Whisky business: US tariffs get icy reception from Scotch makers

Whisky is one of Scotland's biggest exports, but new tariffs could push up prices for US consumers.

    Scotch whisky is sold all around the world, but the US remains the industry's biggest market [Gonzalo Fuentes/Reuters]
    Scotch whisky is sold all around the world, but the US remains the industry's biggest market [Gonzalo Fuentes/Reuters]

    The Scotch whisky industry has said it would be hit hard by a proposed tariff on imports to the United States.

    Scotch whisky exports to the US face 25 percent tariffs under plans which have been approved amid a dispute between Washington and the European Union over aircraft subsidies.

    The World Trade Organization (WTO) gave the US the green light to impose tariffs on up to $7.5bn of goods from the EU in retaliation for illegal subsidies the bloc gave to plane-maker Airbus.

    The ruling clears the way for US President Donald Trump's administration to impose countermeasures on the 28-member bloc and follows a WTO ruling in May 2018 on the Airbus subsidies.

    But the Scotch Whisky Association (SWA) has called on both parties in the argument to put their trade dispute on ice.

    "This is a blow to the Scotch whisky industry," said SWA chief executive Karen Betts on Thursday.

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    "Despite the fact that this dispute is about aircraft subsidies, our sector has been hit hard, with single malt Scotch whisky representing over half of the total value of UK products on the US government tariff list.

    "The tariff will undoubtedly damage the Scotch whisky sector.

    "We expect to see a negative impact on investment and job creation in Scotland, and longer-term impacts on productivity and growth across the industry and our supply chain."

    The Trump administration has announced plans to impose tariffs on European cheeses, as well as aircraft and its parts.

    However, Wednesday's WTO decision may require fine-tuning of that list before it is formally signed off on October 18.

    The Scotch whisky industry directly employs about 11,000 people in Scotland, and many more indirectly through its supply chain. More than 7,000 of the jobs are in rural areas across the country.

    The US is the industry's single biggest market - with more than 1 billion pounds ($1.2bn) of the spirit exported last year, up from 280 million pounds ($347m) in 1994.

    HMRC data and SWA analysis show the US market accounted for 22 percent of global value and 10.7 percent of global volumes of Scotch whisky exports in 2018.

    When Scotland's food and drink businesses are facing the potential impact of a no-deal Brexit, the last thing they need is the further uncertainty of increased tariffs on exports to US

    Scottish government spokesman

    "For the last 25 years, trade in spirits between Europe and the US has been tariff-free," Betts added.

    "In that time, exports of Scotch whisky to the US and of American whiskey to the UK and Europe have grown significantly, benefitting communities on both sides of the Atlantic, boosting investment, employment and prosperity for all.

    "For this reason, the SWA - alongside American and European spirits producers - has urged the EU and the US not to draw spirits into trade disputes that have nothing to do with our sector.

    "In particular, the UK government must now work with both sides to urge a negotiated settlement and to ensure that these damaging tariffs do not take effect."

    "Resorting to tariffs is not in the interests of the UK, EU or US. The UK is working closely with the US, EU and European partners to support a negotiated settlement to the Airbus and Boeing disputes," a Department for International Trade spokesman said.

    "The UK, through the EU, is seeking confirmation from the WTO that we have complied fully with WTO rulings regarding support to Airbus, and should not be subject to tariffs."

    A Scottish government spokesman said: "When Scotland's food and drink businesses are facing the potential impact of a no-deal Brexit, the last thing they need is the further uncertainty of increased tariffs on exports to US.

    "We have made our concerns about the impact on whisky and other Scottish produce clear to UK ministers and expect them to do all they can to protect Scottish exports.

    "We will continue to work with key partners, including the Scotch Whisky Association, to support the industry and minimise potential tariffs."

    SOURCE: Al Jazeera and news agencies