UK avoids wine red tape as US expands tariffs on EU goods

The Christmas break saw two important announcements for the US, UK and EU wine trades, with a Brexit deal bringing relief to some and additional tariffs meaning misery for others.

As 2020 came to an end, the US, UK and European Union wine trades were both facing up to continued uncertainty going into the new year, the US over the continuation and possible escalation of tariffs on European wines, the UK over potentially ruinous VI-1 certification forms on European wines should Brexit negotiations yield no results and the EU over both.

Just before Christmas, the British government and European Union announced they had agreed on a deal (since ratified by Parliament) which has done away with the need for the VI-1 certificate.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “The deal means that wine produced in either the UK or EU will not require the much feared, costly VI-1 certificate. Instead there will be a simplified import certificate with the eminently sensible prospect of the information being made available electronically in future – something which the WSTA has been calling for to benefit businesses both sides of the channel ever since the referendum.”

The simplified certificate will only require a set list of basic information, including the country of origin, name of the producer, region of origin and other associated geographic indicators and alcoholic strength but this latter point will not, crucially, have to be backed up by laboratory verification.

The deal does not mean entirely clear sailing for the sector, however. As Beale continued: “While not having to complete VI-1 certificates for EU wine coming into the UK, and English and Welsh wines being sent to the EU is a welcome relief, the UK wine trade will still have to complete VI-1 forms when sending third country wines to Northern Ireland and the rest of the EU.  Businesses are still waiting on the UK Government to confirm the details necessary to complete the paperwork. With less than a week to go before businesses shipping wine to the EU will need to complete these forms, it is simply unacceptable that they are still in the dark about the forms and processes required.”

It was nonetheless, he continued, “a good first step towards abolishing unnecessary and costly red tape. This is not only good news for UK wine businesses but also UK consumers who won’t see wine prices rocket.”

Over in the US, however, Christmas tidings were less joyful with the government announcing an additional set of tariffs on various French and German products, including wine and spirits, as part of the on-going Boeing-Airbus dispute.

The US imposed 25% tariffs on most EU wines under 14% in October 2019 but now non-sparkling French and German wines of all types as well as Cognac and other brandies will be subject to the tariffs as well.

This is in response to the World Trade Organisation’s decision to allow the EU to apply tariffs to US imports after the tariffs were first announced, to the tune of US$4 billion (including wines and spirits), which the US now says were calculated inaccurately as they did not take into account the impact of Covid-19.

The US Trade Representative said: “In implementing its tariffs… the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the Covid-19 virus.

“The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilized a normal period. Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach.”

Although many may have hoped that the election of Joe Biden would herald a truce in the trade spat, this additional move should demonstrate (as the drinks business noted at the time) that these tariffs were not initiated solely by President Donald Trump and are unlikely to be lifted by Biden – certainly in the short term.

The news will no doubt be a heavy blow to importers and retailers of European wines, especially French and German ones, in the US as it will be for the producers themselves.

At the very least, EU producers can breathe a sigh of relief alongside their UK counterparts that at least one potential snag has been overcome to set 2021 off on something approaching the right footing.