Irish drinks to benefit from US tariff truce
The decision to suspend tariffs for four months signals a promising breakthrough in the dispute on civil aircraft subsidies which has left much destruction to the spirits sector in its wake, stated the Distilled Spirits Council of the US in reacting to the agreement.
The truce also brings to a temporary end the imposition of 25% levies on French and German wines exported to the US.
In return the EU is to suspend tariffs on some €3.36 billion-worth ($4bn) of US exports imposed by the EU on US rum, brandy and vodka in November 2020. In addition, the US is suspending the 25% tariffs imposed on liqueurs and cordials from Germany, Ireland, Italy and Spain in October 2019 and on certain Cognacs and other grape brandies from France and Germany in January 2021.
The agreement followed a phonecall between President Joe Biden and the European Commission President Ursula von der Leyen where he underscored his support for the EU and his commitment to repair and revitalise the US-EU partnership.
A subsequent White House statement read, “Noting our shared values and the world’s largest trade and investment relationship, the leaders agreed to suspend the tariffs related to the World Trade Organization Aircraft disputes for four months and to work toward resolving these long-running disputes at the World Trade Organization”.
The pair also discussed the importance of close US-EU cooperation to contain Covid-19 and enhance global health security, pursue a sustainable global economic recovery, tackle the climate crisis and strengthen democracy. The two leaders also agreed to coordinate on issues of shared interest including China, Russia, Belarus, Ukraine and the Western Balkans.
Ursula von der Leyen described the development as “a very positive signal for our economic cooperation in the years to come.”
Only last December the US escalated the dispute, imposing new tariffs on a range of EU products.
However tariffs on Bushmills Single Malt whiskey were suspended earlier last week as part of a separate deal the US President struck with the UK.
Irish alcohol exports fell by nearly a fifth in 2020 on the back of Covid-19 Lockdowns, Brexit and US tariffs. However dairy exports to the US were up 11% in value despite the tariffs.
The temporary suspension of tariffs including those on Irish Cream and other Irish liqueurs is a positive development for the Irish spirits industry, according to Drinks|Ireland.
The US is a vitally important market for this industry, it stated. In 2019 it was the number one market for Irish GI spirits (Irish Whiskey, Irish Cream and Poitín) with 2,385,800 nine-litre cases of Irish cream exported from Ireland to the US that year.
“All Irish whiskey exports to the US are once again tariff-free,” commented William Lavelle, Head of Drinks Ireland|Irish Whiskey, “We had repeatedly called for de-escalation of the transatlantic trade dispute and we wish to thank both Secretary of State for International Trade Liz Truss MP and the new Biden administration for agreeing to this tariff suspension.”
The agreement has come as a huge relief to all European spirits producers negatively affected by the US tariffs over the past 16 months and whose exports have fallen drastically as a result, commented spiritsEUROPE, “… hurting jobs and growth amidst a very difficult market situation marked by the Covid crisis.
“We hope that both the EU and the US will now be able to find a final and permanent resolution to the Airbus-Boeing dispute as well as also resolve the steel and aluminium dispute which still hurts US whiskey exports to the EU,” it concluded.
The decision to suspend tariffs for four months signals a promising breakthrough in the dispute on civil aircraft subsidies which has left much destruction to the spirits sector in its wake, stated the Distilled Spirits Council of the US in reacting to the agreement.
For nearly three years, American distillers have been collateral damage in the US-EU trade disputes over aircraft subsidies and steel and aluminium tariffs, it pointed out.
“Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic,” stated DISCUS, pointing out that “momentum is building for an end to these debilitating tariffs.”
American Whiskey exports to the EU, American Whiskey’s biggest export market, grew from $502 million in 2008 to $702 million in 2018, an increase of 40%. Since the tariffs were imposed, American Whiskey exports to the EU have declined by 37%.
“Until steps are taken to address the dispute over steel and aluminium tariffs, American Whiskey — the United States’ largest spirits export category — will remain at a serious competitive disadvantage in our two most important export markets,” it stated.
