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January 2016 WINES&VINES 17 WINE INDUSTRY NEWS TOP STORY Wine Industry Escapes Retaliatory Tariffs W ashington, D.C.— Wineries that ex- port to Canada and Mexico have es- caped significant tariffs following lawmakers' repeal of Country of Origin Labeling (COOL) for beef and pork in accordance with a recent World Trade Organization (WTO) ruling. On Dec. 7, an arbitrator with the WTO reiterated decisions the international trade organization has delivered since 2011, deeming COOL requirements an undue regulatory burden on foreign meat producers and a potential cause of inaccurate labeling in stores. Originally adopted in 2002, successive changes to COOL re- quirements have cost livestock producers in Canada and Mexico billions of dollars. The latest WTO decision marked the end of the road for U.S. appeals and opened the door to retaliatory tariffs on wine to the tune of approximately $1.25 billion per year. "If the U.S. Senate does not take immediate action to repeal COOL for beef and pork, Canada will quickly take steps to retaliate," threatened a statement issued by Canada's ministers of agriculture and international trade following the WTO decision's release. Congress paid heed and nixed COOL requirements for pork and beef Dec. 18 as part of an omnibus appropriations bill that bundled together a number of measures as lawmakers prepared to adjourn for the holidays. (COOL provisions remain in place for lamb, goat, venison, fish and shellfish, fruits and vegetables, ginseng and vari- ous nuts.) WineAmerica, which cheered a bid to effect the repeal of COOL last June, breathed a sigh of relief following the bill's passage. "We applaud the work of the Senate and the House to make sure the COOL rules were re- pealed, avoiding costly tariffs on American wine and host of other products," Michael Kaiser, director of public affairs for WineAmerica, told Wines & Vines immediately following the bill's passage. "This was an issue we never anticipated being involved with, but we worked to make sure we protected the business interests of American wineries." WTO authorization for retalia- tory tariffs was due by Dec. 21, meaning passage of the omnibus bill came in the nick of time. Speaking from the December WTO meeting in Nairobi, Kenya, Canada's International Trade Minister Chrystia Freeland said that retaliatory tariffs would promptly follow receipt of autho- rization. Tariffs would have meant a significant mark-up to the half- billion dollars worth of wine the United States ships to Canada and Mexico each year. The markups levied by Cana- da's various provincial liquor boards, which are layered on after duties, would have further com- pounded damage from the tariffs. A wine valued at $10 on one side of the border would have become a super-premium $40 bottle for consumers on the other. Add in exchange rates, which have driven double-digit increases in the price of some foods in Can- ada during the past year, and U.S. wines would be even less competi- tive in Canada, the country's most important export market. The effect on California pro- ducers and the entire U.S. wine industry would reverse decades of efforts to boost market share, said Bobby Koch, president and CEO of California's Wine Institute. "Retaliation by Canada and Mexico would set our wine ex- ports back decades and cost bil- lions of dollars in lost sales over time," he said prior to passage of the appropriations bill. With the bill approved and heading to the White House for signature, his relief was palpable. "Passage of the omnibus will once and for all lift the threat of potentially devastating tariffs on California wine and allow our pro- ducers to get back to focusing on growing their sales in these key markets," he said. —Peter Mitham " This was an issue we never anticipated being involved with, but we worked to make sure we pro- tected the business interests of Ameri- can wineries." —Michael Kaiser, WineAmerica " Passage of the omnibus will once and for all lift the threat of potentially devastating tariffs on California wine." —Bobby Koch, Wine Institute Prices for California wines selling for $7.99 per bottle at a shop in Vancouver, British Columbia, could have skyrocketed as a result of tariffs against the U.S.