Trump makes Provence Look Even More to the East! – Update

Update 2020-02-23

On Valentine´s Day it was announced that the by US previously announced tax of 100% on European wines and spirits, and many other non-aircraft European products, will not apply as of February 15! But the already decided tax of 25% will be retained and there is still a risk that the 100% tax can be applied at short notice!

It could have been worse, i.e. with a 100% tax, but still the situation is critical for e.g. France and Provence’s rosé wine export. The US is France’s largest wine export market, accounting for about 20% of the exports and for Provence the figure is even higher, as much as 46% is exported to the US. The 25% tax has already meant that the US export has fallen significantly while exports to China have increased.

But not only the European wine industry will be affected, but the US wine dealer will also be severely affected. As many as 26,000 comments were sent to the Office of United States Trade Representative, arguing why certain products should be exempted from the penalty, many coming from wine dealers who are afraid their many-year-old business may go bankrupt or that they will have to dismiss employees. Some comments also come from restaurateurs who claim that the US wines do not fit all dishes and that they are afraid losing customers.

The following was posted 2020-01-14

Provence has already increased its efforts to export more of its market-leading rosé wine to the Asian countries, the wine is perfectly suited to many spicy foods so it is an obvious market. You can safely assume that this effort will be intensified now that Trump charges the French wines with 25 – 100% in penalty tax. The United States is Provence’s by far the largest wine export market and accounts for 46% of exports, but as if Trump is not causing enough with problems, Brexit is in the pipeline which will cause uncertainty for Provence’s second largest export market.

Read more and if you are fast you can also influence the US process!

Trump has long believed that the wines from the US are unfairly taxed in Europe. Trump became even more angry when France this summer adopted the “GAFA digital tax”, pending the upcoming tax on which the OECD is working. The measure means that the largest technology companies that provide services to French consumers will pay a tax of 3% of their turnover. Thirty companies are affected in addition to GAFA (Google, Amazon, Facebook, Apple), including Airbnb, Instagram and Criteo.

However, the reason for the penalty on wine, and many other products, is the 15-year-old conflict over state subsidies to Airbus and Boeing, where US were allowed in court to tax European products. Of course, aircraft are also affected by the tax, an extra sensitive issue as Boeing’s 737 MAX plan is currently grounded for an unknown time as the aviation authorities have banned the aircraft and Boeing today stands with 400 ready-made aircraft that cannot be delivered.

If you want to see which European products are currently penalized by 25% and which from February 15 risk 100% penalty tax, you can find the comprehensive lists here:
https://www.regulations.gov/document?D=USTR-2019-0003-2518

The wines and spirits that are taxed at 25% today are whisky and still wines with less than 14% alcohol in containers of no more than two litres. However, from 15 February all wines and spirits, and many other European products, risk a tax of 100%.

It has been speculated as to why champagne and cognac are excluded right now. The LVMH group produces many such exclusive products where the world’s fourth richest person Bernard Arnault is chairman. Could it be because Trump and Arnault are “best friends” and that LVMH has started building a Loius Vitton plant in Texas where Arnault and Donald Trump with daughter Ivanka in a ceremony cut the “band”?

An exciting continuation of this complicated issue follows for Europe’s producers of beverages, food, aircraft, knives, clothes, tools ……

One can safely assume that Provence’s efforts in the east will now be intensified. Today, China accounts for just under 0.5% of Provence wine exports and given that the east market is predicted to grow, it is wise that CIVP (le Conseil Interprofessionnel des vins de Provence) has now begun the process of AOC Côtes de Provence becoming a protected origin in China to make it easier to attack counterfeiting.

Source: La Revue du Vin de France and others

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