Industry reacts to UK-US five-year tariff truceBy Melita Kiely
Trade bodies and producers on both sides of the Atlantic have welcomed the US and UK’s agreement to suspend retaliatory tariffs for five years in relation to the Boeing-Airbus dispute.
The UK-US five-year truce was confirmed yesterday (17 June), and follows a similar deal between the EU and the US, which also agreed to a five-year suspension of retaliatory tariffs on products such as Cognac and vodka.
The trade war between the EU, the UK and the US is part of a 17-year feud between aircraft manufacturers Airbus and Boeing. In 2019, the US government imposed tariffs on US$7.5 billion worth of EU goods, including single malt Scotch and single malt Irish whiskey, because of the ongoing dispute.
In March 2021, the US and the EU agreed to a four-month suspension of tariffs.
In December 2020, the UK government said it would suspend the tariffs that the EU imposed on US$4bn of US goods, including rum, vodka, brandy and vermouth.
The latest news regarding the five-year suspension has signalled good news for single malt Scotch whisky and single malt Irish whiskey, which have been subject to 25% tariffs as a result of the aerospace spat.
Liz Truss, the UK’s international trade secretary, said: “This deal will support jobs across the country and is fantastic news for major employers like Scotch whisky and sectors like aerospace. We took the decision to de-escalate the dispute at the start of the year when we became a sovereign trading nation, which was crucial to breaking the deadlock and bringing the US to the table.
“I want to thank Katherine [Tai, US trade representative] personally for her role in making this happen. Today’s deal draws a line under an incredibly damaging issue and means we can focus on taking our trading relationship with the US to the next level, including working more closely to challenge unfair practices by nations like China and using the power of free trade to build back better from the pandemic.”
Click through the following pages to see how the industry has reacted to the latest development.
Scotch Whisky Association
Karen Betts, chief executive of the Scotch Whisky Association, said: “This is very good news for Scotch whisky. The past two years have been extremely damaging for our industry, with the loss of over £600m in exports to the United States caused by a 25% tariff on single malt Scotch whisky imposed as a result of the long-running dispute between US and European aircraft manufacturers. This deal removes the threat of tariffs being reimposed on Scotch whisky next month and enables distillers to focus on recovering exports to our largest and most valuable export market.
“[Yesterday’s] agreement is a culmination of many months of intensive negotiations and we’re grateful to Liz Truss, international trade secretary, and Katherine Tai, US trade representative, and their teams for their hard work. Given, however, that this deal suspends tariffs rather than fully resolving the underlying dispute, what’s critical now is that the governments and aerospace companies on both sides stick to their commitments and work with one another constructively.
“I want to note too that American whiskeys remain subject to tariffs on entry into the UK and EU as a result of a separate dispute on steel and aluminium, and we hope these tariffs can also be resolved quickly.”
Ivan Menezes, chief executive of Diageo, said: “I am delighted with the resolution of the aerospace dispute and the end of punitive tariffs on Scotch and other spirits. This deal will safeguard thousands of jobs across Scotland and the rest of the UK.
“All of us at Diageo congratulate the prime minister, Liz Truss, Alister Jack [Scottish secretary] and their teams for their tireless efforts to bring these complex negotiations to a successful conclusion. With the end of this dispute, a new free trade agreement with Australia that removes remaining tariffs on UK spirits and the opening of trade talks with India, the largest whisky market in the world, the UK’s newly independent trade policy is now bringing major benefits for Scotch and Scotland.
“Distilleries across Scotland will be raising a celebratory dram to UK trade secretary Liz Truss and USTR ambassador Katherine Tai this evening [17 June].”
Distilled Spirits Council of the US
Chris Swonger, president and CEO of the Distilled Spirits Council of the US (Discus), said: “The US-UK agreement to suspend tariffs on distilled spirits products for five years in the long-standing WTO [World Trade Organization] Boeing-Airbus dispute is another welcome and important development in our call for a return to duty-free trade in distilled spirits. We greatly appreciate the Biden administration’s leadership in resetting the important transatlantic trading relationship with the UK, which is critical to the deeply integrated US and UK spirits industries.
“Securing the long-term suspension of the tariffs on distilled spirits is essential to support our producers, exporters, logistics providers – and everyone in between – which thrived as a result of the tariff-free trade with the UK that was in place from 1997-2018.
“Under today’s agreement, the UK will suspend for five years the 25% tariffs on US rum, brandy and vodka, and the US will suspend for five years the 25% tariffs on single malt Scotch, single malt Irish whiskey from Northern Ireland, and liqueurs and cordials.
“Unfortunately, American whiskeys remain the only spirit subject to tariffs in the transatlantic trade disputes due to the continued application of a 25% tariff in connection with a dispute on steel and aluminium. This puts American whiskeys at a serious competitive disadvantage in the UK and the EU, our two most important export markets. Since the tariffs were imposed, American whiskey exports to the UK have declined by 53%. We are pleased that the UK government has launched a consultation to review these tariffs and would encourage the UK to promptly remove its tariff on American whiskeys.
“On behalf of the US spirits industry, we commend the Biden administration for its hard work and dedication in securing the long-term suspension of the US-UK tariffs on distilled spirits products in the WTO dispute. We hope this positive momentum will also lead to the prompt and permanent removal of the EU and UK’s tariffs on American whiskeys.”
Artisanal Spirits Company
David Ridley, managing director of the Artisanal Spirits Company (ASC), said: “[Yesterday’s] trade deal is an important, positive development for the Scotch whisky industry.
“The suspension of the tariffs removes regulatory uncertainty in one of our key markets for the foreseeable future, providing ASC with greater visibility around US exports and enabling us to plan with increased confidence and continuity to further build on our rapid growth momentum in the USA.
“The agreement is fantastic news for the industry and the growing number of Scotch whisky lovers in the US, who can now look forward to wider availability of the iconic spirit.”