DISCUS Calls for Permanent Removal of Trade Barriers

The Korean War isn't over.  It's just paused for an armistice.  And that's true for retaliatory tariffs on U.S. distilled spirits products that were part of trade disputes with the EU and UK over steel-aluminum and aircraft subsidies.  They're suspended, not abolished.

But remembering that when the EU and UK retaliatory tariffs were being applied from 2018 to 2021, total U.S. spirits exports fell 12% to $1.6 billion and American Whiskey exports dropped 18% to $975 million, the Distilled Spirits Council of the U.S. submitted a detailed report to the U.S. Trade Representative identifying key foreign trade barriers impeding U.S. exports of distilled spirits.  

It's not just retaliatory tariffs.  The barriers also include discriminatory taxes, regulatory standards, and certification and labeling measures.

Currently, retaliatory tariffs on U.S. distilled spirits products as part of trade disputes with the EU and UK over steel-aluminum and aircraft subsidies are suspended. The only retaliatory tariffs that remain on U.S. distilled spirits are those applied by China in the Section 301 dispute and by Turkey over steel and aluminum.

Following a decrease in exports between 2018 and 2021 due largely to retaliatory tariffs, this long-term positive trend restarted in 2022. From January-August 2022, total U.S. spirits exports and American Whiskeys in particular increased by 22% and 20%, respectively, over the same period the previous year.

“We strongly urge the administration to secure the permanent return to zero-for-zero tariffs on spirits with the EU and UK,” said Robert Maron, DISCUS vp-international trade. “If the retaliatory tariffs were to return, they would reverse the rebound in U.S. spirits exports that has been seen through August 2022.”

DISCUS member companies export to more than 130 countries worldwide, with total U.S. spirits exports in 2021 valued at more than $1.6 billion. In 2021, U.S. spirits were exported from small, medium, and large distillers located in 45 states, up from 41 in 2020.

In 2021, the top five markets for American spirits exports by value were: 1) Canada ($242 million, down 3%); 2) Netherlands ($121 million, up 112%); 3) Japan ($120 million, down 5%); 4) UK ($107 million, up 28%); and 5) Australia ($102 million, down 11%).

American Whiskey drives U.S spirits exports and accounts for 62 percent of total American spirits exports. In 2021, the top five markets for American Whiskey exports by value were: 1) Japan ($96 million, down 1%); 2) UK ($88 million, up 23%); 3) Australia ($85 million, down 14%); 4) Germany ($81 million, up 7%); and 5) France ($78 million, down 11%).

The DISCUS submission also identified countries that assess excessive tariffs, discriminatory excise taxes, and other non-tariff barriers on imported distilled spirits, including:

• India: maintains an excessive tariff of 150 percent ad valorem
• Vietnam: imposes a 45 percent ad valorem tariff
• EU, Brazil, Thailand, Indonesia, Peru, and Costa Rica among others: continue to apply discriminatory spirits taxes or product markups in favor of domestically produced spirits
• Singapore, Brazil, India, Malaysia, South Africa, and elsewhere:  labeling requirements and standards of identity are under consideration, which are inconsistent with standard international practices and could impose unnecessary barriers to entry for U.S. spirits exporters