The Effects of British Tariffs on the French Wine Industry (1700-1860)

The Effects of British Tariffs on the French Wine Industry (1700-1860)

France’s world dominance in the wine industry goes back to the 15^th century. Wine production and exports had long been a significant source of income for the country, especially from the seventeenth to nineteenth centuries. Apart from wine, France also dominated the world market by supplying other products. Wine’s popularity set it up for easy taxation by authorities at the exchange point.

Like any international transaction, France’s wine exports were influenced by changing political winds. One major importer of French wine was Britain. Britain had risen to be a major wine business partner as the drink became a favorite for the British. In particular, French wine became a common phenomenon in Charles II’s court. The British provided a large market for French wine establishing France’s monopoly in British wine imports. Bordeaux was the leading British wine supplier and still is an important wine region today.

Introduction of British Tariffs on the French Wine

Admittedly, Britain was concerned about its dependence on France for wine. The changing political influences led to a shift from France to Portugal. The shift was intended to reduce reliance and was reflected in tariffs. After the War of Grand Alliance and the War of the Spanish Succession, the British introduced tariffs that favored Portuguese products but stifled French imports. Prior to the shift, the French winemakers, especially in Bordeaux, dreamed of a booming business lasting many years. However, their dream was short-lived. The introduction of tariffs on French products, including wine, significantly impacted the French wine industry.

As stated above, one of the triggers for the changing business environment in France was the end of the War of the Spanish Succession. The war destabilized the market, and the British developed a new relationship with Portugal. “In 1713 Parliament rejected most favored nation articles in the commercial treaty with France, while maintaining the Methuen Treaty with Portugal.”[1] The treaty allowed for an exchange of English wool for Portuguese wine. Additionally, the French exporters were forced to pay more for their wines despite being lighter in alcoholic content than the Portuguese and Spanish.

British tariffs were applied on a fixed volumetric basis, raising duties even for the cheapest wines. As a result, affordable wines declined in the British market for most of the 18^th and early 19^th centuries. Due to the introduced charges, British demand for French wine decreased significantly. It is important to note that Britain was the largest importer of French wine at the time. The decline in demand due to the tariffs reduced income for French winemakers leading to an economic shock, especially in Bordeaux.

British domestic charges were also manipulated to reduce competition from cheap French wines. These changes gave the beer a reasonable protection margin and contributed to the discriminatory and prohibitive measures against French wine. As a result, affordable French wines could not be imported.

Did you know? From the start of the 18^th century to the mid-19^th century, only “the highest quality and highest priced French wines,”[2] such as red Bordeaux, were imported into the British market.

A Blessing in Disguise

Introducing fixed volumetric tariffs on wine from France shifted dynamics in the winemaking practices. French winemakers opted for making the “highest quality and highest priced wines.”[3] Therefore, they adopted new winemaking practices that encourage extended cellaring and producing high-quality wines. While British tariffs may have aimed to reduce French wine exports to Britain, they led to the adoption of new methods for producing high-quality wines in France. By the end of the 19^th century, France had earned a reputation for producing the finest wines in the world. French vignerons innovated new winemaking practices to ensure high-quality wine production in the preceding years. Nevertheless, the discovery of new winemaking practices could prove useful later after tariffs were eased.

Read: French Wine Production During the 1900s & First World War

France’s Absolute Advantage

Britain had long wanted to overcome dependence on its economic rival. Its efforts are demonstrated by the tariffs and the support she offered Portugal in viticulture and wine production. Britain sent experts to teach Portuguese vignerons how to produce wine that could resemble French’s finest.

However, many high-class individuals retained their ability to acquire high-quality French wines and continued supporting the French wine industry regardless of the tariffs. But the lower classes could no longer afford the French wine and instead began drinking locally produced beer and spirits. Therefore, the French only retained the advantage of producing high-quality wines accessible to the British high-class set, while cheap wines could not penetrate the market due to high duties.

On This Day in Wine History

December 27, 1703 – On this day, the Methuen Treaty was signed. Methuen Treaty was an agreement between Britain and Portugal formalizing the countries’ trade partnerships and economic dependence of Portugal on Britain. The treaty involved the exchange of English wool for Portuguese wine. “The English king, who ultimately had to approve the treaty, agreed as he also benefited. Eliminating French wine imports was politically palatable, and a treaty with Portugal also included Brazil, a large market for woolens.”[4] The treaty influenced the wine trade between France and Britain in the 18^th and early 19^th centuries. The British embraced this treaty in a bid to offset their dependence on France for wine. Besides, they imposed import duties on French wine to reduce its impact on the British market. Therefore, the Methuen treaty was decisive in the Portuguese, British, and French economy.

February 6, 1715 – The War of the Spanish Succession ended on this day. The war resulted after the death of Charles II of Spain. France could not export her products to Britain during the war, which started in July 1710. Since France was the major exporter of British wine, the war significantly affected its wine economy. The inability to export products to France had been triggered by the 1689 War of the Grand Alliance. Besides, the concerns about Britain’s overdependence led to the tilt towards Portugal and Spain for wine during the war. After the war, Britain imposed tariffs that prevented the easy entry of French wine until 1860, when the Anglo-French Commercial Treaty was signed, allowing normal trade between France and Britain.

January 23, 1860 – The Cobden-Chevalier Treaty was signed on this day. Prior to this date, European countries had embraced unilateral tariffs that significantly impacted inter-border trade, especially between Britain and France. Tariffs unilaterally imposed by Britain on French products reduced market penetration experienced in the previous centuries.[5] These tariffs devastated the French wine industry, overturning the flourishing wine trade between the two countries. However, toward the mid-19^th century, changes in commerce and calls for free trade led to the treaty’s signing. The treaty allowed moderation of tariffs throughout Europe, ushering in a new era of free trade. As a result, the French wine exports to Britain steadily increased. The treaty led to improved living standards in France, and once again wine industry was burgeoning under Napoleon III.

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References:

1. John V C Nye, War, Wine, and Taxes the Political Economy of Anglo-French Trade, 1689-1900 (Princeton University Press, 2018). P. 34
2. Nye, p. 36
3. Ibid, p. 36
4. R. Warren Anderson, “Rent Seeking and the Treaty of Methuen,” Journal of Public Finance and Public Choice 32, no. 1 (April 1, 2014): 119, https://doi.org/10.1332/251569214×15664520275066.
5. John V C Nye, “The Myth of Free-Trade Britain,” Econlib, 2003, https://www.econlib.org/library/Columns/y2003/Nyefreetrade.html.