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US-Canada-Mexico trade deal to benefit US spirits exports

The US and Canada have reached a deal to replace the North American Free Trade Agreement (Nafta), which will retain duty-free access for US spirits exports to Canada and Mexico.

US whiskey continues to face retaliatory tariffs in Canada and Mexico

The two countries have agreed on a new “modernised” deal, called The United States-Mexico-Canada Agreement (USMCA), to replace the 1994 Nafta pact.

The agreement gives the US greater access to Canada’s dairy market and allows extra imports of Canadian cars.

On Monday, president Donald Trump tweeted the “wonderful new trade deal”.

“It is a great deal for all three countries,” he wrote, “solves the many deficiencies and mistakes in Nafta, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the US and will bring all three great nations together in competition with the rest of the world. The USMCA is a historic transaction!”

‘Welcome news’

US trade body The Distilled Spirits Council said the USMCA deal is “welcome news for American spirits exporters”.

“Trade is a key component to a strong economy, and the US spirits industry and our consumers benefit from free and fair trade agreements,” said Distilled Spirits Council interim president and CEO Clarkson Hine.

“We hope this creates new momentum for further discussions in North America, the EU and elsewhere that lead to the swift removal of retaliatory tariffs on American spirits exports.”

The agreement also “reaffirms commitments concerning the internal sale and distribution of distilled spirits and tariff-free trade in spirits”.

In addition, the US secured Mexico’s agreement to consider granting distinctive product recognition for ‘American rye whiskey’ .

The deal also protects product recognition for ‘Bourbon’ and ‘Tennessee whiskey’ in Canada and Mexico, and for ‘Canadian whisky’, ‘Tequila’ and ‘Mescal’ in the US.

However, US whiskey continues to face retaliatory tariffs in Canada and Mexico, the Distilled Spirits Council warned.

“Now that this important agreement has been achieved, we hope the three parties can quickly resolve their other trade disputes so that free and fair trade for US whiskey exports is resumed,” Hine said.

Canada is imposing a retaliatory tariff of 10% on American whiskey in response to the steel and aluminium tariffs. In 2017, total US whiskey exports to Canada were valued at US$48.7 million.

Meanwhile, Mexico is imposing a retaliatory tariff of 25% on US whiskeys. Total US whiskey exports to Mexico were valued at US$13.4m last year.

China has already announced plans to slap a 25% tariff on US whiskey in response to punitive US measures.

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