Chilean wine category to benefit from new trade deal

The UK has signed a trade deal with Chile to ensure continuity between the two countries once Brexit finally takes place.

The government name checked the Wine & Spirit Trade Association at the top of its press release, declaring that the deal protects a large chunk of the UK wine industry.

WSTA chief executive Miles Beale said: “It is imperative for the UK wine industry that trade with Chile remains undisrupted. In the last 12 months UK consumers bought the equivalent of 105 million bottles of Chilean wine with sales worth some £720 million. That amounts to about 9% of the total UK still wine sales by volume and 8% by value.

“The agreement avoids unnecessary tariffs which will ultimately save consumers money. Without this agreement tariffs added to wine from Chile coming to the UK would cost industry an estimated £9.2 million.”

The government said certainty around the deal would further strengthen the trading relationship between the UK and Chile, which grew 11% to £1.8 billion in 2017.

UK manufacturers benefit from preferential access to the Chilean market to sell their goods, and UK consumers benefit from lower prices on Chilean goods, such as wines, fruits and nuts and other products.  

Trade in goods and services between the UK and Chile has grown by 9% per year on average since the agreement was provisionally applied in 2003. UK exports to Chile have grown by 16% on average each year and a total increase of 351% since the agreement was provisionally applied.

The  agreement also protects intellectual property rights and maintains preferential market access for trade in services.

International trade secretary Dr Liam Fox said: “Today we have signed an important trade continuity agreement as we prepare to leave the European Union. This will ensure there is no disruption to British business exporting to Chile after we leave the EU and will mean consumers continue to benefit from low prices and more choice on supermarket shelves.

“Our trading relationship with Chile continues to go from strength to strength, with exports rising over 20% to almost £1 billion last year. This free trade agreement will allow trade to continue as freely as it does currently and will help to strengthen our trading relationship even further.”

Chilean ambassador Jamie Bowden added: “The UK and Chile enjoy a long-lasting trade relationship. The UK is still working to achieve an agreement with the European Union on the terms of our departure. The success of those talks will determine whether the current EU-Chile agreement ceases to apply to the UK at the end of March this year, or at the end of an implementation period.

“In either scenario, the agreement we have signed today means that there will be no disruption to UK-Chile trade as the UK leaves the EU.”

The new UK-Chile agreement is designed to replicate the existing trading arrangements as far as possible. It will come into effect as soon as the implementation period ends in January 2021, or on March 29, 2019, if the UK leaves the EU without a deal.

The government said it will sign a number of other arrangements in the coming weeks.

Concha y Toro is the largest supplier of Chilean wine to the UK and it has enjoyed strong sales growth  over the past few years. UK general manager Simon Doyle recently told DRN: “We have to be pragmatic and agile and anticipate different scenarios. Brexit is a challenge, but there’s a limit to what we can do in practice. We just have to make sure we have a good inventory. We are bringing a lot more inventory into the UK to help offset any challenges around the March-April period.”

Fears that business would be impacted could be assuaged by news of this deal.

It was interesting to note that, in its press release, the government stressed the importance of protecting the UK’s wine industry, which contributes almost £19 billion to the UK economy supporting around 190,000 jobs. It comes after the Treasury singled wine out for a clobbering at the last Budget, despite the WSTA continually pointint out how many jobs the industry supports and the economic contribution it makes. 

“The duty rise is coming into play at the end of February, which is a huge frustration for wine, to be called out for very special, negative treatment by the Treasury,” said Doyle. “We have to work on that. The WSTA do a good job. As an industry we need to do more to demonstrate the benefits we give to UK manufacturers. We pack up a lot of wine in the Northeast of England, a region that needs a lot of investment. We need to be a bit more proactive as wine producers, working alongside the WSTA, to get these messages out more assertively than we have in the past.”