EU Averts Wine War With U.S. for Now

Seeking to avoid a trade war over wine, the European Commission has decided to extend its current arrangement allowing imports of U.S. wine for one year and restart stalled negotiations next month, said a spokeswoman for the European Commission.

The decision vanquishes growing concern about a possible disruption in the $2-billion wine trade between the United States and Europe.

But it does not resolve the disagreements over the use of European place names on U.S. wine that derailed the trade negotiations last month. A last-minute proposal by American negotiators that the Europeans say would give U.S. wine companies carte blanche to use such geographic names as Champagne, Chianti, Madeira, Port and Sherry remains unacceptable, according to European Commission sources.

Under a long-running arrangement between the European Commission and the United States set to expire Dec. 31, Europe has annually waived its highly specific rules for winemaking to allow the importation of U.S. wine. Europe has never formally accepted U.S. methods for making wine that differ from its own.

The European Commission considered allowing that trade agreement to lapse -- a move that could have closed European markets to U.S. wine at least temporarily -- after the U.S. negotiators refused to withdraw their proposal on place names.

The American wine industry, which has been the driving force behind the U.S. position at the negotiating table, insists that companies should be free to continue to use European place names on their wine labels.

The Europeans have said they would allow existing U.S. trademarks some protection, but they want to phase out the use of their grape-growing regions as descriptors on U.S. wine labels.

“It’s in no party’s best interest to disrupt trade,” said Gladys Horiuchi, a spokeswoman for the San Francisco-based Wine Institute, which represents California’s wine industry. The institute had not received formal notice of the extension of the current trade arrangement, she said.

Negotiators for the United States declined to comment.

The European Union sells $1.7 billion a year worth of wine in the U.S. market, while American winemakers export $306 million in wine to Europe.

The battle over Americans’ use of European place names dates back a generation, and this latest round of bilateral negotiations spans five years, with meetings alternating between Washington and Brussels and, recently, daily teleconferences.

Both sides believed that an agreement was imminent before the U.S. trade representative’s office put forward the proposal protecting U.S. wine companies’ usage of European appellations.