Communication from the Commission to the Council and the European Parliament - Towards a sustainable European wine sector {SEC(2006) 770 SEC(2006) 780}
Date: 2006-06-22
Institutions: European Commission
Subjects: common organisation of markets, deregulation, labelling, reform of the CAP, viticulture

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.06.2006 
COM(2006) 319 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Towards a sustainable European wine sector 

{SEC(2006) 770 
SEC(2006) 780} 

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COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Towards a sustainable European wine sector 

BACKGROUND 

This  Communication  represents  a  Commission  initiative  as  part  of  the  continuing  common 
agricultural policy (CAP) reforms of 20031, 20042 and 20053, which cover all the main sectors 
except  wine  and  fruit  and  vegetables.  The  deterioration  of  the  balance  between  supply  and 
demand  in  the  wine  sector  and  the  increasing  challenges  inherent  in  a  European  and 
international  wine  market  require  reform  of  the  sector.  Community  policies  on  sustainable 
development,  agreed  at  the  Göteborg  European  Council4,  on  greater  competitiveness  in  the 
Relaunched Lisbon Strategy5, and on Simplification and Better Regulation for the CAP6 also 
point in that direction. 

The European Union (EU) is the world’s leading producer, consumer, exporter and importer 
of wine. In terms of quality, its reputation is recognised worldwide. This has been earned by 
centuries  of  quality  wine  making  which  has  provided  consumers  worldwide  with  excellent 
quality products. In addition, it provides high value landscapes and allows a profitable use of 
land which might otherwise be abandoned – both of which are environmental assets, provided 
production is carried out in an environmentally respectful way. 

The  wine  sector  in  the  EU  represents  a  vital  economic  activity,  especially  as  regards 
employment  and  export  revenue.  With  more  than  1.5 million  holdings  using  3.4 million ha 
(2% of the EU-25 agricultural area) wine production in 2004 represented 5.4% of agricultural 
output.  Wine  production  represents  around  10%  of  the  value  of  agricultural  production  in 
France, Italy, Austria, Portugal, Luxembourg and Slovenia, and a little less in Spain. 

Council  Regulation  (EC)  No 1493/1999  on  the  common  organisation  in  wine  (wine  CMO) 
established  a  complex  EU  regime  notably  as  regards  production  potential,  market 
mechanisms,  wine  making  practices  (WMPs),  wine  classification,  labelling  and  trade. 
Supplementary layers of rules at national and regional levels add to the lack of clarity. This 
goes with subsidiarity, but simplification and transparency are also legitimate aims. 

Many support schemes have remained unchanged for some years, as has the level of aid they 
offer. All the measures financed from the Community’s budget need to be reviewed, notably 
because of the increasing tendency towards crisis distillation not only for table wine but for 
“quality wine” produced in specified regions (QWpsr). Crisis distillation, which used to be an 
exception, is increasingly becoming a regular practice, undertaken in three out of the last five 
years. It was requested by several Member States in the 2005/06 wine year, despite an 11% 
reduction  in  production,  for  significant  quantities  of  table  wine  and  “quality  wine”.  It  is 

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5 
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General CAP reform. 
Cotton, hops, olive oil, tobacco. 
Sugar. 
Presidency Conclusions, 15-16 June 2001. 
COM(2005) 24 final. 
COM(2005) 509 final. 

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necessary  therefore  to  ensure  that  future  policy  is  cost  effective  and  that  the  money  is  well 
spent. Moreover, from a public health point of view, concerns have been raised that subsidies 
to  potable  alcohol  distillation  artificially  lower  the  price  of  wine  spirits  which  are  high  in 
alcohol content. 

An  Impact  Assessment (IA)  covering  possible  options  for  a  new  Community  policy  for  the 
wine  sector  has  been  carried  out  to  ensure  synergy  with  other  Community  policies. 
It represents the work of all the relevant Commission departments and is presented together 
with this Communication. 

The Commission launched a public debate on future policy by holding a Wine Seminar with 
stakeholders  on  16 February 2006.  The  documents  of  the  Seminar  are  available  on  the 
European  Commission  website7.  The  Advisory  Group  on  Wine  has  also  discussed  the 
potential  reform  scenarios.  In  addition,  many  bilateral  meetings  have  been  organised  with  a 
wide range of stakeholders. 

1. 

