Any trade deal with the US must commit to remove tariffs on Scotch Whisky
The success of the Scotch Whisky industry was built on open markets and free trade, the UK must continue to support this industry and be unapologetic about our free trade ambitions post-Brexit, writes David Mundell MP, former Secretary of State for Scotland.
Scotch Whisky has long been the jewel in the UK’s exporting crown. As Secretary of State for Scotland, I spoke often of the whisky industry’s stand-out success. The scale of the industry is staggering, and I could recite the numbers in my sleep: £4.7 billion in exports to 180 countries globally, 40,000 jobs supported across the UK, 20% of UK food and drink exports, 41 bottles exported every second.
But this great British export is now under considerable pressure, since the imposition by the United States last October of a 25% tariff on the import of all Single Malt Scotch Whisky as a result of a long-running dispute over aircraft manufacture.
The challenge should not be underestimated. Of the forty-one bottles of Scotch shipped from Scotland every second, one is a Single Malt bound for the United States. Every one of these bottles has had an additional 25% tax applied to it for the past three months. One bottle, every second.
No business, and no industry, can sustain that for long.
That is why later today in Parliament I will lead a debate on the impact the tariffs are having on the Scotch Whisky industry and, more importantly, what we can do return to zero-tariff trade.
First, the impact. While it is too early to assess the full market impact, some distillers have told me that they have paused investment, reduced exports, delayed launching new brands and laid-off staff in the US. One company has told me that they have stopped exports to the US altogether, as their US importer will no longer take Single Malts. Overall, exports are markedly down – 26% in October and 33% in November compared to the previous year. The Scotch Whisky Association estimates that if tariffs were to remain in place for a year then around £100m of export value could be lost.
This mirrors the experience of the US whiskey industry, which has faced a 25% tariff into the EU in the last 18 months in a separate trade dispute over steel and aluminium. During that time, the industry has seen a fall in exports of 29%. That is what is in store for Scotch if a resolution is not found, and found quickly.
So what can be done to support the industry?
Fittingly, at the same time as the tariff debate, elsewhere in Parliament MPs will be debating ‘Global Britain’.
What is 'Global Britain' if it is not about reinvesting in the UK on the world stage, championing rules-based trade and demonstrating that the UK is open, outward looking and confident?
The Scotch Whisky industry has embodied this spirit for over 150 years. Distillers, large and small stride the world, and their brands have become synonymous with quality, heritage and provenance.
Their success has been built on open markets and free trade. As we leave the EU and embark on an independent trade policy for the first time in forty years the UK must be unapologetic about our free trade ambitions. This includes a deal with the US – and the government should ensure that the first phase of a comprehensive agreement includes a commitment to remove tariffs on Scotch Whisky to the US, and US whiskey to the UK as soon as the UK can on leaving the EU.
That is for the mid-term, but we must also give the industry the shot in the arm in needs now.
The industry is paying nearly two-thirds of the UK’s total tariff liability in a dispute that has nothing to do with Scotch. That cannot be fair.
While disentangling Scotch and other sectors from complex trade disputes is not entirely in the gift of the UK government, with a Budget on 11th March, the UK government has the opportunity to stand with the Scotch Whisky industry, and offer support in its home market as it deals with pressure overseas
Global Britain must begin by backing our success stories here at home.
David Mundell is the Conservative Member of Parliament for Dumfriesshire, Clydesdale and Tweedale.
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