Understanding The Wine Trade Agreement Between European And U.S. Wineries

Most people who live in the United States don't realize what goes into getting a bottle of European wine on the shelf of their local grocery store. People also don't realize that many U.S. wines also sit on the shelves of European stores. Trade agreements and agreements on winemaking practices are just the beginning of what it takes for both European wines to be available in the United States and U.S. wines to be available in Europe. This article details the specifics of the most recent wine world trade agreement between the United States and Europe.

European and U.S. winemakers signed a wine trade agreement in March 2006 that only took a mere 23 years to complete. While it isn't totally clear why it took quite so long for these winemakers to come to an agreement, wine producers celebrated because now both small wineries and large wineries like Gallo and Franzia could devote some of their production to export markets.

The agreement addresses a previous sore point for both sides, the "mutual recognition of currently authorized U.S. and EC winemaking practices and recognition of each other's wine place names of origin." Robert Koch, CEO of The Wine Institute, praised this first part of a forthcoming larger agreement. Members of The Wine Institute export 95% of U.S. wine and believe this important first step will help to establish further continued communication that will hopefully reduce the huge EC subsidies to the wine sector of The World Trade Organization.

One of the main reasons the agreement took so long was because European winemakers did not like that U.S. winemakers added acid to balance their ripe wines. The practice of adding acid is against European winemaking laws, although they don't usually ripen their wines to the point to where they need to add any acid.

Alternatively, laws do allow European winemakers to add sugar into their cold vintage wines, which U.S. winemakers are not allowed to do and which is not necessary due to the warm climate of California. European winemakers also oppose the U.S. winemaking practices of adding water during fermentation to reduce a high alcohol level and adding wood chips to wines to suggest barrel aging. As part of the agreement, U.S. winemakers can now continue these practices whether a wine is destined to stay in the U.S. or will be exported to Europe.

Another issue that extended the time it took to reach an agreement includes the names of many U.S. wines. Names such as Burgundy, Chablis, Champagne, and Port are all place names in Europe, which has long been a sore point for Europeans. If the European winemakers were to turn the tables on U.S. winemakers, they would label their wines Sonoma or Napa, but none has ever done so.

This would be illegal in the United States as by law, domestic labels can only bear the name of a place if the grapes used in making the wine were grown there. The most inexpensive, but biggest selling, labels in the U.S. won the argument, including Almaden Chianti, Gallo Hearty Burgundy, Inglenook Chablis, Korbel Champagne, and Paul Masson Chablis. The new agreement allows U.S. winemakers to continue using these places names on existing domestic wine labels, but prohibits it on new ones.

Half of the $658 million in U.S. wine exports in 2005 were from European sales. That amount is small compared to the $2.6 billion earned by European winemakers for exported wine sold in the United States. With U.S. exports increasing 200% since 1997, the U.S. has some catching up to do. Even more to the point of this agreement, European winemakers want to protect the enormous market they sell to in the U.S. This is ultimately why they agreed to trade a little copyright and accept some added water and oak chips.

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