In what the U.S. Trade Representative said was a signal that both the European Union and the U.S. are determined to embark on a fresh start to their relationship, the two sides agreed to “mutually suspend for four months tariffs related to the World Trade Organization (WTO) Aircraft disputes.
Distilled Spirits Council of the U.S. called the announcement ” a promising break-through” but added it is “extremely disappointed that tariffs on American Whiskey, the United States’ largest spirits export, remain and will double on June 1 if not resolved.”
The suspension will cover all tariffs both on aircraft as well as on non-aircraft products, and will become effective as soon as the internal procedures on both sides are completed, USTR said. “This will allow the EU and the US to ease the burden on their industries and workers and focus efforts towards resolving these long-running disputes at the WTO.
“The EU and the US are committed to reach a comprehensive and durable negotiated solution to the Aircraft disputes. Key elements of a negotiated solution will include disciplines on future support in this sector, outstanding support measures, monitoring and enforcement, and addressing the trade distortive practices of and challenges posed by new entrants to the sector from non-market economies, such as China, USTR said.
Today’s announcement suspends the 25% tariffs imposed by the EU on U.S. rum, brandy and vodka in November 2020. In addition, the U.S. is suspending the 25% tariffs imposed on liqueurs and cordials from Germany, Ireland, Italy, and Spain in October 2019, and on certain Cognacs and other grape brandies from France and Germany in January 2021.
The suspension of these tariffs on spirits is happening at critical time for the U.S. hospitality industry, DISCUS said. Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic.
Momentum is building for an end to these debilitating tariffs following yesterday’s announcement to suspend U.S. tariffs on UK products, including Single Malt Scotch Whisky, in connection with the civil aircraft dispute.
While this is a very positive development, the EU and the UK continue to impose a 25% tariff on American Whiskey, which will double to 50% on June 1, 2021. This excessive burden — tied to a dispute over steel and aluminum –is unfair and not sustainable, DISCUS said. .
These tariffs have damaged what had been for many years a great American export success story, DISCUS said. American Whiskey exports to the EU, our largest export market, grew from $502 million in 2008 to $702 million in 2018, an increase of 40%. Since the tariffs were imposed, American Whiskey exports to the EU have declined by 37% and to the UK by 53%.
Until steps are taken to address the dispute over steel and aluminum tariffs, American Whiskey — the United States’ largest spirits export category — will remain at a serious competitive disadvantage in our two most important export markets.