Irish Whiskey Association EU-US trade warning
The Irish Whiskey Association, the trade association representing Irish Whiskey producers on the island of Ireland, together with Drinks Ireland, representing the wider drinks manufacturing sector, has today (14 May) warned that the Irish and EU spirits sectors remain uniquely exposed should no resolution of EU-US trade tensions be found.
These organisations recommend the immediate removal of all tariffs on EU and US spirits, allowing the spirits sector to return to the tariff-free environment in which it has found such success.
Irish Whiskey now faces a 10% tariff on exports to the USA, which is the biggest market for this premium product – 95% of Irish Whiskey is exported, and exports to the US are worth around €420 million per annum.
The Irish Whiskey Association has recommend that pressures on the EU spirits sector are considered, and efforts to secure a satisfactory outcome to negotiations is prioritised.
Overall drinks exports from Ireland to the US total €865 million every year.
This 10% tariff is already costing Irish drinks producers thousands of euros every week.
This additional cost, coupled with a weakened dollar, is placing major pressure on the sector, and a swift resolution is required.
The immediate cost implications and deepening trade uncertainty are negatively impacting markets and businesses for distillers and drinks manufacturers throughout the country.
Both Drinks Ireland and The Irish Whiskey Association are encouraged by the fact that the European Commission has consistently sought to negotiate a deal and has engaged in discussions with their US counterparts in good faith.
Irish Whiskey, Cream and Poitín producers are appreciative of the consultation and communication that both the European Commission and the Irish government have engaged in with affected sectors.
Drinks Ireland and The Irish Whiskey Association hope that a satisfactory conclusion of these negotiations can be reached, as this would benefit all spirits drinks producers in Ireland.
A tariff-free environment has worked and will work best for the spirits sector.
From the introduction of zero-for-zero tariffs in 1997 until 2018 with the steel/aluminum dispute, the value of the spirits sector on both sides of the Atlantic experienced a growth of 450%.
The spirits sector in both the USA and the EU remain interconnected, however this period of uncertainty and heightened trade tensions puts investments at risk.
There are further threats which may impact on the competitiveness of the Irish drinks sector.
Ireland remains the primary importer of US casks in the EU, and ex-bourbon and ex-American Whiskey casks are an integral component of the Irish Whiskey.
As per the previously announced retaliatory list for steel/aluminum trade dispute, casks will be subject to a 25% tariff should a negotiated deal not be found.
This, compounded with the (current) 10% on Irish exports to the USA, would leave Irish Whiskey producers at a unique disadvantage, particularly when compared to other spirits categories in competing markets.
All these developments come against the backdrop of the recent conclusion of the UK-India Free Trade Agreement – which ensures an immediate 50% reduction in tariffs for UK whiskies and spirits to India.
This secures a more favourable trading environment for our direct competitors, placing EU products at a further, unique disadvantage.
Ahead of the Trade Council tomorrow, Drinks Ireland and The Irish Whiskey Association recommend that these pressures on the EU spirits sector are considered, and that efforts to secure a satisfactory outcome to negotiations is prioritised.
