Letter to USTR Robert Lighthizer Expressing Concern Over Retaliatory Tariffs on European Wines

Summary

A letter dated January 17, 2020 from members of the House Committee on Small Business, including Chairwoman Nydia M. Velazquez, to United States Trade Representative Robert Lighthizer. The members write that a 100% tariff on European wines will harm American small businesses across the beverage sector, citing more than 6,500 wine importers and distributors and 47,000 wine retailers. It says 85% of the sale of European wines in the U.S. goes to domestic businesses and wine is less than 1% of U.S. imports from the European Union. It states that the current 25% tariff is projected to cost 12,000 American jobs and that the proposed 100% tariffs could cause the loss of 78,000 jobs, and says the beverage community generates over $363 billion annually. The members urge the USTR not to target these firms and hope the issues are resolved without retaliatory tariffs.

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STEVE CHABOT, OHIO

RANKING MEMBER

NYDIA M. VELAZQUEZ, New York

CHAIRWOMAN

Congress of the Wnited States

A.D. House of Representatives

Committee on Small Business
236) Rayburn House Office Building
Washington, HE 20515-0315

January 17, 2020

The Honorable Robert Lighthizer

United States Trade Representative

Office of the United States Trade Representative
600 17% Street NW

Washington, DC 20508

Dear Ambassador Lighthizer:

As members of the House Small Business Committee, we write to express our strong concern
about U.S. retaliatory tariffs on European wines and the negative impacts on American small
businesses. A 100% tariff on European wines will cause a ripple effect across the entire beverage
sector, from producers, to distributors, to retailers and the hospitality industry.

In the U.S. there are more than 6,500 wine importers and distributors, 47,000 wine retailers, and °
over | million restaurants, most of which are small businesses. Given the structure of the
beverage industry, 85% of the sale of European wines in the U.S. goes to domestic businesses
such as importers, wholesalers, distributors, and retailors.! These firms depend on a vibrant,
healthy beverage market for their livelihood, and domestic producers depend on a strong network
of distributors and retailers to get their product to market.

We understand the need for appropriate measures to address the recent WTO decision and
France’s digital services tax, but wine makes up less than 1% of U.S. imports from the European
Union.’ As a result, tariffs on wines will not have a significant impact on the European economy
but will have dramatic effects on domestic firms. The current 25% tariff on certain European
wines and spirits is projected to result in 12,000 American jobs lost. The proposed tariffs of
100% on all European wines could result in prices that are unworkable for domestic businesses,

causing the loss of 78,000 jobs.

1 Lettie Teague, How Tariffs Could Devastate the Wine World, THE WALL STREET JOURNAL, Jan. 8, 2020.
* Office of the United States Trade Representative, European Union, https://ustr.gov/countries-regions/europe-

middle-east/europe/european-union
3 National Association of Wine Retailers. NAWR’s Official Statement Concerning U.S. Tariffs on European Union

Wines. January 2020.

In addition to causing job losses to businesses across the country in the wholesale, distribution,
retail, and hospitality industries, increased tariffs will also jeopardize U.S. beverage producers
who rely on these industries to get their products to market. These firms are already hurting due
to retaliatory tariffs by key trading partners. U.S. wine exports to China are down 57%, and
whiskey exports to Europe have decreased by 29%. Additional tariffs and retaliation could cause
further harm to businesses already struggling because of trade disputes that has nothing to do

with their industry.

The U.S. beverage community, from farmers, to producers, distributors, and retailers are an
essential part of our economy, generating over $363 billion annually, and we urge you not to
target these firms in trade disputes which has nothing at all to do their products. We hope you
will exhaust all means possible to resolve these issues without resorting to retaliatory tariffs that
have an outsized impact on American small businesses.

We appreciate your attention into this matter and look forward to working with you on trade
policies that bolster American small businesses. If you have any questions regarding this request,
please contact Michael Stein, Counsel for the House Small Business Committee Majority at

(202) 225-4038.

Sincerely,
Nydia M. Velazqnez Dwight Evans Ai chitega:
Member of Congress Member of Congress
Onge (aig? pe
Aifgie Craig Judy Chu
Member of Congress Member of Congress
Andy Kim Adriano Espaillat
Member of Congress Member an
onio Delgado Marc Veasey

Member of Congress Member of Congress
Bradley S. Schneider
Member of Congress

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