The Miami Herald / July 18, 1995
By Larry Luxner
WASHINGTON -- Bringing Chile into NAFTA might be great for the Chileans, but could spell disaster for the U.S. wine industry, say lobbyists who are scrambling to exempt wine from any possible trade pact between Washington and Santiago.
"There are absolutely no opportunities for the American wine industry in Chile," argues Bob Hartzell, president of the California Wine Grape Growers Association. "Frankly, the administration can do all the negotiating it wants, but we didn't find any strong feeling among members of Congress to give the president fast-track authority."
Adds Bob Kalik, president of the American Vintners Association, whose organization represents 450 wineries in 38 states, or close to 50% of all wine produced in the United States: "There isn't going to be one additional drop of American wine sold in Chile as a result of the free trade agreement."
In an April 28 letter to the Office of the U.S. Trade Representative, the San Francisco-based Wine Institute argued that "including wine in a free-trade agreement with Chile would be highly asymmetrical in Chile's favor. Given the dynamics, the United States wine industry would bear the extreme adverse consequences, while Chilean wine producers would enjoy the benefits."
The Wine Institute points out that between 1981 and 1992, Chile's wine exports grew 17-fold. They now stand at more than $120 million annually, with about 25% of that going to the United States. And from 1991 to 1993, Chile's wine-grape acreage increased from 146,000 to 173,000 acres -- while California acreage dropped over the same period.
Lobbyists also point out that land in Chile's best grape-growing regions costs between $750 and $4,000 per acre, compared to $25,000 to $40,000 for a comparable acre of vineyard in California. Finally, labor costs in Chile are vastly lower than in the United States ($8 a day with no benefits in Chile, compared to $8-16 an hour with benefits in California), as are production costs. And Chilean vintners don't have to content with phylloxera and Pierce's Disease, as do their California counterparts.
That state's efforts to exempt wine from the current U.S.-Chile trade talks do have a precedent. In 1993, lobbyists representing the U.S. Commonwealth of Puerto Rico successfully kept canned tuna off the list of Mexican products that could enter the United States duty-free under NAFTA. The exemption, which doesn't permit duty-free Mexican tuna imports until 2009, may have saved as many as 5,000 cannery jobs in Puerto Rico.
The Puerto Rican tuna business, however, pales in comparison to wine production.
"Our estimates show that over 600,000 jobs depend upon the U.S. wine industry," De Luca said, adding that 90% of those jobs are in California. "The time has come for the U.S. wine industry to stop being the sacrificial lamb of international trade negotiations."