Why Open Markets Matter
05 May 2015
Last week I made a speech in Brussels that tried to re-make an
argument that perhaps, sometimes, we take for granted.
That is that open markets matter and, if we are to secure our
industry's growth in the future, we need to keep making their case
regularly and robustly.
To understand why, just look to the past.
Many of today's world-famous Scotch Whiskies started life in the
19th century as small, local brands. Today, they are
global. And that has not happened by accident.
Clearly, much of that is down to the efforts of distillers,
building high quality, aspirational brands. It has taken
time, craftsmanship, and investment. Dedicated people,
world-class marketing, and routes to market have played their
But the industry's success has also been supported by a clear
focus on open markets, long-term thinking on trade issues, and
collaboration at industry level.
That matters because Scotch Whisky is at the heart of our
economy and exports are its lifeblood. Every year, around £4bn of
Scotch Whisky is exported around the world, representing nearly 20%
of total Scottish exports. Today, Scotch is the second
biggest net contributor to the UK's trade balance.
A key part of recent growth has been driven by positive economic
trends. Aspirational consumers with more disposable income -
whether in New York, Shanghai or Mumbai - want to buy products of
authenticity and status. Scotch is sought after in the same
way as a designer watch or luxury hand bag because of its cache and
As economies slow, however, we can be reminded that a bottle of
whisky often attracts a lot of attention from
High tariffs, discriminatory taxes, restrictive labelling and
price controls. Such measures are often protectionist
and distort competition. Increasingly, they are justified by
spurious public health arguments. In all, we count around 600
trade barriers in our export markets that prevent fair market
Tackling such barriers takes time and needs consistent
effort. However, only by doing so will we fully realise the
opportunities in emerging markets across Latin America, Africa, and
We have to do the hard work of opening markets now so that we
secure the benefits in 20 years' time. So looking ahead, what
are our priorities?
First, the SWA attaches a high importance to maintaining the
global rules-based trading system, underpinned by the
The WTO plays an important role providing a framework to discuss
potential barriers to trade and of course a forum to resolve
disputes. Tax discrimination against spirit drinks in the
likes of the Philippines and Japan has been resolved under its
auspices. The WTO trade facilitation deal should help
to remove cost and complexity from our businesses.
Second, we are active supporters of ambitious free trade
EU deals with the likes of South Korea have been important and
we look forward to full implementation of recent agreements with
Canada, Colombia and Singapore, as well as completion of important
talks with Vietnam. A future EU deal with India would be of
Such talks take time but they are often the once in a generation
opportunity to remove tariffs, end discriminatory taxes, and
facilitate trade. Increasingly, they are a chance to tackle
issues around services, investment and rules of origin. They
are key to the international protection of the Scotch Whisky
geographical indication from unfair competition.
The importance of such deals means that we are increasingly
troubled by the debate around another potential agreement, the
Trans-Atlantic Trade and Investment Partnership (TTIP). That debate
appears to have brought old concerns on the winners and losers of
trade back to the fore, as well as raising the spectre of new
threats to public services or a race to the bottom in
It is important, as an industry, we tackle such misperceptions
head on. Whilst the direct benefits of TTIP to the whisky
industry may be modest, we have to remind people that trade deals
are about consumers, jobs and raising standards. TTIP
has the potential to become a gold standard on 'behind the border'
issues, setting a valuable precedent for other
And as such negotiations get more complex, more flexibility and
a final framework that allows talks on other issues to evolve could
be a useful model to develop.
Third, our plea to officials is that negotiating and concluding
trade agreements is not an end in itself. FTAs must be
implemented and enforced if they are to deliver the promised
benefits. The same is true of the EU's own single market
Fourth, at a time when the industry faces the continued risk of
protectionism and loud anti-trade rhetoric, we see it as our job to
be ready to restate that our industry, like many others, is better
off when markets are open.
Open markets create jobs, competitiveness, and consumer choice,
as well as generating new ideas and value chains that help our
businesses to thrive.
It is understandable that people can be sceptical. Such
agreements have not always lived up to the hype. Negotiations
are by their nature uncertain and there is therefore a need to be
transparent and to consult fully as they develop.
However, as President Obama said last week, you can't stop the
global economy on your country's shoreline. Instead, we must
work hard to ensure a level playing field, shaping deals that
benefit everyone and raise standards.
For 150 years, open markets have underpinned the whisky
industry's export success and only by maintaining a global mind set
will we see the industry's future potential fully
Take, for example, the 6 whisky distilleries that opened in
Scotland in 2014 or the fact that around 30 distilleries are
currently at different stages of development. Like the
distillers of the 19th century, today's new producers and their
brands are likely to be small-scale and locally focused at
first. But it will be success in export markets that drive
their future growth and support investment.
We need to keep making an old case for new markets.
SWA Public Affairs & Communications Director