Alcohol sales: Britain will have to renegotiate bilateral deals

Britain will have to rework its bilateral deals for alcohol sales in India following its breakaway decision.

David Frost, Chief Executive of the Scotch Whisky Association, told BusinessLine that while it is too early to comment on the specifics as it has to work through the details and consult with its members, the process of leaving the EU will inevitably generate significant uncertainty.

 “Of course, we are confident Scotch Whisky will remain the pre-eminent international spirit drink.  But equally, there are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world,” Frost said.

SWA has been fighting a long drawn battle with India on imposing high tariffs on Scotch Whisky. It has repeatedly taken its case to the WTO for bringing down tariffs in India, which is at present about 150 per cent. Makers of Scotch Whisky export nearly 90 per cent of what they produce. Being part of the EU has boosted the industry body’s chances of better negotiations with emerging markets like India.

Frost said the British government will now need to consult as it prepares its negotiating approach.  “We look forward to working closely with them on that. We urge thoughtful and serious consideration by all parties so that we can secure the best possible continued access to the EU and other export markets on which Scotch Whisky’s success has been built, whilst minimising costs and complexity.”

A Diageo spokesperson told this paper that it will now have to work closely with its industry bodies to seek clarity on the transition process.

The London-based Diageo plc owns nearly 55 per cent stake in India’s largest liquor maker, United Spirits. “We respect the views of the British people in the EU referendum. As one of the UK’s leading exporters, Diageo remains committed to the long-term prosperity of the Scotch whisky industry,” the spokesperson for Diageo said. United Spirits’ stock fell 2.89 per cent to close at ₹2,349.55. The spokesperson added that it is its priority that the UK continues to benefit from open access to the EU as well as favourable international trade agreements to protect the UK’s important export industries, including Scotch whisky.”

A recent poll conducted among Wine and Spirit Trade Association, an industry body, said leaving the EU will lead to a more uncertain trading environment and losing the benefit of the EU’s free trade agreements with third countries. The long drawn negotiations could impact on £3.5 billion worth of export trade outside the EU, the association claimed. The results of the poll were published in a UK-based online publication, City AM .

The outgoing prime minister David Cameron had, before the referendum on Brexit, warned that leaving the EU will force the industry to renegotiate bilateral deals for alcohol sales such as South Africa, the US, South Korea, China and India.

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