Examination of Witnesses (Questions 176
- 179)
MONDAY 7 MARCH 2007
MR JOSÉ RAMÓN FERNANDEZ
Q176 Chairman:
Good morning. I will explain very briefly who we are and what
we are trying to do. We are the Agriculture, Environment and Fisheries
Sub-Committee of our House of Lords EU Select Committee. The job
of the Committee is to look at EU proposals, scrutinise them,
make comments and prepare reports on issues of interest. The Committee
itself consists of representatives from all parties and, distinctively
in the House of Lords, Cross-benchers, who are aligned to no party
whatsoever. So it is a very widely-based committee, and indeed
it is drawn from all parts of the United Kingdom with the notable
exception of Wales. We have started this inquiry into the wine
regime. We have already taken some evidence in the United Kingdom
and we thought it would be helpful to us if people closer to the
decision-making process in Brussels could come and give us their
views in order to help us formulate our own views eventually.
We hope in the near future to do some fieldwork in parts of France
on what the effects of reform may be. We have spoken in the United
Kingdom to the Wine and Spirits Trade Association, which is part
of your overall body. It would be helpful if you could give us
a brief introduction explaining the nature of your organisation
and what you see as the main challenges facing the wine industry
in Europe and how they could be best answered through reform of
the regime.
Mr Fernandez: Thank you very much. First of
all, I am very grateful for having the opportunity to be here
today. I would just like to say that the way in which your country
is reflecting on the position of what is a priority issue for
us like the Common Market Organisation is obviously best practice
in terms of open consultation with all stakeholders and something
that we would very much like to have also from other Member States
in the European Union. I have also had the opportunity to have
some contact with Government representatives of the UK here in
Brussels. Let me explain very briefly what is the Comité
Européen des Entreprises Vins. The CEEV is a very well-established
organisation at European level. It is the umbrella organisation
representing the wine industry and trade in the European Union.
That means that we are talking about more than 20 national organisations
and companies in the wine industry and trade. We represent around
90% of European Union wine exports all around the world, including,
of course, not only the trade in the European Union but also exports
to third countries. It is important to understand that it is a
very atomised sector in the European Union, even in terms of companies,
not just producers. We are talking about thousands of small and
medium companies which have a very small market share for the
different brands in the different wine categories, so the role
of a professional organisation is quite important in terms of
trying to put together and define the common interests of the
whole industry and trade in the European Union. It is a well established
organisation in terms of presence in Brussels. We have been here
since the early sixties. At the beginning it was just a club of
the main companies in the wine-producing countries but more recently
we have been able to step out of our European wine-producing bubble
and start to have a more open structure incorporating genuine
import sectors in the European Union, such as we had in the past
from the UK and other countries in the European Union. Today we
consider that we represent the whole trade and industry side of
the wine sector in the EU. The main challenge we have is sustainable
development. That is why the reform of the Common Market Organisation
is essential, and we link this to the other big challenge we have
in terms of being more competitive and having sustainable development,
which is the promotion of the place of wine and wine culture in
our European society. There are more and more discussions taking
place about the compatibility of drinking our products with a
healthy lifestyle. That is a major challenge and we are absolutely
determined to contribute to the solution by promoting moderation
and responsibility in the consumption of our products. In approaching
the reform of the Common Market Organisation we have to have a
broader perspective, that is, we have to provide a real European
wine policy, which also includes this social aspect of how to
promote the place of our product in society and make that compatible
with a healthy lifestyle.
Q177 Chairman:
We have got to the stage with the wine regime where the Commissioner
is basically saying that the present situation is unsustainable.
If you look at it you can identify systemic production surpluses
leading to "crisis" distillation now becoming year-on-year
crisis distillation, a high level of import penetration and a
decline in consumption in many parts of Europe. In order for a
European wine industry to be competitive in that situation what
do you think the main policy elements of the reform ought to be?
Mr Fernandez: Let me start by recalling the
background. Why do we have today the wine policy that we have?
