Chairman GIBBONS. Thank you, Mr. Davis. Mr. Frenzel. Mr. FRENZEL. Thank you, Mr. Davis. That is interesting testimony. Can you review again who the National Association of Beverage Importers are? Mr. DAVIS. Yes, sir, we have about 120 companies which import wine, spirits, and beer into the United States. Mr. FRENZEL. Are you an association executive or do you represent one of the members as well? Mr. DAVIS. I am president of the association and do not represent any single member. Chairman GIBBONS. OK. Mr. FRENZEL. On page 6 of your testimony, you talk about an ITC decision. Previous witnesses have indicated that because of that decision, that they were cut out of that decision on a technicality and to be sure as near as I can figure that their own injury was perhaps not determined. But your quotation indicates that the ITC did investigate and found that there was no injury. Mr. DAVIS. Yes. That was with respect to the domestic wine injury as opposed to the grape growers. Mr. FRENZEL. OK. And your testimony also indicates that there was serious overplanting? Mr. DAVIS. Yes. That would appear from the production figures that we have. There is no question Mr. FRENZEL. There was an increase of about 50 percent in grape production in 1 year, wasn't there? Mr. DAVIS. No. That was 1978 to 1982, 4 years. As previous testimony indicated, there is a serious surplus of wine in the United States as there is in Europe. Mr. FRENZEL. Well, I appreciate your testimony, particularly with respect to opposition of elements within the industry itself. I, too, am concerned about the designated major trading countries which are undesignated and I am somewhat concerned about the mandatory investigations. As you know, this committee has jurisdiction over the budget of the ITC and over portions of the budget of the Commerce Department and a load of a 20-nation investigation would make it impossible to do the other work that we have in mind for them in this year unless a case were brought in the normal course and there was some allegation that it looked like it had some merit to it. I thank you for your testimony here. Chairman GIBBONS. Thank you, Mr. Davis. I appreciate your reminding me that wine is made of substances other than grapes. Mr. DAVIS. Thank you. Chairman GIBBONS. Thank you, sir. Our next witness is Joseph Seagram, Seagram & Sons, and a number of the other different distillers in this country represented by Mr. James Lundquist, counsel, and Mr. Gunter von Conrad, counsel. STATEMENT OF JAMES H. LUNDQUIST, GUNTER VON CONRAD, AND MATTHEW J. CLARK, COUNSEL, BARNES, RICHARDSON & COLBURN, ON BEHALF OF JOSEPH E. SEAGRAM & SONS, INC.; SCHIEFFELIN & CO.; BROWN-FORMAN CORP.; HEUBLEIN INC.; AND HIRAM WALKER & SONS, INC. Chairman GIBBONS. Come right ahead. I didn't read a list of all your clients, but they are impressive. I have practiced law and wish I had all those, too. Mr. FRENZEL. Do they pay you or just send you Christmas presents? Mr. LUNDQUIST. We do this out of love for the service. I am Jim Lundquist, a partner in the firm of Barnes, Richardson & Colburn. With me is Gunter von Conrad, our partner, and my colleague, Matthew Clark. I am a resident of Long Island. Chairman GIBBONS. I didn't know they were growing grapes there now. Mr. LUNDQUIST. That is getting to be quite a fad there. We hope soon to have wines to export to the Washington community. Chairman GIBBONS. You should send us samples first. Mr. LUNDQUIST. In any event, this group includes Joseph E. Seagram & Sons, Inc.; Schieffelin & Company; Brown-Forman Corp. of Louisville, KY; Heublein of Connecticut; and Hiram Walker & Sons, Inc., of Michigan. We have appeared separately although we have appeared with the group that preceded us because we represent such names as Inglenook, Paul Masson, Almeden, Taylor California, and other names that are well known. Heublein is the second largest wine producer in the United States and Seagram is third and the biggest one, Gallo, didn't appear. I think we should think about that because we are concerned. I have plied trade waters since the Dillon Round. This is the first piece of legislation I have seen that I could say would blow us back to base one. We would be back to the Havana charter because it is product-specific and on these arguments, I know it is late and we will ask you to file our brief as part of the record. Chairman GIBBONS. It will be included in the record. Mr. LUNDQUIST. It is one of the few pieces of revised legislation that has gotten worse in 6 months and I will tell you why. The reasons you have stated, Mr. Frenzel, are the reasons that this bill would forecast a second trade war that even a general trade agreement authority would be hard pressed to settle. Isn't it strange that the Wine Institute could not accept any of the statistics we have? It won't accept the ITC statistics. It won't accept the Department of Commerce Bureau of Census statistics, so I suggest we take a look at their statistics. They are a matter of record. I will provide them for the record later and avert to them. Chairman GIBBONS. Fine. Mr. LUNDQUIST. The Californians, I will just talk about them. They have increased the production of wine grapes, table wine I should say, every year almost. There is a little bunch, but they increased from 385 in 1981 to 450 million gallons in 1982. Now, when someone increases their production so that it overtakes capacity and the world currency situation makes us on the east coast com pare bottles of wine and see the French and Italian product is less expensive to belly marketplace competition based on unsubsidized cost deferential, this is not a reason to pass bullet legislation that would take care of a single industry. Out of the wine-type grapes produced in the United States by the California industry in 1982, 96.9 percent of those, or 97 percent, were used to make wine. Perhaps the idea of an overproduction here is the thing we should be looking at rather than imports. One last figure. I quote from Impact, a recognized Californiabased newsletter, the 1983 edition. Mr. Chairman, I will provide this for the record, but here is the market trends that their industry shows and you can see that this is 1981 and in 1991, they estimate in this paragraph, which I will submit, an almost doubling of the market. At the invitation of the Honorable Sam M. Gibbons, Chairman of the Subcommittee on Trade of the Committee on Ways & Means, we are forwarding the following documents for inclusion in the record of the hearing on H.R. 3795 and its substitute version held on Tuesday, July 24, 1984, in which we presented testimony on behalf of Joseph E. Seagram & Sons, Inc., Heublein Inc, Schieffelin & Co., Brown-Forman Corporation, and Hiram Walker & Sons, Inc.: - Copies of two statistical graphs, referred to by witness James H. Lundquist, demonstrating the projected increases in domestic consumption of table wines; and - A brief background and summary of points referred to by witness Gunter von Conrad regarding the actions of the California State Department of Food & Agriculture's proposed Wine and Wine Grape Improvement Program which became the subject of inquiries by the Honorable Bill Frenzel. |