Scotch whisky: US tariffs

Daniel Zeichner Excerpts

Thursday 30th January 2020 Westminster Hall

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to serve with you in the Chair, Ms Buck.

I congratulate all Members on such sensible and thoughtful contributions. In particular, I thank the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) for securing the debate and for his broad-ranging and sensible introduction to it. I also congratulate the hon. Member for North East Fife (Wendy Chamberlain) on what might have been her first contribution in Westminster Hall, which is a less aggressive place than our other Chamber. I was struck by her comments about Diageo and the European Union. I also thank some of my colleagues in the shadow International Trade team for helping me to prepare for this debate, which is just as much about trade as it is about food and drink.

The Scotch whisky industry is thriving and, as we have heard, incredibly important to the United Kingdom as our ninth most valuable export, contributing £5.5 billion to the UK economy last year and supporting 42,000 jobs across the nation. It is particularly important for Scotland’s economy, accounting for the vast majority of Scotland’s exports of food and drink, and providing 10,500 jobs, in particular in rural communities involved in the distillation, production and maturation processes.

Having the Scottish whisky industry embroiled in the increasingly tit-for-tat trade disputes that have been festering between the US and the EU over the past 15 years is a cause for profound regret. We can all agree that something is wrong when a trade dispute that originated in alleged subsidies for aircraft has escalated primarily to affect a whisky industry that has been doing nothing but mind its own business and thrive, without tariffs, for decades. With the 25% tariffs that have been slapped on American imports of single malt Scotch whiskies and Scotch whisky liqueurs from the UK, Scotch whisky now pays for more than 60% of the UK’s tariff bill arising from the Airbus case. That absolutely cannot be right. As hon. Members have outlined, we are now seeing real impacts of the row on people.

The EU as a bloc remains our largest export market for Scotch whisky, but as an individual country the US is our largest market, and clearly our largest export market for single malt Scotch whisky. The tariffs imposed on those products in October have therefore had considerable impact already, as we have heard, with the value of Scotch whisky exports to the US down 33% in November 2019 compared with November 2018.

Those hit hardest by the tariffs, as we have heard, are disproportionately the small and medium-sized distilleries across Scotland, which only produce single malt and have the US as a key market. The Scotch Whisky Association estimates that the industry could lose as much as 20% of its sales to the US over the next year if the tariffs remain. That would be worth £1 billion. As we are all aware, a decline in the value of our exports to the US of such magnitude will inevitably have knock-on effects on investment, productivity and jobs.

Scotch whisky has not been alone in being hit by the American tariffs, and it is worth repeating that the 25% tariffs also hit a range of our agricultural exports, including pork and cheese. The British Meat Processors Association tells us that they face some real difficulties, and we have already seen the value of UK pork exports to the US fall by 42% between November 2018 and November 2019.

The main subject today, however, is the impact on Scotch whisky. Following the US Trade Representative’s announcement of a further review of its tariffs in December, we now face the real possibility of the tariffs on single malt whisky being increased, or their coverage expanded to include the blended Scotch that is currently excluded. That would make an already challenging situation much more difficult.

Such bullying tactics by President Trump are sadly reflective of an approach to international trade that I fear we will only see more of as we leave the European Union. President Trump has made his desire to put America first explicit, and is playing fast and loose with the global rules-based system governing international trade. So far, he has unfairly attacked foreign industries with tariffs, blocked the appointment of judges to the World Trade Organisation’s appellate body and, recently, threatened to pull the US out of the World Trade Organisation altogether. We urgently need an end to that tit for tat, and the removal of tariffs on both sides, on both Scotch and American whiskies. The Scotch whisky and American whiskey industries are in clear agreement on that.

The Prime Minister’s promise to remove EU tariffs on American whiskey as soon as we leave the EU is welcome, and it is clear that he believes this will go some way to encouraging President Trump to remove tariffs on our Scotch whisky. What is less welcome, and remarkably counter-intuitive, are recent reports that the Prime Minister is threatening both the US and the EU with high tariffs in some bid to speed up post-Brexit trade deals. We are familiar with the Prime Minister preparing completely different positions to cover all eventualities, but will the Minister make it crystal clear that tariffs on American whiskey will be excluded from this threat? If he will not, how can the Government possibly guarantee that pursuing such an aggressive trade stance will not embroil the Scotch whisky industry yet further in a burgeoning trade war?

In the meantime, the Scotch Whisky Association has been waiting nearly three months for a response from the Government on their plans for short-term support for the industry while it is subject to the tariffs. I hope that the Government will confirm today what their intentions are in that regard.

The sad reality is that this entire episode demonstrates just how difficult our upcoming trade negotiations will be once we leave the EU. One of the main economic advantages of being in the EU was the fact that in trade negotiations the UK was part of a trading bloc of 28 countries. Now we are on our own. In a future trade deal with the US, therefore, we will have to face up to the full force of its demands to export to us hormone- treated beef and chlorine-washed chicken. We will also have to ensure that the geographical indicators for our produce—such as Scotch whisky and Cornish pasties—are not lost once we leave the EU’s protective framework. The signs to date of the Government’s commitment to protecting the good name and value of our regional goods are, frankly, not promising.

