Scotch distillers urge PM to come up trumps in battle to end damaging trade war tariffs
Scottish and American whisky industries demand action to resolve conflict ‘that has nothing to do with us’, writes Sean Murphy
With the threat of a trade war between the US and EU looming, representatives of the Scottish and US whisky industries have come together to call for an end to punitive tariffs on both sides of the Atlantic that are wiping millions off export values every month.
The chief executives of the Scotch Whisky Association (SWA) and the Distilled Spirits Council of the United States (DISCUS) hope to persuade the UK and US governments to urgently find a negotiated solution to unrelated trade disputes and remove all tariffs on distilled spirits.
Following a 25 per cent tariff imposed on imports of US whiskey into the EU in June 2018 – in response to US tariffs on European steel and aluminium – the US, led by the Trump administration, imposed a similar tariff on imports of single malt Scotch to the US in October in answer to a long-running dispute over EU and US subsidies to Airbus and Boeing.
With the value of Scottish whisky exports to the US almost quadrupling from £280m in 1994 to more than £1bn last year and more than four bottles being exported there every second, the American market has become vastly important to the Scotch industry, accounting for just over a fifth (22 per cent) of global value alone.
Pointing out that Scotch and American whiskies have traded tariff-free across the Atlantic for more than 25 years, the two bodies say they are now caught in transatlantic trade disputes that have nothing to do with them but which are now harming investment, productivity, jobs and growth.
Speaking at a Scotch Whisky reception at Dover House hosted by the Secretary of State for Scotland, Karen Betts, chief executive of the SWA, said that only constructive negotiations would solve the disputes and that tariffs on whiskies would not.
She said: “Our message is clear. The UK and US governments must return quickly to tariff-free trade.
“The current disputes about steel, aluminium and aircraft manufacture have nothing to do with us, but the tariffs stemming from them are causing needless damage to our industry on both sides of the Atlantic, and to the livelihoods we support. Exports each way are markedly down, and if these falls are maintained over the year around £100 million is likely to be lost in Scotch whisky exports.
“Many smaller Scotch whisky companies are now asking themselves how they can continue exporting to the US, whether they can build up alternative markets, and, if not, how their businesses will cope.
“Until a resolution is found, it is critically important that the UK and Scottish governments act to mitigate the impact of tariffs on Scotch whisky producers, particularly SMES which are being disproportionately hit. A cut to excise duty in the March Budget would help businesses strengthen their presence in the UK while exports to the US are under such pressure.”
Chris Swonger, president and CEO of DISCUS, added that both industries have enjoyed great export growth over the last 25 years of tarriff free trading, with American whiskey exports to the UK having grown 410 per cent in that time.
He said: “The zero-for-zero tariff agreement ended in June 2018. We need to get back to zero-tariff trade which benefited distillers on both sides of the Atlantic so our industries can go back to doing what we do best – distilling amazing whiskeys and sharing them with the world.”
Prime Minister Boris Johnson, who the SWA are calling on to support the sector and mitigate the impact, has already vowed to remove tariffs on US whiskey once the UK leaves the EU.