US President Donald Trump and French counterpart Emmanuel Macron may find their wine a little more expensive

Paris (AFP) - The tariffs imposed on American wine imports that were shot down as unfair by Donald Trump this week are duties imposed at a European level which have not changed in 20 years.

Although the US president pointed the finger at France, which is a major wine producer, it is part of the 28-member European Union and does not set its own trade policy or tariffs.

- How much are the duties on wine? -

The import duties imposed on every bottle of wine are low but higher in the European Union than in the United States.

Depending on the type and alcohol content, imported wine faces US duties of 5.3 cents to 12.7 cents (5 to 12 euro centimes) a bottle, according to the US International Trade Commission. Sparkling wines are taxed a higher rate of about 14.9 cents a bottle.

But US wines shipped to the EU face duties of 11 to 29 cents a bottle, according to the Wine Institute, a trade body promoting American exports.

According to France’s Federation for Wine and Spirit Exporters (FEVS), a bottle of American white wine with an alcohol volume (ABV) of 13 percent will be subjected to an 11-cent tax, while an equivalent bottle of European wine would pay about half that to enter the US.

And an American red with 14.5 percent alcohol content will be taxed at 0.14 cents a bottle while its European equivalent will pay a fractionally lower tariff of 13 cents.

Duties imposed on wine imported in bulk, however, are higher on the US side than in Europe, where bulk accounts for a quarter of the US imports by value.

The EU tariff imposed on a litre of 14.5 percent American wine stands at nearly 14 cents while across the Atlantic, the equivalent US duty is 22 cents.

- Who is exporting what? -

In 2018, the US exported 3.5 million hectolitres of wine worldwide, a stable figure compared to the previous year, the Paris-based International Organisation of Vine and Wine (OIV).

But the value of US wine exports fell slightly to 1.22 billion euros, down from 1.3 billion a year earlier.

Exports and imports of wine between the United States and the major wine-producing countries of the European Union, in 2017.

The three main global wine exporters – Spain, Italy and France – shifted 54.8 million hectolitres in 2018, collectively accounting for more than 50 percent of the global market by volume.

But that figure demonstrated a drop of almost 8.0 percent from the 59.4 million hectolitres exported a year earlier, due to a weak harvest following a spring frost that impacted on volumes.

Despite the problematic grape harvest, Spain, France and Italy managed to increase the overall value of their exports in 2018 to 18.4 billion euros, up from 17.9 billion a year earlier.

Of the three, France is the biggest exporter by value, with 9.3 billion euros of wine exported in 2018, compared with Italy’s 6.1 billion and 2.9 billion for Spain.

- How do American wines enter the EU? -

External trade tariffs are the same across all EU countries, and access to the market is under the same conditions for all suppliers, whether from Australia or Argentina, in line with World Trade Organization regulations, FEVS says.

The EU is the biggest importer of American wines, and between 2007 and 2018, US exports to France tripled.

- How do European wines enter the US market? -

If the duties are lower in the US than in Europe, the regulatory environment for entering the American market is more complicated, with regulations dating back to the Prohibition era of the 1920s when alcohol sales were banned in the United States.

In effect, exporters are not permitted to sell direct to American consumers, with the United States imposing a three-tier system for selling alcohol, which obliges them to work through a distributor or wholesaler.

These distributors, who are generally grouped by state, slap on margins of between 20 and 30 percent, which significantly hikes the price of wine for consumers, FEVS says.