Whisky tariffs could be cut in Australia trade deal

By James Ridler contact

- Last updated on GMT

A free trade agreement with Australia could see UK whisky export tariffs cut
A free trade agreement with Australia could see UK whisky export tariffs cut

Related tags: Drinks

The UK’s proposed trade deal with Australia could cut – though not necessarily scrap – tariffs on Scotch whisky exports to the country, supporting thousands of jobs in the Scottish drinks industry, according to the Government.

Amid concerns the Australia deal could lead to zero tariffs being phased in, threatening UK farmers’ competitiveness, ​international trade secretary Liz Truss highlighted efforts to remove the 5% tariff on whisky exports.

“A UK-Australia trade agreement would be significant for Scotch whisky and the union,” ​said Truss. “Part of the promise of leaving the EU was striking deals with countries well beyond Europe, opening new opportunities for iconic British goods like Scotch overseas.  

“I am fighting hard to get these tariffs cut and secure a deal that benefits producers in Scotland and helps the whole of the UK.”

However, she stopped short of promising tariffs would be completely scrapped.

Glenkinchie Distillery backs free trade deals

Glenkinchie Distillery manager, Ramsay Borthwick, said: “We are proud to make the highest quality single malt whisky that is exported to more than 180 countries around the world as part of the Johnnie Walker Scotch Whisky brand.

“Growing future global exports of Scotch whisky through free trade deals that open up markets like Australia will be good for Glenkinchie, Johnnie Walker and the wider Scotch whisky industry.”

The Scotch Whisky Association’s chief executive Karen Betts pointed out that exports to Australia had almost doubled over the past 10 years and that the sector over all was looking forward to a conclusion of a free trade agreement (FTA) to support this growth.

“The FTA is also an opportunity to strengthen the legal protection of Scotch whisky in Australia, and to improve its enforcement,”​ she added. “Stopping those who seek to take advantage of the quality reputation of Scotch whisky with counterfeit Scotch is a priority for us in Australia, as it is in all our export markets.”

Export market

Australia sits as the eighth largest export destination for Scotch whisky, with a value of £113m. In 2020, £125.8 million worth of beverages – which included products such as Whisky – exported to Australia faced tariffs of 5%.

Commenting on the potential gains for food and drink manufacturers, minister for exports Graham Stuart said: “From whisky to shortbread, Scotland offers an array of food and drink that many can enjoy and, thanks to the imminent UK-Australia trade deal, more people than ever will be able to do just that.

As we continue to reduce trade barriers and cut red tape, UK businesses and consumers can be assured that they will benefit from all the trade deals we are signing with countries across the world. The 800 Scottish businesses exporting goods to Australia last year are no exception to this and the others that will join them will only further showcase the very best Britain has to offer.”

Hesitation for the industry

Despite promises that the UK/Australia deal would benefit the food and drink industry, talk of zero tariffs have amplified fears about the damaging, anti-competitive effect this would have on UK farmers.

Mark Lynch, partner at corporate finance house Oghma Partners voiced concerns that UK producers would be at a scale disadvantage and questioned if the Government could be trusted to subsidise livelihoods with direct payments.

The Food and Drink Federation warned the Government to be mindful that some sectors within the wider food and drink industry may be vulnerable to the complete removal of tariffs without quota limits, given the strategic importance of UK production to food security and to rural economies.

Meanwhile, lack of clarity regarding exports to the EU​ and a continued shortage of shipping containers are continued to plague UK food manufacturers.

Related topics: Supply Chain, Drinks

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