Brexit - what now for Scotch Whisky?
03 Aug 2016
Since UK voters decided that the UK should leave the European
Union, the Scotch Whisky Association has been busy consulting
members on what that means for one of the country's most
significant industries and exporters.
More than 90% of Scotch Whisky produced is sold outside the UK.
Indeed, Scotch Whisky is the biggest single net contributor to the
UK's balance of trade in goods, and without this contribution the
UK's trade deficit would be over 10% larger. Moreover, of the
£3.8 billion worth of Scotch exported last year, £1.2bn - almost a
third of the total - was shipped to the EU.
So, as global traders, the industry is taking a very close
interest in the arrangements for trade after Brexit. The
Scotch Whisky Association (SWA) has a wealth of knowledge and
experience of EU and global trade and legal issues, built up over
many years. We are ideally placed to advise on the
post-Brexit options that will be best for the UK economy and its
position on the world stage.
Here the SWA sets out the potential consequences of Brexit for
Scotch - including challenges and opportunities - and what action
the industry wants to see from governments.
1. We can be confident certain things will not change,
whatever the future arrangements:
- Scotch Whisky will not face a tariff on exports to the
EU. 0% is the current EU tariff and World Trade Organisation
(WTO) rules mean it won't change.
- In many markets Scotch will also continue to benefit from
existing zero tariffs, for example in the US, Canada, and Mexico,
as these are offered to all countries already. In many other
markets that already demand high tariffs, for example India, Brexit
will not make the situation any worse.
- We will be able to protect Scotch Whisky across the EU and
globally to the extent we can now, although the precise mechanisms
for some markets will have to change, and we will have to put other
measures in place to ensure continuity.
2. Other things will definitely change:
- As for other UK goods, there will be new administrative
requirements (rules of origin) for exports to the EU.
- The UK will eventually lose access to the EU's Free Trade
Agreements (FTAs). Unless there are transitional arrangements,
Scotch will lose significant tariff reductions in certain markets,
notably Korea, South Africa, and Colombia and Peru. The UK will
eventually need to negotiate its own FTAs or rely, as the EU
largely does with most countries, on WTO rules. This will
take a major upgrade of capacity within the UK Government and can't
be done quickly.
- We will no longer be subject to EU rules on excise duty or
3. There are some major uncertainties:
- The Government has not yet been clear whether it is looking for
the UK to have EEA status, like Norway, or a more distant
relationship based on a Free Trade Agreement with the EU, like
Canada or Switzerland. The key difference is that EEA status
keeps most EU single market laws in force in the UK, at the price
of accepting free movement and a budget contribution.
An FTA relationship means Britain would need its own rules in these
- The difference is crucial because many laws setting out the
rules for Scotch and the food and drink sector generally are made
at European level - for example rules on the definition of whisky,
food labelling, bottle sizes, and so on. If these laws are to
be rewritten it will make Brexit more complicated and the industry
will need to start planning now.
4. So the Scotch Whisky industry priorities are as
- a UK trade policy that is as open and free trading as
- Broad clarity on the nature of the future arrangement that is
sought with the EU, so we know how much new legislation to
- agreement with the EU on practical arrangements enabling us to
export Scotch Whisky to and across Europe as simply as
possible. We will also need new UK legislation for customs
enforcement and interception of counterfeit goods;
- Existing FTAs' provisions to be subject to transitional
arrangements, or to be 'grandfathered' (ie continue application to
the UK after Brexit). This will need an understanding with the EU
and with the third countries concerned;
- Over the medium term, UK development of its own network of
trade agreements with non-EU countries;
- reflection on a new excise duty regime that is fairer to Scotch
Whisky and taxes alcohol more rationally across categories;
- No further burdens on business at such a sensitive time.
We urge government in Edinburgh and London to work closely with
us and to put in place mechanisms that allow vital industries such
as Scotch Whisky a seat at the table.
David Frost, Scotch Whisky Association chief executive, said:
"Scotch Whisky is one of the UK's most successful exports. We are
calling on the UK Government to bring clarity to the transition to
Brexit as soon as possible, and to negotiate to ensure that the
current open trading environment is not affected. Finding
practical ways forward on export practicalities and on free trade
agreements should be high on the agenda as negotiations begin in
the coming months. We plan to play an active role in influencing
this whole process to ensure that Scotch remains a product enjoyed
across the globe."
Please visit our website to read an accompanying blog on Brexit by
The SWA will provide regular updates on Brexit and the impact on
Scotch Whisky. David is available for interview to discuss any of
the aspects covered in this SWA statement. The SWA is happy to
provide further comment pieces on the implications for Scotch
Whisky of Brexit.
David Frost is also a member of the Scottish Government's
Standing Council on Europe, in a personal capacity.
With media enquiries please contact Rosemary Gallagher, SWA head
of communications, 0131 222 9230 or 07432 605385 or email email@example.com or
David Williamson, SWA director of public affairs and
communications, 0131 222 9226 or 07730 496151 or email firstname.lastname@example.org