USA maintains duty on Scotch Whisky as its cuts other UK tariffs

The USA has maintained its 25% duty on single malt whisky as the US trade representative announced the US would not proceed with proposals to impose tariffs on British goods such as gin, beer and vodka.

USA maintains duty on Scotch Whisky as its cuts other UK tariffs

Shortbread manufacturers have also received a reprieve, as the USA announced it would remove a tariff on sweet biscuits. 

The decision to hold off on additional duties for British goods was welcomed by Liz Truss, the UK’s international trade secretary, who had warned that targeting “great British products” risked derailing transatlantic negotiations over a free trade agreement.

Ms Truss said that she would intensify talks over the whisky tariff and call for its removal as soon as possible after industry chiefs warned that the sector had already suffered from a £300 million hit.

Scottish trade minister Ivan McKee has called for intensified efforts to have US tariffs lifted on Scottish goods, including single malt whisky. He has urged the UK Government to act after the US announced it was retaining  25% tariffs on a range of products from the UK and EU.

Mr McKee called on the UK Government to prioritise attempts to persuade the US to lift all the sanctions and save jobs. 

The Minister said: “Scottish businesses are being hit hard by these tariffs and jobs and livelihoods are now at risk. I urge UK Ministers to step up engagement with their US counterparts as a matter of urgency. At the very least, they must put getting these damaging tariffs removed from key Scottish produce ahead of securing a UK-US trade deal.

“While the removal of the tariff on sweet biscuits will be a relief to Scotland’s bakery sector, the continued extra charge on items including single malt scotch whisky, cashmere, cheese and some wool products means continued difficulties for Scottish exporters.

“We repeatedly urged the UK Government to make the lifting of tariffs a condition of entering trade negotiations with the US earlier this year, but it failed to do so.”

He added: “Every day that the tariffs remain in place is a further drag on Scottish businesses working to recover from the economic impact of coronavirus (COVID-19). We are clear that the UK Government must stop compromising Scottish economic interests and put getting these tariffs lifted ahead of a UK-US trade deal.”

The continuance of the 25% tariff on whisky stems from the Trump administration’s long-running dispute with the EU over its monetary aid to Boeing.

Last autumn, the World Trade Organisation (WTO) ruled that the US government could impose tariffs on $7.5 billion of goods from the European Union because the bloc had illegally subsidised the European aerospace company Airbus.

The EU has accused the US of providing state aid to the American aircraft manufacturer Boeing, and is seeking to apply duties on $11.2 billion of US exports, but the WTO has postponed its ruling until the autumn of this year.

Yesterday, Robert Lighthizer, the US trade representative, announced that the US would not proceed with proposals to target gin and vodka with new duties and broaden the whisky levy so that it also included blended products.

Mr Lighthizer said: “The EU and member states have not taken the actions necessary to come into compliance with WTO decisions. The United States, however, is committed to obtaining a long-term resolution to this dispute.”

He said that American officials will begin a new process with their European counterparts in an effort to reach an agreement. 

A European official acknowledged the decision “not to exacerbate the ongoing aircraft dispute by increasing tariffs on European products”, and said that the EU “believes that both sides should now build on this decision and intensify their efforts to find a negotiated solution to the ongoing trade irritants”.

The smaller number of changes to existing levies will come into effect in September, The Times reports.

Responding to the continuance of the whisky tariff, Karen Betts, chief executive of the Scotch Whisky Association, urged the British government to do more to protect the industry.

She said that the 25% tariff on single malt “is inflicting huge damage on the Scotch whisky sector. She said: “with exports to the US down 30 per cent since the tariff came into effect and the industry grappling with losses now totalling around £300 million”.

“I am pleased that the US has not applied these additional tariffs, and welcome the decision to lift tariffs on shortbread,” she said. “However, the announcement does not address tariffs that already exist on goods like single malt Scotch whisky. These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible.”

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, commented: “The decision by United States Trade Representative (USTR) Robert Lighthizer to remove extra tariffs imposed on Scottish shortbread and to avoid adding more trade taxes on our gin and blended whisky exports is a ray of light through the storm of this damaging trade dispute.

“It is now more important than ever that the UK International Trade Secretary Liz Truss MP redoubles her efforts to have further tariffs that have been imposed on Scotch whisky and cashmere knitwear lifted. Now is the time to prove our mettle as a global trading nation by seeking a bilateral UK/US solution.’’

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