Producers expect customs tariffs for single malt Scotch whisky to be lifted
The ongoing COVID-19 pandemic is not the only challenge Scotch whisky industry have to face. High customs tariffs imposed by the US on single malt whisky exports still apply. Fortunately, the governments of the United States and Great Britain began negotiations on a trade agreement between these countries. Information about the commencement of negotiations was welcomed by organizations of strong alcohol producers in both countries – Discus (The Distilled Spirits Council of the US) and SWA (Scotch Whisky Association).
On May 5, the United States Trade Representative Robert Lighthizer and British Secretary of State for International Trade announced Elizabeth Truss to begin formal negotiations on a trade agreement between the two nations. The talks will last from May 6 to May 15, and over 200 representatives of the UK and US governments will be involved.
Scotch whisky tariffs
Discus and SWA welcomed the negotiations and at the same time called for the removal of tariffs that cost both the US and the British side millions of pounds of lost exports. Tariffs that were imposed in October 2019 in connection with the EU-US trade dispute caused a 27% drop in Scotch whisky exports to the United States in the fourth quarter of 2019. In turn, in June 2018, the EU imposed a 25% retaliation tariff, including one on American whiskey because of a trade dispute over steel and aluminum. As a result, US whiskey exports to the EU market fell by 27% last year.
SWA Director Karen Betts said in a statement that trade must be "free, fair and fluid" to help Britain deal with "Covid-19's human and economic costs."
‘’The difficult situation we are in on tariffs has now become much harder as our industry copes with the impact of the Covid-19 crisis too. […] In these difficult times, trade disputes and tariffs are compounding the damage to businesses. Scotch whisky and American whiskey distillers, bars and restaurants need to find ways through the human and economic crisis brought on by Covid-19” – said Karen Betts and added that the removal of tarrifs “would be very significant for us right now.’’
“We applaud the administration for launching trade negotiations with one of our most important trading partners and urge the administration to secure an agreement that results in the removal of additional tariffs imposed on American whiskey and UK spirits. In 2019, the UK ranked as the US spirits sector’s second largest single market with exports valued at US$111 million; and American whiskeys (US$101 million) accounting for 91% of the total. A US-UK trade agreement would solidify the special economic relationship that binds our two countries – said Chris Swonger, Discus president and CEO.
Particularly given the potential economic impact of a pandemic, it is very important to facilitate free trade for British spirits producers. Scotch whisky accounts for over 20% of the value of food and drink exports for the whole of Great Britain, and reaching agreement on the removal of tariffs is crucial for this sector to be able to fully participate in the recovery after the pandemic.
