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Whisky body hits out as US plans tariffs in EU trade dispute

The World Trade Organisation has given Donald Trump’s administration approval to target spirits, cheeses, olives and aircraft imported from the bloc.

The US market accounted for 22% of the global value of exports in 2018 (David Cheskin/PA)
The US market accounted for 22% of the global value of exports in 2018 (David Cheskin/PA)

By Conor Riordan, PA Scotland

An industry body has criticised plans for 25% trade tariffs on Scotch whisky exported to the US which have been approved amid a dispute with the EU over aircraft subsidies.

The World Trade Organisation (WTO) gave the US the green light to impose tariffs on up to 7.5 billion dollars (£6.1 billion) of goods from the European Union as retaliation for illegal subsidies the bloc gave to plane-maker Airbus.

It clears the way for the Donald Trump administration to impose counter-measures on the 28-member bloc and follows a WTO ruling in May 2018 on the Airbus subsidies.

The Scotch Whisky Association (SWA) has called on both parties in the argument to de-escalate their trade dispute.

Chief executive Karen Betts said: “This is a blow to the Scotch whisky industry.

“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.

“We believe the tariff will also have a cumulative impact on consumer choice.”

The Trump administration has announced plans to impose tariffs on EU cheeses, olives and whisky, as well as aircraft and aircraft 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.

America is the industry’s single biggest market – with more than £1 billion of the spirit exported last year.

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

The value of exports to the US grew to £1 billion last year from £280 million in 1994.

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

“In that time, exports of Scotch whisky to the US and of American whiskey to the UK and Europe have grown significantly, benefiting 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.”

A Department for International Trade spokesman said: “Resorting to tariffs is not in the interests of the UK, EU or US.

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The SWA has called on the UK Government to work with the EU and US to de-escalate the dispute (Stefan Rousseau/PA)

“The UK is working closely with the US, EU and European partners to support a negotiated settlement to the Airbus and Boeing disputes.

“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.”

Gary Smith, GMB Scotland secretary, said: “This is a troubling glimpse into the post-Brexit future and everyone with the Scottish economy’s best interests at heart should be concerned about our prospects following this development.

“The collective strength we have in the EU trading bloc will be gone and there is simply no such thing as a ‘special relationship’ with the United States – Trump will squeeze the UK economy for everything he can get.

“That’s why we have consistently called on the UK Government to bring forward measures to defend whisky and white spirits manufacturing in the face of Brexit uncertainty and to stand up to US demands on the removal of the geographical indicator protection for single malt production.”

PA

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