Distilled Spirits Council Outlines Key Foreign Trade Barriers Impacting the U.S. Spirits Sector in Report to USTR
–Removal of Retaliatory Tariffs on American Whiskeys Remains Top Priority–
WASHINGTON – The Distilled Spirits Council of the United States (DISCUS) submitted a detailed report yesterday with the United States Trade Representative (USTR) identifying key foreign trade barriers impeding U.S. distilled spirits exports.
The report provided a comprehensive review of the major trade barriers facing U.S. spirits exporters in countries around the globe, such as retaliatory tariffs, discriminatory taxation, import policies, and certification and labeling measures.
“The retaliatory tariffs on American Whiskey exports to the EU and the UK remain the top trade barrier facing the U.S. spirits industry,” said Robert Maron, Distilled Spirits Council Vice President for International Trade. “These tariffs have seriously impeded the export progress that has benefitted our sector and created jobs across the country.”
Retaliatory tariffs have been imposed on U.S. distilled spirits since mid-2018 by the European Union, United Kingdom, Turkey and China. Due to the continued application of retaliatory tariffs, total U.S. spirits exports were down 23 percent to $1.4 billion and American Whiskey exports were down 29 percent to $846 million from 2018 to 2020.
Maron added, “The impact of restrictions related to preventing the spread of COVID-19 and the necessary closure of bars and restaurants around the world is having a compounding negative effect on exports of American distilled spirits already suffering due to retaliatory tariffs.”
American Whiskey exports to the EU, the U.S. spirits industry’s largest export market, have plunged 37 percent, from $702 million to $440 million (2018-2020) and American Whiskey exports to the UK, the fourth largest market, have declined by 53 percent, from $150 million to $71 million (2018-2020).
“The Biden administration has made significant progress in resetting trade relationships with our global trade partners and is working to resolve longstanding trade disputes. We urge the administration and our trading partners to engage in further dialogue that will lead to the immediate and permanent removal of these retaliatory tariffs,” said Maron.
The report underscored that the U.S. distilled spirits sector has benefitted significantly over the past two decades from the comprehensive multilateral, regional and bilateral trade agreements the U.S. has concluded.
In 1997, the U.S., EU and UK eliminated tariffs on practically all distilled spirits as part of the “zero-for-zero” agreement. This agreement led to a 290 percent increase in American spirits exports to the EU and UK before retaliatory tariffs were imposed on American Whiskeys in 2018.
“It is critical to secure a return to the ‘zero-for-zero’ agreement with the EU and UK, which has been instrumental to our export success,” added Maron.
DISCUS member companies export to more than 130 countries worldwide, with total U.S. spirits exports in 2020 valued at more than $1.4 billion. Additionally, U.S. spirits are now exported from small, medium and large distillers located in 41 states.
American Whiskeys account for 61 percent of total American spirits exports. In 2020, the top five markets for American spirits exports by value were: 1) Canada ($249 million, up 23.2 percent); 2) Japan ($125 million, down 9.4 percent); 3) Australia ($114 million, up 11.2 percent); 4) United Kingdom ($83 million, down 25.4 percent; 5) France ($81 million, down 13 percent).
The top five markets for American Whiskey exports by value were: 1) Japan ($103 million, down 15.7 percent); 2) Australia ($98 million, up 15.8 percent); 3) Germany ($76 million, down 7.2 percent); 4) United Kingdom ($71 million, down 29.6 percent); and 5) France ($60 million, down 18.5 percent).
The DISCUS submission also identified countries that assess excessive tariffs, discriminatory excise taxes and other non-tariff barriers on imported distilled spirits, including:
- India: maintains an excessive tariff of 150 percent ad valorem
- Vietnam: imposes a 45 percent ad valorem tariff
- EU, Brazil, Thailand, Indonesia, Peru, Costa Rica and Ecuador among others: continue to apply discriminatory spirits taxes or product markups in favor of domestically produced spirits
- Thailand, Israel, India, China, Russia and elsewhere: labeling requirements and standards of identity are under consideration, which are inconsistent with standard international practices and could impose unnecessary barriers to entry for U.S. spirits exporters
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The Distilled Spirits Council of the United States is the leading voice and advocate for distilled spirits in the U.S., advocating on legislative, regulatory and public affairs issues impacting the distilled spirits sector at the local, state, federal and international levels. DISCUS members are committed to responsibility and encourage adults who drink to do so in moderation.