Tariff wars cause sharp decline in wine and whisky exports

Dozens of global drinks trade bodies have written to the European Union and US government demanding an end to their tariff war after exports of French, German, Italian and Spanish wine have fallen by 54% since last year.

Last month the World Trade Organisation authorised the EU to impose US$4 billion in tariffs on US imports in the ongoing dispute.

The 16-year feud, which centres around subsidies given to Boeing and Airbus, is now the WTO’s longest-running corporate dispute.

The WTO authorised the US to implement 25% tariffs in October 2019 on a range of EU goods – including wine, spirits and liqueurs made in certain countries – worth $7.5bn This is $3.5bn more than has been granted to the EU.

Now, 18 trade bodies have sent a joint letter to the United States Trade Representative (USTR) and the European Commission for Trade expressing their concerns over the long term impact punitive tariffs will have on the global alcohol sector. The group said they will “only increase harm” to an industry that has already seen bars and restaurants, a crucial revenue channel for drinks producers, shut or severely restricted due to the pandemic.

US imports of wines mentioned in the tariff legislation from Germany, France, Spain and UK fell by 54% between Nov 2019 and July 2020 ($575m) compared to the same period last year. ($1.2bn).

Exports of American-made whiskey to the EU, the US spirits industry’s largest overseas market, fell from $757m to $449m between August 2019 and July 2020, according to the Distilled Spirits Council of the US (Discus). The organisation also claims that US imports of Scotch are down by nearly 35% between Oct 2019 and July 2020 to $852m, compared the same period last year ($1.31bn).

The trade bodies said the latest ruling granting the EU permission to impose billions in tariffs could trigger more taxes on US alcohol. The EU previously indicated that it may impose tariffs on rum, brandy, vodka and wine.

“The escalation of tariffs on the distilled spirits and wine sectors, by either the US or EU, will only increase harm to an industry already suffering,” the letter said.

“The spirits and wine industries and hospitality sector are facing incredible economic harm due to the mandatory closings of restaurants, bars and distillery and winery tasting rooms in response to the outbreak of Covid-19.

“These tariffs, which have been imposed in connection with unrelated trade disputes, have generated severe economic pain for our sectors and our wider supply chains.”

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