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Wine farmers fear free trade

Staff Reporter

The exclusion of wine products from the EU free trade agreement negotiations has had wine farmers calling for tariff protection. Lynda Loxton reports

South African wines have taken the world by storm, but the wine industry is growing restive about the possible unfair competition it could face from imports.

This week, KWV chairman Lourens Jonker told the co-operative’s annual meeting in Paarl he was particularly concerned about competition from highly subsidised European wine producers, who might be tempted to dump their wine on the South African market to the detriment of the local industry.

But President Nelson Mandela, who attended the end of the meeting to receive a scroll of honour from KWV for his role in lifting sanctions, warned against any desire for tariff protection, saying that “we must at all times ensure that South African business is internationally competitive out of merit and not because of protection”.

Jonker said the South African wine industry was “definitely marginalised” because of the government assistance that European Union wine farmers received. He added that the government and the wine industry “would have to plan strategies to capture world markets very carefully and ensure that, on home ground, fair trading rules apply”.

Earlier, during KWV’s annual meeting, Jonker had gone further and said that KWV was preparing to “convince the authorities that a well-considered, responsible and conservative tariff structure is essential”.

Mandela said that to improve the competitiveness of the wine industry, the government was also reviewing all its regulations, controls, licensing and competition.

“The question to be answered is: what changes are needed in our new circumstances to create a climate, without protection or special privileges, for substantial growth. For the ultimate aim can never be to run down a national asset,” he said.

Jonker told the KWV annual meeting that the exclusion of most wine products from the negotiations on a free trade agreement with the EU was “disappointing and KWV does not accept it readily”.

KWV’s wine exports have risen from 2,5-million cases in 1993 to 7,7-million cases in 1995 and the wine industry plans to increase export earnings to R1,1-billion by the year 2000 from the present R300-million.

Jonker said the 1996 crop just picked was the largest in the country’s history at one billion litres, or 6,6% larger than the 1995 crop.

He said the depreciation of the rand would benefit exports, but could have a negative impact on production costs. South African wines would, however, remain competitive “with a favourable quality-price ratio”.

Smaller wine crops in Italy and Spain, in particular, had also improved prices.

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