Although the European Union single
market is often portrayed as a border-free trading environment,
Scotch Whisky continues to face several barriers to trade in
individual countries. The Global Affairs Department seeks
to remove any barriers that exist or arise.
The Global Affairs Department (GAD) ensures Scotch Whisky
can be sold without undue restriction and on equal terms with all
other spirit drinks in:
- The 28 EU Member States
- The European Economic Area (EEA)/European Free Trade
Association (EFTA) countries - Norway, Iceland, Switzerland and
- The countries that are currently, or likely to be, EU accession
candidates - all the states in the Balkan region and Turkey.
- Promoting, supporting or opposing EU and/or national
legislative or other trade related measures affecting Scotch
- Pursuing the removal of intra-EU barriers to trade.
- Seeking the introduction of EU-compatible trade legislation in
each of the accession countries at the earliest opportunity.
- Providing members with information on the regulatory framework
for trade in Scotch Whisky in each of the countries for which GAD
The Work of the Global Affairs Department at EU level
The EU has expanded from six countries in 1957 to 28 today. With
each phase of enlargement, more countries adopt Europe's common
trade rules and remove their previous national, sometimes
protectionist, legislation. But there remains scope for individual
Member States to enact national legislation that can impact on
Scotch Whisky. Some of that legislation has given rise to barriers
which GAD is challenging.
The application of the EU's trade environment means Scotch has
become more accessible to a far wider audience. With over 500
million consumers in the EU, it is vital that the SWA monitors EU
laws on a constant basis to ensure they remain proportionate and do
not inadvertently give rise to barriers within the single
market. This is doubly important as EU laws are sometimes used
as the benchmark for other countries when considering new
GAD spends considerable time assessing EU and national
legislative proposals to determine their possible impact on the
Scotch Whisky trade. Much of this work involves a dialogue
with the European Commission, Members of the European Parliament,
UK government officials, public sector officials in other EU Member
States and fellow members of spiritsEUROPE, the trade association
for the EU spirits industry.
Some issues GAD is focusing on at EU level:
Following a long debate, in 2011 the EU adopted a new law
on food labelling the main provisions of which came into force
in December 2014.
The Association was closely involved in the evolution of the new
legislation. Along with all other foodstuffs, the law sets down
rules relating to almost every aspect of the information which
consumers see on foodstuffs.
For Scotch Whisky, this covers everything from the requirement
to state alcohol content to the size of font required when whisky
is sold in miniature bottles. The new law also contains specific
provisions requiring the Commission to report further on areas
including ingredient and nutrition labelling and in relation to the
origin of foodstuffs.
While the legislation laid down timeframes, as a consequence of
political discussions between the institutions, as well as European
Parliament elections, and changes in the Commission, there are
likely to be delays in reports and the legislative process being
GAD is engaged in a dialogue with EU and national officials and
other stakeholders to try to ensure that, whatever rules emerge,
they are meaningful and do not discriminate against Scotch Whisky
and other spirits.
EU rules set out how every spirit drink, including whisky, vodka
and brandy, must be made.
Additional provisions give protection for spirits with
'Geographical Indications' (GI), including Scotch Whisky, Polish
Vodka, and Brandy de Jerez.
EU GI legislation recognises Scotch Whisky as a product that
must be made in Scotland. The rules defining spirits play a vital
role in the Association's efforts to protect consumers from fake
'whisky'/'Scotch Whisky' in the EU and other countries around the
The very technical rules in this area were most recently updated
in 2008. While this was a considerable improvement on its
predecessor, it remained open to interpretation in some areas; this
necessitated further close liaison between the Commission and
industry and the welcome adoption of an Implementing Regulation,
mainly to deal with use of compound terms (whisky liqueur, gin and
tonic etc.) in summer 2013.
The research conducted in the preparation of the new rules
revealed other areas where the 2008 law could be clarified. The
Commission is now working on a new legislative proposal in this
area. In addition, as a consequence of changes within the
Commission, there is a closer focus on the rules relating to the
protection of 'geographical indications' (GI), such as Scotch
Whisky. We are again engaged in discussions to try to ensure the
current levels of protection for Scotch Whisky are not
There are a number of EU Directives setting out how alcoholic
beverages must be taxed. While these rules - mainly from the
early 1990s - clarified and harmonised earlier national rules, they
continue to give rise to difficulties:
- There is a (high) minimum tax rate that must be applied on
spirits but a much lower rate on beer
- Although wine competes directly with other alcoholic beverages,
EU Member States are allowed to exempt it from excise tax (more
than half do so)
- The rules allow Member States, in some circumstances, to apply
lower rates of tax on some spirits. This always distorts
competition in the market and the rules are often very poorly
enforced. Some countries have unilaterally, and illegally,
applied their own derogations
- The rules permit Member States to apply 'strip stamps' or other
duty marks on spirits. These always complicate trade
logistics, add costs, discriminate against spirits and prevent free
movement in the internal market
GAD is regularly involved, often alongside colleagues from
spiritsEUROPE, in efforts to resolve trading difficulties that have
arisen in this area. Occasionally, and in violation of EU and other
rules, preferential tax treatment is granted to domestic spirits;
this discriminates against Scotch Whisky and other imported
spirits. We have recently worked on issues in Greece, Hungary,
Romania and Switzerland. GAD challenges these measures in an effort
to ensure fair and equal trading conditions for Scotch
Whisky. In a breakthrough for the
Association which had launched a formal complaint, the European
Court of Justice ruled that tax exemption in Hungary for palinka,
the country's traditional fruit spirit, is illegal.
The application of the EU's trade rules is a
requirement for every accession candidate country.
As each candidate's accession talks advance, the Association
is involved in scrutinising their national laws to identify
the areas where changes are required to meet EU norms. The
outcome of this research forms the basis of the EU spirits
industry's dialogue with Commission negotiators.
Currently there are eight (potential) candidate countries at
various stages of the accession process, including Turkey and the
Western Balkan countries. GAD is in close contact with the
Commission to ensure that barriers to trade are addressed and
national rules are aligned with the EU acquis at the earliest
opportunity. This is of particular importance with regard to Serbia
where excise discrimination against Scotch Whisky is incompatible
with EU rules.
Turkey has long been seen as a potentially very significant
export market for Scotch Whisky.
Although a Customs Union Agreement - essentially creating a free
trade area between the EU and Turkey - was signed in 1995, Scotch
Whisky exports face significant barriers preventing meaningful
GAD has long been involved in a dialogue, primarily with
officials in London, Brussels and Ankara, to try to overcome the
difficulties. The trade regime remains generally unpredictable and
opaque; new barriers have arisen as old ones disappear.
For many years, Scotch has faced considerable market access
difficulties as a consequence of onerous administrative
requirements. While these have been eased appreciably
since the start of 2012, areas of difficulty remain and the SWA is
monitoring developments closely. More recently, Turkey took the
extremely unwelcome step of banning the promotion and advertising
of alcoholic beverages. The same legislation also introduced a
requirement for all drinks to bear a health warning label. In 2014,
the Association challenged efforts to introduce a so-called
track and verification label which would be a burden to the
industry and of no added benefit to the consumer.
Another issue facing Scotch Whisky is the application of excise
tax rates that are higher than those on the Turkish national
spirit, raki. Following a welcome agreement in 2009 to harmonise
all tax rates in stages by 2018, Turkey has significantly reduced
the level of discrimination against Scotch Whisky, most
recently in January 2015.