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Duty Drawback 
An Explanation 
Information from: 
Dr. Steven Fike, WineCustoms 
Dr. Dan Sumner & Georgi Gabrielyan, UC Davis 
SJVWA Industry Forum Final Panel – November 21, 2014
What is Drawback? 
• A Government Trade Program to 
Encourage Exports 
• A Refund of Duties Paid on Imported 
Merchandise 
• Must Be Matched by Commercially Like Goods 
• Can Only Be Collected Upon Export 
• Exporter can Recoup up to 99% of Import Duty 
• In the case of Wine, Excise Tax can be part of the 
drawback in addition to Import Tariffs.
Duty Drawback & Wine 
• Must be collected and matched by like 
types of wine 
• Bulk with bulk 
• White with white, Red w/ red 
• The Drawback for wine includes the Federal Excise 
Tax plus duty: 
• Excise: $0.2827 per liter 
• Duty: $0.063/ltr for Bottled & $0.14/ltr for Bulk 
• Can be utilized for TABLE WINE ONLY
Duty Drawback & Wine 
• Must be matched within 3 years of Import 
• Wine matched must not exceed 50% of 
value between imported and exported 
wine per liter 
• DUTY Plus EXCISE can be a significant 
percentage of the total value of imported 
wine
When Exports Exceed Imports 
• There is an incentive to import to match 
exported values 
• U.S. Bulk Wine Market falls to match lower 
price of imported wine 
• Imports increase as a percentage of 
domestic supply 
• Valley growers and CA bulk producers 
struggle to compete
When Imports Exceed Exports 
• Exports increase due to Drawback 
Incentives 
• Relative price of CA wine on international market 
falls and becomes more competitive 
• Some wine previously sold domestically should 
switch to export sales 
• Domestic wine, and hence grapes, increase in 
value vis a vis imports at a lower base price
Macro Economic Impacts 
• Winners: 
• Exporters, when imports 
exceed exports 
• Growers supplying 
exporters, when imports 
exceed exports 
• Importers, when exports 
exceed imports 
• U.S. Consumers: always 
can find some sort of 
deal on wine 
• Losers: 
• U.S. Wineries which do 
not export 
• U.S. Wineries which 
export but do not import 
• Growers who do not 
supply exporting 
wineries 
• Growers, when exports 
exceed imports 
• U.S. Taxpayers

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Duty Drawback, An Explanation - Vallis

  • 1. Duty Drawback An Explanation Information from: Dr. Steven Fike, WineCustoms Dr. Dan Sumner & Georgi Gabrielyan, UC Davis SJVWA Industry Forum Final Panel – November 21, 2014
  • 2. What is Drawback? • A Government Trade Program to Encourage Exports • A Refund of Duties Paid on Imported Merchandise • Must Be Matched by Commercially Like Goods • Can Only Be Collected Upon Export • Exporter can Recoup up to 99% of Import Duty • In the case of Wine, Excise Tax can be part of the drawback in addition to Import Tariffs.
  • 3. Duty Drawback & Wine • Must be collected and matched by like types of wine • Bulk with bulk • White with white, Red w/ red • The Drawback for wine includes the Federal Excise Tax plus duty: • Excise: $0.2827 per liter • Duty: $0.063/ltr for Bottled & $0.14/ltr for Bulk • Can be utilized for TABLE WINE ONLY
  • 4. Duty Drawback & Wine • Must be matched within 3 years of Import • Wine matched must not exceed 50% of value between imported and exported wine per liter • DUTY Plus EXCISE can be a significant percentage of the total value of imported wine
  • 5. When Exports Exceed Imports • There is an incentive to import to match exported values • U.S. Bulk Wine Market falls to match lower price of imported wine • Imports increase as a percentage of domestic supply • Valley growers and CA bulk producers struggle to compete
  • 6. When Imports Exceed Exports • Exports increase due to Drawback Incentives • Relative price of CA wine on international market falls and becomes more competitive • Some wine previously sold domestically should switch to export sales • Domestic wine, and hence grapes, increase in value vis a vis imports at a lower base price
  • 7. Macro Economic Impacts • Winners: • Exporters, when imports exceed exports • Growers supplying exporters, when imports exceed exports • Importers, when exports exceed imports • U.S. Consumers: always can find some sort of deal on wine • Losers: • U.S. Wineries which do not export • U.S. Wineries which export but do not import • Growers who do not supply exporting wineries • Growers, when exports exceed imports • U.S. Taxpayers