CURRENT SITUATION AND MID-TERM FORECAST FOR THE WINE MARKET 

Since  1975/76,  the  European  problem  of  overproduction  has  been  addressed  by  a  policy  of 
limiting  production  potential,  and  encouraging  the  permanent  abandonment  of  production 
areas,  contributing  to  a  decrease  from  4.5 million ha  in 1976  to  3.2 million ha  in  2005. 
However, since 1996, optional implementation of the grubbing-up scheme by Member States 
has led to a decrease in uptake which, together with the allocation of new planting rights, has 
practically cancelled out earlier benefits. Wine production8 in the last five wine years varied 
between 166  and  196 million hl  for  the EU-25.  The  share  of QWpsr  in  the  total  EU wine 
production has been increasing and currently almost equals that of table wines. 

EU wine consumption has fallen significantly and steadily in recent decades. This trend has 
particularly affected table wine, whereas the consumption of QWpsr is growing, so that now 
the two have almost equal shares. 

Since 1996 the volume of wine imports into the EU-25 has been growing at a rate of 10% a 
year,  reaching  almost  11.8 million hl  in  2005.  So-called  “new  world”  wines  have  gained 
considerable  market  share  from  EU  wines.  The  volume  of  wine  exported  from  the 
Community has been increasing since 1996 but at a much slower rate than imports, to reach 
about 13.2 million hl in 2005. Overall, the EU remains a net wine exporter. 

The mid-term outlook for the EU wine sector until 2010/2011, under the assumption that the 
wine CMO is unchanged and on the basis of the expected trends in production, consumption 
and trade dynamics, is that excess wine production will increase up to 27 million hl (15% of 
production), or to 15 million hl (8.4% of production), if the quantities distilled with aid to the 
potable  alcohol  sector  are  not  considered  surplus.  The  surplus  is  a  particularly  serious 
problem  for  table  wine  but  the  situation  of  QWpsr  has  also  deteriorated.  The  EU-27  wine 
balance is outlined in the IA. 

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At http://europa.eu.int/comm/agriculture/capreform/wine/index_en.htm. 
Total wine production = vinified production + production of grape musts and juices. 

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2. 

THE WINE CMO TODAY 

The wine CMO is organised around a comprehensive but complex set of policy tools. Three 
measures aim at managing production potential, by limiting planting rights and by supporting 
structural improvement through (a) permanent grubbing-up and (b) restructuring/reconversion 
programmes  focusing  on  adapting  quality  and  quantity  to  consumer  demand.  The  planting 
rights restrictions, including a ban on new plantings, are valid until 31 July 2010. 

The internal market measures include traditional measures such as crisis distillation of surplus 
wine  and  distillation  of  surplus  wine  from  dual  purpose  grapes.  The  aim  is  to  limit  price 
decreases.  Then  there  is  compulsory  distillation  of  lees  and  marc,  by-products  of  wine 
making,  to  avoid  over-pressing  of  grapes  and  improve  wine  quality.  Finally,  there  is  the 
distillation of table wine into potable alcohol for use in the spirit drinks industry, its purpose 
being to maintain certain parts of the potable alcohol sector as a traditional outlet for wine. 

To  avoid  market  disturbance  and  its  consequences,  aid  is  paid  for  the  temporary  private 
storage of wine and grape must. In addition, aid is available to encourage the alternative use 
of  grape  must,  notably  for  enrichment  and  grape  juice.  The  CMO  also  includes  traditional 
trade  mechanisms  such  as  duties,  refunds  and  licences.  Agreements  with  non-EU  countries 
have also been concluded. 

The  wine  CMO,  contrary  to  most  others,  provides  a  full  set  of  rules  governing  definitions, 
QWpsr and table wine with a Geographical Indication (GI), WMPs, and labelling, ensuring a 
fair and transparent standard of quality for consumers. 

3. 

PROBLEMS IDENTIFIED WITH TODAY’S CMO AND CHANGING CIRCUMSTANCES 

3.1.  Market situation 

•  EU wine consumption, is declining by about 750 000 hl or 0.65% annually. 

•  Consumption patterns in general and those of wine in particular, are changing, as 

are lifestyles. 

•  The  structural  surplus  is  estimated  at  about  15 million hl  of  wine,  which  is 

equivalent to about 8.4% of EU-27 wine production. 

•  Intervention via distillation is required to remove about 15% of wine production 

every year. 

