Russia-France trade clash, as the Russian parliament passed the alcoholic drinks law, is a good example of why European democracies are losing out to the Kremlin.
The law, passed by the Russian parliament, says “Champagne” is only a product made in Russia. The same paper required French producers to sell their products in Russia as “sparkling wines”, despite the Regulation (EU) No.1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural products and foodstuffs.
Many legal structures reserve the word Champagne exclusively for sparkling wines from the Champagne region, made in accordance with Comité Interprofessionnel du vin de Champagne regulations. In the European Union and many other countries the name Champagne is legally protected by the Madrid system under an 1891 treaty, which reserved it for the sparkling wine produced in the eponymous region and adhering to the standards defined for it as an appellation d’origine contrôlée; the protection was reaffirmed in the Treaty of Versailles after World War I. Similar legal protection has been adopted by over 70 countries.
Most recently Australia, Chile, Brazil, Canada and China passed laws or signed agreements with Europe that limit the use of the term “Champagne” to only those products produced in the Champagne region. The United States bans the use from all new U.S.-produced wines. Russia, therefore, violated not just European laws, but also the Madrid system.
On Saturday the celebrated champagne producer Moët Hennessy, part of the LVMH luxury group that includes Veuve Clicquot, Ruinart, Mercier, Krug and Dom Pérignon, threatened to suspend exports to Russia.
But on Sunday, according to Bloomberg, the Champagne houses of Moet Hennessy will soon include a “sparkling wine” mention on their bottles shipped to Russia to respect a new law that reserves the name of the French region for bubbly wines made in the former Soviet country.
Russia imports almost 50m litres of sparkling wine every year. French champagne represents 13% of this market and Moët Hennessy only 2% of this.
The reason the law was passed in Russia is that Putin’s close friend and associate Yuri Kovalchuk, the billionaire owns the Novy Svet and Massandra wineries in Crimea, annexed by Moscow from Ukraine in 2014, that produce a product called Soviet champagne. That way, this illegal decision not only violates EU standards, but in fact legalizes Crimea’s annexation that triggered the sanctions against the Kremlin.
France has 16,200 champagne wine growers and 360 champagne houses, producing around 231m bottles a year. Champagne is made from only three grapes: pinot noir, meunier and chardonnay. The market is worth €4.2bn, of which €2.6bn is exports, with the UK and US the biggest customers.
This way, the market share for Moët Hen in Russia is about 130,000 liters a year. That volume can be easily marketed elsewhere. But the company got on board with Russian law that completely infringes EU rules, including those protecting geographical names in agricultural products. Such decisions all but encourage Russia to pass similar acts that infringe on the rights of European producers and further violate international standards.
The respond by the European countries to trampling on democracy, violating international law and the facts of crimes committed by Russians in Europe obviously lies at the heart of Moscow’s persisting aggressive policy, as it does not get in the way of Russia’s misguided and malign activity.
This example, de facto, reveals that European companies do not argue for the laws the EU adopted to protect them at the global market. That attitude might explain the reason why the international sanctions regime is not performing well. Eager to get profit, the companies are forced to favor law violation by other countries, as the desire by political regimes to stay in power pushes them to ignore violations by major companies. That cause-effect link is leading to a gradual loss of values by Europe.
Read also: Carrots and sticks
