| On December 12, 2003, the Food and
Drug Administration imposed tough new reporting requirements
on importers of foods and beverages. These new “Prior
Notice” rules were in response to The Bioterrorism Act
of 2002, which directed the FDA, in conjunction with U.S. Customs,
to create a system for tracing contaminated food products. The
system requires all importers to report shipments prior to arrival,
providing detailed information on each product in the shipment,
including the FDA registration number of the facility where
the product was produced. As a further condition of the system,
FDA cannot disclose registration numbers; they are the property
of the producer and can only be given out by them.
When FDA developed these rules, it assumed that foods and
beverages are ordinarily imported into the United States by
a person with a direct relationship with the producer. They
assumed that access to FDA registration numbers would be automatic.
However, a large percentage of America’s fine wine imports
are purchased on the open market—from restaurants, private
collectors, auctions or merchants. For these wines, access
to FDA registration numbers will be far from automatic. Not
only do the purchasers (small importers and private collectors)
not have direct access to producers’ registration numbers,
many producers are displaying an unwillingness to give them
out. In fact, there is strong evidence that a number of large
American wine importers are putting pressure on the producers
they represent to not give out these numbers, securing for
them a monopoly in the U.S. market.
Consequences of the new laws are far-reaching and potentially
devastating for consumers, producers and merchants. Each year
an estimated $200,000,000 of the world’s scarcest and
most sought-after wines will be denied access to the American
market. Producers’ designated importers will have a
virtual monopoly and a free hand to raise prices. Many of
the small importers and wholesalers who breathe diversity
into the American wine market could be forced to close. With
them out of the way, an oligopoly of large wholesalers, who
have quietly been buying up small distributors in many states,
will become an even more dominant and oppressive force in
the American wine market. If retailers or consumers are unhappy
with their prices, or how wines are shipped and stored, there
will be no alternatives.
The market for older vintages will be particularly hard hit.
It will become virtually impossible for merchants, restaurants,
auction houses and private collectors to obtain older wines
from Europe. Even private collectors, buying wines at auction
in Europe, will be unable to get their purchases home.
The implications for the world market are no less rosy. The
ability of American importers to buy wine on the open market
in Europe has long performed an important balancing function
internationally, correcting poor producer allocations and
assuring that virtually all wines eventually find a home.
Without the ability of the U.S. market to pick up the slack,
producers will be faced with falling prices and diminished
prestige in Europe, as gluts emerge in under-performing markets.
And without a market for older vintages, producers of collectible
wines will sell much less wine overall.
But none of this has to be. FDA can perform its important
anti-terrorism function, complying fully with its Bioterrorism
Act mandate, by allowing importers to supply a complete name
and address for producers in lieu of registration numbers.
In the event of product contamination, the agency will be
no less able to track down the source of the problem. And
America’s fine wine market will be saved from sure devastation.
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