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questionRefLabel S5W-17000

Asked by: Kate Forbes, Skye, Lochaber and Badenoch, Scottish National Party
Date lodged: 31 May 2018

Question

To ask the Scottish Government what impact Brexit will have on protecting the designation, exports and global reputation of Scotch whisky.

Current status: Answered by Fergus Ewing on 18 June 2018


Answer

In 2017, around a third of all Scotch Whisky exports, amounting to £1.37billion, went to the rest of the EU.

The Scottish Government believes that Scotland’s future is best served by continued EU membership, in line with the wishes of the Scottish people, expressed in the 2016 referendum. Brexit will mean that there will be a need to introduce customs and excise procedures between the UK and EU. At present the UK enjoys the benefits of rules that facilitate duty suspension on movements in the EU. If these rules fall away, industry will need time to prepare for the new procedures that will apply after transition. That preparation time will be anything upwards of 12 months and could be longer if new customs arrangements are agreed. It is important that any new customs and excise regime does not place an undue burden on business.

Failure to reach a comprehensive trade agreement and achieve minimal regulatory divergence with the EU on all goods could result in increased costs for the industry. While Scotch Whisky will continue to benefit from a zero tariff on exports to the EU, competitiveness could be put at risk because of the effects of tariffs on supply chain inputs on such things as glass bottles (3-5%), closures such as corks (5%), distilling machinery (1.7%) and on cereals ( 93/1000kg on barley).

It is also vitally important that the UK will continue to benefit from the existing EU bilateral trade deals that have been previously negotiated, with countries like South Korea, the Dominican Republic, Colombia and Morocco, as these represent 10% of Scotch Whisky exports.

Scotch Whisky is recognised around the world as a quality product. That reputation is maintained through adherence to high standards which are set out by a framework of EU laws and regulations, which include that the product must be produced in Scotland according to traditional practice. Robust legal protection of Scotch Whisky in the UK, EU and global markets will continue to be essential. Stability in these rules will be critical to Scotch Whisky‘s reputation, which is why incorporating all EU laws into UK law is vital. As part of maintaining Scotch Whisky’s status as a product of the highest quality, there is a need through trade agreements to secure robust legal protection for Scotch Whisky as a Geographical Indication (GI) to safeguard this vital sector.