•  Wine  stocks  which  exceed  one  year’s  production  are  increasing,  with  little 
prospect  of  disposing  of  them.  This  exerts  downward  pressure  on  prices  and 
producers’ incomes. 

•  Imports  are  increasing  at  a  faster  rate  than  exports,  the  gap  is  narrowing  and 
imports  may  soon  exceed  exports.  The  world  trade  in  wine  is  already  highly 
liberalised, with EU wine import duty at low levels. 

•  The  surge  in  “new  world”  wine  production  and  sales  highlights  the  need  for 

EU wine producers to become more competitive. 

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3.2. 

Regulating production potential 

•  The success of the ban on planting rights in curbing production potential is limited 
by the granting of new additional planting rights and by the increase in yields in 
some Member States. 

•  Planting rights increase the cost of production and act as a brake on rationalisation 

of the structure of holdings, reducing competitiveness. 

•  Non-EU countries do not apply such planting restrictions. 

•  The  restructuring  and  conversion  scheme  has  enabled  producers  to  upgrade  to 
“quality wine” but could also lead to an increase in production. It may sometimes 
cover normal renewal, which would defeat its purpose. 

•  The use of the grubbing-up scheme has virtually stopped since 1996. 

•  After many years, some Member States have still not dealt with certain so-called 
irregular  vineyards  (planted  before  1  September  1998)  or  the  grubbing-up  of 
certain so-called illicit vineyards (planted from 1 September 1998). The areas for 
which  regularisation  has  been  refused  and  which  are  still  under  examination 
amount to about 68 100 ha, or about 2% of the total EU-25 area under vines. 

3.3.  Market support measures 

•  Market support measures in the form of distillation are not very effective in terms 
of  securing  vine  growers'  income  and  serve  as  a  permanent  outlet  sustaining  an 
unsaleable surplus. 

•  Crisis distillation, designed to tackle conjunctural surpluses, is used as a structural 

measure and now also covers “quality wines”. 

•  The  private  storage  aid  scheme  has  become  a  structural  measure.  Wine  storage 

costs should be borne by the industry. 

3.4.  Wine-making practices, geographical indications and labelling 

•  The  rigidity  of  procedures  for  adopting  and  adapting  WMPs  hinders 

competitiveness. 

•  EU regulations are too complex, notably on definitions, WMPs, and classification, 

i.e. QWpsr, table wine with a GI and table wine. 

•  On QWpsr, there is no ‘quality’ concept at international level and no reference in 
Community legislation to the concept of ‘geographical indication’ as defined by 
the  WTO’s  Trade  Related  Aspects  of  Intellectual  Property  Rights  (TRIPs) 
Agreement. Besides, in recent decades, there has been an increase in the number 
of QWpsr and table wines with GIs, which leads to customer confusion, weakens 
the Community GI policy in the EU and abroad, and contributes to the decline of 
the market situation. 

•  On labelling: 

– 

consumers  are  confused  by  wine  labels  resulting  from  a  complex  legal 
system consisting of a mixture of legal instruments which deal differently 
with several wine categories and with some particulars depending on the 
product; 

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– 

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certain  inflexible  labelling  rules  hamper  the  marketing  of  European 
wines.  A  major  drawback  is  the  prohibition  of  the  indication  of  the 
vintage and the vine variety on table wine without a GI; 

non-EU  countries  regularly  criticise  European  labelling  policy  as  far  as 
the  sales  designation  (for  example,  QWpsr,  table  wine  with  a  GI  and 
table  wine),  the  use  of  optional  indications,  the  reservation  of  bottle 
shapes  and  the  policy  on  traditional  terms  are  concerned.  In  that 
connection the review of the labelling rules should take into account their 
impact  on  imports  from  third  countries  and  the  EC’s  international 
obligations. 

•  Independent  analysis  suggests  that  appropriate  liberalisation  of  wine-making 
practices, in line with International Wine and Vine Organisation (OIV) rules, and 
more  consumer-oriented  labelling  would  enable  EU  wine  producers  to  expand 
their  outlets  and 
their 
improve 
competitiveness and reducing the structural imbalance. 

their  marketing, 

improving 

thereby 

3.5. 

Health and lifestyle 

In  recent  years  concerns  have  grown  about  the  increasing  trend  of  high  risk 
consumption of alcohol among young people. However, there appear to be beneficial 
impacts  on  health  among  older  people.  Information  on  the  advantages  and  the 
benefits  of  moderate  and  responsible  consumption  of  wine  as  well  as  information 
related  to  alcohol-harm  has  to  be  provided  to  all  concerned.  Community  policy 
should reflect this. 

