The makers of single malt Scotch whiskey breathed a sigh of relief on Thursday after the United States agreed to suspend tariffs on one of Scotland’s top exports following the resolution of a long-standing trade dispute between the United States and the European Union concerning subsidies to the aircraft companies Boeing and Airbus.
Former US President Donald Trump imposed tariffs of 25% in October 2019 in the aerospace subsidy trade dispute. Although the UK is no longer a member of the EU, it was part of the bloc when tariffs were introduced.
Earlier this week, the US and the EU reached an agreement to end their dispute, paving the way for a five-year suspension of tariffs the two sides had imposed on a range of products, especially olive oil and cheese, as well as whiskey.
The Scotch Whiskey Association estimated that the tariffs contributed to a 30% drop in total exports to the United States, equivalent to about 600 million pounds ($ 850 million) in the 18 months to March 2021.
“This deal removes the threat of a reimposition of tariffs on Scotch whiskey next month and allows distillers to focus on recovering exports to our largest and most valuable export market,” said Karen Betts , general manager of the association.
A thaw in US-EU relations was widely expected after the election of US President Joe Biden, who made clear his intention to improve relations. In March, the two sides agreed to temporarily suspend tariffs related to the Airbus-Boeing dispute in a bid to negotiate a solution.
Following the US-EU aerospace deal, UK Secretary of State for International Trade Liz Truss and US Trade Representative Katherine Tai agreed to suspend retaliatory tariffs for five years.
“Today’s agreement puts an end to an incredibly damaging problem and means we can focus on improving our trade relationship with the United States, including working more closely to challenge unfair country practices. like China and using the power of free trade to build back better [coronavirus] pandemic, ”Truss said.
Tai said the agreement, in which the two sides also agreed to form a working group on the civil aviation industry and cooperate against “non-market practices of third countries” can build on ” to ensure fair competition and meet the common challenges of China and other non-market economies ”.
Following the UK’s departure from the EU’s economic orbit earlier this year, it is free to negotiate trade deals with any country it chooses. Earlier this week, the British government negotiated the outline of a free trade agreement with Australia that will eliminate tariffs on a wide range of products over the next few years.
Ivan Menezes, CEO of beverage giant Diageo, said the elimination of tariffs on Scotch whiskey and other recent developments illustrate the benefits that can come from Brexit.
“With the end of this dispute, a new free trade agreement with Australia that removes remaining tariffs on British spirits and the opening of trade negotiations with India, the world’s largest whiskey market , the UK’s newly independent trade policy now brings major benefits. for Scotch and Scotland, ”said Menezes, whose company’s single malt whiskey stable includes Talisker and Laphroaig.
The Scottish National Party, which runs decentralized administration in Scotland, called for more support from the UK government to help businesses that have suffered.
“While this announcement is welcome after months of multi-party campaigning, the losses to Scotch whiskey exports have been staggering and it will take time for the industry to get back on its feet,” said lawmaker David Linden.
Under Thursday’s deal, the UK will suspend 25 percent tariffs on US rum, brandy and vodka for five years. American whiskeys, however, will continue to face a 25% UK tariff imposed in the steel and aluminum dispute between the EU and the US.
The U.S. Distilled Spirits Council welcomed Thursday’s deal and hopes that a resolution can soon be found to lift tariffs on U.S. whiskeys, which it says contributed to a 53% drop in exports to UK.
“We hope that this positive momentum will also lead to the rapid and permanent removal of EU and UK tariffs on US whiskeys,” said Chris Swonger, CEO of the group.
Her counterpart from the Scotch Whiskey Association, Karen Betts, said she hopes these issues “can also be resolved quickly.”