EU trade pact will flood Korea with cheap wine

Korean oenophiles will have reason to rejoice when the Korea-EU free trade deal, which was nearly finalized on Monday, is finally ratified, since the pact will eliminate the 15 percent tariff on European wine imports here, leading to an expected 13 percent decrease in consumer prices, according to industry representatives.

For example, a Chateau Mouton Rothschild (2004) now priced at 1.5 million won ($1,200) will sell for 1.3 million, while a Chateau Talbot (2005) will go from 220,000 to 191,400 won.

Wine experts welcome the changes in price as they will help boost overall consumption, which has dropped recently due to the bad economy.

“European wine, especially from France, is relatively more expensive than wine from New Zealand, Australia and Chile,” said Kim Ji-ye from Winenara, one of the biggest wine distribution companies in Korea. “Opening trade barriers between Korea and the EU will offer consumers a chance to taste and purchase wine at a more reasonable price, which will increase overall wine sales,” she said.

The local wine industry enjoyed a boom after the Korea-Chile free trade deal was ratified in 2004, when the 15 percent levy was phased out at about 3 percent per year over five years. Consumers responded by buying more Chilean wine. In 2003, wine from the South American country accounted for just 7 percent of the import wine market, but by last year that had increased to 18 percent.

Industry experts say sales of European wines will also rise.

“Many people here tend to avoid buying European wine because of the relatively expensive prices compared to wines from Chile or Australia,” said an industry official. “With the Korea-EU trade agreement, European wine will become more competitive and will expand its market share.”

As of 2008, France enjoyed the largest share of the imported wine market in Korea with 39 percent, followed by Chile. Italian wine ranked third with 14 percent, while Spanish wine was in sixth with 5 percent and German wine seventh with 2 percent.

Not everyone is pleased. Local wine producer Yoon Hyo-joong from Wine Korea even worries that he could be driven out of business.

“I feel hopeless,” Yoon said. “Currently, Korean wine takes up only 8 to 10 percent of the overall wine market, here but this will decrease with lower costs for European wine.” He said that in order for Korean wine to compete, the government should ease the 30 percent tax imposed on alcoholic drinks