One man’s meat is another man’s poison the saying goes. Applied to the world of wine in Thailand, changes in how wine imports are treated under new trade agreements will have the kingdon’s wine drinkers cheering about lower prices and its domestic winemakers jeering even more about what it considers governmental roadblocks toxic to its success. People who follow the news are familiar with the homeland industry’s travails as the reslult of onerous taxation and outmoded regulation combined with a difficult climate and competition from imports and other forms of alcohol. While consumers of imported wines toast the new tariff regime, this latest blow could eventually convince winemakers to abandon their barrels and yeasts, instead turning their grapes into juice.

Starting this year wine partially made in ASEAN free trade zones can be imported to Thailand without duty. According to the ASEAN Free Trade Area agreement (AFTA), a French or Italian wine company can ship bulk wine to Malaysia, assure that the final product contains at least 40-percent local product (bottle, label, carton) and re-export it to Thailand. The bottom line for already feeling-put-upon Thai wine producers is that wine products from around the world that are funnelled through the AFTA member countries will have a lower retail price than Thai wine. In addition, the Thailand-Australian Free Trade Area (TAFTA), which also includes New Zealand, will gradually reduce import duties for wine to 20 percent in 2010, and will completely abolish them by 2015. Any other wine country not included in the FTA, but if bottling in a member country, has its import tax dopped to 0 percent.

This is adding insult to injury to Thai wine producers just as things seemed to be improving, at least regionally. Australian critic Dennis Gastin, an expert on Asian wine, wrote last year that “…wineries in many Asian countries are now posting strong production and sales growth and local wines are taking a respected place on local tables alongside wines from more traditional sources.” Indeed, several small but good-quality Thai wineries have received several international awards in respected wine competitions. The Thai Wine Association has been founded to implement and control international production standards (Thai Wine charter), the first such selfgoverning wine-industry body in Asia.

But the Thai wine industry struggles to deal with a host of hurdles already. A severe climate and less-than-ideal environmental conditions as well as draconian taxes take their economic toll on local wine production. Thai wine does not have import duty levied, but local excise taxes make it as expensive, if not more, than imported wines. In its infant stage and consisting of less than a dozen passionate producers who continuously prove that good wine can be made in Thailand, wine production here is a tough act to maintain. Comparing Thai with Indian wine production – a good example of a tropical country having success with wine growing – shows why Thai wine is in such peril.

In India the government saw a burgeoning wine industry as a boost to the economy and set up the Indian Grape Processing Board comprised of growers, universities, producers and government food and commerce bureaucrats. It promotes and develops grape-growing sectors, maintain import duties to favour local production and support alternative farming to develop grape contract farming. Environmental differences do make India a more inviting place for a wine industry than Thailand. But both countries must deal with the homogenic maturity process in tropical climates in comparison to other wine countries that make mechanisation near impossible so labour costs are high. Suffice it to say that one must be a specialist and passionate visionary to grow wine in Thailand.

Thai wine, though of good quality and internationally acclaimed, is so expensive to produce that it struggles already to compete with imports. Now that duties for some wines are set for elimination, Thai wine will be even more expensive than imported wine and the only way the industry could survive is through exports creating the strange situation in which a local product is cheaper to buy beyond its own borders. The solution, a cynic could say, would be to drink Thai wine abroad only. But the Thai wine industry is too small to rely on export business alone.

Other Asian governments have implemented support programmes for grape farming and their respective wine industries seeing the positive economic and image benefits that producing wine brings to their countries. They also acknowledge scientifically proven health benefits of drinking wine and that consumers in countries where wine is part of the daily diet show a much more moderate drinking attitude compared to those where hard liquor is more convenient to obtain than wine. The end result of the Thai government’s lack of support for its domestic industry might be for wineries to stop producing. With lower tarrifs on imports we might see the birth of more Thai wine drinkers, but the death of Thailand’s wine industry.