Last week, spiritsEUROPE had the pleasure of welcoming our U.S. counterparts from the Distilled Spirits Council of the United States (DISCUS) in Brussels. Speaking with one voice, we stressed the vital importance of the transatlantic relationship for the EU and US spirits sectors’ international success and highlighted the strong economic benefits brought by our landmark “zero-for-zero” agreement. This agreement, whereby the U.S. & the EU decided to eliminate tariffs on the majority of spirits categories in 1997, resulted in a 450% growth in bilateral trade in spirits in the following 20 years. Spirit drinks are part of the traditions and rural ecosystem of the U.S. & the EU, supporting numerous jobs in rural areas, as well as in the hospitality and tourism sectors. As way of example, every job in spirits production in the EU supports 6 jobs in upstream sectors, including agriculture, while on average, every job in spirits production worldwide supports 13 jobs in direct downstream businesses. The unique nature of these products, many of which are distinctive products of the U.S. and the EU, means that their production cannot be delocalised. Together, we stressed the deep commercial links that exist between EU & U.S. spirits producers, and how this had benefitted the emergence and growth of a rich offering from craft distillers on both sides, boosting our respective hospitality sectors and bringing more choice to consumers in the process.
Unfortunately, this success story was put at risk when retaliatory tariffs were imposed on our products – first, in 2018, on U.S. whiskey, as part of the steel and aluminium dispute, and later on both EU and US spirits as part of the Airbus and Boing disputes. These disputes – which are wholly unrelated to our sector – have been going on for too long, hurting us and our commercial partners in the process, and creating significant uncertainty, damaging our ability to reinforce our mutual investments in the U.S. & the EU. Meanwhile, imposing tariffs on our products has not helped resolve these long-lasting disputes.
Thankfully, retaliatory tariffs on our products were eventually suspended, which supported the post-COVID recovery in our sectors and helped relaunch the positive dynamic we had seen pre-2018 on transatlantic trade & investment in spirits across the Atlantic. As inflation and weaker consumer growth are impacting spirits exports and sales on both sides of the Atlantic, EU & U.S. spirits producers need the certainty that tariffs will not return – on both sides of the Atlantic. This means that the current suspension on EU rebalancing tariffs on US American whiskey needs to be extended, at least to the end of the year, as a matter of urgency, while we need to ensure that spirits get exempted from any broader tariffs that may be imposed on the U.S. side, precisely due to their distinctive nature and the fact that production of the vast majority of them cannot be relocated. The current economic slowdown already affecting us will be exacerbated if a cycle of tariffs and matching retaliation begins, and the impact will be felt not just by our sectors, but also by consumers and the struggling hospitality sector, which is still recovering from the pandemic.
Our joint plea to U.S. & EU policy-makers is to break the negative cycle as a matter of urgency and ensure we can all put retaliatory tariffs behind us for good – prioritising dialogue and greater transatlantic cooperation on spirits trade, to assist in expanding opportunities for both EU & U.S. spirits exports around the world. This is the only thing that will allow EU & US producers to keep investing in each-others’ regions, supporting good agricultural, rural, manufacturing and services jobs in the process. We need #ToastsNotTariffs!
