World: The Scotch Whisky Association worried about the post-Brexit future of whisky exports to emerging markets

The Scotch Whisky Association (SWA) has warned that trade tariffs on exports to emerging markets such as Korea, South Africa and Colombia could rise as a result of the Brexit vote, The Spirits Business reported on August 3.

Such countries currently have Free Trade Agreements (FTAs) with the EU that mean no or very low tariffs on whisky, and after completing a post-referendum consultation with its membership, the SWA has warned that unless there are transitional arrangements Scotch will lose out on “significant tariff reductions”.

The SWA said the UK “will eventually need to negotiate its own FTAs or rely, as the EU largely does with most countries, on WTO (World Trade Organisation) rules”, adding that that this process would “take a major upgrade of capacity within the UK Government” and could not be actioned quickly.

The body called for a trade policy that was “as open and free trading as possible”, and urged the government for clarity on future trading arrangements as soon as possible.

The SWA added that the UK must develop its own network of trade agreements with non-EU countries over the medium term.

David Frost, SWA chief executive, said: “Scotch Whisky is one of the UK’s most successful exports. We are calling on the UK government to bring clarity to the transition to Brexit as soon as possible, and to negotiate to ensure that the current open trading environment is not affected.

“Finding practical ways forward on export practicalities and on free trade agreements should be high on the agenda as negotiations begin in the coming months. We plan to play an active role in influencing this whole process to ensure that Scotch remains a product enjoyed across the globe.”

In many markets Scotch will also continue to benefit from existing zero tariffs, as in the US, Canada, and Mexico. The SWA also confirmed that other markets that already demand high tariffs such as India, “Brexit will not make the situation any worse”.

Scotch whisky will not face a tariff on exports to the EU, and will no longer be subject to EU rules on excise duty or VAT, however as with other UK goods the industry anticipates new administrative requirements (rules of origin) for such exports.

The SWA summarised: “We urge government in Edinburgh and London to work closely with us and to put in place mechanisms that allow vital industries such as Scotch whisky a seat at the table.”

Scotch whisky is the biggest single net contributor to the UK’s balance of trade in goods, without which the UK’s trade deficit would be more than 10% larger.

04 August, 2016