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EU acts to trim surfeit of wine

Farmers will receive compensation for digging up vineyards to curb overproduction.

December 20, 2007|From the Associated Press

BRUSSELS — The European Union approved major changes Wednesday to rules governing the wine industry. The regulations are designed to counter withering competition from producers in places such as California, Australia and Chile.

The EU is trying to curtail overproduction and subsidies and instill vintners with a fresh drive to reclaim the continent's dominant status as a global wine exporter, officials said.

France and Italy, which have resisted attempts to overhaul the industry, agreed to new rules in exchange for an extended transition period and some concessions on state support.

Three days of intense bartering capped two years of often bitter negotiations in which the EU head office sought a far-reaching liberalization of a sector that has long propped up unprofitable vintners.

Under new rules that will take effect next year, farmers will be compensated for digging up about 5% of vineyards in a bid to curb overproduction, half the amount that was proposed under an initial plan drawn up by EU Farm Commissioner Mariann Fischer Boel.

Over the last 10 years, the French wine industry has been plagued by declining consumption at home, coupled with dwindling demand for French wine abroad.

Wines from New World countries such as Australia, Chile and the United States outpaced French exports for the first time in 2003.

Sales in France -- which still account for about two-thirds of national wine production -- have been hurt by anti-alcohol campaigns and tougher drunk driving laws.

Chronic overproduction has compounded the problem, which has led to surplus wine being boiled down to pure alcohol. In 2005, quality wines joined the ranks of cheap table wines that are distilled.

Fischer Boel sought to eliminate 500 million euros ($720 million) in funding that is used to turn unwanted wine into industrial alcohol and other methods to dispose of excess product. The compromise package would allow for a longer transition period and continue some funding for distillation.

Plans to ban the addition of sugar to wine, which increases alcohol content and is done in northern climes to compensate for the lack of sunshine, were scrapped altogether because France, Germany, Austria and several Central European nations staunchly opposed it.

Rules that would allow profitable wine producers to expand their holdings at will to compete with New World multinationals were delayed until after 2013.

Fischer Boel said the changes were necessary to maintain Europe's status as a producer of many of the world's best wines.

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