US suspends tariffs on single malt Scotch whisky

The United States has temporarily suspended all retaliatory tariffs on UK goods from the long-running Boeing-Airbus dispute, including Scotch whisky.

The US and UK have agreed to a joint approach towards resolving the conflict over aerospace tariffs, which has been going on for 16 years.

Tariffs will be suspended on whisky, and a range of other goods, from Monday, March 8, for four months, backdated to March 4.

The suspension is expected to help struggling whisky producers protect jobs – the industry supports 50,000 jobs, with tariffs being reduced from 25% to zero.

Karen Betts, chief executive of the Scotch Whisky Association, said: “This is fabulous news, and our industry is delighted.

“The tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch whisky in the sixteen months it has been in place, with exports to the US falling by 35%, costing companies over half a billion pounds.

“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief.

“Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the US means livelihoods and communities across Scotland will be protected.”

Scotch was the UK’s largest food and drink export in 2020, and exports of single malt Irish and Scotch whiskies to the US were worth around £340m in 2018.

GMB, the union, welcomed the news but said tribute must be paid to workers on both sides of the Atlantic who fought to stop the tariffs.

GMB Scotland Secretary Gary Smith said: “It should be a moment of reflection for the UK Government, not celebration. The economic damage has been done and livelihoods have been lost because ministers failed to recognise the importance of this industry to Scotland and Britain from the outset of this tariffs war.”

The Scotch Whisky Association said exports dropped to the lowest level in a decade last year due to a combination of coronavirus and the US export tariff.

The government said the Department for International Trade will continue to engage with the US to agree a fair settlement to the dispute that removes punitive tariffs.

As well as whisky, other businesses who will benefit from the decision are cashmere producers in Ayrshire.

In 2018, the UK exported around £11m worth of the knitted and crocheted clothing to the US that were targeted by the tariffs, of which around £6m are cashmere.

International trade secretary Liz Truss said: “The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenfiddich, the more money those producers will have to invest in their businesses, their staff and futures.”

Prime Minister Boris Johnson said: “From Scotch Whisky distillers to Stilton-makers, businesses across the UK will benefit from the US decision today to suspend tariffs in this dispute.

“It shows what the UK can do as an independent trading nation, striking deals that back our businesses and support free and fair trade.

“I now look forward to strengthening the UK-US relationship, as we drive economic growth and build back better together.”

Airbus and Boeing disputes

Both the EU and US have claimed each other unfairly subsidizes its airplane manufacturer.

In 2004, the US challenged European loans to Airbus for aircraft development by filing a case at the World Trade Organisation (WTO).

Over the years, both sides have been found to have infringed on articles of agreement by subsidizing aircraft companies.

In 2019, the WTO Appellate Body, the final court of appeal at the WTO ruled that the US had continued to unlawfully subsidise aircraft manufacturer Boeing, causing significant harm to Airbus.

The WTO’s ruling in the 16 year-long dispute confirmed that the United States had not complied with obligations to withdraw subsidies previously declared illegal by the WTO Appellate Body in 2012, adversely affecting the UK and EU aerospace industry.

Following the findings, in October the EU was authorised in a WTO arbitration and has gone on to place retaliatory tariffs on $4bn worth of US products in the Boeing dispute.