Comments by the German Winegrowers Association on the proposal

							Comments by the German Winegrowers' Association on
the proposal by the EU Commission on the reform of the
Common Wine Market

Date: 2007/07/05




A. Introduction:
The European Commission has presented its proposals for the reform of EU wine
market organisation on 4th July 2007. Since the presentation of its memorandum
"Towards a sustainable European wine sector" on 22.06.2006, it has shown great
willingness to communicate. However, the published draft by the EU Commission
concerning the reform of EU wine market organisation have shown that the
comments of the European Parliament, the Economic and Social Committee, the
Committee of the Regions, the Assembly of European Winegrowing Regions, the
European winegrowers' associations and the Forum of the German Viticultural
Industry have been ignored de facto.

The German government, federal states and the wine industry have stated
unanimously that the top priority of reform must be to improve the competitiveness of
our industry on the global wine market. However, the implementation of the published
drafts of the EU Commission would deteriorate the competitiveness of the German
viticulture industry considerably. The reason for this is the ban on sucrose and the
changes to the enrichment rules, the abolition of the current quality system, the
abolition of quality-orientated growing rules, the completely insufficient plans for
national funding frameworks.

Thus the German Winegrowers' Association would request that the German
government inform the EU Commission that it is not prepared to negotiate
reform of the EU wine market on this basis.
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B. Primary reasons for opposition:

On Title II: Support measures


On Chapter I: National support programmes

The welcome plan to make a national funding framework available to each
winegrowing member country in order to use this money to finance measures suited
to their situation from a specified range of measures, has been insufficiently
developed by the EU Commission. Therefore we completely reject this proposal.

The following measures are missing in the catalogue: Improvement of production and
marketing structures, quality management programmes, steep slope programs and
trade promotion measures, also for the internal market. In our opinion, an expansion
with the named items is essential to achieve the intended target of the reform, i.e.
improved competitiveness of the European wine sector. We consider it unacceptable
that money should be invested in green harvesting (= destruction ("plowing") of
harvested grapes)!

We reject the planned express exclusion of research programmes from the national
programmes, as research is a first key step "towards a sustainable European wine
sector".

We fully approve of investments in promotion in third-country markets as a measure
promoting exports. However, it is unclear whether, in this context, it is necessary to
oblige the member countries to reserve a minimum amount of their budget for these
measures.

We completely reject the proposal that winegrowers who receive money from the
national funding framework for restructuring/conversion of vineyards or green
harvesting should be subject to obligations of cross-compliance. For these are
investment and not production-related measures. For the rest, the additional
bureaucracy and administration costs involved would cause those affected to shy
away from participation in the programme.

We expressly reject the proposal of the EU Commission to make the main criteria for
the distribution of EU funds to the member states the previous distribution of financial
aid, i.e. the historical share. Such an approach is unfair and is particularly
disadvantageous to the interests of the Central and Eastern European states. In an
enlarged EU, the allocation of funds must be fair. It is surely not right that those who
have previously wasted the EU budget for unwise distillations should now by
awarded a bonus.
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On Chapter II: Transfer of funds

We also emphatically oppose the transfer of funds from the EC wine market
organisation to rural development, which is planned for 2009 onwards. This transfer
weakens the necessary wine-specific budget for measures to improve the
competitiveness of the winegrowing sector! The funds specified for the winegrowing
sector must remain intact, along with the current funding framework for joint wine
market organisation. Otherwise there is the risk that the funds will be used for other
rural development sectors (even completely outside the field of agriculture) and
withdrawn from the winegrowing sector.


On Title III: Regulatory measures

The German Winegrowers' Association considers the overall package of suggestions
made for the oenological practices to be wholly unacceptable. Isolated improvements
would make no difference to the status quo or the memorandum of 22.06.2006. In its
current form, the proposal would mean the end of large parts of German and Central
European winegrowing!


