Kenya is among markets targeted to grow Scotch Whisky exports in the aftermath of Britain’s decision to exit the European Union.
The Scotch Whisky Association (SWA) has issued a call to the UK government to give a high priority to negotiating new trade deals in key markets, including fast-growing emerging ones such as Kenya after Brexit.
The trade body, whose aims include advancing the global interests and profile of Scotch Whisky, has highlighted that its biggest needs are an open trading policy and pragmatic, non-disruptive transitional arrangements after Brexit and is urging the UK to work to ensure global trading arrangements that are better than those already in place and support key export industries, such as Scotch Whisky.
The SWA’s analysis highlights markets with long-term potential for whisky exports and where an ambitious free trade agreement (FTA) with the UK could eventually deliver significant benefits through the elimination of tariffs and trade barriers.
According to the lobby, priorities could include major markets with long-term potential: above all India, but also China, and Brazil (and the wider Mercosur region of Argentina, Paraguay, Uruguay and Venezuela) as well as fast-growing emerging markets with potential such as Kenya, Angola, Nigeria, Burma and Vietnam.
Also of interest to SWA are established markets where further growth is possible with the boost of an FTA, namely Australia and Thailand.
Last year, Scotch Whisky exports were worth nearly Sh495 billion (£4bn) in customs value, making Scotch the biggest single net contributor to the UK’s trade balance in goods and the country’s largest food and drink export.
Analysis of the potential impact of Brexit on Scotch Whisky distillers also led the SWA to conclude that whilst Scotch Whisky will not face any new tariffs when shipped to the EU, there remains uncertainty around some future practicalities of exporting to the EU. It wants the UK to negotiate to minimise cost and complexity for distillers.
Negotiators should ensure the UK can continue to benefit from existing EU trade agreements with major whisky markets, such as Colombia, Korea, or Mexico, with current provisions ‘grandfathered’ – transferred over after Brexit. Vietnam would also come into this category if the EU’s deal came into force before the UK leaves, it further highlights.
“The industry sees little value in the UK being part of the EU Customs Union should it wish to strike new trade deals. The benefits would be outweighed by the limits on the UK pursuing an open trade policy and agreeing its own deals,” SWA said in a statement.
It wants UK Government departments and embassies to boost even further their trade capacity and expertise to support strategically important exports, like Scotch Whisky, on market access and intellectual property.
SWA also welcomed the business certainty offered by the Great Repeal Bill – legislation transposing all EU rules into UK law, at least for a provisional period after Brexit. This would cover essential rules, for example, on bottle sizes, labelling, and product definitions. In the longer-term, there are areas, such as energy and taxation, where there may be opportunities for change to support industry competitiveness.
The SWA further called on the UK Government to ensure that no new domestic tax or regulatory burdens are placed on Scotch Whisky at a time of continued uncertainty following the Brexit vote.
David Frost, Scotch Whisky Association chief executive, said: “Brexit poses challenges and uncertainty but also brings opportunities if the UK can secure favourable bilateral trade deals with key export markets. India, for example, is a growing market for Scotch but we are being held back by a 150% import tariff. EU talks with India have proved challenging for a decade now and we hope the UK will now take a fresh approach to securing an ambitious trade agreement.
“We want the UK to have an open and liberal trading policy, to put transitional arrangements in place that minimise trade disruption after Brexit, and to negotiate better global arrangements than we currently have. An even more trade-focused British embassy network around the world will be needed to make this happen.
“The UK should be a voice for open markets globally. The more open the market, the more Scotch Whisky exports will grow to the benefit of the wider economy.”
Most that 90% of Scotch Whisky produced is sold outside of the UK.