After a year-long intense consultation with all stekholders concerned, the Commission adopted on 4 July 2007 a proposal for reforming the Common Market Organisation for wine.
The purpose of the reform is to make better use of the annual budget of €1.3 billion to help the wine sector. "We currently spend around €500 million a year simply getting rid of wine for which there is no market. And if we do not reform, excess wine production is forecast to reach 15% of annual production by 2010," said Agriculture and Rural Development Commissioner Mariann Fischer Boel.
The Commission therefore proposes the abolition of all inefficient market support measures like distillation, aid for storage or export subsidies as well as ban on the use of sugar for enriching wine, contrary to International Organisation of Vine and Wine (OIV) definitions.
In return, the EU executive plans to give uncompetitive wine producers financial incentives to encourage them, on a voluntary basis, to dig up their vines and leave the sector. The target is to get rid off of some 200,000 hectares of vine, with €430 million foreseen for this purpose for the first year. The budget for this grubbing-up premium will gradually decrease to €59 million in the fifth year, strongly encouraging the uncompetitive producers to do so already in the first year.
One of the main aims of the proposed reform is "to increase the competitiveness of the EU's wine-producers, strengthen the reputation of EU quality wine as the best in the world, recover old markets and win new ones," said Commissioner Boel adding that an extra €120 million per year, some 10% of the total wine budget, is proposed to be earmarked for promoting European wines in third countries. In addition, extra funding for rural development policy is to be "ring-fenced" for wine regions.
With regard to wine-making practices, the Commission proposes aligning EU's list of permitted practices with those accepted by OIV. As to labelling rules, the concept of EU quality wines would be based on geographical origins to make labelling simpler.