World Wide Trade Group and the Mutual Acceptance of Oenological Practices and Requirements for Wine Labelling Agreements: Department of Agriculture, Forestry and Fisheries briefing

Meeting report

Department of Agriculture, Forestry and Fisheries: briefing
The Department of Agriculture, Forestry and Fisheries briefed the Committee on the World Wide Trade Group and on the Mutual Acceptance of Oenological Practises and Requirements for Wine Labelling Agreements. The delegation comprised of Mr Bigman Maloa Deputy Director General: Food Safety and Biosecurity, Mr Alex Serumula Deputy Director: Food Safety and Quality Assurance, Mr Gunter Muller Deputy Director: International Trade, and Ms Wendy Jonker Assistant Director: Liquid Products. Mr Maloa led the briefing.

The World Wide Trade Group formed in 1998 was an informal group of wine producing countries whose objective was to facilitate the trade in wine and to reduce barriers in the wine trade. Group participants were Argentina, Australia, Canada, Chile, Georgia, New Zealand, South Africa and the United States of America (USA). The Group had no formal membership, membership fees and secretariat. The Group was chaired by a rotating chairperson. Until March 2010 South Africa (SA) had chaired the Group. Argentina currently held the chair.
The Mutual Acceptance Agreement and the Labelling Agreement were at the core of the Group. Negotiations on the Mutual Acceptance Agreement were concluded in 2001 and on the Labelling Agreement in 2007. All members except SA and Georgia had implemented the Mutual Acceptance Agreement. The Labelling Agreement was at various stages of ratification; only the USA and Chile had completed the necessary internal processes.
The Mutual Acceptance Agreement recognised wine making practices of signatories as compliant with own practices. It included a common definition of wine. The benefit to SA was that it reduced costs related to documentation and analysis. Export logistics to Group countries were simplified. For example the Department no longer had to provide a certificate with each consignment of wine exported to the USA.
The Labelling Agreement’s objective was to accept common labelling information and minimize labelling related trade barriers. The agreement for example did not prevent national mandatory information like health warnings on labels. The benefit to SA was that the Labelling Agreement created certainty in terms of labelling requirements for Group markets. Costs were further also reduced as there was no need to print a label for each market.
Both agreements were enabling Agreements aimed at facilitating wine trade. The Agreements would ease the export of wine to signatory countries. They were in conformity with the provisions of the World Trade Organisation.
Small legislative changes to SA’s wine legislation were required as a result of the Agreements. The Liquor Products Act 1989 (Act No. 60 of 1989) had to be amended to provide for these Agreements. Table 6 of the regulations was amended in 2008 to ensure that SA wine containing Pimarizin was not exported to Group countries as it was not allowed in wines in those countries. Members were assured that there was no food safety risk in terms of its use as it was used in foodstuffs like cheese and sausage in Europe and other countries. Pimarizin effectively worked to prevent the formation of moulds. Sections 16 and 27 of the Liquor Products Act were also amended in May 2009 to allow for the implementation of the provisions of the Mutual Acceptance Agreement and the Labelling Agreement.
The International Organisation for Wine and Vine (OIV) was an intergovernmental organisation based in Paris, France. The OIV was a scientific and technical organisation and provided international standards and guidelines for wine, vine and wine based beverages, new wine making practises and technologies. In 2001 the OIV went through a process of review as many countries felt it to be too Eurocentric. The USA and Canada were the only Group participants who were not members of the OIV. The Department did not see conflict between the OIV and the Group as the two organisations had different fields of work and objectives and complemented each other. The Group focused on enhancing trade whereas the OIV had a scientific and technical focus.
Mr Maloa however pointed out that the Group had formed partly due to the fact that France and Italy wished to control the wine industry. Even though the Europeans were so strict and controlling, 72% of SA’s wines were exported to Europe. SA’s wine industry’s exports generated income to the value of R6 billion in 2008. SA and Argentine were direct competitors in the industry. SA was ranked number eighth in the world as a wine producer according to an OIV forecast for 2007. France and Italy were the biggest wine producers. As an exporter SA ranked last compared to other wine producing countries. More surprising was that SA did not even feature compared to other countries as far as the volume of consumption of wine was concerned.
The Department concluded the briefing with the suggestion that the Committee recommend that Parliament to ratify the Mutual Acceptance of Oenological Practices and Labelling Agreements to enable SA to accede to the agreements and implement them.

