White House Suspends Tariffs on Scotch Whiskey and EU Wine

March 5, 2021 by Dan McCue

WASHINGTON – The White House on Thursday agreed to suspend millions of dollars worth of tariffs on U.K. exports, including Scotch whisky, as part of an effort to resolve a long-running trans-Atlantic trade dispute over aerospace subsidies.

In a joint statement, the White House and London said the U.S. government will suspend tariffs for four months to de-escalate trade tensions stemming from aid for Boeing and Airbus.

It is one of the longest-running disputes at the World Trade Organization.

Former U.S. President Donald Trump’s administration had slapped tariffs in 2019 on $7.5 billion worth of European goods in retaliation for state support given to Airbus.

Britain was targeted along with the other three stakeholders in Airbus – Spain, France and Germany – for more tariffs than other countries.

The EU retaliated with tariffs on up to $4 billion of U.S. goods over subsidies to Boeing, but the U.K. offered an olive branch to the U.S. by announcing it would suspend tariffs from January, an offer that President Joe Biden’s administration has now moved to reciprocate.

Speaking to reporters Thursday, White House spokeswoman Jen Psaki said a U.S./U.K. trade accord remains a priority for the Biden administration, but the situation is further complicated by Brexit and the future of Northern Ireland’s trade standing with the rest of the world.

President Biden has said that any trade deal between the U.S. and U.K. must be contingent upon respect for the Good Friday Agreement, which brought an end to most of the violence associated with the political conflict in Northern Ireland.

Psaki reiterated that position Thursday, saying the president “has been unequivocal in support for the Good Friday Agreement.

“This agreement has been the bedrock of peace, stability, and prosperity for all the people of Northern Ireland.,” she said.

Asked about potential next steps and whether Thursday’s developments might create space for a negotiated settlement of the trade dispute, Psaki said she had nothing “to preview” at this time.

Distillers of Scotch whisky — the U.K.’s largest food and drink export last year — cheered the news that the 25% tariff would be cut to zero.

Scotch exports to the U.S. fell by a third since the tariffs were imposed 16 months earlier, costing the industry more than half a billion pounds, the Scotch Whisky Association said.

“Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the U.S. means livelihoods and communities across Scotland will be protected,” said the trade group’s CEO, Karen Betts.

Scottish cashmere producers, pig farmers, and Stilton cheese makers will also benefit from the suspension of tariffs, the U.K. Department for International Trade said.

Here in the U.S., the suspension of tariffs on Scotch whiskey, biscuits, clotted cream and other U.K. goods was applauded by the Coalition to Stop Restaurant Tariffs, a group with members in all 50 states.

“We applaud President Biden’s decision to suspend these tariffs,” said Andrew Fortgang, a member of the coalition’s leadership team and James Beard Award-nominated co-owner and wine director of Le Pigeon and Canard in Portland, Ore. 

“It’s a smart step that sets the stage for the United States and United Kingdom to resolve trade tensions. But it is only a small step on the path to the restaurant industry’s recovery. We rely on wine, food, and spirits from across Europe. We need all tariffs on those products scrapped. We’re starting to see signs of hope, with all adults expected to be vaccinated by May and a major aid program working its way through Congress now. The major missing piece in our recovery is removal of all wine, food, and spirits from this 17-year-old battle over aircraft subsidies.

“We call on President Biden and incoming U.S. Trade Representative Katherine Tai to lift these harmful levies as soon as soon as possible,” Fortgang said.

Ben Aneff, president of the U.S. Wine Trade Alliance, agreed, saying his organization is thankful the Biden administration and U.S. Trade Representative’s office quickly acted to relieve U.S. businesses of what the industry has long seen as an unfair burden.

“Wine tariffs have no place in an aircraft subsidy dispute between Europe and the United States. A tariff-free environment will increase jobs and lower costs for millions of consumers, which is critical as we begin to emerge from the worst pandemic in a century,” Aneff said.

“The food and wine tariffs have threatened the livelihoods of America’s 47,000 wine retailers and 6,500 small importers and distributors. These firms can now focus on rebuilding their businesses in the wake of the pandemic, which has devastated the small businesses around the country that depend on these products,” he continued.

“American firms have long been the ones paying the tariff. Every $100 million worth of damage the wine tariff inflicts on European businesses brings over $400 million in damage to U.S. companies. Tariffs on wine are incredibly ineffective and disproportionately damaging to American businesses. 

“This victory was a joint, industry-wide effort. USWTA-affiliated wine importers, distributors, retailers, and consumers sent an unprecedented number of comments to the USTR. We’re glad and thankful the Biden administration listened and offered relief. 

“As the United States and European Union delve into trade negotiations, USWTA is hopeful a final resolution will scrap the wine tariff for good,” Aneff concluded.

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