The United States has won the largest arbitration award in WTO history ($7.5 bn) in its dispute with the European Union over illegal subsidies to Airbus. This judgment has resulted in the imposition of a 25% tarrifs on a number European spirit drinks exported to the USA as from 18 October.
We deeply regret this decision. As a totally unrelated sector, it is unacceptable that the spirits sector is to pay the price for a dispute that pertains to civil aircraft subsidies. It is particularly egregious to see that unrelated sectors like spirits will be hit by an extra 25% tariffs when the sector at stake will be subject to just a 10% rate.
Over and over again in the past 18 months (since 25% tariffs were imposed by the EU on American whiskey in July 2018) we have underlined that imposing tariffs on spirits harms consumers and producers on both sides of the Atlantic. The success of the spirits sector in the United States and in the European Union is mutually reinforcing. Indeed, many of our European producers operate distilleries and production sites in the US, while many American producers also own distilleries in Europe.
On 18 October, 15 international beverage alcohol associations sent a letter to the U.S. administration and the EU Commission calling for an immediate end to tariffs on distilled spirits and welcoming their statements of their shared intent to reach negotiated solutions to the disputes.
It is clear that there are no winners in a trade war. The decision taken last week could have a significant economic impact – especially considering that the tariffs imposed by the EU on Bourbon Whisky since July 2018 have resulted in a 21% sales decrease. This has affected many craft distillers in the US and their suppliers, but also European companies who have made acquisitions in the Bourbon Whisky segment. As tariffs are taxes on consumers, it is important that we not forget the impact on price and value, which has a knock-on effect on demand for our products in the EU and US marketplaces.
The next quarter is the busiest time of the year for all of us as consumers gear up for holiday gift-giving and entertaining. In order to protect the jobs and communities we support, we urgently call on the U.S. and the EU to reach an agreement to de-escalate the current trade disputes by immediately and simultaneously removing the EU’s retaliatory tariff on U.S. whiskey and the U.S. tariffs on EU spirits.
