufacturers are pressing both the European Union and the United States to eliminate tariffs on their products, highlighting the sector's precarious position following a recent trade agreement that failed to address their concerns. The deal, announced earlier this week, focuses on resolving long-standing disputes in other industries but leaves the alcoholic beverages sector in limbo, potentially exacerbating economic pressures on producers already grappling with global market challenges.

The plea comes from key industry groups, including the Comité Européen des Entreprises Vins (CEEV), which represents wine producers across Europe, and spiritsEUROPE, the trade association for the spirits industry. These organizations argue that zero tariffs would not only stabilize trade relations but also foster growth in a market that has been battered by retaliatory measures stemming from unrelated trade conflicts. "The wine and spirits sector has been caught in the crossfire of broader trade wars for too long," said a spokesperson for CEEV in a statement released on Thursday. "It's time for a dedicated agreement that recognizes our industry's unique contributions to transatlantic commerce."

The backdrop to this urgency is the ongoing fallout from the Airbus-Boeing subsidy dispute, which has led to tariffs on various goods, including European wines, whiskies, and other spirits imported into the U.S. In 2019, the U.S. imposed 25% tariffs on certain European wines and spirits as retaliation for EU subsidies to Airbus, while the EU countered with tariffs on American products like bourbon and rum. Although suspensions and partial resolutions have been negotiated in recent years, the latest EU-US deal, which primarily addresses steel and aluminum tariffs, does not extend relief to the beverages sector. This omission has left producers feeling sidelined, with many fearing renewed impositions or prolonged uncertainty.

Industry leaders emphasize the economic stakes involved. Europe is a powerhouse in wine production, with countries like France, Italy, and Spain accounting for a significant portion of global output. The U.S. market is crucial for these exporters, representing billions in annual sales. According to trade data, European wine exports to the U.S. reached approximately $6 billion in 2022, despite the tariff hurdles. Spirits, including Scotch whisky and French cognac, add another layer of value, with exports valued at over $2 billion annually. However, tariffs have eroded profit margins, forced price hikes, and in some cases, led to lost market share to competitors from non-tariffed regions like Australia or South America.

"The current situation is unsustainable," noted Ulrich Adam, director general of spiritsEUROPE. "Our members have seen sales drop by as much as 20% in key U.S. markets due to these tariffs. Zero tariffs would level the playing field and allow us to compete based on quality, not artificial barriers." Adam pointed to the mutual benefits, as American consumers enjoy a wide array of European products, and U.S. producers could see reciprocal advantages in European markets.

The recent EU-US agreement, hailed as a step toward de-escalating trade tensions, stems from negotiations under the Biden administration and the European Commission. It includes provisions to suspend tariffs on steel and aluminum for two years, aiming to prevent a return to the trade wars of the Trump era. Officials on both sides have described it as a "truce" that could pave the way for broader cooperation on issues like climate change and supply chain resilience. However, the exclusion of the wine and spirits sector has drawn criticism from affected industries, who argue that their products were unfairly targeted as pawns in larger geopolitical games.

Historical context reveals how these tariffs originated. The World Trade Organization (WTO) ruled in favor of the U.S. in 2019, allowing tariffs on $7.5 billion worth of EU goods due to illegal subsidies for Airbus. In response, the EU won a similar ruling against Boeing subsidies, imposing tariffs on $4 billion of U.S. goods. While both sides suspended these measures in 2021 as a goodwill gesture, the suspensions are temporary, and without a permanent resolution, the threat of reinstatement looms. For wine and spirits, this means ongoing anxiety, as producers plan harvests, bottlings, and shipments years in advance.

European producers are not alone in their advocacy. U.S. importers, distributors, and retailers have echoed the call for zero tariffs, citing the impact on consumer choice and prices. The Distilled Spirits Council of the United States (DISCUS) has supported efforts to remove these barriers, noting that tariffs harm American jobs in hospitality and retail sectors. "Tariffs on European spirits have ripple effects throughout our economy," said a DISCUS representative. "From bars in New York to restaurants in California, these costs get passed on, ultimately hurting consumers and businesses alike."

Looking ahead, industry groups are lobbying for a standalone agreement specifically for wine and spirits. They propose a "zero-for-zero" tariff framework, where both sides eliminate duties on these products permanently. This model has precedents in other trade pacts, such as the U.S.-Australia Free Trade Agreement, which includes zero tariffs on wines. Proponents argue that such a deal would boost bilateral trade by an estimated 10-15%, based on economic modeling from trade analysts.

Challenges remain, however. Political hurdles in both the EU and U.S. could complicate negotiations. In the U.S., midterm elections and domestic priorities might delay action, while in Europe, varying interests among member states—such as France's strong wine lobby versus other sectors—could slow consensus. Additionally, global factors like inflation, supply chain disruptions from the Ukraine conflict, and shifting consumer preferences toward low-alcohol or non-alcoholic beverages add layers of complexity.

Despite these obstacles, optimism persists. Recent diplomatic engagements, including summits between U.S. President Joe Biden and European leaders, have emphasized strengthening transatlantic ties. "We're at a pivotal moment," said a senior EU trade official, speaking anonymously. "Resolving these lingering tariff issues could symbolize a new era of cooperation."

For European wine and spirits makers, the push for zero tariffs is more than a trade demand—it's a fight for survival in a competitive global market. Vineyards in Bordeaux and distilleries in Scotland have weathered storms before, but prolonged uncertainty could lead to irreversible damage. As one French winemaker put it, "Our products tell stories of heritage and craftsmanship. Tariffs silence those stories and stifle innovation."

In the coming months, industry associations plan to ramp up advocacy efforts, including petitions to the European Commission and outreach to U.S. lawmakers. Virtual roundtables and trade fairs are being organized to highlight the mutual benefits of tariff-free trade. Analysts predict that if a deal is reached, it could serve as a template for resolving other sectoral disputes, potentially leading to a more comprehensive EU-US trade framework.

The sector's plight underscores broader themes in international trade: how interconnected economies can suffer when disputes in one area spill over into unrelated industries. For now, European producers remain hopeful yet vigilant, urging swift action to ensure their bottles continue flowing across the Atlantic without the burden of tariffs.

As negotiations evolve, the wine and spirits industry stands as a reminder that even in times of diplomatic progress, some sectors risk being left behind. The call for zero tariffs is not just about economics—it's about preserving cultural exchanges that enrich both sides of the pond. With the right political will, a resolution could uncork new opportunities for growth and collaboration.

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Read the Full NBC New York Article at:
[ https://www.nbcnewyork.com/news/business/money-report/european-wine-and-spirits-makers-urge-0-tariffs-as-eu-u-s-deal-leaves-sector-in-the-dark/6349987/ ]