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U.S. Wineries Push for Trade Pact With Korea

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 address. “If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.”

Korea’s top diplomat in Washington, a self-described wine lover, is also making his pitch for a carve-out for American winemakers in a new trade proposal with his country. In a speech two weeks ago to the Napa Valley Vintners Association, Ambassador Han Duk-soo said a new deal for winemakers would not only be an opportunity for American companies, but a chance to stock his cellar.

“I am absolutely certain that the [Korean free trade agreement] will create jobs, stimulate economic growth and strengthen the important partnership our two countries enjoy — a partnership based on security and shared values,” Han said in prepared remarks. “Let me add that I have a personal interest in this. Eventually, my ambassadorship will end, and I’ll go home to Korea. When I do, I will look forward to a nice, affordable California Cabernet. I’m counting on you to help make that possible.”

Public Citizen’s Global Trade Watch, which opposes the current trade agreement, noted it does not have any particular issues with the wine producers’ deal. The organization’s research director, Todd Tucker, said in an interview that “these kinds of narrow industry interests need to be balanced against the need for President Obama to deliver on his campaign commitments.”

“We don’t have any problems with Koreans buying our wine,” he said.

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