US Tariffs: Scotch Whisky

David Mundell Excerpts

Monday 7th October 2019 Commons Chamber

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

(Urgent Question): I know that you always indulge a novice in these proceedings, Mr Speaker.

To ask the Secretary of State for International Trade to make a statement on what discussions Her Majesty’s Government have had with the US and EU, following the announcement by the United States trade representative of their intention to impose tariffs of 25% on single malt Scotch whisky and other UK products on 18 October.

[The Minister of State, Department for International Trade (Conor Burns)]

rose—

[Conor Burns]

Thank you, Mr Speaker. I am grateful to my right hon. Friend for his question.

The United Kingdom continues to be a champion of the international rules-based order of which the World Trade Organisation is the cornerstone. However, the United Kingdom is clear that resorting to tariffs is in no one’s interests. Low tariffs and free trade underpin prosperity and jobs in the UK and globally, which is why we are pursuing an ambitious free trade agenda, lowering tariffs and quotas where possible and working on an ambitious package of bilateral free trade agreements.

The Government are disappointed by the United States Administration’s announcement that they intend to impose tariffs on the UK and our European partners following the most recent ruling. My right hon. Friend asks what communications there have been between the Government and the United States. We have continued to raise this issue at the highest levels; my right hon. Friend the Secretary of State has spoken to US Trade Representative Lighthizer, Commerce Secretary Ross and Vice-President Pence; my right hon. Friend the Chancellor has raised the issue of Airbus tariffs with the US Secretary of the Treasury; and the issue was raised by my right hon. Friend the Member for Maidenhead (Mrs May) with President Trump during his state visit to the United Kingdom in June this year.

The dispute has a long history; indeed, it goes back to 2004. I will not detain the House by setting out that history, but it is long and complex and has led to the WTO judgment. Although the UK, France, Germany and Spain took steps to bring their support into compliance with the WTO, the WTO ruled last year that further steps were required to bring that support fully into compliance. Following that ruling, the UK and other Airbus nations have now taken steps to bring their support fully into line. The Airbus nations are seeking confirmation from the WTO in the ongoing proceedings that those steps are sufficient to achieve compliance. A ruling is expected in the coming months.

However, WTO procedure allows for the US to seek authorisation to retaliate against the EU in parallel to the ongoing proceedings and before the WTO has confirmed whether the Airbus nations have now complied with their WTO obligations. On 2 October, the WTO announced that the US can be authorised to impose up to approximately $7.5 billion in tariffs annually. Following that, the US published a list of tariffs on the EU, targeting products produced by the Airbus nations and the wider EU. These measures are not in the interests of the UK, the European Union or the United States. Tariffs will only inflict damage on businesses and citizens on both sides of the Atlantic and harm global trade and the broader aviation industry at a sensitive time.

We are working closely with the US, the EU and our European partners to support a negotiated settlement to the Airbus dispute, along with the separate Boeing disputes. I reassure the House that we will continue to press the issue at the highest levels and urge the United States to withhold tariffs until the WTO has confirmed that we have complied in the compliance proceedings—something that we expect to happen within the next couple of months.

Single malt Scotch whisky has been tariff free with the United States for more than 25 years now, and whisky exports to the US are worth more than £1 billion annually. Single malt producers are often small and medium-sized companies, and the tariffs will hit those who can afford them least. We will continue to talk to the US at the highest levels to press for a settlement and for the US to hold off applying the tariffs until we have had time for a ruling.

[David Mundell]

I welcome the Minister to the Dispatch Box and thank him for his answer. I welcome the fact that this urgent question was chosen to be discussed, because the matter is urgent. There are 10 days left until the US proposes to introduce tariffs of 25% on Scotch malt whisky, which represents 60% of the UK-origin goods included on the list and 10% of the non-aviation goods from across Europe that are on the list. Curiously, products such as brandy and cognac from France are not included on the list.

As the Minister said, the US market is vital for the Scotch whisky industry, with a turnover of more than £1 billion. The distilleries involved in exporting malt to the United States are often small. They are often craft distilleries, whose establishment in recent years we particularly welcomed in Scotland. If tariffs are imposed, those industries will have to scale back their efforts in the United States. The industry estimates that there could be a loss of £228 million in revenue, and that 3,000 jobs, mainly in rural Scotland, could be affected by the proposals.

I want the Government to show even more urgency than they have done to date. There are two things that can be done immediately. First, the industry has made it clear that if the Government announce that when the UK leaves the EU on 31 October this year that they will not impose tariffs on bourbon or American whiskies, that would greatly help the dialogue with the United States.

Secondly, I know that the Minister has the close ear of the Prime Minister, and it is important that he urge him to intervene directly with President Trump. It was my duty to welcome President Trump to Scotland last year. During that event, he told me that he loved Scotland. If the Prime Minister could convey directly to President Trump the damage that the proposals would do to Scotland, particularly rural Scotland, that could have an impact. I would be pleased if the Minister confirmed that he would indeed urge the Prime Minister to make those representations.

[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.