Dispute leaves Scotch on the rocks
Whisky makers fall foul of US-Europe trade conflict
The Scotch whisky industry has become the latest to be drawn into a long-running dispute between the US and Europe over aircraft subsidies after being included in a list of additional tariffs Washington is threatening on EU goods.
The Office of the US Trade Representative (USTR) on Monday proposed a list of “additional products for tariff countermeasures in response to harm caused by EU aircraft subsidies” with an approximate trade value of US$4 billion ($6b).
The US$4b, which also covers a variety of cheeses from parmesan to gouda, as well as olives and pasta, is in addition to a previous list published in April that accounted for US$21b worth of trade.
The US is the largest export market for Scotch whisky by value, representing just over £1b ($1.88b) last year, and any tariffs would have a detrimental impact on trade.
“Exports of Scotch whisky to the US have been zero tariff for 20 years, so it is disappointing that Scotch whisky has been drawn into this dispute,” the Scotch Whisky Association said on Tuesday.
It added that the industry had “consistently opposed the imposition of tariffs”.
“We continue to urge the UK government, the EU and the US government to resolve the Airbus-Boeing subsidies dispute without resorting to tariff retaliations for unrelated sectors,” the association added.
The USTR said it was adding 89 tariff subcategories to its initial list in response to public comments.
The move is the latest in a 15-year spat between the US and the EU over the subsidies that each side provides to Boeing and Airbus.
Washington and Brussels have won cases at the World Trade Organisation against tax breaks and other aid to Airbus and Boeing, and have
drawn up lengthy retaliation lists.
In practice, the amount of retaliation both sides are allowed to take will be determined by arbitrators at the WTO, and a decision on the US complaint against Airbus is expected this summer. The EU case against Boeing is running six to nine months behind.
EU trade officials have said the final retaliation amounts, for both sides, will be significantly less than the long lists that each side has assembled.
“The figures quoted by the USTR are based on US internal estimates that have not been awarded by the WTO,” a commission spokesman said. Airbus said the move only “adds to the trade tensions but in reality does not change anything” as the level of retaliation would be decided by the WTO.
The company added that it was “not creating a healthy environment for working towards a negotiated solution”.
This latest threat could dampen hopes that the US is starting to scale back its trade disputes, which are being fought on multiple fronts, after US President Donald Trump and China president Xi Jinping agreed to resume trade talks at the G20 summit in Osaka, Japan, over the weekend.