In Burgundy, Tariffs Leave Sour Aftertaste

Wine producers in Burgundy, the region of France most affected by last week’s Bush Administration decision to impose stiff tariffs on European white wines, reacted with bitterness and bewilderment Monday to their unwanted leading role in the fermenting trade war over farm subsidies.

“For 30 years, the United States has been our best customer. This is a catastrophe,” said Gerard Boudot, a wine producer in the village of Puligny-Montrachet, famous for its rich, yellow-gold Chardonnay wines much favored in the United States.

Jean-Jacques Vincent, a producer in Fuisse who sells more than 20,000 bottles of white Pouilly-Fuisse annually in the U.S. market, observed of the trade action, “It’s a flagrant injustice.”

Overall, the Burgundy region 200 miles southeast of Paris exports more white wine to the United States than any other wine territory in France. Exports to the U.S. market--about 8 million bottles in 1991--account for more than 15% of Burgundy’s total foreign wine trade.

What the winemakers say is most unfair is that they are mostly on the U.S. side in the dispute with the European Community over subsidies to European oil-seed producers. U.S. officials claim that the EC subsidies give European oil-seed farmers an unfair advantage that costs U.S. farmers $1 billion in trade on the world market.

In retaliation, after five fruitless years of negotiations with the Europeans, the U.S. government Thursday announced tariffs on $300 million worth of European products, mainly white wine produced in France, Germany and Italy. The issue has sparked the nastiest dispute in years between Europe--particularly France, leading defender of the subsidies--and the United States.

But the winemakers of Burgundy receive no subsidies from the French government or the EC. U.S. officials in Paris, who searched for a way to achieve the most dramatic impact on the French economy, said that made no difference in their decision to target white wine in the trade sanctions announced by U.S. trade representative Carla Anderson Hills.

Ignoring the prestigious red wines of Bordeaux and the sparkling white wines of Champagne, neither of which is on the tariff list, the U.S. government instead aimed its trade guns at Burgundy. It happens to be the home territory of France’s outspoken agriculture minister, Jean-Pierre Soisson.

In addition to his agriculture job in the national government, Soisson is president of the Regional Council in Dijon, which includes the Burgundy region. Along with Trade Minister Dominique Strauss-Kahn, Soisson is considered by the Americans to be one of the most intransigent French officials on the oil-seed question.

But Soisson, who opponents claim was elected to the regional post with the secret backing of the extreme right-wing National Front Party, is a controversial figure in Burgundy--not necessarily beloved by the wine growers and dealers who dominate the local economy.

By targeting white wine in the opening salvo of the developing trade war over agricultural subsidies, the U.S. government hoped the Burgundy winemakers--as a kind of fifth column in the early skirmishes of a trade war--would help pressure Soisson and the French government.

But the strategic ploy has left a bitter aftertaste in a region that has long prided itself on its close relations with America.

“We feel like hostages in this affair,” said Pierre-Henry Gaget, president of a major wine-exporting company in Beaune. “We had nothing to do with the problem, and yet we are the ones who are targeted.”

Gerard Boudot, a broad-shouldered producer who supervises the production of his Domaine Etienne Sauzet white wines from a computer-equipped office on the outskirts of Puligny-Montrachet, said he feels torn by two loyalties in the trade dispute. As a proud, independent Burgundian, he is no fan of subsidies enjoyed by the oil-seed producers. But as a Frenchman, he resents what he views as the heavy-handed tactics used by the Americans.

“What they did was a little too tough,” he said. “First the Americans hit us with a big stick. Then they say, ‘Let’s negotiate.’ ”

Not only do most of the Burgundians oppose government subsidies for agricultural products, but they are happiest when the dollar is strong and the U.S. economy is vibrant. That’s when Americans can best afford to buy their white wines. They range in price from about $10 a bottle for a generic Burgundy white to more than $50 for wines produced in hillside vineyards here in the region south of Beaune, which includes such famous appellations as Meursault, Montrachet, Chassagne-Montrachet and Puligny-Montrachet.

In 1985, the best Burgundy year ever, they sold almost 20 million bottles of Burgundy white wine to the United States, more than to all the rest of the 12-nation EC.

One irony of the wine war is that because of the high sales tax on wine sold in France, used in part to pay the high agricultural subsidies to soybean, rapeseed and sunflower farmers, Burgundy white wines are often less expensive in the United States than in France.

If the punitive tariffs--set at 200% on white wine--take effect Dec. 5 as announced, Burgundy wine producers say exports will stop completely. The principal beneficiaries would be California and other U.S. wine producers, who, because they depend on the high-quality French whites to boost the international image of wine, are mostly opposed to the tariffs.

The two pillars of the French policy, Soisson and Strauss-Kahn, have urged the EC to draw up its own list of products to target from the United States. But Gaget, president of the prestigious Maison Louis Jadot wine-distribution company, said he has opposed such retaliation on the part of the Europeans.

“I see no reason for this eye-for-an-eye business,” he said in a breakfast at a wine-cellar restaurant. “We are not at war with the United States. Americans are our best friends.”