Trade bodies urge return to tariff-free trade

27th January, 2020 by Nicola Carruthers

Industry groups Spirits Europe and the Distilled Spirits Council of the US (Discus) have joined forces to demand an “urgent return” to tariff-free transatlantic trade.

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The trade groups are urging for US spirits to be excluded from the final retaliation list in the Boeing dispute

Today (27 January), the two trade associations will meet with European Union (EU) and US officials in Brussels to discuss how to “end growing risks and avoidable economic damage to consumers and distillers on both sides of the Atlantic as a result of EU and US tariffs on certain spirits”.

On 18 October 2019, the US government imposed 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 were the result of a dispute between the EU and US over alleged “illegal” subsidies for plane manufacturer Airbus, which the US claims caused the Boeing 777, 787 and 747 aircrafts to lose sales and market share, affecting revenue for US producers and jobs for US workers.

In December, the US government said it was considering increasing tariffs on EU goods, including single malt Scotch whisky.

The EU’s 25% retaliatory tariff on US products was imposed in July 2018. As a result, American whiskey exports to the EU fell 28% between January and November 2019. The trade groups expect “similar economic damage” for European spirits after the implementation of US tariffs in October last year.

Spirits Europe and Discus have highlighted the “enormous benefits” of free trade through a new brochure. For spirits, the US and EU are each other’s biggest export destinations with mutual trade growing 450% since the ‘zero for zero’ agreement in 1997, which ended most tariffs on spirits.

‘Collateral damage’ 

“Transatlantic spirits trade is a hallmark example for the enormous mutual gains that can be achieved for consumers and producers whenever trade is free,” said Ulrich Adam, director general of Spirits Europe.

“Unfortunately, amidst recent EU-US trade tensions, our sector has been turned into a hallmark example of the considerable, yet entirely avoidable economic risks and damage whenever free trade is interrupted by tariffs.”

Discus president and CEO Chris Swonger said that EU and US distillers “have become collateral damage in matters that are completely unrelated to the spirits sector”.

He said: “Our industry has a long and active history supporting efforts to liberalise global trade in spirits, which allowed our products to compete freely and fairly in global markets. We are fully committed to working with the EU and US governments to help return our industry to tariff-free trade.”

In a joint statement, Adam and Swonger added: “We urge the European Commission to remove the rebalancing tariffs on US whiskey that were imposed in connection to US steel and aluminium tariffs and to exclude US spirits from the final retaliation list in the Boeing dispute, in case it cannot be resolved beforehand.

“We also urge USTR [Office of the US Trade Representative] to simultaneously remove tariffs on imported EU spirits, as they are exerting a significant negative impact also on the US market.”

In addition, Discus said that jobs in the US “have been eliminated and hiring halted” as a result of the US tariffs on EU spirits and wine. Analysis from the trade body predicts that 78,600 US jobs could ultimately be lost if these tariffs remain in place or are increased.

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