[Congressional Record Volume 144, Number 44 (Tuesday, April 21, 1998)]
[Extensions of Remarks]
[Pages E595-E596]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  AMERICAN WINE DELEGATION CONTRIBUTES TO IMPROVED U.S.-SOUTH AFRICAN 
                           BUSINESS RELATIONS

                                 ______
                                 

                       HON. GEORGE P. RADANOVICH

                             of california

                    in the house of representatives

                        Tuesday, April 21, 1998

  Mr. RADANOVICH. Mr. Speaker, fellow members of the House and Senate, 
and colleagues in the U.S. wine industry, last May 20th to 30th, 1997, 
I had the opportunity to again lend my support to an American 
Delegation of Viticulture and Enology that spent two weeks visiting and 
studying all aspects of the Republic of South Africa's wine industry.
  In April of 1996, I had the opportunity of providing support and 
guidance to a similar trip, the first officially invited U.S. wine 
delegation to visit the People's Republic of China since 1949. A 
summary of that report, which is still hailed as a primary source of 
information on the PRC wine industry, was entered into the 
Congressional Record of September 28, 1996, Vol. 142, No. 137, pp. 
E1776-E1777.
  The trip to South Africa, also organized under the sponsorship of the 
People to People Citizen Ambassador Program, was conducted for the 
purposes of establishing contacts at all levels of the South African 
wine industry, assessing the status and growth of the industry and 
identifying the potentials for American wine interest involvement, 
including trade, marketing, investment, and joint venture activities, 
as well as the problems that may be encountered in pursuing such 
business interests.
  The resulting 72-page delegation report entitled, ``A Window on the 
Wine Industry of South Africa,'' not only addresses the above points of 
interest, but provides a current picture of how the South African wine 
industry is structured and operates.
  Descriptions are given of the organization and functions of the 
various government elements that have oversight responsibilities for 
the nation's alcohol beverage industry, supporting research 
institutions, including the University of Stellenbosch's Viticulture 
and Oenology academic program, and other industry/private sector wine 
education initiatives. Also, vineyard management and winemaking 
practices in South Africa are addressed, along with site visit 
descriptions of the nation's largest wine cooperative, KWV, and several 
individual wineries from the most northerly positioned wine estate 
outside of Johannesburg to wine estates of the Cape Town region.
  This report, I feel, given the current national attention being 
focused on U.S.-South African relations, particularly in the field of 
business and trade, will serve as a valuable up-to-date source of 
information for anyone in the U.S. wine community who is interested in 
developing a business relationship with or in South Africa.
  I wish to commend the members of this delegation and its leader, 
Gordon Murchie, President of the Vinifera Wine Growers Association, for 
their professionalism in representing the United States in this 
valuable fact-finding and trade relations trip.
  It is with considerable pleasure that I offer the Prologue of this 
report, which not only summarizes the potentials and challenges for 
American wine industry involvement, but outlines how to proceed and who 
to contact, both in the United States and South Africa, to establish 
business and trade relations.
  The full report is available by contacting the Vinifera Wine Growers 
Association.
  For further information on making contact with the government or 
private sector agencies and organizations listed herein, please contact 
my Washington, D.C. office.


   SOUTH AFRICAN WINE INDUSTRY TRADE AND BUSINESS OVERVIEW--PROLOGUE

  South Africa is a proud nation with a history that dates back to 1652 
when the first European settlement was established by Jan van Riebeeck 
and his party at the Cape of Good Hope.
  It is one of the most developed countries on the continent of Africa. 
It boasts a highly sophisticated national infrastructure of 
transportation, communications, social and economic organizations. The 
water from the public system is potable in the entire country.
  But the nation, also, faces some of the most challenging social, 
labor, political and economic problems of any country. However, as the 
post apartheid period was achieved without a major civil uprising, the 
new South Africa is a nation of considerable domestic and international 
economic promise.
  South Africa's wine industry has a 342 year history. It is a 
developed, technologically sophisticated and fully modern industry. 
Generally, the level of viticultural and ecological practices and 
research are equal to any wine producing nation.
  With a population of approximately 43 million, a growing consumer 
base, and a developed product distribution and marketing system, the 
growth of domestic wine sales should continue to increase, inhibited 
only by the industry's inability to produce sufficient quantities to 
meet consumer demand. This is also true of South Africa's potentials of 
marketing its premium wines on the international market.
  Overall, if the South African wine industry can resolve the problems 
of limited water resources and lack of a dependable, trained, skilled, 
and affordable work force, there is little reason that South Africa 
cannot become a major wine exporting nation.
  The climate and opportunities for American wine industry joint 
venture and investment activities, as well as for the exporting of 
American wines to South Africa, are considerable. However, interested 
parties should first conduct an economic feasibility study on shipping 
bottled wines to the South African market. As the consumer base grows 
in South Africa, the appeal of international products also grows. The 
possibility of a joint venture arrangement of shipping bulk wine to 
South Africa for local bottling and marketing at competitive prices 
would appear most doable.
  One of the present drawbacks to doing business with South Africa, 
particularly as it applies to the alcohol beverage industry, is the 
complexity and diffusion of the government's bureaucracy that deals 
with the importation of alcohol beverage products. The number of 
government and quasi government entities that have jurisdiction or 
partial jurisdiction over taxes, tariffs, licensing, quality control, 
authentication of origin, etc., is confusing to say the least.
  This is a situation that the South African government and the wine 
industry are well aware of and are in the process of trying to 
restructure to be more export-import business friendly.

