US Tariffs: Scotch Whisky

Barry Gardiner Excerpts

Monday 7th October 2019 Commons Chamber

[Conor Burns]

I am grateful to my right hon. Friend for those questions. He represents a powerful voice on behalf of the industry and the people of Scotland, along with my hon. Friends around him. It is not just whisky—but I will return to whisky in a second—it is pork, cheese and cashmere. There are a number of areas that will be harmed by the tariffs. Earlier this afternoon, I spoke to Karen Betts, chief executive of the Scottish Whisky Association, who is in South Africa. It is a measure of her concern that she took time out of her schedule to talk to me. The Government are enormously sympathetic, and as I said in my answer, we would urge the United States—tariffs are not in place, and there are 10 days before they are introduced, as my right hon. Friend said—to think again. These tariffs are in no one’s interest. The President of the United States prides himself on being the champion of the little guy, the little business. Well, it is the little business and the little guy who will be harmed most directly if the tariffs come into play.

I can entirely understand my right hon. Friend urging the Government to adjust section 232 countermeasures by removing the tariff on bourbon. We believe in the international rules-based order. It would be the easiest thing in the world simply to say to him, “Yes, we are going to do that.” However, while we remain a member of the European Union, we have to comply with the rules of the European Union. What I would say to him is that when we leave the European Union, nothing is off the table.

[Barry Gardiner (Brent North) (Lab)]

I welcome the urgent question asked by the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell). I welcome, too, the measured tone of the Minister’s response, the factual information that he provided at the Dispatch Box and his support for the international rules-based order.

It is no secret that the American President has sought to define his Administration as one of trade warfare, seeking to put the interests of America first and to repatriate jobs and industry to the USA. He believes that a trade war is one that the US can win. Does the Minister agree that no one wins in a trade war? That much is clear from the spurious Boeing case against the importation of C Series aircraft and the use of section 232 national security measures to prevent steel and aluminium exports to the US, and now again in respect of automotive imports.

The concern for British exporters is that the recent findings of the WTO in relation to aircraft subsidies will be used to secure an advantage for American producers and for American interests in any future trade agreement between our nations. The US trade representative has been clear that the US will impose countermeasures in the first instance and will seek to discuss how to resolve this dispute with the EU thereafter

“in a way that will benefit American workers”.

Other European leaders have been clear in their condemnation of the measures, but our Government have been decidedly more reserved, perhaps for fear of jeopardising any future trade talks. I note in the Government’s response published last week that the UK was seeking clarification from the WTO that the UK was compliant with measures regarding subsidies to Airbus, so I ask the Minister when he expects that such confirmation will be given and whether this indicates a divergence from the EU response.

Many products that these tariffs are being imposed on are subject to geographical indications, which are awarded under trade agreements to protect products of cultural heritage. It is no surprise that these products have been targeted first, as American producers of rival products have made no secret of their desire to destroy such protections. Does the Minister agree that this is not just about responding to the subsidies ruling, but about undermining and eliminating competition in favour of US producers who have long sought to do away with product labelling requirements, restrictive geographical indicators, and even sanitary and phytosanitary standards? Does he agree that going after some of our most iconic products is part of that strategy?

The Scotch whisky exports from this country amount to £6 billion a year—21% of all our food and drink exports, and 41 bottles a second. That is faster than I can drink it! Scotch whisky is so important to our exports. In fact, I think it is our third largest export, so the Government need to do all they can to protect it. These measures come at a time when the UK Prime Minister still insists that we could have a no-deal Brexit in a matter of days—a scenario under which substantial tariffs could be imposed on our exports to the EU. That would be a double whammy for British producers.

The impact of these tariffs on our biggest markets would be enormous, particularly for products such as Scotch whisky. No amount of new trade agreements overseas could mitigate that imminent threat. The EU is understood to be exploring what position to take in respect of these new tariffs. What role will the Minister’s officials be taking in those discussions, given our pending withdrawal?

[Conor Burns]

I am grateful to the shadow Secretary of State for his support; I think this is a relatively rare but very welcome moment where there will be an outbreak of consensus across the House.

The hon. Gentleman is absolutely right to highlight the importance of the Scotch whisky industry to the UK. Whisky is the UK’s biggest single agrifood export, accounting for more than 21% of all UK food and drink exports. In 2018, exports of all whisky from the UK totalled £4.8 billion, of which the Scotch Whisky Association claims £4.7 billion is Scotch whisky. Scotch whisky is the biggest single contributor to the UK balance of trade in goods, and the largest single market for UK exports of all whisky—not just Scotch whisky—by value is the United States, which imported more than £1 billion-worth in 2018 or a volume of 84,791 tonnes.

Beyond that, a further £268 million is injected into the economy through the supply chain, leading to a UK-wide impact of just under £5 billion. Some 40,000 jobs are directly supported by the Scotch whisky industry, 7,000 of which are in rural areas of Scotland. This is an absolutely vital sector to the United Kingdom and one that we are determined to do everything we can to protect.

The shadow Secretary of State will have heard me say to Mr Speaker earlier that the dispute that has led to these threatened tariffs in 10 days’ time is a very long and complex one and is being governed by the investigations at the WTO. It is regrettable, although we accept it, that we were found not to be in compliance and the WTO has given the United States permission to go down this route.

The hon. Gentleman asked me about our belief that we are now completely compliant and have taken the remedial measures necessary to bring ourselves into compliance in this dispute. We hope that that will happen within the next couple of months. We are pressing the WTO for an early decision on that, because the evidence base on this stuff is incredibly important, particularly in our conversations with the United States.

I am anxious this afternoon to dial down the atmosphere and not engage in deep personal attacks on people in other countries. The hon. Gentleman was very restrained, and rightly so, in what he said. We want to keep it on the issues. We think that the proposed tariff is unfair, wrong and unjust, and if we can demonstrate that we are now in compliance in this very long-running dispute and have taken the necessary measures, I hope that we can engage calmly with the United States.

I hope the hon. Gentleman will agree that one of the reasons why the United Kingdom is so internationally necessary, and why our taking up our position again in the WTO when we leave the EU is a good thing and is widely welcomed internationally, is that we believe in the international rules-based order. We believe that any fair, reasoned, rational observer who looks at this will conclude that these tariffs are unjust, unfair and wrong and are targeting people who have done absolutely nothing in terms of the dispute that has given birth to these retaliatory measures. I hope that, with constructive engagement and calm dialogue, we may persuade the United States to think again.