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EU Braces for Marathon Talks on Draining Wine Lakes

Source: Reuters
14/12/2007

Brussels, Dec 14 - Europe's infamous wine "lakes" may become little more than a nasty hangover from the past when the EU shakes up its subsidy-heavy wine policy to drain an unwanted surplus and fend off competition from New World rivals.

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However, it may take a long time before ministers get their traditional glass of champagne to toast a reform agreement.

Although experts from the EU's 27 countries have spent months ironing out the trickier technical points, next week's meeting starting on Monday still looks set to be a marathon negotiation that may drag through the night.

Home to some of the most famous wines on the planet, like Burgundy, Chianti and Rioja, the European Union is also the world's top producer, consumer, importer and exporter of wine.

But not only does Europe produce too much wine that is not being drunk, it then pays out public cash for distilling the surplus into industrial alcohol or biofuels.

In recent years, it has lost part of its traditional export markets to cheaper wines from Australia, Chile and also the United States.

EU Agriculture Commissioner Mariann Fischer Boel is keen to change all this and wants to offer big cash incentives to producers to dig up their vines over the next three years.

Over many months, her ambitious plan has boiled down into three core points: a proposal to allow a free-for-all system for planting new vines, banning sugar to boost alcohol content and the subsidies to be handed out to each country.

Perhaps the trickiest of these will be the proposed sugar ban, where the EU is divided along broad north-south lines.

Sugar is used widely in northern and central European winemaking to boost alcohol content but banned in sunnier Mediterranean regions like Italy, Spain and southern France.

France, the world's top winemaker, puts sugar into wines in some northern vine areas, such as Champagne. Around 20 of the EU's 27 countries oppose the idea of a sugar ban, so some kind of compromise is inevitable if a reform deal is to be struck.

Enriching wine with sugar costs a third as much as using concentrated grape must which is subsidised by the EU to avoid unequal competition.

"The pro-sugar lobby is so unmoveable that the ban on sugar will not go through. So the Commission may think it doesn't have to abolish (aid for) grape must immediately," one diplomat said.

CARROT AND STICK

Many earlier problem areas have been smoothed over, such as a carrot-and-stick plan to encourage winemakers to dig up vines. Fischer Boel has yielded ground here, reducing the target area to be dug up and the scheme's length from five years to three.

But two rather large obstacles remain to a final deal.

The first is an idea to extend a ban on new vine plantings until 2013 and then scrap it. Vine planting is strictly controlled in the EU and, with very few exceptions, no new plantings are allowed until mid-2010.

That idea has angered Europe's top-quality winemakers, who say that after 2013 their areas risk being swamped with new vines and falling prices.

Some countries want to keep the ban for longer than 2013 and others don't want to see it end at all.

The last problem is, as ever over how much cash to hand out and to whom. Under the reform plan, EU countries would be given "national envelopes", hundreds of millions of euros based on their wine production over a certain period in the past.



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