Thursday, 28 April 2022 16:25

On Your Behalf: Free Trade Agreement brings new opportunities

Written by  Sarah Wilson
Sarah Wilson Sarah Wilson

On 1 March 2022 New Zealand signed a Free Trade Agreement with the United Kingdom.

The 1,700 page document represents years of hard work by officials, and there are some key wins that will help winegrowers make and send wine to the UK for the future.

The Free Trade Agreement (FTA) has not yet come into force - this is expected to happen later this year, but there is no guaranteed date. Now that the agreemnet has been signed, both sides need to follow domestic political processes to get ready for its implementation.

When the FTA takes effect, some key benefits for winegrowers will include:

The removal of all tariffs on New Zealand wine

Some products will continue to have tariffs for years, but wine will have all tariffs removed completely from day one. Currently, for a bottle of still wine at 13.5% ABV, tariffs are 9 pence (about 18c in NZD).

To claim this benefit, New Zealand producers will have to complete a declaration that their wine is "originating" (ie, that it is a New Zealand product) and provide it to their importer. New Zealand Winegrowers (NZW) will prepare guidance on how to make this declaration, along with a template, before the FTA takes effect.

VAT and excise will not be affected.

A commitment from the UK not to reinstate VI-1 forms

The VI-1 forms were recently removed, and the FTA confirms that they are gone for good.

'One and the same product' removed

The prohibitions of acidification and enrichment, or acidification and deacidification, of one and the same product will be removed. Additional limits on how much a wine can be deacidified, enriched or sweetened will also be removed (although a wine must not exceed 20% total alcohol to be classified as "wine").

More flexibility in labelling

While UK labels will look reasonably similar following the FTA, there is some flexibility in the following areas:

  • Wine of overripe grapes: Provided that a wine has less than 20% total alcohol, it does not have to be labelled as wine of overripe grapes.
  • Labelling alcohol content: Alcohol content can now be labelled to one decimal point - it will no longer need to be labelled in half or whole units (eg, it could be labelled as 13.2%, rather than having to select 13% or 13.5%). [The tolerance remains the same]
  • Multi-variety claims: In order to make a multi-variety claim on a label, 95% must be from the named varieties (reduced from 100%).

Other flexibility in winemaking practices

More winemaking practices are aligned with New Zealand's under the FTA. Some new products will be permitted for the UK market, including carrageenan, fumaric acid, erythorbic acid and hydrogen peroxide (note: there are use limits on some of these products).

Other products have use limits under existing requirements, and those limits will be removed or lessened when the FTA takes effect, such as ammonium sulphate.

While it's not part of the FTA, NZW would welcome the UK joining the World Wine Trade Group, if it decided to do so in future. This would mean that the UK would permit mutual acceptance of winemaking practices and allow easier access for New Zealand wines into that market.

Find more information

Winegrowers can make wine to the new (more flexible) standards now; however, you will not be able to send that wine to the UK until after the FTA takes effect. This is ultimately a decision for each business, and if you choose to follow this pathway it is at your own risk. There are also additional requirements in terms of record keeping an separating EU wines from non-EU wines. Remember that if wine is made to these new UK requirements, it will not be suitable for the EU market.

Further guidance is on NZW's website at nzwine.com/members/advocacy

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