Another Round On The House WSTA

Another Round On The House WSTA

Uncategorized | 01 March, 2022

Miles Beale, Chief Executive of the Wine and Spirit Trade Association, commends DIT’s result on gin tariffs, says the time is right for removing Bourbon tariffs, and sets out how the WSTA’s approach to international trade knits neatly with an independent UK trade policy.

The UK’s increased number of gin distillers will have raised a glass to Secretary of State Liz Truss and DIT following the US Government’s decision earlier this month not to impose punitive tariffs on British gin exports. This followed intense WSTA lobbying over recent months and high-level engagement with their US counterparts from UK Government Ministers and officials.  The US is British gin’s key export market, with over 30% of the category’s exports destined to journey ‘across the pond’.  Gin’s exemption from a potential 25% tariff means UK exporters, particularly WSTA’s growing cohort of small and medium sized distillers, can breathe easier knowing they do not have a further concern to add to their list of worries for trading in a Covid-constrained world.

The Secretary of State committed to me at our meeting in July that she would do everything in her power to convince her opposite number, US Trade Representative Robert Lighthizer, to exclude gin from the proposed tariffs. Days later, when the Secretary of State presented Ambassador Lighthizer with a bottle of premium British gin and took part in a conversation that kept British gin off the Airbus list, she delivered on that promise. Combined with extensive campaigning by the WSTA and its members, as well as by our partners in the Distilled Spirits Council (DISCUS) in the US, this means that UK gin exports remain tariff free – for another 180 days at least. Not all categories or countries have been so lucky.

British gin remains, and will continue to be, an important British flagship export that demonstrates the values of free trade and, along with other wine and spirits products, is well aligned to the strategic aims of the UK’s new independent trade policy. As the world’s largest exporter of spirit and its second largest importer of wine (by both volume and value) the UK’s wine and spirit industry could be a bellwether for the success of the UK’s new independent trade policy.

 

The UK’s strategic aims, FTAs and global wines and spirits trade

On setting out to establish the UK’s independent trade policy outside of the EU, the Government needs to look no further than wines and spirits to showcase the potential returns for consumers and the manner in which new trade deals could boost our economy. The UK has set out its stall at the multilateral level in the WTO. When the Secretary of State made a speech to 164 WTO Ambassadors in March, she spoke about the need to ‘turn the rise in protectionist measures’[1]. The WSTA, and the global wine and spirit industry remains committed to this vision, and spirits trade has largely been anti-protectionist since the establishment of the ‘zero for zero’ agreement at the WTO in 1995.

I am calling on the UK Government to further recommit to these free trade principles as we emerge from the EU’s Customs Union and, for the next round of orders, let’s reinstate tariff free trade in Bourbon. Tariffs have now been in place against US whiskey imports to the UK since 2018, due to another unrelated EU-US dispute on steel and aluminium. Removing the tariff would send clear signals that the UK is a global proponent of free trade and would show an excellent sign of willing to the US to further resolve the Airbus dispute which has resulted in too many unrelated products, such as single malt Scotch whiskies, liqueurs and English still wines being caught in its net. Let us move from ‘Whisky for whiskey’ to ‘zero for zero’ once more.

Over the last two years, the Government has established an ambitious initial Free Trade Agreement programme, commencing negotiations with Australia, Japan, New Zealand and the US, and the alignment of those nations with UK’s vision of how trade should be conducted is important for strategic reasons, as well as its obvious economic benefits. The WSTA again sees parallels here between the government’s own target markets and their trading principles and those with which the wine and spirits industry aligns closely.

The US and Japan are other key signatories to the ‘zero for zero’ trade in spirits agreement, and Australia and New Zealand have been important actors on the WTO scene in recent years, pushing to resolve tensions between bigger members and at the frontier of what can be achieved in emerging areas of trade, such as digital. From a wine and spirit perspective, all four of these nations are major players, exporting their flagship wine and spirits to the UK market, supporting jobs right across the country. And, in addition to the US being the number one destination for British gin exports, exports to Australia have more than doubled to £23m since 2016[2], whilst British gin exports to Japan have increased by nearly 30% in the same period – and have substantial space to grow in a market with a penchant for British products and nearly 100m adult consumers.

And it’s not all about exporting, importing is GREAT too. The UK remains one of the most important wine markets in the world, and we import 99% of the wine we consume, supporting over 100,000 jobs, from bottling and marketing to retail and hospitality. Much of the wine that enters the UK from Australia, New Zealand and the US now comes in bulk, meaning it is much more environmentally friendly – another key aim of the UK’s new independent trade policy – as well as supporting jobs across the country, in logistics and bottling centres, some of which support some 500 jobs in a single UK location.

Unlike the EU, we do not have a domestic wine industry that requires protection. Our quality English sparkling wines sit at the premium end of the market and challenge Champagne – on the shelves and in awards. English wine producers would benefit from removal of tariffs and non-tariff barriers, and from the UK joining Australia, New Zealand and the US as members of the World Wine Trade Group. The WWTG embodies exactly the principles that the Government’s independent trade policy will be built upon. Opening markets and removing red tape to exports, facilitating trade through mutual recognition of regulations and certification. In addition, the UK remains a vital hub for the trade of wine and is another perfect example of Global Britain. Challenged only by Hong Kong, London is the world’s centre for fine wine trade. I believe we can keep and enhance our status as the key global wine market, and our goals sit comfortably alongside the Government’s free trade aims.

As the Chief Executive of the WSTA, its clear to me that the goals of many of our members are well aligned with the UK’s emerging independent trade policy – provided the government can deliver it in proactive and in good time. The recent announcement of no new tariffs on gin is a staging post and provides a platform for us to build upon, and we look forward to working with the Secretary of State and Department for International Trade to deliver these mutual aims that will benefit the UK and global trade in wines and spirits. The returns will be good for business and good for consumers. As Liz Truss noted in her speech to the 164 WTO Ambassadors, the more we “remove barriers to enterprise within and between nations […] the more rewards we will all reap”. I will raise a glass of Bourbon to that.

[1] https://www.gov.uk/government/news/britain-is-back-liz-truss-calls-for-new-rules-at-wto-to-tackle-unfair-trade-practices

[2] HMRC data, UKTradeInfo.com


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