[[Page E596]]

  For the immediate future, however, it would appear that foreign wine 
interests should consider contacting and working through one of the 
established commercial agents in South Africa who knows how to work his 
or her way through the maze of import regulations and necessary paper 
work.
  For more complete information than contained in this report, a 
starting point for anyone interested in doing business with South 
Africa would be to contact the U.S. Department of Agriculture, Foreign 
Agriculture Service, Africa Desk, Washington, D.C. (Paul Hoffman, 
Africa Area Officer); and for current market information, contact the 
Department of Agriculture, Foreign Agricultural Service, Trade 
Assistance and Promotion Office, Washington, D.C.; or contact directly 
the U.S. Foreign Agricultural Service in Pretoria, South Africa. 
Additional information can be obtained by contacting the U.S. 
Department of Commerce, International Trade Administration, South 
Africa Desk, Washington, D.C., (office Industry Specialist for the 
Alcohol beverage industry is Donald Hodges); and the U.S. Trade 
Information Center for current commercial and economic information 
regarding South Africa.

  South Africa is a signatory to the Tokyo Round Agreement on Import 
Licensing Procedures. Among other products, alcohol beverage products 
require an import permit which the South African importer or foreign 
exporter agent obtains from the Directorate of Import and Export 
Control within the Department of Trade and Industry.
  Since the end of the trade embargo in 1994, U.S. companies can freely 
engage in trade activities with South Africa. But, again, it would be 
advisable for interested industry parties to check with several of the 
U.S. and South African industry-related government and private sector 
entities for advice and up-dated data on current export (e.g., tariff 
rates and customs valuations) and business regulations and procedures. 
For example, the Department of Commerce maintains a U.S. and Foreign 
Commercial Service (U.S. & F.C.S.) office in Johannesburg and a branch 
office in Cape Town. U.S. companies/individuals interested in doing 
wine-related business in South Africa may wish to contact these offices 
directly for further advice, information and recommended contacts: U.S. 
Foreign and Commercial Service, c/o American Consulate General, 
Johannesburg, S.A. and U.S. Foreign and Commercial Service, 
Johannesburg, or Cape Town, American Consulate General, c/o Department 
of State, Washington, D.C.
  Also, there are a number of U.S. and South African business 
organizations both in Washington, D.C., and in South Africa that are 
good sources of information and potential business contacts. They 
include the following: American Chamber of Commerce in Southern Africa; 
U.S.-South Africa Business Council, Washington, D.C.; and Investor 
Responsibility Research Center, Inc. (IRRC), Washington, D.C. The IRRC 
publishes a number of informational materials about American business 
activities in South Africa.
  For information on possible U.S. government assistance in the 
establishment of joint venture capital development projects, e.g., an 
American equipped bottling plant, contact the U.S. Trade and 
Development Agency, Africa Division, Washington, D.C., Mr. John 
Richter, Director.
  For more information on import permits, contact the Director of 
Imports and Exports, Department of Trade and Industry, South Africa.
  For more information on import policy and tariffs, contact the 
Commissioner, Customs and Excise Administration, Department of Finance, 
South Africa; South African Import and Export Association; South 
African Chamber of Business (SACOB); South African Foreign Trade 
Organization (SAFTO); or Embassy of South Africa, Economic/Commercial 
Section.
  Additionally, if one has an interest in marketing a U.S. wine product 
in South Africa, there is the benefit of being able to access an in-
country modern public media network and advertising resource. For 
further information on advertising agencies and advertising programs in 
South Africa, inquiries should be directed to the Association of 
Advertising Agencies, Johannesburg, S.A.
  Current customs duties payable on importation of wine to the Republic 
of South Africa: Fortified--customs duty, .31   per liter; excise duty, 
.5315   per 100 liters; vat payable, 14%. Unfortified--customs duty, 
.31   per liter; excise duty, .36   per 100 liters; vat payable, 14%.
  The South African wine industry has made great strides forward with 
the application of modern scientific viticultural and enological 
practices and the use of state-of-the-art production equipment. The 
continuing research into varieties, soil types, disease and plant 
quality control, fermentation, etc., at the nation's research 
facilities will help ensure the future growth and economic viability of 
the South African wine industry.
  American business involvement in the evolving South African wine 
industry is worth investigating!
  Members of the Delegation: Gordon W. Murchie, Delegation Leader and 
President, Vinifera Wine Growers Association, Alexandria, Virginia; 
Professor Lena B. Brattsten, Department of Entomology, Rutgers 
University, Jackson, New Jersey; Leah J. Jones, Wine Label Sales, FP 
Label Company, Napa, California; Carolyn J. Kelley, M.Ed., Wakefield, 
Massachusetts; Michael & Jacque Martini, Louis M. Martini, Calistoga, 
California; Anita J. Murchie, Delegation Reporter, VWGA; Albert A. 
Oliveira Basport Vineyard, King City, California; Donna M. Oliveira, 
Amaral Vineyard, King City, California; Sharon Osgood, Esq., Law 
Offices of Sharon Osgood, Grand Island, New York; Wilburt E. Rojewsky, 
Alasco Rubber & Plastics Corp., Belmont, California.

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