The European Union agreed to suspend for five years the 25% tariffs on U.S. rum, brandy and vodka imposed in November 2020 as part of the Boeing/Airbus dispute.
In return, the U.S. agreed to suspend for five years the 25% tariffs on liqueurs and cordials from Germany, Ireland, Italy and Spain imposed in October 2019, and on certain Cognacs and other grape brandies from France and Germany imposed in January 2021.
That’s good news for bev/al marketers and for restaurants, bars and small craft distilleries across the country that were forced to shut down their businesses during the pandemic.
But the agreement did nothing to eliminate a separate 25% tariff on American Whiskeys that is part of the steel and aluminum trade dispute. That fracus has “severely damaged what had been for many years a great American export success story.” said Chris Swonger, president, Distilled Spirits Council of the U.S.
“Until steps are taken to permanently remove these tariffs on American Whiskeys, the United States’ largest spirits export category will remain at a serious competitive disadvantage in our two most important export markets,” he added.
“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% ,” Swonger said. “Since the tariffs were imposed, our American Whiskey exports to the EU have declined by 37% and to the UK by 53%.
Robert M. Tobiassen, president, National Association of Beverage Importers, described the five-year suspension as a “truce” that gives the U.S. and the EU “space for the two parties to continue settlement negotiations and move the pivotal negotiations on State-subsidies and support to the World Trade Organization (WTO) and relieve importers and consumers, among others, of the financial burdens of these tariffs.”
Swonger said the announcement is “an important building block to reset the bilateral relationship and we urge the administration to build on this positive momentum,” and added:
“We are committed to working with the Biden administration to help secure the removal of the EU and UK’s tariffs on American Whiskeys. It is critical to secure a return to the zero-for-zero tariff agreement on distilled spirits, which has been instrumental to our export success and job creation on both sides of the Atlantic since 1997.”
Negotiators also agreed that any financing for production or development of large civil aircraft will be on market terms.
The agreement also specifies that any funding for research and development for large civil aircraft will be “through an open and transparent process and intends to make the results of fully government-funded R&D widely available.”
The announcement of the agreement by the U.S. Trade Representative’s Office was met with cheers from bev/al trade associations.
Wine & Spirits Wholesalers of America said it and its coalition partners “opposed the tariffs on beverage alcohol from the outset and have continued to communicate the harmful impacts these tariffs are having on our industry to USTR and Members of Congress. We applaud both U.S. and EU leaders for moving away from litigation that needlessly placed the wine and spirits industry in the crossfire and setting a course for a return to free and open trade. This suspension is welcome news for both the U.S. and EU hospitality sectors in the midst of a post-pandemic recovery.”