Whisky makers nervous over post-Brexit tariff hikes

David Frost
David Frost

The Scotch Whisky Association (SWA) the industry body for Scotch producers has warned that exports of the national drink could face increased tariffs in some countries in the wake of the vote to leave the UK.

The SWA said the loss of access to the EU’s free trade agreements (FTAs) is one of the biggest challenges facing producers, with more than 90 per cent of Scotch sold abroad.

Of the £3.8 billion of Scotch exports in 2015, £1.2bn was into EU countries and although SWA chief executive David Frost said negotiators were entering “unchartered territory”, he noted that it was reassuring to know Scotch will not face a tariff on exports to the EU.

And while in some global markets existing zero tariffs will continue, including in the US, Canada and Mexico, Mr Frost said tariffs could rise from zero to 20 per cent in countries such as Korea, Colombia and South Africa unless transitional arrangements are in place.

With the UK left to negotiate its own FTAs or rely on World Trade Organisation rules, Mr Frost called on the UK Government to negotiate grandfather rights on existing FTA provisions or negotiate some other transitional arrangement that would allow the UK to continue to participate within existing frameworks.

Mr Frost said: “To help combat this we’re calling on the UK Government to do its best to ‘grandfather’ the EU’s FTAs, ie for Britain to continue as a participant even after leaving the EU, or negotiate some other transitional arrangement.

“We also need the Government to put in place plans for the UK’s own network of FTAs, though this will obviously take time.

“And we look to British embassies round the world to do even more than they already do in pressing our case to knock over barriers that stop fair access for Scotch whisky in many markets round the world.”

The former diplomat also warned of a prolonged period of uncertainty.

He said: “I’ve never known an FTA being completed in less than three years. Having said that, if we were talking about modifying an existing trade agreement then your starting point wouldn’t be zero, but it’s certainly years rather than months.”

without the EU’s backing Mr Frost said barriers such as the high tariffs imposed by India or rules and regulations that discriminate against Scotch producers could become more of a threat.

“In the past we would get the European Commission and UK embassies to lobby governments on our behalf. After Brexit we do nnt have the Commission so we’re reliant much more on the UK.”

“It will have to step up its game,” he added.

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