4. 

OBJECTIVES FOR A NEW EU WINE POLICY 

Against  this  background,  the  future  regime  should  ensure  sustainability  for 
producers, make provision for the smooth integration of Bulgaria and Romania and 
the full respect of our international obligations. The EU wine sector is producing the 
best wine in the world and has a huge potential that should be further developed in a 
sustainable manner. The policy also has to react to changing circumstances in order 
to: 

– 

– 

– 

increase  the  competitiveness  of  the  EU’s  wine  producers;  strengthen  the 
reputation of EU quality wine as the best in the world; recover old markets and 
win new ones in the EU and worldwide;  

create a wine regime that operates through clear, simple rules – effective rules 
that balance supply and demand; 

create a wine regime that preserves the best traditions of EU wine production, 
reinforces the social fabric of many rural areas, and ensures that all production 
respects the environment. 

The new EU wine policy should also take in due consideration increased concerns of 
society on health and consumer protection. 

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5. 

OPTIONS  EVALUATED  IN  THE  IMPACT  ASSESSMENT  WHICH  DO  NOT  PROVIDE  AN 
ADEQUATE SOLUTION 

Taking  into  account  the  situation  of  the  sector  and  the  policy  objectives  to  be 
achieved,  the  Commission  considered  four  possible  options  for  the  reform  of  the 
wine CMO. Three of these options – to maintain the status quo, to reform the wine 
CMO  along  the  lines  of  the  CAP  reform  model  and  to  pursue  a  complete 
deregulation – do not provide adequate answers to the problems, the needs and the 
particularities of the wine sector. 

5.1. 

Status quo with possibly some limited adjustments 

In view of the serious difficulties of the current CMO in terms of: 

– 

– 

– 

achieving a better market balance, 

applying  the  rules  correctly  in  some  Member  States,  notably  the  planting 
restrictions, and 

fitting in with the reformed CAP, 

a merely cosmetic amendment would not be sustainable economically or politically. 

The  current  CMO  has  not  eliminated  surpluses  nor  provided  an  answer  to  other 
problems, notably the loss of competitiveness as highlighted by the requests for crisis 
distillation and by the increasing share of non-EU wines on EU markets. There is a 
broad consensus among various stakeholders that major changes are necessary. 

5.2. 

Reform along CAP reform lines 

The main innovation of the CAP reform is the decoupling of direct payments from 
the  type  of  production  and  the  introduction  of  the  Single  Payment  Scheme  (SPS). 
Significant  advantages  are  farming  flexibility,  market  orientation  and  WTO 
friendliness  through  green  box  classification.  One  possible  thrust  of  the  reform 
would be to shift all or part of the budget of the wine CMO to direct payments for 
vineyards  which  could  be  included  in  the  SPS.  Additional  advantages  would  be  a 
major  simplification  and  the  introduction  of  cross-compliance  for  all  vine  growers. 
However,  in  contrast  to  other  sectors,  there  would  be  no  obvious  equitable  way  of 
distributing SPS entitlements. 

On  the  basis  of  the  available  budget,  the  potential  amount  of  decoupled  payment 
would be very small for a permanent crop and would probably not compensate  the 
loss of market support for many growers. 

Abolition  of  market  measures  accompanied  by  decoupled  income  support  fully 
transfers the responsibility for adjusting to changed market situations to producers. If 
the  system  is  consequently  implemented  alone,  a  balanced  market  should  be 
achieved, but only in the medium to long term, and probably only after a major crisis 
in the sector leading to a massive adjustment process. 

5.3. 

Deregulation of the wine market 

The  option  of  complete  deregulation  would  imply  the  abolition  of  all  policy 
instruments for the management of the production potential and of the market. Tools 
such  as  the  ban  on new  plantings,  and  grubbing-up,  the  policy  of  restructuring  and 

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reconversion  and  all  market  measures  would  be  abolished,  leading  to  complete 
liberalisation of the sector. The budget would be either suppressed or transferred to 
the second pillar for RD policy in general. 

The harsh adjustment required by the immediate implementation of this policy and 
the lack of accompanying structural measures would produce in the short term severe 
negative economic and social impacts on the regions concerned. 

6. 

