Trade Wars

What you need to know about the wine trade wars



Oscar Wilde once wrote that “life imitates art much more than art imitates life.”

In “The Roaring Mouse”, a late 1950s film, the mythical nation of Grand Fenwick’s only export, a special wine, Pinot Grand Fenwick, faces competition from California; and their economy is collapsing. Like others, after World War II, its leaders note that no country that declared war on the United States and lost has ever gone hungry.

Prime Minister Rupert of Mountjoy and Field Marshal Tully Bascombe, both played by Peter Sellers, and the 23 men of Grand Fenwick’s army, sail the luxury cruise ship Queen Elizabeth to the United States United, where they do not have the gravitas, to collect any opinion.

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They carry bows and arrows, and wear ancient chain mail, roaming the streets of New York with their secret weapon, the “Q” bomb – of course a dud. On her return, Grand Duchess Gloriana, also played by Sellers, asks: “How did the war go? Bascombe replies: “There was a slight change of plan”:… “We won.

In Shakespeare’s “The Storm” a character says: “Misery tells a man about strange bedfellows. “

The shipwrecked man finds himself considering taking shelter next to a sleeping monster. Nowadays, we have turned politics into poverty. The wine industry often finds itself in the midst of political fights that have nothing to do with wine.

The United States and the European Union have been at a trade war since 2004; on subsidies, for US-based Boeing and EU Airbus. Our former president has stepped up the battle with 25% trade tariffs on European food and wine, including olive oil, cheese and chocolate.

The wine industry, ravaged by COVID-19, considers prices to be piling up. After a recent summit between the EU’s trade chief and our current president, there has been an agreement to suspend tariffs for five years while solutions to the fundamental problems stimulate debate.

As the US has fought against EU aircraft makers, feuds have left everyone in the air competing with China, whose form of government support will give them price advantages integrated.

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Tariffs undermine economic stability and lead to a net loss of production and jobs, with lower income levels. They tend to be regressive, which weighs the most on low-income consumers.

The Tax Foundation is a leading independent tax policy watchdog, ranked just to the right and seen as very credible. He estimates that the previous administration imposed $ 80 billion in new taxes on Americans by lifting tariffs on thousands of products. This equates to our 17th largest tax increase, as a percentage of GDP, since 1940.

Tariffs will reduce long-term GDP by 0.23%, wages by 0.15% and employment of 179,800 full-time equivalent jobs. Whatever political rhetoric is given, it is not easy to win trade wars; in fact, there are never any real winners.

Meanwhile, Australia has transferred its trade war with China to the World Trade Organization, for possible resolution. The initial request is for a ruling on Chinese barley tariffs, but there is also a wine issue that will be submitted soon. China imposed tariffs of 200% on Australian wines for a period of five years, believing Australians were selling below production costs, to conquer their market.

The British and the French also have a small war going on. Without destructive tariffs, the French have thwarted with such red tape for food and wine imports into the EU, that special customs officers are required to follow the rules.

This slows down exports to Europe and increases costs, not so much for the large producers, but for the smaller ones who only ship 600-700 bottles at a time. Errors in the paperwork can cause delays throughout the system, which is why freight companies have increased their rates to accommodate unforeseen circumstances.

It all reminds me of another movie, starring Sellers, a simple-minded gardener named Chance, who spent his entire life in the Washington DC home of a wealthy individual, whom he calls the “Old Man.” .

When he died, a lawyer specializing in inheritance took Chance out of the house to avoid possible claims. Uneducated, his knowledge of the world comes from television. After a limousine hits his leg, he becomes a guest of Eve and her aging husband Ben, the owner of the automobile.

They misunderstand his name as Chauncey Gardner. His demeanor and expensive clothes, the old man’s bespoke luxury clothes, confuse them into believing he is super smart. Ben, a powerful political insider, introduces him to other power brokers.

Ben’s friends are also in awe, misinterpreting Chauncey’s odd statements as a deep thought. Later, as they bury Ben, his friends theorize that Chauncey would make an ideal presidential candidate.

Stay healthy, and well done.

You can reach Robert Russell at [email protected]