Is the End of Distilled Spirits Tariffs in Sight? AIRBUS and WTO Reach Agreement Amid Worldwide Pandemic
Tariffs between the United States and the European Union have created a tangled web that has ensnared many innocent bystanders. It’s hard to imagine that something that happens in the airline business can hurt the distilled spirits industry but that’s the retaliatory world we live in.
Airbus Agrees Settlement to Long-standing WTO Issue
Airbus a global leader in aeronautics, space and related services released a statement that says, “The tariffs imposed by the United States Trade Representative (USTR) are currently harming all targeted industry sectors, including U.S. airlines, and are adding to a very difficult environment as a consequence of the COVID-19 crisis. This is why Airbus has decided to make a final step to remove the last contentious point and amend the French and Spanish contracts to what the WTO considers the appropriate interest rate and risk assessment benchmarks.”
With a possible end in sight for this long outstanding issue the Distilled Spirits Council of the United States – DISCUS released a statement that says, “U.S. distillers welcome today’s announcement regarding Airbus. We hope that this is a significant step toward resolving this longstanding trade dispute that will result in the prompt elimination of tariffs on U.S. and EU distilled spirits. Distillers on both sides of the Atlantic have suffered enough.”
Since October 18, 2019, the U.S. has imposed a 25 percent retaliatory tariff on imports of Single Malt Scotch Whisky; Single Malt Irish Whiskey from Northern Ireland; liqueurs and cordials from Germany, Ireland, Italy, Spain, and United Kingdom; and certain wines from France, Germany, Spain, and the United Kingdom.
According to the latest data available here’s how the tariffs have hurt the distilled spirits industry.
- U.S. imports of Scotch Whisky are down by nearly 33 percent between October 2019-May 2020 ($723 million) compared to October 2018-May 2019 ($1.01 billion).
- U.S. imports of liqueurs and cordials from Germany, Ireland, Italy, Spain and the United Kingdom are down by approximately 23 percent between October 2019-May 2020 ($288 million) compared October 2018-May 2019 ($372 million).
- U.S. imports of certain wines from France, Germany, Spain and the UK are down by approximately 44 percent between October 2019-May 2020 ($587 million) compared October 2018-May 2019 ($1.04 billion).
In addition, the EU has imposed a retaliatory tariff of 25 percent on all U.S. Whiskey imports since June 22, 2018. According to a DISCUS analysis, American Whiskey exports to the EU have tumbled by 33 percent and cost $300 million since the EU’s 25 percent retaliatory tariff went into effect. The EU has stated it may impose retaliatory tariffs this spring on U.S. rum, vodka and brandy in its parallel case at the World Trade Organization concerning Boeing. In addition, the EU is scheduled to increase its retaliatory tariff on American Whiskey to 50 percent in spring 2021.
Airbus takes final step to end long-standing WTO dispute and U.S. tariffs
Here’s the complete statement from Airbus.
Toulouse, 24 July 2020 – Airbus has agreed with the governments of France and Spain to make amendments to the A350 Repayable Launch Investment (RLI) contracts. After 16 years of litigation at the World Trade Organisation (WTO), this is the final step to stop the long-standing dispute and removes any justification for U.S. tariffs.
The tariffs imposed by the United States Trade Representative (USTR) are currently harming all targeted industry sectors, including U.S. airlines, and are adding to a very difficult environment as a consequence of the COVID-19 crisis. This is why Airbus has decided to make a final step to remove the last contentious point and amend the French and Spanish contracts to what the WTO considers the appropriate interest rate and risk assessment benchmarks. The WTO has already ruled that RLI is a valid instrument for governments to partner with industry by sharing investment risks. With this final move, Airbus considers itself in complete compliance with all WTO rulings.
“We have fully complied with all the WTO requirements. These additional amendments to the A350 RLIs demonstrate that Airbus has left no stone unturned to find a way towards a solution,” said Airbus CEO Guillaume Faury. “This is a clear signal of support to those who are suffering from the severe impact of the tariffs imposed by the USTR, especially at a time when industries are hard hit by the consequences of the COVID-19 crisis.”
Here’s some additional insight on this history of the tariffs from Reuters.
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