U.S., EU Settle Wine Name Dispute

The United States and the European Union have settled a long-running dispute over wine names and regulation, a leading trade group said Wednesday.

Under an agreement that the U.S. trade representative is expected to announce today, domestic vintners, including those in California’s $15-billion-a-year wine industry, would have continued access to European Union countries, which buy 2 of every 3 bottles of wine exported from the United States.

At the same time, the deal would bar U.S. winemakers from using famous names such as Champagne, Burgundy and Chablis on new wine brands.

“This agreement promises U.S. wineries a level of certainty that our wines will have long-term access to European markets, such as the United Kingdom, where consumers have embraced wines from California and other states,” said Robert Koch, chief executive of the Wine Institute, a San Francisco-based trade group for California’s industry.

U.S. wine exports, 95% from California, surged 28% in 2004 to $794 million. Still, the state produces only 6% of the world’s wine, leaving significant room for growth, especially in Europe, the institute said.

European producers, which exported $2.3 billion of wine to the United States last year, are loath to enter a trade war because Americans are on course to become the world’s largest wine consumers by 2008.

Because of differing climates and production methods in the U.S. and Europe, California winemakers have faced a series of regulatory hurdles in their export efforts.

With the new pact, however, the EU would grant full recognition of U.S. winemaking practices that previously required renewed approvals or “derogations,” the Wine Institute said.

Most of the practices to be covered by the new agreement are currently permitted in Europe for wines from countries, including Australia and South Africa, that have trade agreements with the European Union, the trade group said.

The Europeans also agreed to recognize the names of individual states, counties and designated American viticultural areas such as Napa on wine labels.

In return, the pact would settle a long dispute over the American custom of using European place names on domestic wines, a practice that is more than a century old.

The agreement would allow for the continued use of such terms on existing brands but not new brands.

Eric Wente, chairman of Wente Vineyards of Livermore, Calif., as well as the Wine Institute, called the deal “a welcome first step in leveling the playing field for our industry.”