PROFOUND REFORM OF THE WINE CMO 

Recognising the problems and the potential of the sector and its particularities, and 
following the in-depth analysis in the Impact Assessment, there is a need to keep a 
specific wine CMO which must, without doubt, be fundamentally reformed. 

The  challenge  is  to  adapt  the  regulatory  framework  and  the  production  structure  to 
obtain  a  sustainable  and  competitive  European  wine  industry  with  long-term 
prospects  while,  at  the  same  time,  ensuring  the  use  of  the  budgetary  means  in  the 
most cost-effective manner. 

The  Commission  considers  this  option  as  the  most  appropriate  response  to  the 
challenges. Two variants are identified. The first one would provide quick answers to 
the  present  difficulties  but  requires  rapid  and  demanding  adjustment  of  the  sector. 
The  second  would  obtain  the  same  result,  but  phased  in  over  time,  which  would 
allow the rural economy and the social fabric to adjust more smoothly. 

6.1. 

Profound Reform of the CMO – Variant A – One-step 

Abolishing the Planting Rights and Grubbing-up Scheme 

The  system  of  planting  rights  restrictions  would  be  either  allowed  to  expire  on 
1 August 2010, or be abolished immediately. However, rules regarding access to GIs 
would de facto limit the number of hectares. 

The current grubbing-up scheme would also be abolished at the same time. 

Each hectare of vineyard grubbed-up at the farmer’s expense would become part of 
the area eligible for the SPS. 

6.2. 

Profound Reform of the CMO – Variant B – Two-step 

This  approach  is  analogous  to  that  adopted  for  the  sugar  sector  –  the  first  phase  is 
restoring market balance and the second phase is building improved competitiveness, 
including the abolition of planting rights. The principal feature of variant B would be 
a  structural  adjustment,  i.e.  temporarily  reactivating  the  grubbing-up  scheme.  The 
system of restrictions on planting rights would be extended until 2013, when it would 
expire.  The  least  competitive  wine  producers  would  have  a  strong  incentive  to  sell 
their planting rights. Rapidly, competitive producers can be expected to focus more 
on the competitiveness of their enterprise, as the cost of planting rights will no longer 
hamper  expansion.  In  the  medium  to  long term  this  would  represent  a  reduction  in 
their fixed production costs. 

The  grubbing-up  premium  will  be  set  at  an  attractive  level.  To encourage  take-up 
from  year 1,  a  decreasing  scale  would  be  set  for  the  premium  over  the  remaining 

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period of planting rights. The aim is to grub up 400 000 ha in the EU over a five-year 
period with a maximum total aid of about EUR 2 400 million. 

Vine growers should be free to choose to grub up or not. 

The  agricultural  area  formerly  used  for  vine  production,  once  grubbed  up,  would 
qualify  as  an  eligible  area  under  the  SPS  and  be  granted  the  average  regional 
decoupled direct payment. 

The Member State envelope could be topped up by a certain amount per grubbed up 
hectare. 

Minimum environmental requirement would be attached to the grubbing up premia 
to avoid land degradation. 

6.3. 

COMMON FEATURES OF VARIANTS A AND B 

Both variants contain common measures such as: 

6.3.1.  Abolishing market management measures and introducing more forward-looking 

measures 

Market management tools would be abolished from day one, namely: 

•  support for by-product distillation, 

•  potable alcohol and dual-purpose grape distillation, 

•  private storage support, 

•  must aid in relation with enrichment and for making grape juice. 

The  crisis  distillation  measure  would  be  abolished,  or  replaced  by  an  alternative 
safety net mechanism using the national envelope. 

6.3.2.  National envelope 

A budget envelope would be made available to each wine-producing Member State, 
calculated according to objective criteria, with which it would be allowed to finance 
measures, according to its preference, from a given menu. There would, however, be 
more resources available at the beginning under variant A because of the absence of 
grubbing-up expenditure. 

This  envelope  could  be  used  by  Member  States,  for  example,  for  certain  crisis 
management measures such as for insurance against natural disasters, for providing 
basic  coverage  against  income  crises,  for  the  administrative  costs  of  setting  up  a 
sector-specific mutual fund9, and for measures such as green harvest. Its use would 
be  subject  to  certain  common  rules  (including  minimum  environmental  rules),  in 
order to avoid distortion of competition, and to approval by the Commission of the 
specific national programme. 

The  vineyard  restructuring/conversion  scheme  would  be  maintained  under  the 
national envelope. 

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COM(2005) 74 final. 