Until recent years the world market was likely to be the European
market. It was perfectly possible to adjust the wine market of
the whole world by regulating the balance between supply and demand
at European level. Today we continue to be the biggest producers
and the biggest consumers but we no longer have a situation in
which we can decide alone in our European bubble what is the way
to lead the sustainability of the sector. We need to have a fundamental
reform of the foundations of our system in order to take into
account the fact that we are in an open world, with our friends
from other wine producing countries around the world who are doing
things very well. We do not fear this competition but we definitely
need to adapt our system in order to be able to compete in this
new environment. The evolution in the world market has been quite
impressive in the last year, so I do not blame immediately the
European Union by saying that they did not anticipate it. What
we are now asking the European Commission to put on the table
is a comprehensive wine policy which eliminates all those market
mechanisms and restrictions that were driving the traditional
supply and demand in our system in order to make companies permeable
to market expectations. We want a market oriented approach but
what we have today does not fit with this philosophy. I would
like to tell you what are the key elements we would like to see
change. In our sector there is a total ban on planting rights
given the quota system that we have today. If you decide to go
for instance to the south of Spain and think you can plant vines
there, you are not allowed to do so. That is the fundamental restriction
which fits with this traditional logic of trying to preserve a
balance at the European level but no longer makes sense because
overseas they have absolute freedom to take production decisions
also in terms of planting. This is a restriction which is intended
to be stopped in 2010 in the current Common Market Organisation,
so the fundamental starting point for us is to abolish this ban
on new planting rights as from 2010. Secondly, there are, as you
know, market intervention mechanisms like crisis distillation,
and we consider that all these interventions are restricting the
sector and the decision-making by the producers and preventing
them from adapting to market expectations. Producers take their
decisions based on their own logic without taking into account
what is happening in the market place because by producing you
get money in the event that you are not able to place your wine
in the market. What we are asking is to fundamentally review the
current market intervention mechanism in order to eliminate all
those mechanisms which are preventing the sector from reacting
to market trends. There is a third point for us which is essential
and that is simplification. I think we will have the opportunity
to elaborate a little bit more on the intensive rules that we
have for labelling and so on, but there is much room for manoeuvre
in terms of simplification of the rules because we also need to
let companies take appropriate decisions in order to be competitive
with what is happening in other parts of the world. The fourth
element which is also essential for us is that until now we have
not had a real external trade policy for wine in the European
Union. The trade policy is mainly in the hands of the European
Union institutions and the European Commission, and until now
the decisions in terms of negotiating bilateral or multilateral
agreements concerning wine have not been driven by the wine market
interest in terms of priorities and negotiating strategies and
we are suffering as a result. The external trade factor has been
considered to be a secondary element instead of a real issue in
the very fundamentals of our European wine policy today. What
we want to see in this new wine policy is a fourth chapter, a
strategic chapter of external trade policies and objectives for
European wines all around the world. Finally, as I have already
mentioned, there will be no sustainability for the wine sector
if we are not able to promote sustained consumption of our quality
products because there is more moderate and responsible consumption
all around Europe and in the world, so we think we also have a
role to play in partnership with the public sector to promote
moderation and responsibility in the consumption of our products.
We are not just talking about promoting our products in terms
of increasing consumption; we are also talking about promoting
moderation and responsibility in the consumption of our products
because, if we do not have this agreement with the public authorities
and the whole of society about the possibility of having a healthy
lifestyle in consuming wine, it is going to be very difficult
to have sustainable development for our sector. Those points are
the pillars of our position for the Wine CMO reform.
Q178 Chairman:
I was interested in what you were saying about having an active
trade policy at Community level. Could you fill us out a little
more on what that might mean? At the moment we have a regime which
is dictated under WTO regulations, including access for New World
wines to that market. Do you think the Community, at the Community
level, should be marketing wine? Or is this a job for the industry
itself to do?
Mr Fernandez: When we are talking about external
trade policy, the first element is the fact that we are a very
atomised sector. There are not big players in our sector and we
are lacking economic intelligence about what is going on in the
world. Different parts of the industry do not have access today
individually to appropriate economic tools allowing them to understand
what are the market trends and the new consumer expectations and
anticipate what is going to happen in the coming years. That is
essential for any business and also for wine, but in comparison
with other parts of the world we do not have this access because
of economic and financial restrictions. We would like to have
some kind of European tool for economic intelligence to provide
information in a transparent way to all the sector about what
are the market expectations and so on.
Q179 Lord Cameron of Dillington:
So it is to produce intelligence, not to promote?
Mr Fernandez: One part of this policy is about
getting intelligence. There is another one which is promotion,
because when you see what is being done by other sectors they
have business plans with ambitious export strategies, and that
is something that we also need.
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