Scotch whisky: US tariffs

Patricia Gibson Excerpts

Thursday 30th January 2020 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I thank the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) for securing the debate, and I am pleased to participate in it. I wish it were not necessary for me to do so, but recent US tariffs are a cause of great concern.

The impact of the 25% tariffs imposed by the US on single malt whiskies on 18 October, despite protestations, have gone unanswered by the UK Government. It is damaging to our distilleries and to Scotland as a whole, given that exports of single malt whisky are worth £1.3 billion. They account for 28% of all Scotch whisky imports, with the US accounting for 25% of all single malt exports last year. The increased price that the tariffs cause can and will cause significant damage to those exports. The Scotch Whiskey Association believes that single malt exports to the US will fall by 20% and that vital market share will be lost as a consequence, as the right hon. Gentleman set out.

The finest single malt whisky is distilled on the isle of Arran in my constituency, and the tariffs are a matter of great concern. Ultimately, jobs are threatened, and sustainability of employment is extremely important in island communities such as Arran. Hundreds of Scottish exporters, including our world-renowned Scotch whisky industry, face paying the price of punishing US trade tariffs. The impact of the tariffs is already being felt. In November 2019, the value of single malt Scotch whisky exports to the USA was £25.7 million, compared with £38.6 million in November 2018. That makes a mockery of any pretence of a “global Britain”, and it is important that the matter is sorted out urgently.

The Prime Minister vowed to remove tariffs on US whiskey once the UK leaves the EU. In doing so, he is putting his trust in a President who has consistently used punishing tariffs as his first political lever. Scotch whisky is crucial to Scotland’s thriving food and drink sector, with the EU market in 2018 valued at around £1.4 billion, which is equivalent to about 30% of Scotch exports. The grim reality is that Scotland will face great vulnerability when it loses its collective bargaining strength because it is no longer a member of the EU.

In such a challenging context, has the Minister considered the possibility of reforming the UK excise duty structures to ensure a fairer tax on Scotch whisky? It is taxed more than any other category of alcohol in the United Kingdom—for example, it is taxed 16% more than wine. Estimates suggest the Scotch whisky industry is larger than the UK shipbuilding industry, and considerably larger than the UK fishing industry. It supports around 42,000 jobs across the UK, including 10,500 people directly employed in Scotland. Scotch whisky is estimated to be the UK’s ninth-most valuable export. I hope that the Minister will do all he can to support the industry at this very challenging time, and that he will seriously look at reforming the excise duty structures.

Even the Minister must understand and appreciate that, because we will lose our collective bargaining strength when we are no longer a member of the EU, we are in a very exposed and vulnerable position. We are facing extremely difficult trade conditions as negotiations proceed. We need to have been working with our EU partners. I am very sorry to say that that opportunity has now been lost.