On Chapter II: Oenological practices

The planned ban on the use of sucrose, as specified in Annex III of the draft is also
rejected completely by the German Winegrowers' Association as is the suggestion to
reduce the approved enrichment limits for wine-growing zones A and B to 2 % vol.
The same applies to the planned reduction in the approved total alcoholic strength by
volume after enrichment for all wines in wine-growing zones A and B to the limits
currently only valid for table wines. This would lead to a scenario in which, in many
winegrowing regions of Central Europe, wine can scarcely be produced according to
legal means.

Favourable might be the regulation of Annex V, letter B, cypher 5b providing power of
authority to the member states to increase the total alcoholic content for all products
listed under N° 4 which are dedicated to the production of wines with certificate of
origin in winegrowing areas A and B. However this implies that the names of
designated winegrowing regions in Germany have to be accepted as denomination of
origin. If this is not the case, then the authority of power should be extended by
“protected geographical specifications”.

The German Winegrowers' Association would like to reiterate the fact that, despite a
single common market, there are still varying location, climactic and weather
conditions within the European Union, which are the reason for the different
production methods in the EU. The Commission ignores these facts when it suggests
a levelling out of the enrichment limits. A ban on sucrose enrichment is also
unacceptable, as the Commission has recognised chaptalisation in third countries
through bilateral agreements and would be diametrically opposed to the aim of
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increasing competitiveness and reducing production costs, if this method were to be
replaced by a costly procedure.



In this context, we must also point out that, during the membership negotiations with
the new EU member countries, just a few years ago, the Central and Eastern
European states were permitted to use sucrose - as it was common practice before
1970. It would be completely ridiculous if this method were now prohibited at short
notice.

In accordance with the current regulations (Annex V Section E No. 6 (EC) No.
1493/1999), member states can, in years when climactic conditions have been
exceptional, authorise the acidification of products in wine-growing zones C Ia and C
Ib under specific conditions. This authorisation is now to be expanded to wine-
growing zone B. We would request that in wine-growing zone A we would also be
authorised.

We fully oppose the intended expansion of the sphere of authorisation with regard to
oenological measures and practices from the Council of Ministers to the EU
Commission. The current practice of regulation has proved its worth and we cannot
see any reason why it should be changed. In addition, a strengthening of the
Commission's position would make it considerably more difficult to assert justified
national interests.

We reject the suggestion that the binding EU regulations pertaining to oenological
practices and processes should not apply to products produced for export. In many
cases, it is not clear when the wine is actually grown to which market the wine will
ultimately be sent. In addition, this proposal would cause control problems and the
risk that wines not produced according to the EU specifications will nevertheless end
up in the common market.


On Chapter III: Designations of origin and geographical indications

The conversion of the current EU wine classification system of quality and table
wines into a horizontal system of wines with designations of origin and geographical
indications and wines without geographic indications is also rejected outright by the
German Winegrowers' Association. This suggestion would have serious negative
consequences on the protection of German designations of origin. In addition, the
proposal does not envisage a continuation of the tried-and-trusted system of official
quality wine testing.

We do not see the necessity for such a extensive change of the current system. In
particular, the attempt by the Commission to achieve increased harmonisation
between the EU quality policies with international regulations, in particular the TRIPs
agreement, does not seem particularly convincing as long as the WTO member
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states continue to block the register to protect geographical indications as specified
in Article 23, Paragraph 4 of the TRIPs agreement.


According to the current proposal, only the name of the specified growing area and
the names of the vin du pays areas will be protected automatically by the new
system. All the other geographical designations, over 3000 in Germany alone, would
try to win recognition as a designation of origin or protected geographical indication in
a complex, bureaucratic registration system and also need to be included in the EU
register, an almost impossible enterprise.


On Chapter IV: Labelling

The German Winegrowers' Association completely rejects the proposal by the
Commission no longer to subject the labelling specifications for viticultural products
to specific regulations, but to regulate these in horizontal specifications in accordance
with other food products. To take the special characteristics of viticultural products
into account, it is also required that the labelling of these products be controlled in
specific regulations. These rules, which have been in existence for decades, have
proved their worth, both from the point of view of producers and consumers.