Our highly prized Scotch whisky industry is a high-profile casualty in this grim world of retaliatory trade wars between men with big egos, little sense of the damage they cause and even less regard for the wider consequences. We urgently need a return to a rules-based order to give stability and security. The jobs and livelihoods of people not just in the UK but in nations across the world depend upon it.

Scotland Bill

Daniel Zeichner Excerpts

Monday 8th June 2015 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to follow that inspiring speech by my hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft). It is also a pleasure to hear so many initial contributions from so many fine hon. Members.

I speak today as the new Member for Cambridge, and let me start by saying a few words about my predecessors. Dr Julian Huppert is a knowledgeable scientist and a committed defender of civil liberties, who argued hard in this House and well in the Select Committee on Home Affairs, where he won many friends. He has been a passionate advocate for cycling and for environmentalism, and he is extremely well regarded in the constituency, having fought hard to improve the funding situation for our local schools and to raise the status of mental health. But my predecessors in Cambridge set a very high bar. Some here will remember David Howarth, another Liberal Democrat MP who was also very well regarded in this House. Before that, we had my dear friend Anne Campbell, a Labour MP from 1992 to 2005, who has been a source of huge support and great wisdom for me.

I suspect that not every Member gets elected to this House at their first attempt. For some it will take two attempts, whereas for others it takes three or four. I am on my fifth, but I am here at last. I suspect that those who have followed a similar course may well have reflected early in their career on the merits of enthusiasm and youth. As one’s career progresses, one recognises the benefits of experience and perhaps a little wisdom—one hopes.

I also suspect that many Members are full of enthusiasm and optimism when they are first selected—I was first selected to fight a rural seat in Norfolk—and find themselves writing their maiden speech. When I reflect on that speech from 20 years ago, I see that quite a lot of it is still valid today: I see a Conservative Government, a Labour Opposition and much talk of Europe. The biggest thing that has changed for me has been moving back to the fine city of Cambridge 10 years ago—it has been the biggest change in my life. What I have seen in Cambridge over those years is a city on the cusp of a technological revolution; the number of jobs in the knowledge-intensive sector is phenomenal. For me, there is the link with today’s discussion about Scotland and devolution, because what our hugely successful companies such as ARM and the Babraham Institute need are more flexibilities, and people in Scotland are arguing for the same. As someone who has argued for many years for devolution to the English regions, I think we need to sort these issues out in a sensible way, which is why I did support the idea of a constitutional convention, as proposed by the Labour party at the last election.

Cambridge is also, like so many other places, a tale of two cities; the challenges our city faces are partly the challenges of success, but we also have divisions. Our businesses need an answer to the traffic problems and the appalling housing crisis we have. A terraced house in Cambridge costs £450,000 and our average rents are double those in England for most homes. Our housing benefit bill has doubled in the past five years—why? It is because 12,000 people in the prosperous city of Cambridge are earning below the living wage—it is not always the way we imagine it. We need different solutions in different places.

I am glad to say that Cambridge now has a Labour council and it is trying to tackle those issues, but it is hard to do. The biggest issue is affordable housing, and I see fellow hon. Members here who have been involved in these debates with me over many years. The biggest problem we have is that although we have a valuable housing stock, we are not allowed to borrow against it. The city deal is welcome, but it is a drop in the ocean compared with what we really need to turn Cambridge into the economic driver that could so help our economy, right across the UK.

When we look at those issues, we ask: why can we not borrow? Some 18 months ago, there was a chink of light from the Treasury, when people began to talk about “tax increment financing”—I apologise for the jargon—or the possibility of borrowing against that value. What happened? The usual forces of conservatism in the Treasury won out yet again, as has happened to Governments of both complexions. I say to both Front-Bench teams: we need to think imaginatively if we are to solve these huge challenges facing not only cities such as Cambridge, but our whole country and our other nations as well.

Creating the kind of tolerant, diverse city that people in a place such as Cambridge want will mean balancing a range of complicated and difficult issues, and recognising that even within a city such as Cambridge there are many different Cambridges. Cambridge has not only the university we all know and love so much, but three other universities: Anglia Ruskin University, which is doing so well; the University of the Third Age; and the Open University—my mother was pleased to be one of the first people to go to it back in the ‘60s. I recall one moment earlier this year when Cambridge United played Manchester United in a rather unequal battle—perhaps—in the FA cup and we held those mighty people to a goalless draw at the Abbey stadium. That was a brief moment when people saw that other Cambridge. I suggest that in our communities right across the country there are other cities and other places, and we need to understand all of them.

I stand before you today as a Labour MP for Cambridge who will represent the buccaneering investors and high-tech gurus of our city who will create wealth. But most of all, I will be standing up and arguing for our public sector workers, who so often are forgotten, but without whom the rest of the city cannot do its job. I am proud to represent Cambridge and look forward to standing up for the city in the years ahead.