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RollCall Wine

RollCall Wine

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U.S. Wineries Push for Trade Pact With Korea
Sept. 15, 2010
By Matthew Murray
Roll Call Staff

After staying on the sidelines in recent years, the domestic wine industry is preparing for an
autumn lobbying push that will try to build support among Members for a revised free-trade deal
with South Korea.

“Wine is really hip there, and Koreans drink a lot — right there with the Russians,” said Eric Pope,
an emerging markets director with the Wine Institute, which represents California producers.

But standing between thirsty Korean consumers and big domestic winemakers such as Robert
Mondavi and Kenwood is a 15 percent tax levied by the key Asian ally on American-made
vintages. With President Barack Obama expected to unveil a new trade proposal when he goes
to South Korea for a G-20 meeting this fall, Pope said his group is readying an advocacy and
messaging campaign that will highlight the economic benefits to domestic firms, if negotiators
agree to abolish the import duty.

According to statistics provided by Pope’s group, Korea is the 14th biggest wine market for
American producers, a downturn from three years ago. In 2007, the Asian country was the No. 8
consumer of American wine, importing roughly $17 million worth of red and white varieties.

The global economic slowdown has also apparently affected the cost-conscious palettes of
Korean wine-lovers, who had purchased $5.4 million worth of U.S. wines as of mid-2010; they are
opting instead for cheaper European and Chilean brands, Pope said.

“For U.S. producers, it’s a slam dunk,” he said. “It’s a good market structure and the [Korean]
market is very receptive.”

The Wine Institute’s Nancy Light said California producers hold a 95 percent share of overall U.S.
wine exports, adding that sales this year are up 32 percent. Still, despite the apparent strong
demand, domestic wineries are at a disadvantage, she said.

“Passage of the Korean Free Trade Agreement by Congress would put us on par with other wine-
producing nations, such as Australia and Chile, that enjoy the benefits of trade agreements with
Korea,” she wrote in an e-mail.

An aide to Rep. George Radanovich, a co-chairman of the Congressional Wine Caucus, said his
boss would like U.S. producers to have the same market benefits as Chilean vineyards.
“George’s interest would be in making sure there’s a level playing field for wine producers from
California,” said Ted Maness, the California Republican’s chief of staff.

The Wine Institute is holding its fire until Obama meets with world leaders this fall, when he is
expected to unveil a new proposal designed to pass Congressional muster. Earlier this summer,
Obama told a G-20 meeting in Toronto that he wanted to finalize a pending free-trade agreement
by the time he visits the Asian country, telling the gathering of the world’s largest economies that
“this will create new jobs and opportunity for people in both our countries.”

While it is unlikely he had the U.S. wine industry specifically in mind, Obama also urged
negotiators to revisit not only the Korean proposal, but also pending free-trade agreements with
Colombia and Panama. Those deals have been approved in recent years by government officials
but await ratification by Members.

“We have to seek new markets aggressively, just as our competitors are,” Obama said in his

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