Richness of California wine is just a few days away

A.M. Costa Rica: Your English language daily news source

Away goes that restrictive tariff

Richness of California wine is just a few days away








By the A.M. Costa Rica staff

Ladies and gentlemen, start your corkscrews.

It is time to begin the countdown to the day when Costa Rica drops its 40 percent import tariff on U.S. wines. And the California wine industry is
standing by to fill the demand.

That day may come sometime in September when the United States certifies that Costa Rica has met its part of the bargain by passing a baker's dozen of legal changes that brings local law into conformity with what was promised under the free trade treaty. There are just a few loose ends to tie up.

Joseph Rollo is an expert on U.S. wine exports. He is director of the Wine Institute
wine glass
International Department in San Francisco, California. Rollo confirmed Monday that under the free trade agreement the tariff here on bottled wine will drop to zero.

In 2007 Costa Rica imported $683,000 worth of U.S. wine, already a 22 percent increase from the previous year, according to statistics from the U.S. Department of Commerce via the wine institute.

"The long-term sales trend continues to be positive. Over the last decade, U.S. and California wine exports increased 77 percent in value and were shipped to 125 countries," said Rollo, in a recent release.

Rollo said in an e-mail that he didn't expect a huge surge in growth, but other indicators would point to the contrary. “I would guess that Chile and, perhaps Argentina, also have FTAs with Costa Rica so our duty reduction may now allow us to be competitive,” said Rollo.

It is true that most wine here comes from Chile, which has a trade agreement dating to 2002, but many wine connoisseurs, especially North

Americans and Europeans are craving something better but not budget-busting.

And the producers are ready to respond. Less than a year ago, representatives from 11 Lodi, California, wineries came to the capital to show off their products. The group was anxious for the treaty to be ratified.

California is the major wine producing area in the United States, although other states have commercial production.

Basic economics says that a more reasonable price for a product will result in greater demand that could translate into greater variety at the store. Most U.S. wine now is low end, although specialty wine shops still offer top-shelf bottles at top-shelf prices.

The tariffs on other wine categories will phase out to zero either in 5 or 15 years, according to the treaty's stipulations. That would include bulk shipments. Some wine producers ship in bulk to save the costs of shipping the bottle weight. These shipments are sent in tanks and bottled overseas. Other producers may ship a powder that can be reconstituted into wine at the destination. Several types of Italian wine were on sale several years ago at PriceSmart that had been liquefied with local water.

U.S. wine exports, reached a record high of $951 million in 2007, an 8.6 percent jump from the previous year, according to the wine institute. Volume shipments in 2007 increased 12 percent to 453 million liters, compared to 2006, said the institute release.

Currently about half of U.S. wine exports are shipped to the European Union, accounting for $474 million, followed by Canada, $234 million; Japan, $63 million; Switzerland, $26 million; and Mexico, $24 million, reported the institute.

In addition to wine about 80 percent of other U.S. exports will be duty-free when the treaty goes into effect. Other products have reducing tariffs, some for as long as 15 years.