Warning from Scotch leader
Lack of non-EU trade deal ‘will cost whisky industry £50m’
Karen Betts: called for swift ratification of deal (photo by Terry Murden)
Scotch whisky leader Karen Betts today warned that failure to secure trading agreements with non-EU countries post-Brexit could cost the industry £50m a year in tariffs.
Mrs Betts, chief executive of the Scotch Whisky Association, said that aside from the EU negotiations proper attention had to be given to non-EU markets.
In an address to the association’s members in Edinburgh, she said: “How the UK trades with countries beyond the EU is…of key importance to our industry. The EU currently has agreements in place with more than 100 countries which govern trade, one way or another.
“Twenty four of these agreements are very important to Scotch whisky, such as the EU’s agreements with South Korea and Columbia. The loss of these agreements would directly, negatively impact Scotch whisky.
“So we are urging the UK government to swiftly put in place similar agreements with those 24 countries – on as good or better terms – to ensure Scotch can continue to be exported with a minimum of extra cost and complication.
“We have calculated that the loss of these 24 agreements would cost the industry over £50 million annually in tariffs, and would reduce our competitiveness in market. Beyond those 24 agreements, we are urging government to focus their efforts for future trade agreements on markets that are important for Scotch whisky’s growth.
“Advantageous trade deals with emerging economies such as India, China and Brazil have the potential to boost the industry’s growth significantly, and are critical to us in the longer term.
On the talks with Brussels, Mrs Betts said the agreed transition period with the EU to 2020 “is a good thing” and the “rules under which we trade with the EU, and the laws that govern how we operate – from the legal definition of whisky to health & safety law – will stay the same until the end of 2020.”
She said politicians in Westminster and Brussels needed to ensure “the swift ratification” of this deal, and to remove altogether the risk of a hard Brexit.
“We continue to call on government to ensure that, after Brexit, we can trade as easily with Europe as we did as an EU member. A third of Scotch whisky exports go to Europe, an established, mature market for Scotch.
“At a minimum, we want to see agreement on: zero tariffs, a minimum of regulatory divergence, and mutual recognition of geographical indications. We will also need sufficient time to prepare for any practical changes the new trading arrangements might bring. If customs and border requirements are going to change, we will need at least a year to prepare for these. That means any new trade deal – which will itself need to be ratified – being tied up very quickly next year.”
Mrs Betts also addressed rising protectionism and said it was important that the government – in amongst the pressures of Brexit – “recognises that today’s climate of rising trade tensions, and threats of an escalating cycle of retaliation, risks slowing growth, stifling innovation and limiting economic opportunity. We continue to hope for a good outcome in the on-going negotiations between the EU and the US over the possible imposition of trade tariffs.”
Addressing domestic issues she called for a review of complex excise rules. She said in a period of economic disruption and change, the industry needs more than ever “a fair wind at home to ensure we succeed globally”.
She said: “Now is the time for close collaboration between government and the private sector to ensure that business is supported by world class infrastructure, high-speed connectivity, capable entrants to the workforce and fair taxes and business rates.
“These issues are key to our industry’s growth. In addition, the UK’s excise system, which has only grown in complexity in the almost 200 years of its existence, gives imported wine a relative tax break against domestically produced spirits and urgently needs to be reviewed. But this is not all about what government needs to do.”
Deputy First Minister John Swinney told delegates that the industry’s desire for collaboration was aligned with that of the Scottish Government which was embraced by the new ScotlandIsNow marketing initiative.
He acknowledged that the industry and government had differed over the issue of minimum unit pricing which came into effect this week.
The Scotch Whisky Association led a legal challenge to oppose the introduction of a legal minimum price on alcohol.
Mr Swinney said: “I hope we can put the issue of minimum unit pricing behind us.”