The chief executive of the Scotch Whisky Association has warned that Scotch exports face increased tariffs in key markets like Korea, Colombia, Peru and South Africa following the UK’s narrow vote to leave the European Union.
The UK exports £4 billion of Scotch every year.
SWA chief executive David Frost said most tariff arrangements for Scotch around the world will not change — but he added: “In some markets the situation is less positive.
“One of our biggest challenges is the unavoidable fact that Brexit is likely to mean the UK will lose access to the EU’s Free Trade Agreements.
“In a small number of countries this will increase the tariffs we face: for example in Korea the tariff will go back up to 20% from the current zero.
“There will be similar changes in places like Colombia, Peru, or South Africa.”
Frost said he spent much of his diplomatic career negotiating in the EU and he knows “only too well the mammoth task that now awaits the UK Government in detaching itself from these existing arrangements.”
Frost said many things will not change.
He said Scotch will not face a tariff on exports to Europe — the EU’s current external tariff is zero and that cannot change.
“Moreover, in most global markets tariffs will not change,” said Frost.
“In many they are zero now and will remain so, including in our largest, the USA.
“In others, although they are high and problematic, for example India with its 150% tariff — Brexit will not change that.
“And we will still have the means to fight against fakes in the EU and beyond.”
Frost said the SWA is calling on the UK Government to do its best to “grandfather” the EU’s Free Trade Agreements — that is, for the UK to continue as a participant even after leaving the EU, or negotiate some other transitional arrangement.
He said the Scotch industry needs Westminster to put in place plans for the UK’s own network of Free Trade Agreements, though this will take time.
“But we are concerned about more than just tariffs,” said Frost.
“Modern trade is about rules and regulations and Scotch Whisky is bound by a huge number of rules set at EU level, for example on the very definition of whisky, or on other issues like food safety or labelling.
“The (UK) Government has not made clear yet whether after Brexit the UK will continue to be a participant in these single market rules, or whether we will need UK-only rules to replace them in the British market.
“That is an important decision that needs taking soon so that we have a sense of the complexity of the transition.”
Frost concluded: “Scotch Whisky is a global free-trading industry. The last thing we want is for Brexit to make Britain inward-looking and defensive.
“I hope the Government can be clear soon about the kind of trade policy Britain will have.
“Our interests are in open markets and free trade, and a focus on measures that can give Scotch even better access to world markets than now.
“So there will be complexities to deal with. In some markets we will face problems. In others there will, eventually, be opportunities if the Government can seize them.
“We look forward to working closely with the Government to make a success of Brexit and to ensure that Scotch Whisky has an even brighter future to come.”