U.S. Wine Industry Facing Steep Tariffs from Canada

For Immediate Release

May 18th, 2015

Washington, D.C. – Today the World Trade Organization Dispute Settlement Body issued their final ruling against the United States country of origin labeling  (COOL) requirements for muscle cuts of meat. What does that mean for the wine industry? If the United States does not repeal its COOL rule, Canada and Mexico will retaliate with substantive tariffs on a variety of American products which could include wine.

Country of Origin Labeling, or “COOL,” is a law requiring retailers to indicate the country of origin on a cut of meat. In 2009 Canada challenged the American implementation of this law at the World Trade Organization (WTO). The WTO ruled in Canada’s favor and has continued to do so in all subsequent appeals. With today’s final ruling, Canada and Mexico will be able to levy tariffs against American products. Wine is on the preliminary “hit list” made public by Canadians.

Read: Congress Moves to Protect U.S. Wines from Canadian Tariffs

Tariffs against American wine will be a huge hit to our industry. Canada is the largest foreign market for American wine.  Last year U.S wine exports to Canada reached $487 million, a 7% increase from 2013. Retail sales for American wine in Canada now eclipse $1 billion. In 2013 the U.S. was the second largest exporter of wine to Canada, with a 16% market share among wine imports sold in Canada.

The preliminary Canadian plan would place a tariff on wine based on the value of the product entering the country. For example, a wine with a $10 import value would be hit with a $10 tariff, doubling the cost of the wine sent into the country. Apart from the immediate financial loss, the American wine industry could face long term effects. Raising the price of a bottle of a US wine will hinder competition with other wine regions, notably South Africa and Australia. The United States could lose shelf space that would take years to regain.

Tariffs will largely affect California wineries, but smaller, family owned wineries in Oregon, Washington, New York and Michigan will also be impacted. In 2014, Washington wineries exported a total of $7.5 million in total wine sales into Canada. Oregon sent almost 22,000 cases of their wine across the border in 2014.

Canada has sixty days to submit a dollar amount to the WTO for retaliation. Once the WTO approves the amount they begin to implement tariffs on targeted commodities. While we hope wine will be omitted,  WineAmerica’s government affairs team is actively lobbying Congress to support a legislative fix, including but not limited to a repeal of the COOL regulations, before any tariffs on U.S. wine exports can be implemented, which could be as soon as the end of the summer.

WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations.  As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

For more information about COOL visit www.coolreform.com. View list of American commodities potentially targeted by Canada. Learn more about WineAmerica and wine industry advocacy at www.wineamerica.org.

Questions and inquires should be directed to Michael Kaiser, Director of Public Affairs at mkaiser@wineamerica.org

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