Cheers! Trade Agreement Ensures Wine Will Flow

The wine industries of China and the European Union (EU) have reached an agreement which will open the door to increased import of European wine into China.  The European Committee of Wine Companies (CEEV) and the Chinese Alcohol Drinks Association (CADA) opened a “Business to Business” (B2B) dialogue between the competing industries to come to an agreement which benefits all parties.  The terms of the agreement are such that China withdraws its anti-dumping and anti-subsidy complaints against the EU and in return the EU will provide technical assistance to Chinese winemakers.  China hopes to improve its domestic winemaking ability, and will be able to capitalize on the superior winemaking knowledge out of Europe through training on quality control, mechanization techniques, and even wine tastings.  The EU, on the other hand, will be able to take advantage of the rapidly-growing market for wine in China; as part of the agreement, the Chinese wine industry will organize tastings of EU wine.

“Dumping” is a technique sometimes used in international commercial transactions; essentially, this is when a company or industry from one nation exports its products to another nation, where it then sells the products at below-market rate or, sometimes, at a rate below what it costs the company to produce the product.  It is often done to squeeze the market, thereby driving out domestic competition.  Once the competition is eliminated, the prices are raised.  Countries may enact anti-dumping regulations, which may including protectionist tariffs that can exceed 100 percent.  Anti-subsidy, on the other hand, are similar protectionist measures which are meant to combat domestic subsidies given to an industry, which result in an unfair advantage when the product is sold internationally.

Who do you think came out better from this agreement: China or the EU?  What would have been the result had an agreement not been reached and the dispute gone to the WTO?  Will Chinese producers be hurt having to compete with European wines?

Source:  European Commission

Photo Source:  Jing Daily

3 comments

  1. I think this is good news for both countries. Free trade is always a good thing because it will help grow each country’s economy. I think this deal was fairly equal. The EU will benefit because of the increased consumption of wine in China. It will help wine develop in a new market as it has in the United States. For China, this will also be helpful because they are receiving a good which the general public wants and it will spur more interest and thus consumption of wine. It will produce a new market in China which will create more jobs and add money to the Chinese economy. China will also benefit from European expertise on wine-making. The best part about this deal is that the complaints made against the EU by the Chinese will be lifted. This will help mend the two country’s relationships and help encourage more trade between them in the future.

  2. I wonder if we will soon live in a world where Chinese wine is considered to be a delicacy? I think both sides of this negotiation are going to benefit from this agreement. China has become a huge importer of wine, which has drastically reduced wine stockpiles around the planet. The question is really whether the wine that China will produce will be of the same quality of its European counterparts? While it does take a significant amount of technical ability to turn grapes into wine, it is also an art, requiring patience and good weather conditions. China is stereotyped as a market known for cheap labor and even cheaper goods, but will these characteristics carry over to the wine production? Or will they make sure to keep their product top shelf? Also, does China even have the proper climate to grow the perfect grapes?

  3. I suppose only time will tell whether China will become a “wine powerhouse.” Certainly countries outside of Europe (America, for example) have had significant exposure and training in the field of wine-making, and yet European wines are still considered the finest. Much of this is largely based on stereotypes. Wine is a product which is steeped in tradition, much to the dismay of winemakers on any continent that is not Europe. In the short term, it is difficult to image China going head-to-head with Europe in terms of luxury wines. As Mr. Pifer mentions, different climate produce different results; Chinese winemakers will have to learn how to make wine based on their climate restraints. Who knows, this could result in a new and unique wine variety.

    But I think what I love most about this story, is how it is a perfect example of the power of negotiation. Had this gone to a tribunal, not only would both sides have likely walked away disappointed, but they probably would have severely damaged their relationship, due to the contentious nature of dispute resolution. Instead, both sides worked together and got value out of the agreement.

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