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UK-Australia trade deal lifts whisky tariff

The UK and Australia have agreed to a new trade deal that will remove tariffs on spirits such as Scotch whisky and gin.

Scotch whisky barrels
A 5% tax on Scotch will be removed as part of the UK-Australia deal

The UK government said the deal is the first new free trade agreement (FTA) to be established since the nation left the European Union (EU) on 31 January 2020.

The UK’s Department of Trade has managed to agree more than 50 continuity free trade agreements, which replicate all of the previous deals the UK had as part of the EU.

The UK-Australia deal was signed in a virtual ceremony by international trade secretary Anne-Marie Trevelyan on Thursday night (16 December), and will now be discussed by Parliament.

According to the government, the deal is expected to provide £10.4 billion (US$13.8bn) of additional trade, while removing tariffs on UK exports. The move will eliminate a 5% tax on Scotch whisky and gin.

“The Scotch whisky industry seeks to trade on a level playing field around the world – and that is what the UK-Australia trade deal delivers,” said Scotch Whisky Association international director Ian McKendrick. “The elimination of the 5% tariff on Scotch whisky in the agreement will help the industry continue to expand exports to Australia, which have almost doubled over the last decade.

“We look forward to working with the UK and Australian governments to implement the deal over the coming years and take advantage of any opportunity to address other regulatory barriers to trade.”

The Wine and Spirit Trade Association’s chief executive, Miles Beale, also welcomed the new agreement, which will “ease the regulatory burdens that businesses face in entering the respective markets”.

The deal will provide a “boost to British gin exporters, as Australia has been one of the fastest-growing markets of the gin export renaissance”, Beale said.

He continued: “Exports to Australia have more than doubled since 2016, to £27.5m [US$36.6m] in customs value. British gin exporters will be keen to continue to build momentum in the market on the back of this announcement.”

Irish whiskey rule reform

The new agreement also includes a reform of the rules of origin for Irish whiskey, according to trade body the Irish Whiskey Association (IWA).

The FTA means that whiskey distilled in Ireland but matured and blended in Northern Ireland will be tariff-free.

The IWA said many Northern Irish distilleries currently produce blended Irish whiskeys containing grain Irish whiskey that are distilled in the south. The trade body noted that Northern Ireland has no grain whiskey distilleries currently in operation.

Rules of origin previously stipulated that a whiskey must be distilled entirely in the areas that are part of the trade agreement, meaning that only Northern Ireland would benefit from the FTA.

However, a reform of the rules now means that Irish grain whiskey distilled in Ireland but matured and blended in Northern Ireland will qualify.

William Lavelle, head of the IWA, said: “Protecting cross-border supply chains and securing reform of rules of origin for mixed-origin Irish whiskey has been a top priority for the Irish Whiskey Association since the UK voted to leave the EU.

“The reform of rules of origin in the new FTA will protect traditional, long-standing supply chains in the Irish whiskey industry and will support Northern Irish distilleries as they target export growth to Australia. We wish to thank the UK negotiating team for their active support in securing these innovative, new rules of origin.”

The IWA said it will continue to call on the EU to enforce similar reforms to the rules of origin in parallel trade negotiations.

Lavelle added: “We hope both the EU and UK reach an agreement to preserve the application of the Protocol on Ireland/Northern Ireland.”

The Irish whiskey category is set for some major changes to its Technical File, spearheaded by the IWA. Last month, The Spirits Business explored what the changes could mean for the category.

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