The TTIP of the trade iceberg
17 Dec 2014
At the Scottish Parliament's European & External Relations
committee last week, I had the opportunity to participate in an
interesting and often lively debate on the importance of the EU-US
Transatlantic Trade and Investment Partnership (TTIP).
The SWA attaches a high priority to ensuring that free trade
agreements (FTAs) deliver benefits to the whisky industry.
TTIP therefore matters to Scotch but not perhaps in the most
immediately obvious of ways.
The USA is already Scotch Whisky's largest export market by
value, with annual exports of over £800 million. Around
£1 in every £5 in Scottish exports to the USA is accounted for by
whisky. Scotch already benefits from a zero tariff, a
reasonable and non-discriminatory excise duty, and robust legal
protection. That suggests that further EU-US trade liberalisation
is likely to deliver only modest direct commercial
There are benefits to be gained however. The removal of
remaining border fees on whisky would save around £4 million a
year. Even more significant is the chance to secure improved
regulatory coherence, setting globally relevant rules for
labelling, certification and testing of spirit drinks.
Industry on both sides of the Atlantic has jointly proposed a
'spirits annex' that has the potential to reduce import costs,
complexity and uncertainty, which would be a particular boost to
SMEs. The aim is that this would be backed by more
robust dispute settlement procedures.
Yet there is, frankly, a bigger picture and a long-term view is
necessary. An ambitious TTIP would set an important
precedent, creating a gold standard for future FTAs in markets
where trade barriers are more commercially significant.
Indeed, our experience is that TTIP is already having a positive
impact on the wider environment.
There is an argument that TTIP helped to kick start talks that
led to a WTO trade facilitation deal which will make it easier to
clear goods through customs and ports. TTIP has also
refocused other countries on trade, getting the EU-Canada agreement
over the finishing line, whilst encouraging Brazil to look again at
dormant EU-Mercosur talks. Equally, Mexico is now keen to
secure an improved 'next generation' FTA with the EU.
This matters at a time when the industry could benefit enormously
from deals with the likes of India and Vietnam.
Finally, TTIP is not the only game in town. The USA is
also negotiating with its partners along the Pacific Rim and a
failure to conclude an ambitious TTIP would likely place EU
exporters at a competitive disadvantage in relation to these
Any trade negotiation throws up uncertainties. That is the
nature of negotiation. However, as the discussions over TTIP
evolve, it is worth remembering that it is just one part - if an
important part - of a wider FTA landscape that could have
significant implications for whisky's future growth.
David Williamson, SWA Government & Communications