Scotch whisky makers rail against UK government inaction over US tariffs | Business

Scotch whisky makers rail against UK government inaction over US tariffs | Business


The Scotch whisky industry has attacked the UK government for its “inexplicably slow” action against hefty tariffs imposed on whisky imports by the US government.

In an unusually critical statement, the Scotch Whisky Association accused UK ministers of prioritising post-Brexit trade talks with the US rather than fight against the 25% tariffs imposed on Scotch whisky and other goods by the US last October, in a dispute over European subsidies for the planemaker Airbus.

Late on Wednesday night it emerged the US had lifted tariffs on shortbread and other products, after intense lobbying by Liz Truss, the UK’s international trade secretary, during the latest round of bilateral talks on a new trade deal. The US also dropped plans to put a tariff on blended whisky and British gin, 70% of which is made in Scottish distilleries.

But the SWA was furious that the 25% tariff has been retained on malt whisky and Scotch whisky liqueurs such as Drambuie. The US is one of the industry’s largest markets, worth nearly £1.1bn last year, with malt whisky making up about a third of that.

Karen Betts, the SWA’s chief executive, said the tariffs had already caused “huge damage” to the industry. It had led to the loss of £300m in US sales, with some firms pulling out of the US entirely, adding to the sales crisis caused by the coronavirus pandemic.

Truss’s visit to the US last week to lobby Robert Lighthizer, the US trade representative leading his government’s trade deal talks, “was clearly too little, too late”, Betts said.

“The UK government must accelerate negotiations to bring an end to tariffs between the UK and US before preparations for November’s presidential election bring talks to a halt,” she added. “It has taken the UK government a full six months after the UK left the EU to start to tackle tariffs directly with the US government, which seems to us inexplicably slow.

“The UK government must now 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 for us.”

Airbus said last month it would end a system of financial support from France and Spain that the World Trade Organization had deemed illegal and unfair to Boeing, Airbus’s arch rival. However, Lighthizer said on Wednesday the EU and member states had “not taken the actions necessary to come into compliance with WTO decisions”.

Truss confirmed on Twitter on Thursday morning she was still pressing for the continuing tariffs on malt whisky to be lifted. “I welcome the US decision not to impose tariffs on gin and blended whisky, and to remove tariffs on shortbread,” she said.

“But there are still tariffs on UK goods like single malt Scotch. These tariffs are in no one’s interests. I am in further talks with [Lighthizer] to remove them asap.”

SWA officials believe the US is keeping the malt whisky, as well as other high-value goods such as cashmere woollens, as a bargaining chip in its battle with the EU and UK in the Airbus-Boeing dispute, after the WTO upheld US complaints that the EU unfairly subsidises Airbus.

The SWA believes UK ministers were relying too heavily on the EU to negotiate a deal in that dispute, and only began focusing on the damage to UK exports after it began intensively lobbying ministers, including Boris Johnson, during the prime minister’s trip to Scotland last month.

The controversy also plays heavily into domestic politics, fuelling attacks in Scotland on the UK government’s eagerness to strike deals with Donald Trump while failing to protect such a valuable and emblematic product, nine months before next May’s Scottish parliamentary election.

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UK ministers are keenly aware that support for the Scottish National party has soared, with the party polling 57% in the latest opinion poll, while backing for independence is as high as 54%, excluding don’t knows. The SWA added to that pressure by criticising the UK government’s £500,000 in extra spending on export promotion as inadequate, and called for the chancellor to cut whisky duty in his autumn statement.

Ivan McKee, the Scottish government’s trade minister, said this crisis was a significant test of Johnson’s post-Brexit trade policy.

“For too long, the UK government waited for the EU to fix this issue for them rather than getting on and fixing it themselves. That prevarication cost months of sales for key Scottish exporters – including our shortbread firms,” he said.

“Having left the EU, the UK government has the trade powers it wanted. Now it must use them. This is a first real test of the independent trade policy it wanted so badly.”



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