French winegrowers are on tenterhooks as they wait to see whether Donald Trump will follow through with his repeated threats to raise tariffs on French wine in retaliation to Gafa tax.
As leaders of the world’s richest countries gather for the G7 opening Saturday, winegrowers in host nation France fear they will have to suffer the consequences from the new French tax on the US tech giants.
Representatives of the Gafa corporations — Google, Apple, Facebook and Amazon — recently railed against the tax aimed at plugging a loophole that allows the firms to pay next to nothing in countries where they make huge profits.
While President Trump has repeatedly warned of retaliation, a 100 percent tax on French wine imports to the US was suggested on Aug 9.
While putting on a brave face, the French wine sector — the world’s top exporter in terms of value and third in volume — is making contingency plans.
Will Americans be willing to pay double for their favourite Cote du Rhone?
“We have to take the American president’s threats seriously,” said Jerome Despey, head of the wine industry section of France’s leading agricultural union FNSEA.
Even before the French parliament approved the Gafa tax on July 11, Trump had hinted that he could impose customs duties on French wine. But at the time the rationale was one of unfair competition with American wines.
“France charges us a lot for the wine and yet we charge them little,” the US president told CNBC in June, adding, “We’ll do something about it.”
Imported wine currently faces US duties of 5.3 cents to 12.7 cents a bottle, while US wines shipped to the EU face duties of 11 to 29 cents a bottle.
Trump repeated the threat on July 26 when he mooted a “substantial reciprocal action” in response to the Gafa tax, which is expected to raise 400 million euros this year, growing to 650 million by 2022.
The contingency plans vary among winegrowing regions. In Champagne, “of course we’re worried because the US is our leading market in terms of value after France,” said regional winegrowers representative Maxime Toubard.
But he said he remains “confident” because “American consumers like champagne”.
In the southwestern Cognac region — which exports nearly half of its production to the US — one industry figure said business leaders were “vigilant” but “nothing is confirmed”.
Thomas Montagne, president of the European Confederation of Independent Winegrowers (CEVI), noted that cheaper and mid-range wines were most at risk from new US tariffs, as opposed to reserve wines.
The high-end wines that will lose market share in the US because of tariffs will still find other export markets, Montagne told.
Mid-range and cheaper wines will “pay the price” imposed by US tariffs, he said.
In Provence, bolstered in recent years by a growing US preference for rose wines, the concern is deep.
The region’s US exports have risen from “practically nil” to 46 percent in a decade, a local industry source said.
Two labels in particular account for the boom: Whispering Angel by Var winegrower Sacha Lichine, and Cotes de Provence Rose Miraval produced by the Provencal estate of Hollywood stars Brad Pitt and Angelina Jolie.
“With the US and Trump, we’re flying blind,” a top French wine official said, adding that existing concerns over Brexit — Britain is France’s second wine export market — make the US tariff threat “even harder to take”. – AFP
