Settlement needed to stop 'profoundly worrying' US tariffs on Scottish whisky

Nicola Sturgeon has called for a speedy, negotiated settlement between the EU and the US to prevent a trade war and stop "profoundly worrying" tariffs being imposed on the whisky industry.

The Scottish whisky industry could be hit by 25 per cent tariffs on its exports to the US as part of a trade war between America and the EU.

Single malt whisky exported from Scotland to the United States is set to be hit by a 25 per cent tariff in a fortnight's time as part of a raft of measures being imposed by President Donald Trump in retaliation against EU subsidies given to aircraft maker Airbus.

Fears have been raised that the tariffs, which would apply from October 18, would devastate the industry which, overall, exported £1bn worth of whisky to the US last year.

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Today, Nicola Sturgeon said the news was "profoundly worrying" for whisky and other Scottish exports.

Pressed at First Minister's Questions on what the Scottish Government could do to reverse the US decision, she said: "I recently wrote to the Prime Minister highlighting the threat to the Scottish whisky industry in particular, I discussed the issue directly with the Scotch Whisky Association just a couple of weeks ago, and we will continue to encourage the UK government to support a negotiated settlement to this and we support the efforts of the EU to find that settlement.

"It's in nobody's interests to have trade wars like this, everyone ends up being a loser, and the sooner we find a resolution the better and I would encourage UK ministers to work hard to do so."

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However she was later challenged by the Scottish Greens to retaliate against President Trump by suspending US military use of publicly-owned Prestwick Airport.The airport, bought for £1 by the Scottish Government six years ago, has been a source of sustained controversy over its decades-long use by the US military, including ‘extraordinary rendition’ flights by the CIA.

It is currently at the heart of a US Congress investigation over its promotion of Donald Trump’s Turnberry resort to US military personnel and accusations that the President has broken the ‘Emoluments Clause’ of the US Constitution, enriching himself through government business directed towards his properties.Scottish Green spokesperson for external affairs, Ross Greer MSP said: “Prestwick Airport is owned by Scottish ministers on behalf of the public. We know it is used for live US military missions across the globe and we now know the role it has played in personally enriching Donald Trump by directing business towards his Turnberry resort, in some cases without mentioning a single other hotel despite dozens being far closer to the airport.“The Scottish Government should have broken these links with the American military machine long ago and certainly as soon as Donald Trump was sworn in as Commander in Chief.

"With these tariffs set to hit our whisky industry hard, likely costing jobs across Scotland, the government should show leadership and respond by suspending use of its airport by the US military. That will certainly catch Mr Trump’s attention and make clear that this attack on the Scottish economy, over a dispute which has nothing to do with us, is not acceptable.”

The tariffs are set to be imposed by the US after the World Trade Organisation ruled in May that Europe illegally subsidised planemaker Airbus, which hurt its American competitor Boeing.

The ruling gives the Trump administration the legal right to impose counter-measures on the EU in the form of tariffs, and products targeted include wine, cheese and olives, which are produced in many countries involved in the Airbus consortium. Brussels has threatened to retaliate similarly against US goods, but the EU has said it hopes not have to resort to that.

In Scotland, other goods which would be affected include cashmere, cheese and seafood.

A Number 10 spokesman said that the UK government was "disappointed" the US had resorted to tariffs, which were "not in anyone's interests. The UK is working closely with the US and the EU to support a negotiated settlement to the Airbus and Boeing dispute, and to avoid these tariffs from coming into force.

"The UK, through the EU, is seeking confirmation from the WTO that we have complied fully with their rulings regarding support to Airbus and should not be subject to tariffs."

The spokesman added that despite the tariffs affecting Scotch whisky but not Irish whisky, the dispute had "nothing to do with trade discussions" with the US after Brexit.

UK Government Minister for Scotland Colin Clark agreed that resorting to tariffs was not "in the best interests of the UK, EU or US." He said: “The whisky industry is a cornerstone of Scotland’s economy, employing around 11,000 people, many in rural areas. The UK Government is working closely with the US, EU and European partners to support a negotiated settlement and avoid these tariffs coming into force.

"The Scottish Secretary will be speaking to the SWA today and making clear how very seriously the UK government takes this issue.”

However a spokesman for the First Minister said that the tariffs "undermined the UK government argument that one way to offset the challenge of Brexit would be a very quick, comprehensive, trade deal with the US, it's clear the US isn't in a mood to exempt the UK or Scotland from these tariffs.

He added: "This is the hard reality that the US plays hardball on these issues and is not prepared to exclude the UK because of what's been said between Trump and Johnson. The suggestion of a free trade agreement post-Brexit is pretty fatally undermined by what's happened today."

The value of Scottish whisky exports to the US has grown from from £280m in 1994 to over £1bn last year, with a third of last year's exports being single malts with a value of £344 million. The US market accounts for 10.7 per cent of global volumes of Scotch whisky exports, with 137 million bottles of whisky exported to America in 2018.

Karen Betts, chief executive of the Scotch Whisky Association, said the tariffs were "a serious situation for the industry". She added: "We heard overnight that a 25 per cent import tariff will be imposed on all single malts into the United States and also all Scotch whisky liqueurs, and that's from a position of zero.

"We've had a zero tariff on imports to the United States for the past 25 years, so this is quite a hike."

She added: “The tariff will undoubtedly damage the Scotch whisky sector. The US is our largest and most valuable single market, and the tariff will put our competitiveness and Scotch whisky’s market share at risk.

"We are also concerned that it will disproportionately impact smaller producers. We expect to see 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. We believe the tariff will also have a cumulative impact on consumer choice.

"We believe it is imperative that the EU and US now take urgent action to de-escalate the trade disputes that have given rise to these tariffs, to ensure that these latest tariffs are not implemented on October 18, and to ensure that other tariffs – including on the export of American whiskey to the EU – are removed quickly. In particular, the UK government must now work with both sides to urge a negotiated settlement and to ensure that these damaging tariffs do not take effect.”

Scottish Labour's finance spokesperson, Rhoda Grant MSP said: “This will be a serious blow to the Scotch whisky industry. People’s jobs and living standards should not be put at risk because of a dispute between politicians.

“It is no surprise Donald Trump doesn’t care about this. He has spent his whole life using his inherited wealth and power to exploit working people. The UK Government must do all it can to ensure the United States reverses this decision.”

Scottish Conservative shadow finance secretary Murdo Fraser said: “This is obviously a very serious blow to the Scotch whisky industry. We will be speaking to our colleagues in the UK Government to see what can be done to sort this out.

"Ultimately, the responsibility here lies with the EU as it stands, and they are the ones who will need to explain to the sector why this has happened. This is something that needs to be resolved as a matter of urgency.”

Liberal Democrat Scottish Affairs spokesperson and MP for Caithness, Sutherland and Easter Ross Jamie Stone said the tariffs "will be a bitter blow to the Scotch whisky industry and deeply damaging to people’s jobs on both sides of the Atlantic."

He added: “The EU remains the largest export region for Scottish whisky and rather than turning our back on it we need to maintain frictionless trade. Instead the Government is creating barriers with our largest export partner.

“The distilleries in my constituency are already worried by the Government’s plans to pursue a hard Brexit and Trump’s decision adds more concerns to the future of the Scotch export market.”