Scott Wright: Whisky industry right to be furious as Government fails to stop damaging tariffs

With exports to North America having plunged by 35 per cent in that time, it is a huge burden for the industry to bear from a dispute it had no role in creating. Not only is it hammering sales in its most lucrative market, the tariffs are undermining jobs and investment, and are having a disproportionate impact on smaller distillers, which are now finding it even more difficult to make headway in the US.

Such is the “unsustainable” situation that the Scotch Whisky Association (SWA) is now calling for the UK Government to step up diplomatic efforts with the US to bring the damaging situation to an end. It also wants a package of support for the industry is it deals simultaneously with the tariffs, Brexit and ongoing restrictions to suppress coronavirus around the world.

That US tariffs are having such an egregious effect should come as no surprise to Government ministers. The industry has been publicly recording the impact ever since Washington adopted the protectionist stance. The damage is mounting by the day. Yet still there is no sign of the matter being adequately tackled by the Johnson Government.

Of course, this is not a straightforward issue to resolve. Before Brexit, the UK may have been able to argue that it had little scope to bring sufficient pressure to bear.

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After all, the tariffs, which have also hit the Scottish textile industry, were introduced amid an escalating trade dispute between the US and European Union over aircraft subsidies. It centres on support given to Airbus by European governments, including the UK, and to Boeing by the US.

Since Brexit, though, the UK has been freer to disentangle itself from the row, which would involve London agreeing a deal with Washington on aircraft subsidies that complies with Word Trade Organization rules. But, despite hopes a ‘mini deal’ could be struck last month, a resolution has still to be found.

The longer the impasse continues, the higher the cost to the Scotch whisky industry, and the greater to risk to jobs and investment in Scotland, particularly in rural areas. It is little wonder the angst being felt in the industry is threatening to boil over.

The lack of action may also grate at a time when the UK Government is trumpeting the likes of trade deal with Japan, which broadly replicate the terms the UK had as a member of the EU, or joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which some say will have little economic benefit.

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“It is a source of great frustration for the Scotch whisky industry that distillers continue to pay for this dispute,” said John Fordyce, co-founder of the Three Stills Company, owner of the Borders Distillery. “The industry is losing tens of millions in exports and sales every month. 2020 is likely to be the worst year for Scotch whisky exports in the last decade, meaning we have lost the ground built up over the last year years in the last 15 months the tariffs have been in place.”

In a noticeably more combative tone than is usual from the SWA, it is urging the UK Government to call for the immediate suspension of all tariffs on sectors unrelated to the aerospace dispute.

For the sake of jobs and investment, it is to be hoped that UK ministers act on this call. They should at least find a more sympathetic ear in the White House, with early signs suggesting Joe Biden may be more open to doing business than Trump.

Allan Hogarth of the Scottish North American Business Council said Biden’s commitment to tackling climate change, which includes sending climate envoy John Kerry to COP26 in Glasgow this year, is an “important sign” of his wish to “build bridges”. “My expectation is we should see this issue getting addressed soon,” Mr Hogarth said.

Distillers around Scotland will be praying that he is right.