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Wine Institute discusses top issues with California legislators, including the extension of the Craft Beverage Modernization and Tax Reform Act

by Kerana Todorov
December 11, 2018

The future of the wine excise tax reform approved late 2017, tariffs on US wine exports, and Brexit are among the issues on the Wine Institute’s to-do list, according to a recent hearing focusing on the wine industry before state legislators.

Wine Institute’s top priority is to extend the provisions of the Craft Beverage Modernization and Tax Reform Act, Tim Schmelzer, vice president of California state relations for the trade association, told legislators on Nov. 29 at a hearing in San Diego.

Schmelzer and other industry members spoke on a variety of topics before a joint hearing of the Assembly Select Committee on Wine and Senate Select Committee on California’s Wine Industry.

The provisions included in the tax reform package President Trump signed in December 2017 sunset in 2019.

The Wine Institute is pushing for the provisions of the Craft Beverage Modernization and Tax Reform Act to become permanent law.

The Craft Beverage Modernization and Tax Reform Act passed in 2017 was the first wine tax cut in 80 years.

There is broad bipartisan support for this, Schmelzer told the legislators on Nov. 29, referring to extending the law. Congress now has to find the “right vehicle and opportunity” to make it happen, he said, referring to a bill to pass the tax cut permanently.

A goal is to have every member of the California delegation sign on, according to Schmelzer. He urged the state legislators to seek support from their federally elected officials. US Rep. Mike Thompson, D-St. Helena, supported passage of the Craft Beverage Modernization and Tax Reform Act.

Both U.S. Reps Nancy Pelosi, D-San Francisco, may be the next Speaker of the House while Kevin McCarthy, R-Bakersfield, will be Minority Leader. “Both being from California, that can’t hurt our chances,” he added.

The Wine Institute is also working on an extension of the Farm Bill, which includes a number of provision to support the wine industry. There is a “decent” chance the bill could be extended another five years, Schmelzer said. The package includes money for program to fund US wine exports.

Funding has dwindled over the years. “We’re going to consider a win this year if we get $8 (million),” he said.

Schmelzer also addressed tariffs imposed on US wines in China. “The China tariffs have been devastating,” Schmelzer said. “And they’re going to get worse before they get better.”

Tariffs on US wines entering China are expected to increase again - to nearly 100 percent.

On a brighter note, the Wine Institute has welcomed the United States – Mexico-Canada Agreement. The agreement was signed on Nov. 30, the day after the San Diego hearing.

The US wine industry had been fighting with British Columbia over what it considered unfair practices – the inability to place US wines on grocery store shelves in the Canadian province.

Schmelzer said one key feature for the wine industry is an agreement to change that practice. Access to the Canadian market, the number one trade partner for the US wine industry, will be improved, he said.

California wine exports may have an opportunity from the United Kingdom’s decision to leave the European community, according to the Wine Institute.

The European Union has been difficult to negotiate with, Schmelzer said. The countries have practices in place to protect their industries. Wine Institute hopes better trade arrangements can be negotiated the United Kingdom directly once Brexit is ratified, according to Schmelzer.

The terms under which the United Kingdom will leave the European Union remain unclear. British Prime Minister Theresa May on Monday delayed a vote in Parliament on the terms of Brexit, according to news report.

The Wine Institute supports the United States’ decision to begin new trade negotiations with Japan, the fourth biggest market for US wine exports. The Wine Institute wants to push “hard” to have tariffs imposed on US wine eliminated so that the US can be on “equal footing” with its competitors in that important market, Schmelzer said.

Other issues on Wine Institute’s agenda include new waste discharge regulations for the wine industry in California; and the ramification of a requirement imposed on a wine producer in Santa Barbara County to install an emission control device on a fermentation tanks.

No action was taken on Nov. 29. Sen. Bill Dodd, D-Napa, and Assemblywoman Cecilia Aguiar-Curry, D-Winters, attended along with state Sen. Mike McGuire, D-Healdsburg; Assemblyman Todd Gloria, D-San Diego; and Assemblywoman Marie Waldron, R-Escondido. Waldron is also the new Republican leader in the state Assembly. Aguiar-Curry co-chairs the Assembly select committee on Wine while Dodd and McGuire co-chair the Senate select committee on California’s wine industry.

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