Wine Exports Disasters Loom

An article on Wine Exports, with my comments between the   ***   ***:

It's impossible to spot from Interstate 5, but one of the success stories in the Obama administration's ambitious effort to double U.S. exports by 2015 can be found in a carefully watched vat of pinot noir at Willamette Valley Vineyards. 

*** “Doubling US exports by 2015” is another move to rip off taxpayers and blame the black guy.  The only way to do this is with massive subsidies, which rip off the taxpayer and the domestic consumer.  We could do this 60 years ago, but we no longer can.  This will fail, except for those who get early cash, and the failuer will be pinned on Obama.***

The Turner-based operation is joining the first major wave of Northwest wineries moving to expand their sales in Hong Kong -- a fast-emerging world wine capital -- that is a gateway to an even larger market in mainland China. 

***Well, somone has not done their homework.  Wine has been pouring in for about five years, at a bout $3 a litre.  Sounds like the plan is to hurry up and go out of business.***

And the pinot noir Erik McLaughlin is preparing to ship to burgeoning Asian markets, starting with Hong Kong, is nothing less than a liquid barometer for broader efforts to sell U.S. goods in foreign markets. 

"This is a significant venture for us," said McLaughlin, Willamette Valley Vineyards' national sales director. "It's truly the gateway to all of Asia." 

***Uh oh, I’ve seen this before, China fever.***

The wine McLaughlin wants to ship to Asia will help his bottom line, but in the larger scheme it is more significant for its symbolism than its raw, economic effect. His wine is literally a drop in the bucket of the larger effort to reboot the nation's stalled economy by selling more goods and services overseas. 

*** At $3 a litre?  Does he think he will get more?  Or is he hoping he can dump enough at $3 a litre to keep his domestic price high, and make it all even out?  To whom does he propose to sell?  How will he beat out all the other countries?  How will he beat Gallo, who has offices in Hong Kong and massive taxpayer subsidies?  Countless small wineries will shipwreck trading with China.***

"We need to export more of our goods," President Obama declared in January's State of the Union address. 

***How come?***

"Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America." 

*** This is nonsensical, and as a practical matter subsidizing exports only harms taxpayers and consumers.  This plan will fail too, like all other Bush/Obama plans.***

In a divided nation, the export goal is a rare point of agreement. The U.S. Chamber of Commerce supports it as do politicians across the political spectrum. Sen. Ron Wyden, D-Ore., for example, has long called for a robust increase in exports. So too has House Minority Leader John Boehner. Wyden estimates that only 4 percent of U.S. companies currently export. 

***Because the other 96% are too smart to export.  Our top three exports are agriculture, which destroys other countries ability to feed themselves, machinery and equipment, which ends up in the hands of our enemies, and oil, to buy friends.  the political spectrum is hardly divided, the dem and repub political masters together no longer believe in America, and agree they should stay in power no matter what.  But to do so, they need someone to blame...***

Wyden, who chairs a Senate subcommittee on International Trade, says boosting wine exports to Hong Kong is a positive step even if in dollar terms the total is small. 

"Sen. Wyden has been pushing the administration toward an export promotion strategy because it really is the biggest untapped opportunity we have for creating jobs and growing our economy here at home," spokeswoman Jennifer Hoelzer said. "This is an excellent example of how helping American businesses navigate trade policy and find markets for their goods overseas can create new opportunities for all sorts of Oregon businesses." 

***The vast untapped market is USA.  Buying and selling outsife of usa is a result of bad government policy.  if the politicians wanted jobs, they would reduce regulations and interference.  Exporting one’s way out of ecnomic trooubles never works.  But they know that.  Small wineries will overextend, the cash will go to huge wineries, “get big or get out” policy will be advanced.***

The Republican view is much the same, though there are sharp difference over specific terms of trade deals with individual countries. 

"Opening the door to new customers for American employers as soon as possible, especially at a time when businesses are critically short on customers, will have a direct and positive impact on supporting and creating American jobs," Boehner said in a December letter to Obama. 

***The sharp disagreement is repubs want the money to go to repub donors, the dems want the money to go to dem donors..***

And while wine from Oregon is a tiny part of overall trade policy, the pact with Hong Kong drew the attention of Commerce Secretary Gary Locke. 

"This agreement will help bring more American wine from all 50 states to Hong Kong's consumers and we are very excited by this development," told the American Chamber of Commerce and Trade Development Council, Hong Kong in May. 

***Florida wine...? alaska wine...? yeccchh... One minor problem, becuase of previous USA export policy, USA wine has a terrible reputation in Hong Kong and China.  More policy efforts will make for more bad reputation. ***

While Hong Kong by itself may be a growing market, it's proximity to, and ties with China make it appealing. China's "emerging middle class is sucking up merchandise," said John G. Murphy, vice president of international affairs for the U.S. Chamber of Commerce. 

*** Yes, at $3 a litre, both bad and good wine is shipped in and treated as junk... the logistics are poor to keep the cost down, why pay $1 a bottle more to keep it in temp controlled carriers? So when a bottle of usa is opened, the chinese gasp, no matter how good it started out, it is bad when opened.  USA export support is the worst thing that could have happened to usa wine exports in asia.***

This is the world that wineries from Oregon and Washington joined in May when they signed an agreement with Hong Kong to trade -- and promote -- wines from the region. It was helped by Hong Kong's desire to increase its profile in not just wine, but the art world and other luxury goods. 

