Negotiating EU-Australian Engagement: the 1994 and 2008 Wine Trade Agreements

Lachlan McKenzie PhD Candidate

School of Social and Political SciencesThe University of Melbourne

The 1994 and 2008 Wine Trade Agreements

• 1994 and 2008, two agreements, one process.

• Concerning geographical indicators (GIs), traditional expressions (TEs) and winemaking practices and labelling.

• Driven by bargaining leverage and respective relationship to industry.

Getting to the negotiation table• EU share of global wine

exports was 58% in the early 1990s

• An industry of significant cultural and economic importance to many member states.

• Europe's strong and coordinated wine lobbies perceived protection of their GIs and TEs as essential to their success.

• No domestic (Australian) legal recourse for the French industry.

• The EU was compelled to negotiate an agreement to protect wine GIs and set a precedent.

Objectives and concessions

Pre-negotiation objectives Pre-negotiation point willing concession to concede

EU • Gain protection of important GIs and TEs.

• Establish a precedent for future negotiations with New World wine producers.

• Recognition of Australian wine-labelling and winemaking practices (and therein unrestricted market access).

Australia • Stop EU restriction on Australian wine exports to Europe.

• Recognition of some European wine GIs and TEs, but faced opposition from industry.

“The French were so offended with us using Champagne, and the denigration of their brand, that it would have overcome any reservations they would have had.” – Australian negotiator

1. Constraints on bargaining: the EU, a hard bargainer

• “the Europeans were the slow ones to come to the table, because they had sixteen people (member states) they had to get to the table”. – Australian negotiator

• Another Australian negotiator described the negotiations as “pedantic, we couldn’t get anything through, the negotiations were very difficult”.

2. Constraints on bargaining:explaining the EU’s diminished inflexibility

• “their (the EU’s) links back to industry were different to Australia’s … the wine industry is controlled much more than in Australia so it was more the case for the industry to accept the laws of the EU” – Australian negotiator

• Conversely Australians had to sell agreements to industry, which “was a real constraint for negotiators” – Australian negotiator

Number of Australian uses of the GI Champagne

Source: Steven Stern, Corrs Chambers Westgarth.

87 90 93 94 96 98 99 03

Figure 2: Number of Australian uses of the GI Red-Burgundy

Source: Steven Stern, Corrs Chambers Westgarth.

87 90 93 94 95 96 98 99

Figure 3: Number of Australian uses of the GI Chablis

Source: Steven Stern, Corrs Chambers Westgarth.

87 90 93 94 95 96 98 99

Concessions

• The EU conceded access for Australian wine to its market.

• This included access to the UK market, one of the largest wine importers globally.

• Australian conceded use of European GIs and TEs, with the ‘best endeavours clause’.

• EU negotiators “would have played a bit harder had they known how well Australian wine would penetrate the UK market” – Australian negotiator

The outcome Objectives achieved/ Gains Concessions

EU • Guarantee of eventual phase out of its wine GIs (final phase out GIs 1 September 2011)

• Over 2,500 GIs recognised by Australia

• Recognition of Australian winemaking techniques, ontological practices an wine labelling (effective free market access)

Australia • EU recognition of Australian winemaking techniques, ontological practices and wine labelling (effective free market access)

• EU recognition of Australian wine GIs

• Protection of European GIs with a phase out period

Gains and Concessions

Australian Wine Exports to Europe

Source: Stephen Stern, Coors Chambers Westgarth.

Australian Wine Exports to the UK

In 2009-10, Australia exported 382 million litres of wine to the EU worth $863 million. (DAFF)

Conclusion

• The negotiations demonstrate– The potential benefit of negotiating

with the EU in areas of common interests, as opposed to issues like agricultural protectionism.

– The importance of understanding EU policy processes.

– The impact that domestic institutions and structures can have on bargaining behaviour.

Thank you