Economic Sustainability

FIVS plays an important role in addressing emerging trade impediments and in seeking to open up markets by advocating for the dismantling of unjustified trade barriers.

Economic Sustainability Working Group – Working Platform

FIVS Working Group Co-Chairs

Nicola Tinelli

Nicola Tinelli is the Head of Institutional Affairs at Unione Italiana Vini, the main trade association representing Italian wine companies at national and international level.

Jamie Ferman

Jamie Ferman is the Senior Director of International Public Policy at Wine Institute and is responsible for removing barriers to trade for U.S. wine exports.

FIVS Economic Sustainability Initiatives

FIVS-22

FIVS-22 is a long-standing customs initiative where FIVS has regularly stressed the need for logical and understandable rules in interventions with national governments and international organisations. For example, FIVS offered one of the major detailed analyses describing considerations to be taken into account in properly classifying alcohol beverage products subjected to novel production techniques.

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There has been a long-standing debate over the proper Customs classification of certain types of alcohol beverages within the World Customs Organisation’s (WCO) approach to classifying products — the Harmonised System (HS). HS Chapter 22 covers the categorisation of alcohol beverages. HS Chapter 22 was set up so that fermented alcohol beverages, whether subject to further filtration processes or supplemented with alcohol, retained their customs classifications as fermented products. An emerging question has revolved around whether the “essential character” of fermented products has been so altered in the production process that they should be reclassified as “distilled.” This question has led to inconsistent classifications of the same product by different countries, as well as by European Union member states which are in the same customs territory. The impetus for reclassification has had its roots in the fact that fiscal treatment of alcohol beverage products in the EU and other countries is based on customs classifications; fiscal rates for distilled products are normally higher than those for fermented ones. Despite some inconsistent classification decisions, the current situation based on a bright line distinction between distilled and fermented products has historically proven workable for the trade. The reclassification by some countries of fermented products as distilled under the theory that they were akin to distilled has however blurred the generally clear demarcation between fermented and distilled products.

Recent Developments

At its 2010 Autumn meeting, the WCO’s Harmonised System Committee (HSC) considered the proper classification of three “test” products and possible revisions to relevant Explanatory Notes in Chapter 22. In 2011, the HSC considered and classified certain fermented products that had undergone purification techniques (e.g., reverse osmosis, ultra-filtration, etc.) under headings that had hitherto been exclusively reserved for distilled beverages. The following industry report, including some particular annexes, describes the high degree of uncertainty such re-classifications would (and now will) have for the trade. This legal examination suggests how these decisions are inconsistent with the long-standing architecture of this customs chapter. The legal analysis (both in summary and complete forms) is still germane, despite having been written before the HSC classification determinations in 2011. In the Spring of 2012, the HSC made changes to the HS definition of “ethyl alcohol” in order to bring its explanatory notes in line with its classification decisions of the test products.

Contribution to Economies

FIVS members, partners, and others have conducted studies to demonstrate how different segments of the wine, spirits, and beer sectors contribute to national economies. FIVS member Wine Australia worked on a report in 2019 exploring wine’s economic impact on Australia. The report calculated that wine contributes $45.5 billion to Australia’s economy. Similarly, Vinos de Chile found that the wine sector made up 0.5% of Chile’s GDP and brought in $205 million in tax revenue in 2019. A study completed in South Africa in 2021 determined that the wine sector makes up 1.1% of that country’s GDP and provides 270,000 jobs. A 2022 Oxford Economics study showed that the global beer sector supports 23 million workers, or one in every 110 jobs around the world. In the United States in 2018, alcohol beverages made up 1.65% of GDP, brought in $363.33 billion, and supported more than 4.4 million jobs. These findings show that the wine, spirits, and beer sectors are an integral part of many national economies. Further information on alcohol beverages’ economic contributions can be found in the reports below.