US duties: Italian Wine is Spared

 Hard times for the trade among countries. After the recent events concerning the never ending story of Brexit, another economic and commercial measure has been adopted with regard to the production and export of European products. This measure, not least, also concerns agricultural and food products, including wine, spirits and liqueurs. On 18 October, in fact, a new protectionist measure has been introduced and which directly affects Italian production with the application of duties by the United States of America. As it is well-known, this measure has been adopted for the countries of the European Union and it does not concern the food and agricultural production only as it is extended and includes a rather wide range of products and categories. The consequences, evidently too obvious to understand and foresee, will bring significant economic loss because of the difficulties arising in exporting products to the United States of America.

 I am not going to talk about the reasons and causes that led to the introduction of these measures – we have always been involved in wine and its sensorial tasting – however it is clear this will directly affect the beverage of Bacchus produced in Italy and in Europe. The consequences of these measures, in fact, have a direct impact both in the production of wine and in its marketing, specifically, in the important aspect of export. It should be noticed, in fact, the sales to foreign countries, including the United States of America, represent an important – often fundamental – share of the profits of Italian and European wineries. These measures, all too easy to guess or predict, will determine a similar response from Europe towards the United States of America, thus introducing duties for the American products entering the European market.

 Too easy to predict, the whole affair will bring economic conditions that, if on one hand they tend to protect the domestic production, will inevitably lead to losses, even considerable, on both sides. All this, by considering the current global economic conditions, will certainly not help to improve the development and prosperity of all the involved parties. After all, it is yet another repetition of what, historically and recurring, occurs when economic conditions become critical and the simple rule of mors tua, vita mea (your death, my life) is adopted. Maybe in the end, all this will lead to the “death” of everyone because the damage becomes mutual and even relevant, and it will take years to recover from the effects of this kind of policies and choices. When a country introduces duties against the production of another one, in fact, it is all too predictable that country will do the same in return. Forms of mutual retaliation detrimental to both at the end.

 Talking about the topic that concerns us most directly, Italian wine has apparently been spared from these measures, but the same cannot be said for other Italian productions of the agricultural and food industry. If the wine is spared, there are other excellencies of our country, including cheese – such as Parmigiano Reggiano – liqueurs and spirits. As far as wine is concerned, these measures have also heavily affected the wine production of France and Germany. France, in particular, has in fact estimated a loss of one billion euros as a consequence of the duties the United States of America has introduced with regard to French wines. In Italy, many have considered this measure adopted against France as a positive and advantageous fact for the wines of our country. In fact, it is easy, but obviously not certain, to foresee this could favor the export of Italian wines since they could become more competitive, in terms of price, than the French ones.

 In my opinion, this is a Pyrrhic victory, as Italy has no concrete reasons to be happy for, because important productions of our country have been heavily affected by these measures. In particular, in addition to Parmigiano Reggiano and other Italian cheeses, the price liquor and spirit drink producers will have to pay is evidently high. For these products, in fact, has been applied a duty of 25%, a measure making them – in fact – scarcely competitive with similar products from other countries, in particular those of the United States of America. It should in fact be considered, in particular, that in this country are being produced similar products and that are directly competing with Italian ones as well as with those of other European countries. In particular, the so-called generic parmesan cheese, which evidently exploits the success and commercial fame of Parmigiano Reggiano to identify a very different product, although very common in that country. It is not difficult to think, in fact, American products of this type will have a considerable commercial and productive relaunch, thanks to the advantageous and favorable competition with those of the other countries, in particular Italy.

 The estimates predict the total loss determined by the introduction of these duties will approximately be 117 million euros and most of it will be suffered by the dairy production for which a 25% tariff is expected. It is also estimated the introduction of these measures by the United States of America will result in an overall 20% drop in sales of food products to this country. Italian wine and olive oil have been spared from these protectionist measures, whereas similar productions from France, Spain and Germany have not. The exclusion of wines from the duties introduced by the United States of America has been extremely welcome by Italian wine producers and by those working in this field. It is in fact speculated this exclusion will allow Italian wine to conquer new shares in the American market to the detriment of French wine, which has always enjoyed the favor of consumers in that country. Italian spirits and liqueurs producers are expecting an export drop of about 35% with a significant economic loss and for which there is nothing to be happy for. It is very likely, Europe will not stand idly by and, it seems too obvious, will adopt equal protectionist measures against American products. An overall picture that, in the end, will see everyone defeated. Italian wine has been spared from these measures and this event could be therefore celebrated with a toast. A toast that, nevertheless, arouses a smile with a bitter taste and that seems to be, at most, a sad grimace.