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6.3.3.  Rural development (RD) 

Many measures could be part of the RD plans adopted by the Member States. Early 
retirement  and  agri-environment  support  could  provide  significant  encouragement 
and  benefit  for  vine  growers.  Farmers  who  decide  to  stop  all  commercial  farming 
activity definitively for the purpose of transferring the holding to other farmers may 
benefit  from  a  maximum  of  €18 000/year  and  a  maximum  of  €180 000  for  a 
maximum of fifteen years. Agri-environment measures to cover additional costs and 
income  foregone  in  providing  and  maintaining  vinescapes/cultural  landscapes  may 
amount to a maximum of €900/ha for a period of between five and seven years. As 
the 2007-2013 RD planning process is in progress, and in order to encourage these 
measures, a transfer of funds between budget headings (market and direct payments 
on  the  one  hand  and  RD  on  the  other  hand)  would  be  necessary  and  would  be 
earmarked for the wine producing regions in line with what was done in the tobacco 
and  cotton  sectors.  Such  development  programmes  could  play  an  important  role  in 
the economic welfare of wine sector stakeholders in the future and in preserving the 
environment in the wine producing regions. 

6.3.4.  Quality policy/geographical indications 

The quality policy would be made clearer, simpler, more transparent, and thus more 
effective, by: 

a) 

b) 

c) 

Substantially revising the current quality regulatory framework, with a view to 
enhancing the conformity of EC quality policy as regards international rules. In 
particular  it  should  be  clearly  aligned  with  the  provisions  of  the  TRIPs 
Agreement. Moreover, the wine quality policy incorporated in the CMO would 
be made consistent with the horizontal quality policy (on Protected Geographic 
Indications  (PGIs)  and  Protected  Designation  of  Origin  (PDOs)).  The 
Commission  proposes  to  establish  two  classes  of  wines:  wine without GI and 
wine with GI. Wines with GI would be further divided into wines with a PGI 
and  wines  with  a  PDO.  A  procedure  for  registration  and  protection  of  GIs 
would need to be established. 

The  concept  of  EU quality  wines  is  based  on  a  geographical  origin  approach 
(quality  wine produced in specified region). The EU wants  to confirm,  adapt, 
promote and enhance this concept worldwide. 

Expanding the role of the interprofessional organisations in order to be able to 
control  and  manage  the  quality  of  the  wine  produced  in  their  territories. 
Control  instruments  should  be  reinforced  as  well,  in  particular  for  the 
production of ‘vin de cépage’. 

6.3.5.  Wine making practices 

The Commission would propose, regarding wine making practices (WMPs): 

– 

– 

to transfer from the Council to the Commission the responsibility for approving 
new or modifying existing WMPs, including taking over the acquis; 

to recognise OIV WMPs and filter at Commission level their incorporation into 
a Commission regulation; 

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– 

– 

– 

to authorise use in the EU of WMPs already agreed internationally for making 
wine to export to those destinations; 

to  delete  the  minimum  natural  alcohol  requirement  of  wine  which  becomes 
redundant  due  to  the  proposed  limitation  on  enrichment  and  there  is  a  legal 
minimum for alcoholic strength by volume of the wine marketed; 

to  ensure  an  acceptable  minimum  level  of  environmental  care  in  the  wine 
making process. 

6.3.6.  Enrichment 

The sugar reform accentuates the problem of using sugar instead of must in enriching 
the alcohol content of wine. There are three possibilities: increase the aid for must, to 
compensate the reduction in the sugar price, leave the level of aid unchanged, which 
may disturb the equilibrium, or remove the aid and ban the use of sugar. On balance, 
the  Commission  considers  the  latter  option  to  be  the  most  advantageous  since  it 
would result in significant savings in the budget and increase the outlets for must.  

Furthermore, the Commission proposes to reduce the maximum level of enrichment 
(with  grape  must)  to  2%  except  in  wine  growing  zone C  (meaning  certain  parts  of 
France,  Spain,  Portugal,  Slovakia,  Italy,  Hungary,  Slovenia,  Greece,  Cyprus,  and 
Malta) where the maximum should be 1%. 

