«The London School of Economics and Political Science Wine In Their Veins: France and the European Community’s Common Wine Policy, 1967-1980 Maria ...»
blockade of Italian wines at the port of Sète and the subsequent ‘wine war’. It then analyses the interventionist turn from 1976–1977 through to the end of the decade.
This chapter argues that overproduction, already systemic, was made worse by the CWP, and that the first five years of the CWP caused grave concern about the feasibility and potential longevity of the policy. By 1976, however, the Council and Commission shifted their opinion on the problems with the continued overproduction, known as the ‘wine lake’. They had initially characterised the issue as an economic imbalance and belatedly recognised that the problem was structural and more long-term than first presumed.
This chapter also argues that the wine crisis, in pitting France and Italy against one another, made their positions on both the CWP and the CAP difficult to maintain. During the wine crisis, France and Italy were required to act carefully and strategically; France and Italy had similar interests in the favourable continuation of the CWP and realised that too strong and public a dispute might expose the policy’s underlying weaknesses and problems, thereby jeopardising the policy in the medium term. Analysing the wine crisis also highlights the significant amount of attention paid to the CWP, despite the fact that only 2% of the Community’s agricultural budget went to the wine sector in 1975, up from 1% the previous year.2 This suggested that it was not simply economic interests at play but that the social significance of the wine sector caused politicians to give it this special attention.
Bulletin of the European Communities, No 4, 8th year. Luxembourg: Office for the Official Publications of the European Communities.
The Implementation of the Common Wine Policy in 1970, its Assumptions and Problems As was argued in the last chapter, the birth of the Common Wine Policy in 1970 was the outcome of ‘extremely arduous negotiations’3 from 1967 to the beginning of 1970. The long process was ‘wearisome, often profitless, and largely dominated by the clash of national interests’,4 particularly the central issue of uniting the French and Italian camps. But the process was seen as essential and the rationale for a common wine market had long been established. In the 1957 Treaty of Rome, the architects decided that the social significance of wine was such that it was necessary for it to be included in an eventual common agricultural policy.5 But the differences between national wine production methods, as well as a stubborn resistance to compromise during the negotiations meant a policy was hard to come by. Even after the CWP has been created, the Directorate-General for Agriculture declared that it was ‘not surprising…that wines from different areas of the Community often have very little in common as regards distinctive features, price, or markets.’6 Though negotiations and discussions had occurred throughout the 1960s related to the wine market, most of the process was related to moves towards harmonisation of tariffs. The major regulation to predate 816/70 was 24/62, which called for the establishment of a vineyard register in each member state and the collection of statistics on annual wine production levels; it attempts to establish some regulations on quality wine. The importance of wine to the community was emphasised, but the Community recognised even then in their preamble 2965/X/70-E: The Background to the Common Organisation of the Market in Wine, 1970. European Commission. Luxembourg: Division for Agricultural Information in collaboration with Directorate-General for Agriculture.
Antonio Niederbacher, Wine in the European Community, ed. European Commission (Luxembourg: Office for Official Publications of the European Communities, 1983)., 33.
2965/X/70-E: The Background to the Common Organisation of the Market in Wine, 1970. European Commission. Luxembourg: Division for Agricultural Information in collaboration with Directorate-General for Agriculture.
that ‘the wine policies followed by the different Member States at their national levels presented significant divergences.’7 On April 28, 1970, after the Hague Summit in which a trade-off between the Italians and the French resulted in agreements on the financing of the Common Agricultural Policy and the extension of the policy to wine, the Council released a comprehensive programme for the genuine beginnings of the common wine market. Regulation 817/70 supplemented this, with provisions specifically for quality wine management. The new Common Wine Policy was ‘liberal...along the lines of the management system in the Italian wine-making sector’,8 which had far fewer restrictions, particularly in planting and replanting, than the French system.
As laid out in the previous chapter, the common wine market was intended to manage the following areas: price controls and interventions, foreign trade, the production from and the control of the development of planting, and issues related to oenological practices and preparation for consumption. Though the market had some protectionist and interventionist aspects, it was still overall a liberal policy in scope. It established regulations for trade with non-Community countries and pricing mechanisms. It removed tariffs and taxes, requiring the free and unencumbered flow of wine within the Six. Provisions for private storage and distillation methods were also outlined, along with the establishment of five wine-growing regions. Very importantly, planting was not restricted by this regulation. Instead, the right to freely plant was a principle well-enshrined in the document.
'Regulation (EEC) No 24/62 on the progressive establishment of a common organisation of the market in wine.' Classification of Vine Varieties in the European Community and the Common Organisation of the Market in Wine.,12.
The main difference between the Common Wine Market and the other regimes covering agricultural products, like grain, beef, or milk and milk products, was the operation of its intervention policy. Target prices for CAP products were set before the upcoming season to allow farmers to aim for a good set return, also known as the prix d’orientation. An intervention price, or prix d’intervention, was also set; when prices fell to this level, intervention by national bodies was automatically triggered. However, the CWP was the exception to this established rule – intervention and decisions about actions to take in the case of overproduction were to be taken on a case-to-case basis by the Commission and the Council. This was to put the wine market into a different category than the other markets, as it required constant management and control by the Community organs.
The first few years of the CWP were marked by relatively stable conditions as Member States adjusted to harmonising their national wine policy to the common one. The most prominent change since the introduction of the CWP was that wine growers were not meeting the new instated target prices of the policy and so were able to receive financial support from the Community for it. The 1970 harvest was larger than that of the previous year, and so storage aid was granted by the Community very soon after the policy came into effect. However, this did not prove enough and a round of exceptional distillation, quite a costly measure, was permitted in addition to storage, with 3.4 million hectolitres of wine distilled in ethyl alcohol in the 1970–71 wine year.9 Spahni, The Common Wine Policy and Price Stablisation, 58., and Niederbacher, Wine in the European Community, 44.
