The post-Brexit landscape is already starting to pay dividends for Australian wine producers, with the removal of import tariffs for wine announced last month under our Free Trade Agreement; and further good news announced in recent weeks of the removal of VI-1 Certificate requirements.
Australian Wine producers woke to the great news on 25 July 2021 as the UK announced it would cut red tape for all importers by removing the burdensome requirement for VI-1 certificates on all imports of wine into Great Britain.
VI-1 Certificates are an import certificate required for wines exported to the EU and the requirements was rolled over into UK regulations following Brexit. The cost of VI-1 certificates to the Australian wine industry in 2020 has been estimated at $50Million and their removal has been a key aspect of our and other countries Free Trade Agreement negotiations with the UK.
These changes are not immediate, as UK law will need to be amended before these changes can be adopted. We understand that the changes are expected to come into force from 1 October 2021.
Carbon tax for imports, or carbon border adjustments, have had quite a bit of international attention of late. In late July 2021, the European Commission released its much awaited proposal for its plans for Carbon Border Adjustment Mechanism, which supposedly provides a clear path toward reaching the EUs ambitious target of a 55% reduction in carbon emissions by 2030. At this stage, the proposal will only apply to steel, iron, fertiliser, cement and electricity, however it has been made clear that the EU intends to continue to evaluate its effectiveness and is likely to extend its scope to more products and services.
While this release was touted as providing greater clarity, there remains many questions and uncertainties around the practical implications for imported products into the EU. Details such as how the pricing works, and how any carbon price within the EU Emissions Trading System (ETS) can dovetail with systems elsewhere, will require further clarification.
A much less publicised form of carbon taxation was also announced by the United States (US) as the US Democrats outlined a budget proposal that will include a ‘polluter import fee’. Like the EU plan, it too lacked detail but appeared to mainly focus on energy.
While agriculture and more specifically wine are not yet the target for these type of schemes, as they are developed and expanded, there is a genuine risk they will have implications for our sector. Countries like Australia, that are considered to not be pulling their weight in efforts to address their carbon emissions, will be left behind and vulnerable to these type of import taxes into the future.
As noted in our June update Australian Grape & Wine is engaged in an ongoing action to protect Australian producers rights to continue to use the grape variety prosecco on labels of product sold in Singapore.
Recent media attention surrounding the outcome of our Singapore Prosecco case have prompted Australian Grape & Wine to respond. The article clarifying some facts of decision was released by the Daily Wine News in late July and can be found here.