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As Truss pledges more talks...

Dismay as US retains whisky tariff and losses hit £300m

Karen Betts SWA

Karen Betts: ‘deeply disappointing’ (pic: Terry Murden)

Scotch whisky chief Karen Betts accused International Trade Secretary Liz Truss of taking too long to enter talks with the US after it said it would retain a punishing tariff on single malts.

The Office of the US Trade Representative announced that it will modify tariffs on the EU, but the 25% levy on many European spirits imposed last October will remain in place.

These include Single Malt Scotch Whisky, Single Malt Irish Whiskey from Northern Ireland, and liqueurs and cordials from Germany, Ireland, Italy, Spain and the UK. The tariff on shortbread has been lifted.

Ms Truss issued a statement this morning saying she would be seeking further talks with her counterpart in the US.

“In Washington DC last week I met my opposite number Bob Lighthizer, the US Trade Representative, to warn against new tariffs being imposed on great British products like gin and blended whisky. I am pleased that the US has not applied these additional tariffs, and welcome the decision to lift tariffs on shortbread. 

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“However, the announcement does not address tariffs that already exist on goods like single malt Scotch whisky. These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible.”

Scotch Whisky Association CEO Karen Betts said the tariffs have now cost the industry £300 million in lost sales and said Ms Truss’s visit to Washington was “too little, too late.”

The tariffs were introduced as part of a 16-year trade battle over state aid involving Airbus and American rival Boeing.

Some whisky producers say the tariff has caused them to withdraw exports to the US.

Macallan single malt whisky

Single malts have been targeted

Ms Betts said: “It’s deeply disappointing to see that the 25% tariff on Single Malt Scotch Whisky exports to the US has been retained by the US government.  

“The tariff is inflicting huge damage on the Scotch Whisky sector, with exports to the US down 30% since the tariff came into effect and the industry grappling with losses now totalling around £300 million.  

“These losses relate only to tariffs – the impact of Covid-19 has been serious and has compounded what is now a very serious situation for Scotch Whisky, with some brands forced out of the market and jobs in the industry and our supply chain now at risk.”

Ms Betts said the six months it has taken the UK government to tackle tariffs directly with the US government “seems to us inexplicably slow” and called for progress before the November presidential election campaign kicks in.

She called for the UK government to focus its energy on developing a clear strategy for settling the UK share of the Airbus/Boeing and steel and aluminium disputes with the US, rather than looking to the EU to do this. 

The Prime Minister and Chancellor must step in to ensure that the damage to our industry is, as far as possible, mitigated

– Karen Betts

“Negotiations on a free trade agreement with the US will not solve tariffs and will not be credible while they remain in place. While we welcomed International Trade Secretary Liz Truss’ visit to the US last week, to talk directly to US Trade Representative Robert Lighthizer, it was clearly too little, too late. 

“In the meantime, the Prime Minister and Chancellor must step in to ensure that the damage to our industry is, as far as possible, mitigated.  Scotch Whisky is a crucial part of Scotland’s economy, employing over 11,000 people and many more than that through our supply chain, in some of the UK’s most productive jobs.  

“The support promised to date – £500,000 of export promotion – is woefully inadequate compared to the support offered by the French and US governments to their national industries that have been targeted by tariffs. At the very least, the government must commit to a duty cut in the Autumn Budget.”

Mr Lighthizer said: “The EU and member states have not taken the actions necessary to come into compliance with WTO decisions.

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“The United States, however, is committed to obtaining a long-term resolution to this dispute. Accordingly, the United States will begin a new process with the EU in an effort to reach an agreement that will remedy the conduct that harmed the U.S. aviation industry and workers and will ensure a level playing field for U.S. companies.”

The Distilled Spirits Council US (DiSCUS) said: “The EU’s tariff on American Whiskey, now in place for over two years, is causing severe damage to U.S. exports and negatively impacting jobs in the US.

“Continuing tariffs on EU beverage alcohol products will only cause additional harm to hospitality businesses in cities and towns across the country that are already suffering, resulting in additional lost U.S. jobs during these uncertain economic times.”

DiSCUS also expressed concern that the EU may escalate the situation by imposing new tax on US rum, vodka and brandy. The statement also noted that the EU is scheduled to increase its retaliatory tariff on American Whiskey from 25% to 50% in Spring 2021.

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