US tariffs on Scotch whisky show how difficult it will be for the UK to strike a post-Brexit trade deal that will replace even a fraction of the trade we will lose by leaving EU, says Ian Murray.
You can’t help but notice the extensive refurbishment works happening at the former House of Fraser’s department store in west Princes Street. The vast building is being transformed into an international Johnnie Walker whisky visitors’ centre.
It shows how important the whisky industry is to Scotland’s economy – it is the jewel in our crown. It is both iconic around the world and a major source of employment. It is also more than that. It is about who we are and our culture.
The industry has been growing as whisky becomes more and more popular across the globe.
The danger is that our cherished industry is becoming a pawn in a tit-for-tat global trade dispute.
Last year, the US imposed a 25 per cent duty on Scotch whisky and liqueurs as part of a long-running dispute at the World Trade Organisation (WTO) over aircraft subsidies.
The mood music from the Trump administration in Washington was that these punitive and unnecessary tariffs would be reduced or removed but I was shocked this week to hear that the Scotch Whisky Association (SWA) was heading to the US for urgent talks amid fears that Trump administration will further increase tariffs on single malts.
No special favours
This issue on its own is very worrying, but also translates to how weak the UK negotiating position may be in any future post-Brexit trade deal with the US. One of the main economic advantages of being a member of the European Union is the fact that the UK is part of a trading block of over 500 million people and 28 countries. That makes it much more powerful when discussing trade with other global partners.
For three years the industry trade union, GMB Scotland, has been calling on the UK government to bring forward protective measures for the whisky and spirits sector but there has been little to no progress.
he government needs to intervene now to mitigate the impact of the previous tariff increases but also to tackle the threat of further increases. Importantly, it must lay down a marker that in future trade deal negotiations the UK will not compromise on protecting whisky and other industries.
If these tariff increases are implemented it will show that President Trump is in no mood to grant any special favours to the UK in any future trade negotiations.
The world visitor centre for Johnnie Walker is hugely significant but any downturn in the whisky industry will have a disproportionate impact on Scotland’s rural communities which rely more heavily on distillation, production and maturation. We also have considerable employment through bottling plants in the Central Belt.
Johnson’s fantasy rhetoric
The debate about Brexit will no doubt continue unabated in the coming months as Boris Johnson tries to justify his vacuous “get Brexit done” slogan. The threat of ‘no deal’ is well and truly back on the table at the end of this year as a future trading relationship with the EU will be almost impossible to conclude in the short time available.
Boris Johnson will be desperate to get a trade deal with a large partner like the US, but from a fairly weak negotiating stance. This crisis engulfing trade in Scotch whisky with the US is an indication of how difficult it will be to replace even a small fraction of the trade we will lose by being part of the European Union.
The Trump administration is uncompromising and will set aside any “special relationship” with the UK in order to extract maximum economic benefit for the US.
Whisky is so important to the Scottish and UK economy. I will be doing all I can to support the SWA and GMB Scotland with this issue. As the reality of Brexit bites against the fantasy rhetoric of the Prime Minister, it may be the issue of Scotch whisky tariffs that finally bursts Boris Johnson’s vacuous promises on Brexit. Let’s hope Edinburgh’s newest visitor centre continues to celebrate the bright future of Scotch whisky and is not turned into a museum of a once bright past.
Ian Murray is the Labour MP for Edinburgh South