6.3.7.  Labelling 

The Commission proposes to simplify the labelling provisions by setting up a single 
legal  framework  applying  to  all  the  different  categories  of  wine  and  particulars 
relating to them. It would be tailored to the expressed needs of consumers and more 
consistent with the wine quality policy. In particular, this would involve: 

– 

– 

– 

transfer of competence from the Council to the Commission; 

the  use  of  a  single  legal  tool  for  all  wines  by  complementing  the  rules  in  the 
horizontal  labelling  Directive  2000/13/EC  as  appropriate  to  meet  the 
particularities of the wine sector as regards compulsory and optional labelling 
needs; 

improving  the  flexibility  of  the  labelling  policy,  in  taking  into  account  the 
WTO policies, by: 1) removing the distinction between the rules on labelling 
wines with and without GIs, most importantly facilitating the indication of vine 
variety  and  vintage  on  wines  without  GI  status,  in  order  to  allow  EU  wine 
producers  to  market  “new  world”  type  wines  (i.e.  single  vine  variety),  and 
thereby put EU wine producers on an equal footing with external competitors, 
2) maintaining  and  improving  the  traditional  terms  system,  3)  adapting  the 
policy  on  trademarks,  4)  amending  the  language  rules  in  the  wine  sector  to 
allow  more  flexibility  on  the  use  of  languages,  5)  ensuring  health  and 
consumer  information  and  protection,  6)  fully  informing  the  consumer  of  the 
origin  of  the  product  through  appropriate  labelling  rules  on  traceability  and 
7) allowing  to  inform  consumers  on  the  environmental  aspects  of  production 
practices. 

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6.3.8.  Promotion and information 

Several  stakeholders,  in  particular  during  the  16 February  Seminar,  underlined  the 
need for increased emphasis on wine marketing. The Commission intends to pursue 
with  vigour  a  responsible  promotion  and  information  policy.  All  available 
opportunities  in  existing  Community  legislation  should  be  used  to  carry  out 
ambitious promotion projects outside the EU. 

Information  campaigns  on  responsible/moderate  wine  consumption  could  also  be 
considered within the EU. 

6.3.9.  Environment 

The Commission intends to ensure that the reform of the wine regime improves the 
environmental impacts of vine growing and wine making. In particular, it intends to 
include minimum environmental requirements for the wine sector covering the main 
pressures from the sector (notably, soil erosion and contamination, the use of plant 
protection products, and waste management). 

6.3.10.  WTO 

An  important  feature  of  the  profound  reform  will  be  to  make  the  new  wine  CMO 
WTO-friendly. Thus, current trade distorting (“Amber Box”) intervention measures 
will be eliminated, and where internal support measures continue to exist, preference 
will be given to “Green Box” measures. The present ban on vinification of imported 
must and blending of Community wines with non-EU wines will be examined in the 
same spirit. 

7. 

SO-CALLED IRREGULAR AND ILLICIT PLANTINGS 

Irrespective  of  the  removal  of  the  planting  ban,  economic  operators  and  Member 
States  have  to  comply  with  existing  Community  legislation  regarding  so-called 
irregular vineyards and illicit vineyards. Compliance with these rules is crucial to the 
functioning of the existing CMO. If the rules are not observed, the Commission will 
(continue  to)  take  appropriate  measures  in  the  framework  of  the  clearance  of 
accounts  procedures  or,  if  necessary,  initiate  infringement  procedures  under 
Article 226 of the Treaty. 

8. 

BUDGETARY IMPACT 

Precise  estimates  of  the  budgetary  impact  of  the  measures  outlined  above  will  be 
established  when  the  formal  legislative  proposals  are  presented.  However,  the 
financial impact will not exceed levels of expenditure during the last years. 

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9. 

FINAL REMARKS 

The  Commission  is  of  the  opinion  that  a  fundamental  reform  of  the  wine  CMO  is 
necessary. 

The eventual implementation of these modifications should lead to simplification and 
better  regulation,  with  positive  consequences  on  limiting  the  management  and 
statistical monitoring costs, on easing implementation and controls, hence on limiting 
the  risk  of  fraud  and  misuse  of  public  funds.  In addition  it  would  increase 
management efficiency through a higher level of subsidiarity given to Member States 
for the determination of the type of measures they need to respond to their specific 
situation.  Finally,  a  reform  along  these  lines  will  significantly  strengthen  the 
Commission’s  possibility  to  defend  its  policy  in  all  international  fora,  which  it 
intends to pursue actively. 

With  this  Communication  the  Commission  invites  all  stakeholders  to  participate  in 
an  open  debate  on  the  future  wine  CMO,  which  will  assist  it  in  drafting  proposals 
before the end of this year. 

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