Discussion
Mr G Mokgoro (ANC, Northern Cape) praised the Department for its presentation and said that perhaps there was still a great deal of scope for marketing in the wine industry.  The World Wine Trade Group seemed to have stability and understanding in its organisation. He asked why the Group had been formed on an informal basis. Why was it not formalized?

Mr Maloa replied that the rationale behind the informality of the Group was that the Group was not meant to be prescriptive. Formal entities like the World Trade Organisation (WTO) and the OIV already existed. The idea was for access and entry not to be as stringent as it was with the WTO and the OIV. There was no reason for the Group to be prescriptive.  Nations should not be compelled to do things which they could not do. The informality was good for democratic processes.

Mr O de Beer (COPE, Western Cape) asked which small changes were needed to legislation. He felt that the Group was functioning on an ad hoc basis whilst it was regulating the wine industry. This was of concern. Compliance in consumption had been stressed in the presentation but it had to be remembered that standards was also important.

Mr Maloa said that the Liquor Products Act was South African legislation. Neither the USA nor Argentina could prescribe what it should contain.

The Chairperson referred to the formal membership of the Group and asked how many members it had. She also asked how many representatives there were from each of the member countries. Had Cabinet approval been obtained for the formation of the Group?  Greater detail was requested on the changes that had been required to be made to the Liquor Products Act.

Mr Maloa stated that there were eight countries at present which formed the Group. There was no prescription in terms of the numbers of members. He said that the Departmental team present including himself was intrinsically involved in the Group as far as SA’s involvement was concerned. The USA and Argentina had many representatives in the Group. As at November 2009 there were 60 representatives in the Group. The Group was yet to obtain Cabinet approval hence the presentation to the Committee.
Mr Muller added that both the Mutual Acceptance Agreement and the Labelling Agreement had been submitted to Cabinet. Approval had been obtained on the 19 November 2008. The current process in Parliament was the second step. He emphasized that participation in the Group was informal but the two agreements were formal. The two agreements had to go through formal ratification processes. The meetings and gatherings of the group were also informal.
Ms Jonker noted that there were three changes to the Regulations and to the Liquor Products Act. The first related to the use of Pimarizin. Its use was allowed in SA. It was used in fruit juices, yoghurts and in wine. The addition of Pimarizin to wine prevented secondary fermentation. It kept wine stable. However in Europe it was used in cheeses and in sausages but not in wine. The other Group members did not use Pimarizin in wines. Hence SA did not use Pimarizin in wines that were exported to the Group members. The countries to which this provision applied were specifically listed. Sections 16 and 27 of the Liquor Products Act were amended. In principle it made provision for SA to accede to the Mutual Acceptance Agreement and the Labelling Agreement. The point was to have equivalence between all countries in the Group.

Mr De Beer asked how the members of the Group had been recruited.

Mr Maloa responded that the Group was so to say a coalition of the injured. The members of the Group wished to do things differently from the practices of most European wine producing countries.
Mr Gunter said that European countries were in the habit of ‘ganging up’ on the countries that had formed the Group. The Group had nevertheless moved beyond this issue. The idea was to remove barriers of trade. The European countries had too many stringent requirements. The environment created by the Group was more trade friendly.

The Chairperson asked if there were any representatives from the wine industry in the Group.

Mr Maloa affirmed that there were representatives from the Wine and Spirits Board as well as from wholesalers.

The Chairperson said that not all the members of the Committee were present. Hence the Committee would discuss the issue at a later time and furnish the Department with a report.  

The Committee was unable to continue with other items on its agenda since for these a quorum of members was required.

The meeting was adjourned.