Q4 Trade Update

Posted 10/06/2020

As we move into the final quarter of 2020, the wine and spirits industry continues to be confronted by the impact of the pandemic as well as trade issues. We have wrapped up our latest shipping contract updates with all of our global carriers, and we can report relative stability in the primary wine and spirits trade lanes going into the final quarter of the year. Beyond shipping, we are working closely on the following hot topics in trade:

WTO Boeing Case: The case against Boeing is in the final stages, with a draft decision on the dollar amount to be awarded given to the EU Commission and the USTR. The amount should be finalized on October 26, 2020. The EU Commission has drafted a list of items for possible retaliatory tariffs, and some US Beverage Alcohol items are on the list. WSSA and other associations have signed on to a letter pushing the U.S. and E.U. to negotiate a settlement to eliminate the tariffs on beverage alcohol, both in the USA and on the E.U. side.

WTO Airbus Case: As noted previously, the last review of the tariffs on E.U. products resulted in a “no-change” status on beverage alcohol. The next review is scheduled for February 2021. The hope is that the Boeing situation may get the parties back to the table.

CBMA: WSSA participated in a joint association call with Chris Arneson, Senior Tax Policy Advisor, with the U.S. Senate Finance Committee to discuss movement on extension/permanence of the Craft Beverage Modernization Act. At this point, the most likely outcome is a vote on a tax extender bill during the lame duck session post-election. It is extremely difficult to get movement on any legislation right now, as proven out by the stalled efforts on a new COVID-19 relief package. Sen. McConnell is the key to getting any bills to the floor, and for our Kentucky members, we encourage you to contact the Senator’s office to encourage a vote on CBMA. There is plenty of bi-partisan support for CBMA, and if it comes to a vote, passage is very likely. Should you need any information on how to make your voice heard on this important issue, please let us know.   

BREXIT: The U.S. and U.K. are continuing to work on a trade agreement, but this agreement will be contingent on what the U.K. and E.U. come up with. In terms of beverage alcohol, the key objectives are to eliminate retaliatory tariffs and expand the list of “distinctive” products to include more American items, such as American Rye Whiskey. The deadline to reach this new agreement is set for April 1, 2021. There are many other implications of BREXIT in terms of trade, such as labeling requirements. Currently, if you sell to the E.U., there is a common labeling requirement. With the departure of the U.K., products shipping to the U.K. will require a different label. We will be sending out a more detailed message on BREXIT issues, but please feel free to contact us should you have any immediate concerns. Additionally, please email us if you are interested in a webinar on BREXIT.

FDA UFI Requirement: We have been sending reminders about the upcoming bi-annual requirement for FDA registration. We have received questions in regards to the new requirement to provide a Unique Facility Identifier (UFI). As of now, the DUNS number is the number that meets the Agency needs and must now be included in FDA registrations. Should you have any questions on this new requirement, or how to obtain a DUNS number, please let us know.

Government Funding: Congress has passed a continuing resolution to fund the Federal Government, but only up to December 11, 2020. Thus, funding will become an issue post-election, with the option to issue another CR to get through to the installation of the new administration and members of Congress in January or potentially passing a budget bill for FY 2021. A lot will depend on the results of the election. 

We will be expanding on many of these topics in our upcoming newsletter and will keep you posted via email as all of these issues develop over the next few months.