Once upon a time, when hopes of a reasonably swift Doha Development Round remained high, the relatively few European negotiators could concentrate their efforts on those multilateral talks. With Doha stuck in paralysis, however, the EU has – like many others around the world – turned to multiple bilateral negotiations instead. As a very export-oriented sector, the European spirits sector appreciates this approach: keep plugging away at Doha, but at the same time, open markets quickly through bilateral agreements. Before 2006, around 24% of trade was covered by Free Trade Agreements. Today, the figure is closer to 32% and the Commission expects this number to rise above 77% once ongoing negotiations are concluded.
Yesterday, several NGOs were very vocal against Free Trade agreements, TTIP and CETA in particular. Our answer to this demonstration is instead a call for trade to top the EU agenda. This is not a selfish request but a win-win proposal for Europe. On average, 2/3 of the price paid for a bottle of spirits is tax. Through VAT and excise duty alone, the spirits sector generated about €23bn for EU exchequers last year. Apart from this contribution towards public finances, export success (€10bn in 2015) also generates investment and employment in Europe. To take the example of the leading export category, small and large Scotch andIrish whisk(e)y producers have made important investments to meet the growing worldwide demand. In Ireland, 10 new distilleries have commenced production of Irish whiskey in the last year while plans are in motion to open an additional 22. This will allow the sector to grow global market share by 300% over the next 15 years. Investments are also in new bottling plants which have considerable knock-on benefits for other sectors, such as glass manufacturers, coopers, transporters and packagers. Spirits drinks, like Scotch and Irish whiskey, covered by geographical indications represent 2/3 of our exports in value outside the EU and cannot be “delocalized.”
The EU is considering strategies and policies to sustain growth and stability in today’s highly globalised economy. As far as international trade is concerned, our answer is to call for ‘more Europe’. The elimination of high import tariffs and other barriers such as discriminatory tax policy, insufficient intellectual property protection or complex custom procedures need to be addressed by the EU through the conclusion of ambitious Free Trade Agreements (FTAs) with our main trading partners, a reinforced market access strategy, and credible enforcement mechanisms. Of course, while this would be advantageous to the large spirits producers, it is especially beneficial to the vast number of small craft distilleries working in the spirits sector. Independent or family owned distilleries who may not have the resources to compete internationally as of yet, might be able to after the implementation of the FTAs
The first bilateral agreement signed since Doha was the EU-Korea agreement, which entered into force in July 2011. The EU/Peru and Columbia agreements took effect in summer 2013 but also with the Philippines in 2015. EU-Vietnam FTA is underway like TTIP and CETA and this week - unnoticed - the EU is opening the 1st round of negotiations with Indonesia.
Yet, this is not enough. India, for instance, is the largest whisky market in the world. Yet, less than 1% of consumption is of imported products. The abolition of the 150% import tariff would allow a boom in European spirits exports within a few years of liberalisation.
