US and UK must ‘prioritise urgent removal of tariffs’

The Scotch Whisky Association (SWA) has called for the US and UK to “prioritise the urgent, early removal of all tariffs on whiskies” after the US government decided to maintain the 25% import tax on EU goods.

SWA’s Karen Betts: “The EU, US and UK must now redouble their efforts to resolve transatlantic trade disputes quickly”

On Friday (14 February), the US Trade Representative (USTR) released a statement that said it had decided to maintain the 25% tariffs imposed on 18 October 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 US has been embroiled in an ongoing spat with the World Trade Organization over alleged illegal subsidies for plane manufacturers Airbus and Boeing. The tariff was launched in retaliation against EU subsidies given to aerospace company Airbus.

According to last week’s statement, the US will increase the additional duty rate imposed on aircrafts imported from the EU to 15% from 10%, effective 18 March 2020.

Tariff-free trade

The SWA said it was “deeply disappointed” over the decision to maintain the tariffs.

“This tariff has now been in place for four months and is hitting Scotch whisky producers hard, particularly small distilleries,” said SWA chief executive Karen Betts.

“We’ve seen a significant drop in exports already, and based on this we believe we could be facing at least £100 million (US$130m) in lost exports over a year.

“The EU, US and UK must now redouble their efforts to resolve transatlantic trade disputes quickly, so that Scotch and American whiskies can return to the tariff-free trade from which we have benefitted for more than 20 years.

“It cannot be right that our industry is continuing to pay the price of trade disputes that have nothing to do with our sector.”

Betts also said the trade body welcomed the UK government’s commitment to “remove EU tariffs on US whiskey as soon as possible now that the UK has left the EU” and that the UK government “must work to ensure that the US reciprocates”. The UK formally left the EU on 31 January 2020.

The SWA is also urging a cut in excise duty in the UK budget, planned for 11 March, which “would go some way to helping Scotch whisky businesses strengthen their presence in the UK to counter-balance losses in the US”.

New figures from the Distilled Spirits Council of the US (Discus) showed that American whiskey exports to the EU fell 27% following the retaliatory tariff on US whiskey.

“It has become abundantly clear that tariffs on distilled spirits products are causing rough seas on both sides of the Atlantic,” Discus said in a statement.

“We are gravely concerned that if these disputes are not resolved soon, these US tariffs on EU spirits imports will cause a similar drag on the US economy, jeopardising American companies and jobs.

“The longer these disputes are unresolved, the greater the threat of even more tariffs on our industry.”

Discus also said that the EU could impose retaliatory tariffs on rum, vodka and brandy exports from the US in relation to the Boeing dispute. The EU is expected to up its retaliatory tariff on American whiskey to 50% in spring 2021.