WASHINGTON - U.S. Senator Charles E. Schumer urged the Treasury Department and the Department of Homeland Security to withdraw the October 15, proposals by the Bureau of Customs and Border Protection (CBP) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) that would significantly affect New York’s wine industry.

The CBP and TTB have proposed changes that would repeal a program that currently provides a rebate for wine producers and distributors who export NYS wine.  Under the program, any federal tax or duty that an American vineyard or distributer pays on wine imported from another country is refunded when that same entity exports American-made wine of roughly the same value.  Current duties and taxes on wine imports total approximately $1.30 per gallon.  Under the existing drawback program, the American vineyard or distributor gets a refund of these taxes and duties if they export a similarly-valued bottle of NYS-made wine.  The refund is a significant incentive for companies to export wine to Canada and overseas, and allows them to price those bottles more competitively, boosting sales and revenue for NYS vineyards.  This incentive program is known as “substitution drawback” because vineyards and distributors are “substituting” a US-produced bottle of wine for an imported bottle of wine. 

“Over the past decade, the wine industry in New York has profited greatly from the substitution drawback program,” said Schumer. “Preserving these measures will ensure the continued economic growth of the industry and level the playing field for U.S. businesses who want to grow their exports. That is why I am urging Treasury and DHS to withdraw these proposals and maintain the current drawback program.”

The value of U.S. wine exports has doubled in the past 10 years, exceeding $1 billion in 2008.  New York State is the third largest producer of wine (by volume) in the country, with over 200 million bottles produced annually, 255 wineries statewide, $420 million in sales, and 15,000 employees.  According to the United States Department of Agriculture, approximately 55 percent of wine made in New York is sold through distributors, a significant portion of which is exported to Canada.  Exports of NYS wine have grown exponentially – over 240 percent – in the past decade.  The value of exports is expected to top $45 million in 2009.  The dramatic increase in exports is due in large part to the availability of the drawback program, which allows refunds of federal taxes paid on imports when comparable merchandise is exported.

Schumer, along with 9 other Senators from the top wine-producing states, wrote to Treasury Secretary Timothy Geithner and Secretary of Homeland Security Janet Napolitano to encourage them to withdraw the CBP and TTB proposed regulations and retain the current drawback program.  Schumer warned that the­­ continued success and growth of the U.S. wine industry and U.S. wine exports is directly tied to the drawback program and that eliminating eligibility for refunds of duties and taxes on exports would restrict the industry’s economic potential in New York and across the country. Senators Kirsten Gillibrand, Dianne Feinstein, Barbara Boxer, Maria Cantwell, Patty Murray, Ron Wyden, Debbie Stabenow, Mary Landrieu, and Jeff Merkley signed on to Schumer’s letter.