EU Wine, Spirits Producers Baffled After Being Hit With US Tariffs in Airbus Subsidy Case

CC0 / / Whisky bar
Whisky bar - Sputnik International
BRUSSELS (Sputnik) - European producers of wine and Scotch whisky, which were unexpectedly caught in the middle of EU-US dispute over Airbus subsidies, said US decision to punish them with huge tariffs in response to the unrelated standoff came as a "cold shower," which, if tariffs take effect, would have far-reaching consequences for the industry.

"What is difficult to accept is that the USA has taken other sectors, the Wine and Whisky sector, to impose heavy levies, at a level of 25%, while they only impose levies of 10% on new European planes. Are bottles of wine flying? No, so they should limit their measures to the aircraft manufacturing industry!" Ignacio Sanchez Recarte, the secretary-general of the European Wine Companies Committee (CEEV), said.

On Wednesday, the World Trade Organization (WTO) ruled that the United States can impose tariffs on $7.5 billion worth of goods from the European Union as retaliation for the bloc’s illegal subsidies to Airbus. Washington is now requesting 10 per cent tariffs on civil aircraft and 25 per cent tariffs on a number of food products imported from EU countries. French, Spanish, German and UK still wines, plus single malt Scotch whisky, are among those targeted by the tariffs.

According to Recarte, though the levies are ad valorem, which makes it possible to declare lower value of goods at customs, consumers will still "see the difference and feel the pinch."

"What is very detrimental is for the importers to have to change their product from category, in terms of marketing and sales. It also questions future sales. The American market is highly competitive for wines, with their own national production and the wines from South America or Australia for example, so for the European producers and exporters, it is really a cold shower if – as announced by the US, the tariffs start being applied from October 18," he stressed.

The reaction is just as surprised and angry in the Scotch Whisky Association (SWA).

"The US market accounted for 22% of global value, and 10.7% of global volumes of Scotch Whisky exports in 2018. We sold for more than 1.3 billion US$ of scotch whisky in the US last year! So you can imagine that we are very disappointed," Karen Betts, the SWA chief executive, said.

The tariffs, Betts went on to argue, are a "heavy blow" to the industry since Single Malt Scotch Whisky represents over half of the total value of UK products on the US Government tariff list.

She regretted that the sector has been hit, even though the "dispute is about aircraft subsidies." Betts also recalled that EU-US trade in spirits has been tariff-free for the last 25 years, boosting "investment, employment and prosperity" on both sides of the Atlantic. Now, the situation would change.

"If the levy is applied, we expect a negative impact on investment and job creation in Scotland, and longer-term impacts on productivity and growth across the industry and our supply chain ... These damaging tariffs must not take effect," she said.

The Scotch Whisky Association chief, therefore, urged the European Union and the United States to "take urgent action" to ensure that the latest tariffs will not take effect and "other tariffs – including on the export of American Whiskey to the EU – are removed quickly."

EU-US trade tensions have been mounting since the Donald Trump administration introduced tariffs on steel and aluminium imported from Europe on 31 May 2018. The next month, the bloc retaliated with 25 percent tariffs on American motorcycles and other items, including US whiskey.

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