Marketing

Transatlantic drinks producers plead for US/EU tariff resolution

A coalition of 20 trade associations representing the US, EU and UK wine and distilled spirits and related sectors today warned that new European Union tariffs of 25% on US gin, rum, brandy, vodka and vermouth would further damage the once-booming transatlantic drinks trade.
“The US and EU need to return to the negotiating table without delay,” says the coalition.

“The US and EU need to return to the negotiating table without delay,” says the coalition.

This follows the sending of a letter to the United States Trade Representative and the European Commission for Trade on October the 7th signed by some 18 US and EU associations expressing their shared opposition to tariffs on wine, distilled spirits and beer and urging their immediate elimination.

Yesterday, the EU announced a $4 billion tariff package on goods from the US – authorised by the World Trade Organisation last month – in retaliation for tariffs imposed on EU goods by the Trump Administration.

“The application of excessive and unwarranted tariffs has to end,” today’s coalition said, “Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits, wine and beer are being slammed from both sides of the Atlantic in an aircraft dispute wholly unrelated to the drinks business. This is on top of the closings of restaurants, bars, distilleries and winery tasting rooms because of the Covid-19 pandemic.”

Today’s additional tariffs on US products will further degrade the difficult situation the wines and spirits industries have been facing since additional tariffs were imposed in 2018. Specifically, on October the 18th, 2019, the US imposed a 25% tariff on Single Malt Scotch Whisky, Single Malt Irish Whiskey from Northern Ireland, liqueurs and cordials from Germany, Ireland, Italy, Spain and the UK as well as certain wines from Germany, France, Spain and the UK.Altogether the tariff package added another $7.5 billion onto costs

This resulted in a painful 34% decline in Scotch Whisky exports between October 2019 and August 2020 ($949 million) compared to October 2018 through August 2019 ($1.43 billion), a 28% decline in liqueurs and cordials exports between October 2019 and August 2020 ($371 million) compared to October 2018 through August 2019 ($514 million) and a 54% decline in wine exports between November 2019 and August 2020 ($528 million) compared to November 2018 through August 2019 ($1.2 billion).

Similarly, the EU imposed a 25% tariff on Bourbon and other US Whiskeys in June 2018 in response to US tariffs on steel and aluminium which has resulted in a 41% decline in American Whiskey exports to the EU (including the UK until it departs the EU customs union).

According to an analysis  by the Distilled Spirits Council of the US this has cost American Whiskey exporters more than $300 million since the EU’s retaliatory tariff went into effect in June 2018.

The coalition also noted that the imposition of additional tariffs would force more businesses to close their doors and lay-off more workers in sectors already severely weakened because of the global pandemic and related restrictions.

“The US and EU need to return to the negotiating table without delay,” the coalition added, “They need to immediately suspend the current tariffs as they negotiate an agreement to simultaneously eliminate additional tariffs on distilled spirits and wine in these disputes unrelated to the sector.”

The coalition is now made up of the Distilled Spirits Council Of The United StatesSpiritsEUROPEScotch Whisky AssociationComité Européen Des Entreprises VinsWine InstituteAmerican Beverage LicenseesWineAmericaWine & Spirits Wholesalers Of AmericaNational Retail FederationAmerican Craft Spirits AssociationAmerican Distilled Spirits AllianceU.S. Wine Trade AllianceNational Council Of Chain RestaurantsKentucky Distillers’ AssociationNational Restaurant AssociationNational Association Of Beverage ImportersNational Association Of Wine Retailers, The Wine and Spirits Trade Association, Napa Valley Vintners, and Wine And Spirits Shippers Association.

Despite the announcement by the EU of the latest set of tariffs, it was hoped that more progress could be made with the President-elect Joe Biden in resolving the issue.

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