We would like to point out that the EC wine labelling law was changed only recently
after years of discussion. The last reform of wine market organisation and the
introduction of the principle of abuse, also for still wines, made a basic change to the
wine labelling law. As we see it, no new aspects are raised here which were not
taken into account during the discussions at that stage.

The winegrowing industry has now got used to the new wine labelling law and any
rapidly ordered change to this law would cause a lasting impediment to the planning
security of the growers and could not be reconciled with the declared aim of
increasing the competitiveness of European winegrowers.


On Title V: Production potential


On Chapter II: Transitional planting right regime

We completely oppose the planned total liberalisation of planting rights from
1.1.2014. This would lead to the giving up of vineyards on difficult-to-manage steep
slopes and to the corresponding expansion of flat areas. Furthermore, this would
cause a loss of identity for many winegrowing regions, who would loose their
attraction. We also fear large-scale rejection on the producer market if such growing
regulations were to be scrapped.
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In any case, we would plead for an authorisation of the member states to continue
their previous growing rules or to adjust them to guarantee quality winegrowing.


In future, it must also be ensured that viticulture only takes place in areas considered
suitable for such activities. Thus, the authorisation of the Commission, as seen in this
draft, to be able to order from 1st January 2014 that the obligations to keep a
vineyard register and to list production potential will be waived, meet with our express
disapproval.


On Chapter III: Grubbing-up scheme

The German Winegrowers' Association completely opposes the proposal to carry out
a complete grubbing-up scheme to then lift the ban on new planting and then to
totally liberalise plantings. The proposal completely ignores the fact that the
community is open and that a reduction in production potential is sure to cause
increased imports from third countries. The available funds are required to increase
the competitiveness of the EU winegrowing sector. Therefore, we reject an obligation
of member states to carry out grubbing-up schemes. At most, we can imagine that
member states offer grubbing-up schemes in the context of the national funding
framework.

We do not see any need for the grubbed-up areas then to be guaranteed direct
payments for many subsequent years as part of the Common Agricultural Policy.


In our opinion, the Cross-Compliance regulations do not apply to the grubbed-up
areas and would prevent participation in the scheme.


On immediate waiving of interventional measures

The Commission's proposal intends to withdraw the following interventional
measures immediately:

   •   Assistance for the distillation of by-products
   •   Wine and crisis distillation
   •   Assistance for private storage
   •   Grape must additions in conjunction with enrichment and the production of
       grape juice.

The German Winegrowers' Association can agree with these proposals. It is also
willing, although not itself affected, to accept the option of "phasing out" or the
transfer of these measures to the national funding framework.
C. Closing comments:
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The German Winegrowers' Association can only agree to a reform of the EU
wine market organisation, if the reform improves the competitiveness of the
German viticulture industry. With the EU Commission's published
considerations, this would not be the case. On the contrary, considerable
competitive disadvantages would be the result.

To create a basis for negotiation, the EU Commission must work a new reform
paper which takes the following viewpoints into account:


The correct approach towards a national funding framework must be expanded
considerably to take into account the measures to be executed and should also be
checked with regard to the currently planned elements.

A liberalisation of wine production methods can only be approved if sucrose remains
a legitimate method of enrichment. The restrictions with regard to the enrichment
limits must be withdrawn and the differentiation between table and quality wines must
remain intact.

Special rules for labelling and origin protection for wines must remain in place.


Abolition of the EU planting rules can only be considered if the withdrawal of the EU
regulations is coupled with the explicit authorisation of the member states, so that
they can continue their quality-orientated growing regulations with the limitation of
areas under vines, winegrowing conditions, and new and replanting rights.

The proposal to abolish intervention measures can be supported if it is uncoupled
from a ban on sucrose. The German Winegrowers' Association is prepared to
support a phasing out of intervention measures in the beneficiary countries within the
national funding framework.

The German Winegrowers' Association can only support grubbing-up schemes within
the national funding framework if the funds earmarked for this purpose (1070 million
Euros between 2009-2013) in the EU budget are allocated to the national funding
framework and the grubbing-up measures are voluntary.