News analysis: Italy preparing for blow to wine sector by likely new U.S. tariffs

Source: Xinhua| 2020-01-03 12:10:32|Editor: ZD
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ROME, Jan. 2 (Xinhua) -- Italian winemakers are worried that the United States will raise import tariffs on products they make, which could deal a big blow on Italy's already fragile economic growth prospects.

Washington threatened to levy massive tariffs on French wine last month, but it spared the Italian wine industry.

Now, with trade talks between the European Union (EU) and the United States set to conclude in January, there is speculation among industry and trade officials and in the Italian media that Italian wines could soon face tariffs of up to 50 percent, double their current level.

"Winemakers (in Italy) could be facing big problems," Lorenzo Tersi, a long-time consultant in Italy's wine sector, told Xinhua. "Unless there is a breakthrough in trade talks, we could damage our share of the market in the United States, after we worked hard for a long time to build it up to 30 percent."

If the tariffs are raised, it could have a dramatic impact on Italy's wine sales in the United States, which hit 2 billion U.S. dollars in 2018, Tersi said.

Lorenzo Bazzana, head of the economic division at Italian agricultural industry group Coldiretti, told Xinhua that it would be difficult to overestimate the importance of the U.S. market for Italian winemakers.

"It's a top market for Italian wines," Bazzana said. "The impacts could be devastating."

Tersi and Bazzana said the possible new tariffs from the United States would put downward pressure on prices of Italian wines, cutting into profits for winemakers. The extra cost would also help boost sales in the United States of wines produced outside the EU, including from Chile and Argentina, as well as those produced domestically, such as in California State.

If that happens, it would not be easy for Italian producers to reclaim market share later, analysts said.

All of that would be bad news for the Italian economy, which has grown slower than the EU as a whole since at least the start of the global economic turmoil in 2008. The Italian government forecast that the Italian economy will grow 0.6 percent in 2020, higher than this year's growth rate but below the forecast for the EU.

According to both Tersi and Bazzana, higher tariffs on Italian wine and other exports could be enough to act as a drag on the country's growth prospects.

"Anything that reduces production and pushes prices lower, or reduces exports will hurt economic growth," Tersi said.

There is still hope for the Italian wine sector, according to Confagricoltura, a national federation for the Italian agricultural sector. Confagricoltura has called on EU trade representatives to take action to help protect European exports.

"We have expressed to the European Union the importance of mobilizing adequate measures to help support sectors affected by the United States tariffs," Confagricoltura president Massimiliano Giansanti said in a statement.