No port, no sherry and no 15m euros
Business Report (South Africa) | October 15, 2007
No port, no sherry and no 15m euros
By Ronnie Morris
Cape Town — On January 27 2002, the oak trees outside the manor house at Nederburg Estate in Paarl bore mute testimony to the signing of a historic wine and spirits agreement between South Africa and the EU.
In return for free access to the EU and payment of €15 million (R143 million at Friday’s exchange rate), the South African government agreed to phase out the names port, sherry, grappa and ouzo over five years.
Five years later, disillusionment and frustration has set in, with port producers in fear that the EU will renege on the agreement.
Karel Nel, the chairman of the SA Port Producers’ Association, said the €15 million had not been paid, even though by 2012 South African producers had to desist from using the names port, sherry, grappa and ouzo.
The EU funds were intended to help producers that had lost the generic names to rebrand their products in the local market. However, the bulk of the money was earmarked to fund transformation of the industry.
Nel said the funds were needed to start advertising and introducing the names Cape Ruby or Cape Tawny. His organisation, which had 32 members representing 80 percent of port producers, was awaiting the outcome of negotiations to postpone the phasing out of the names.
Johan van Rooyen, the chief executive of the SA Wine Industry Council, the industry-wide body, said that apart from the EU funds, the biggest frustration was the particulars of the trade agreement with the EU and the treatment of South Africa compared with that of its competitors.
"Some of our competitors are treated far more equally than us, even though there is a World Trade Organization stipulation that you treat everyone equally."
A package of issues surrounding the free trade agreement was up for discussion, including the €15 million.
Van Rooyen said some of the disagreements were really "stupid’’ things, such as paperwork that was delaying matters tremendously, and the EU’s bureaucracy.
"There are about 20 issues, some of them less complex than others, such as labelling agreements. All these things effectively make the cost of doing business much higher. It’s impairing us in doing business in the way we should.
"We are saying, [we’ll go up to] here and no further. We want to obtain clarity on these things, which are making it more difficult for us to push our international trade."
Van Rooyen said the threat by port producers to continue using the names port and sherry beyond the cut-off date was not credible because the agreement had been signed.
However, port producers had done the right thing by asking for a postponement.
Frank Oberholzer, the EU’s press and information officer, said the €15 million was contingent on the wine and spirits agreement being ratified by South Africa’s department of trade and industry.
"Once there’s a ratification, I am firmly of the belief that everything is pretty much on track," he said.
"The €15 million is contingent on that signature, so that’s entirely in the hands of the South African authorities."
Comment could not be obtained from the department.
