In a strategic move to safeguard French exports in the face of impending US trade restrictions, the European Commission has approved a EUR 5 billion French re-insurance scheme to support the export of wines and spirits to the United States.
The measure, approved under EU State aid rules, will be in effect from 8 May to 8 July 2025 and seeks to mitigate the financial risks French exporters face due to the expected surge in tariffs.
The French Scheme: A Lifeline for Exporters
France notified the European Commission of the scheme under its Cap Francexport re-insurance regime, administered by Bpifrance Assurance Export. The regime provides credit support to exporters targeting markets considered non-marketable by private insurers, due to commercial or political instability.
The newly approved measure specifically targets short-term export credit insurance, addressing the liquidity and risk challenges French wine and spirits exporters encounter when shipping to the US. The scheme offers re-insurance backing to private insurers against default risks, thereby encouraging continued exports despite market uncertainty.
Regulatory Approval: Targeted, Proportionate, and Temporary
The European Commission evaluated the proposal under Article 107(3)(c) of the Treaty on the Functioning of the European Union and the Short-Term Export Credit Communication. It concluded that the temporary unavailability of private market solutions for US-bound exports of wine and spirits justifies the public intervention.
According to the Commission, the scheme meets three key criteria:
- Necessity: The scheme addresses a clear market failure due to the sudden risk spike associated with US-bound exports.
- Appropriateness and Proportionality: It is narrowly targeted in scope and duration, ensuring minimal distortion of competition.
- Incentive Effect: Exporters would likely not engage in these transactions without the support, demonstrating the added value of the scheme.
Context: Trade Tensions and Tariff Pressures
The approval follows the 2 April 2025 announcement by the US of a new round of tariffs, including:
- 25% on steel, aluminium, cars, and car parts (under Section 232),
- 20% on other goods including agri-food products and alcoholic beverages.
In response, both the US and EU temporarily paused parts of their planned tariffs to allow negotiations to unfold. The 90-day pause, announced by the US on 9 April, offers a narrow window for exporters to ship products before tariffs resume.
European Commission President Ursula von der Leyen noted that while negotiations are ongoing, countermeasures would be reinstated if talks fail to deliver a satisfactory outcome.
Implications for the Wine and Spirits Sector
France is one of the world's largest exporters of wine and spirits, with the US being a key market. The EUR 5 billion re-insurance scheme is expected to bolster confidence in the supply chain and encourage exporters to act swiftly before tariffs take full effect. It also exemplifies how targeted EU-level state aid can serve as a tactical buffer against geopolitical trade shifts.
As trade talks continue, the wine and spirits industry watches closely. The next two months may prove critical not just for shipment volumes, but for long-term transatlantic trade dynamics.
Source here.