On March 28, 1972, French Permanent Representative Étienne Burin de Roziers sent an urgent telegram to the Council stating that the French were concerned about the ‘perspectives peu encourageantes’10 of the new wine policy, and presented the French request to have an extraordinary session of the CSA dedicated to the topic as soon as possible. At this meeting, the French wished to discuss having a round of exceptional distillation, which they had previously told the Council was a request that was a direct result of the fact that the CWP as it stood had not been crafted to address the concerns the French had consistently raised – it was instead ‘pas suffisamment rigoureux’ especially when it came to ‘le classement communautaire des cépages, la fixation des titres alcoométriques naturels minima, l’enrichissement par sucrage.’11 It was notably the French region of Languedoc-Roussillon that was one of those most obviously benefitting from this lack of rigour. As a result of the case the French brought forward, the crux of which rested on the insufficient income of winegrowers from current table wine pricing, another round of distillation – this time for 3.5 million hectolitres – was called for.12 Even with consumption insufficient to meet growing production, officials believed the situation was manageable after the second season under the CWP; it seemed to them that ‘balance was restored’.13 But this was primarily a result of lower production (see below) after an initially high year depressed prices – both French and Italian prices dropped at the end of 1970 and French prices continued to fall the next season. This made the gap between production and consumption appear less troubling, though as previously discussed, many indicators pointed to systemic overproduction. The immediate and frequent use and need of 'Situation viti-vinicole de la Communauté: mesures de distillation'. Telegram from Étienne Burin de Roziers to the Council of Ministers. March 28, 1972. CM2 1972/860.1, CMA.
'Memorandum relatif au secteur viti-vinicole.' Memorandom establishing French position on the Community's wine policy. Undated. Forwarded to Council Secretary General Christian Calmes by Emile Cazimajou, Deputy Permanent Representative for France. May 18, 1972, CM2/1972 860.1, CMA.
Spahni, The Common Wine Policy and Price Stablisation, 44.
Niederbacher, Wine in the European Community, 44.
the intervention mechanisms concerned the Council and even prompted them to introduce measures to make storage easier.14
Compiled from information provided by the United Nations Food and Agriculture Organisation’s Statistics Division, accessed at www.faostat.fao.org.
The issue of systemic overproduction was aggravated by the economic environment. The early 1970s were pockmarked with economic uncertainty and downturn that was to continue through the decade. International currency problems were the foremost of the early issues.
Richard Nixon unilaterally closed the gold window in April 1971, centre-piece of the international economic order of the previous two and a half decades. He suspended dollar convertibility and moved from fixed to floating exchange rates, effectively collapsing the Bretton Woods Accord.16 Bretton Woods was a carefully negotiated international monetary order which championed fixed exchange rates – this system depended on an economic This was done by amending 816/70 to include Article 6a in 1971, which allowed easier recourse to storage aid.
Production of wine was negligible enough in Belgium, the Netherlands, and Luxembourg as to neither be very important in this context to the overall total in the EEC, nor to merit any record in FAOSTATS.
For more detailed treatments, see Jeffry A. Freiden and David A. Lake, International Political Economy:
Perspectives on Global Power and Wealth, 4th Edition (London: Routledge, 2004).; Eric Helleiner, States and the Reemergence of Global Finance: From Bretton Woods to the 1990s (Ithaca: Cornell, 1994).; Robert Gilpin, Global Political Economy: Understanding the International Economic Order (Oxford: Oxford University Press, 2001).; and Jr. Eckes, Alfred E., A Search for Solvency: Bretton Woods and the International Monetary System, 1941-1971 (Austin: University of Texas Press, 1975).
powerhouse to which all other countries were pegged. Nixon’s decision to float the dollar unhinged the system and other countries quickly followed suit and were forced to float.17 The dollar, already suffering, was unable to sustain the OPEC oil crisis of 1973; the result was, after two devaluations of the American dollar, the switch to floating in March 1973 by the European central banks. In this atmosphere, the threat of currency fluctuation was a pressing concern. To safeguard against this in the common market, in which free movement of goods was fundamental, a monetary policy was set up in the EEC. Alongside this, to protect agricultural goods in the Community, Monetary Compensatory Amounts (MCA) were introduced in 1969, a system of border taxes and subsidies of imports and exports which was to become an important component of CAP operations. MCAS were introduced to account for the differentials arising from the conversion of national currencies into the European Unit of Account (EUA), and were meant to be based on a single uniform price across the Community and it was this system that was dealt a particularly painful blow by the onset of exchange rate fluctuation.18 As the European currencies underwent oscillations due to significant changes in the international currency system, European currencies shifted noticeably in relation to the EUA.
The franc was an exception in that it was fairly stable at this time, though it was classed as a weak currency, reflecting the fact that it had lost twenty percent of its value vis-à-vis the Deutsche Mark in 1969, given the relative strength of other currencies like the deutsche mark.
Weak currencies had imports subsidised at the border while strong currencies had exports subsidised. The franc, classed as a weak currency, was therefore particularly susceptible to impact of Italian imports, as a direct result of the depreciations of the lira against the franc;
Joanne Gowa, Closing the Gold Window: Domestic Politics and the End of Bretton Woods (Ithaca: Cornell University Press, 1983).
Robert W. Ackrill, The Common Agricultural Policy (Sheffield: Sheffield Academic Press for the University Association for Contemporary European Studies, 2000), 31.