***Yes, people in Hong Kong signed agreements that say USA govt officials will give taxpayers money to people in Hong Kong to promote Washington and Oregon wines, with no obligation on their part.  The USA money will increase people’s desire to buy wines.  if and when the people of hong kong act on that desire, they will buy French wines, not USA wine.  IN advertising, the benefits inure to the leader.  When Royal Crown Cola advertises, people buy more Coke.  When taxpyers fork over money to Hong Kong wine dealers, hong Kong will buy more French wine.  Our trade officials likley know this, but who cares.  They get to visit Hong Kong on our money.***

It also didn't hurt that Hong Kong is a gateway to China's immense market and that the principality in 2008 scrapped an 80 percent import tax. Wine imports jumped to nearly $500 million, almost 10 percent of which came from the U.S. 

***At $3 a litre, why does not anyone mention this?***

Then, in June, Oregon and Washington became the first entities -- nudging aside wine powerhouses such as France and California -- to sign a memorandum of understanding with the Hong Kong Commerce and Economic Development Bureau. 

***ROFL... we beat France and California onto an agreement to burn Washington and Oregon taxpayers, and raise our domestic prices.  Go team!***

While overall shipments remain relatively modest -- Washington exported more than $720,000 worth of wine to Hong Kong in 2009, while Oregon exported about $70,000, according to industry figures -- winery owners in both states say there's promise of much more to come. 

"The wine business there has just gone crazy," said Alex Sokol Blosser, co-president of Sokol Blosser Winery in Dundee. "Japan may still be the big kahuna in terms of Asian markets for us, but you really can't afford to overlook Hong Kong at this point." 

***I’ll bet Blosser is out of business in three years, based on nothing more than that statement.  If his domestic biz was sound, he would not be looking to export. Ther eis nothing crazy about cutting 80% taxes to zero and seeing an increase in business. if we want to see wine sales increase, then cut USA taxes to zero on wine, and watch USA sales of wine blossom.  Instead we’ll see small USA wineries fold, first those who try to export to China.***

An intriguing allure of Hong Kong and, beyond that, mainland China, lies in the fact that so many other export markets already are at capacity, said Ronni Lacroute, co-owner of WillaKenzie Estate Winery in Yamhill. 

"It will take years before we're at the same stage as we are in U.S. markets," she said. "But compared to those markets, Hong Kong and China have infinitely more potential for growth." 

***More crazy talk.  China market is at capacity right now. Outside of natural disaster, All markets are at capacity.  So it is just a matter of growing with a growing market.  This takes serving customers through passion and joy.  Export promotion has nothing to do with success.***

In Washington, new clusters of export brokers are popping up to help groups of seven to 10 wineries combine efforts to crack the Hong Kong market, said Lily Ferguson, the Washington Wine Commission's export manager. 

***Yes, preying on distressed winemakers and shipping out good stuff at $3 a litre, which is disrespected and handled poorly.  Fist step, get rid of the Wahington Wine Commission.***

In terms of sheer volume, export figures from Washington to Hong Kong weren't overwhelming when last reported, at the end of June 2009, Ferguson said. But she predicted much higher figures when new numbers come out later this month. Nationally, however, Hong Kong has become the fourth-largest importer of wine from the United States. 

***At $3 a litre, on average.***

Given the costs of shipping and marketing, larger producers are likely to pave the way for smaller operations, said Al Portney, vice president of international sales for Washington wine giant Ste. Michelle Wine Estates, which owns Erath Winery in Dundee. 

"We have the means to invest and develop markets like this," Portney said. "In the end, I think a lot of people will benefit from this." 

***Of course not in a free market.  Giant Ste. Michelle would not export an ounce if it were not for massive subsidies.  Ste. Michelle will be buying up the small wineries for pennies on the dollar as the small wineries go under as a part of the US Govt “get big or get out” policy.***

The White House and economists say exports by small businesses are helpful in that they also open markets for larger sales of goods and services from bigger companies. 

***Hmm... true, and it directly contradicts the previous paragraphs, but who cares?  Point is, if true, why not step back and let that happen?***

Right now, the White House will take any help it can get. The Commerce Department reported last week that June imports jumped while exports dropped, pushing the trade gap to its widest point in two years. 

***the Obama administration’s job is to take the blame for Bush/Clinton policy failures, so it cannot expect any help.***

More than 250,000 small businesses are currently exporting goods and services, according to the federal records. Yet in dollar terms, those firms account for about one-third of the total value of exports. 

That imbalance is why groups like the Chamber of Commerce and Republicans in Congress are pressing the administration to move forward with trade agreements. Agreements with Colombia, Panama are currently pending but disagreements on Capitol Hill have stalled progress. 

*** Healthy economoies export healthy amounts.  If we want to promote exports, then reduce burden of govt on domestic businesses. No one, but no one, is calling for that.***

Yet even if political and economic differences block those agreements, Hong Kong's door will remain open for Oregon wineries, which supporters and the White House hope will lead to bigger deals and a better economy. 

***the only differences is who gets the loot coming from the rip-off of taxpyers and consumers.  Dem or repub?***

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