Drinks groups unite to call for urgent end to US tariffs

21st October, 2019 by Nicola Carruthers

Fifteen alcohol trade groups have sent a letter to the US administration and European Commission calling for an urgent end to 25% tariffs on EU goods, including single malt Scotch, which could result in the loss of 8,000 jobs.

US spirits

The new tariffs “are greatly harming the industry’s competitiveness”

On 2 October, the US government revealed its intentions to impose a 25% import tariff on EU goods, including single malt Scotch whisky, single malt whiskey from Northern Ireland, liqueurs and cordials from Germany, Italy, Spain, Ireland and the UK and wine. The tariffs came into force last Friday (18 October).

The US has been embroiled in an ongoing spat with the World Trade Organization (WTO) over illegal subsidies for plane manufacturers Airbus and Boeing. The tariff has been launched in retaliation against EU subsidies given to aerospace company Airbus.

The Scotch Whisky Association (SWA) warned that the tariff on single malts “will see exports to the US drop by as much as 20% in the next 12 months, as Scotch whisky will become less competitive in the US market”.

The groups signed two letters, which were addressed to Cecilia Malmström, European commissioner for trade and Phil Hogan, European commissioner for Agriculture & Rural Development, and Robert Lighthizer, the US trade representative.

It was signed by 15 trade associations including the SWA, American Craft Spirits Association, American Distilled Spirits Association, Bureau National Interprofessionnel du Cognac (BNIC), Distilled Spirits Council, Irish Whiskey Association, Kentucky Distillers’ Association, Spirits Europe, and Wine and Spirit Trade Association.

‘Transatlantic industry’ 

The associations said that the new tariffs “will further damage a transatlantic industry that has already been negatively impacted by the EU’s retaliatory tariff on American whiskey”.

The EU’s 25% retaliatory tariff on US products was imposed in July 2018, and resulted in an almost 21% sales decrease for American whiskey exports.

“These tariffs are greatly harming the industry’s competitiveness, long-standing partnerships, workers and our farm suppliers,” the groups said in a joint statement.

It could also result in the loss of 8,000 “good-paying jobs” across the US alcohol sector.

The letter read: “Our industries had a long and active history supporting efforts to liberalise global trade in distilled spirits and wines, which allowed our products to compete freely and fairly in global markets.

“The US and EU wines and spirits sectors have become very interconnected, with companies owning a range of European and American distinctive spirits and wines.

“We have continued to work together with our respective governments to improve market access in other countries through the elimination of other tariffs, discriminatory taxes and other trade barriers to our exports.”

The EU and US first reached an agreement for tariff-free trade in distilled spirits in 1994.

“Prior to these recent trade disputes, US and EU spirits exporters enjoyed more than two decades of tariff-free access to each other’s markets, and US and EU wine exporters have faced very low tariffs,” the joint statement read.

“This open access to each other’s markets has significantly benefitted EU and US distillers, vintners, farmers, and the hospitality industry on both sides of the Atlantic, resulting in increased jobs, community investment and consumer choice.”

The trade groups also warned that the EU could respond with additional tariffs on US spirits and wines.

“The next quarter is the busiest time of the year for spirits and wine producers on both sides of the Atlantic as consumers gear up for holiday gift-giving and entertaining,” the statement continued.

“In order to protect the jobs and communities we support, we urgently call on the US and the EU to reach an agreement to de-escalate the current trade disputes by immediately and simultaneously removing the EU’s retaliatory tariff on US whiskey and the US tariffs on EU spirits and wines.“

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