The Distilled Spirits Council of the United States (DISCUS) has submitted a comprehensive report to the United States Trade Representative (USTR) identifying key foreign trade barriers impeding U.S. distilled spirits exports.

The report details the major trade barriers faced by U.S. spirits exporters around the world, including retaliatory tariffs, discriminatory taxes, regulatory standards, and certification and labeling measures.

Robert Maron, DISCUS Vice President for International Trade, stated that the U.S. spirits sector’s top trade priority continues to be securing the permanent removal of retaliatory tariffs on U.S. spirits exports imposed by key trading partners.

“2022 was a banner year for American spirits exports, due largely to the temporary suspension of the EU’s retaliatory tariff on American Whiskeys,” Maron said in a news release. “For this record growth to continue, it is imperative that the EU and U.S. reach an immediate agreement to permanently remove the retaliatory tariff on American Whiskey before it is reimposed and doubled by the EU on Jan. 1, 2024.  If the retaliatory tariffs return, they will reverse the rebound in U.S. spirits exports in 2022 and accelerated through 2023.”

In the past few years, trade conflicts unrelated to the spirits industry have led to retaliatory tariffs on select U.S. spirits products in crucial export markets. This has impeded the overall growth of U.S. spirits exports. From 2018 to 2021, there was a 12% decrease in total U.S. spirits exports and a decrease of 18% in total American Whiskey exports. (USITC Dataweb)

In 2022, U.S. spirits exports rebounded over pre-tariff levels in 2017 (the last full year before retaliatory tariffs) due in large part to the suspension of retaliatory tariffs on a range U.S. spirits exports by the EU and UK.

DISCUS member companies export to more than 130 countries worldwide, with total U.S. spirits exports reaching a record $2.06 billion in 2022. From January-August 2023, total U.S. spirits exports and American Whiskeys increased by 24% and 48%, respectively, over the same period the previous year.The 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 currently 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.In 2022, the top five markets for American spirits exports by value were: Canada ($262.5 million, up 8.4%), the Netherlands ($167.2 million, up 28.4%), the U.K. ($158.4 million, up 49.3%), Spain ($145.7 million, up 57.8%), and Australia ($141.2 million, up 39.1%).

American Whiskey drives U.S. spirits exports and accounts for 62 percent of total American Whiskey exports.  In 2022, the top five markets for American Whiskey exports by value were: the Netherlands ($151.2 million, up 95.7%), Australia ($117.1 million, up 39.1%), the U.K. ($112.1 million, up 28.3%), Germany ($103.5 million, up 27.8%), and Japan ($102.4 million, up 7.2%).

In 2022, U.S. spirits were exported from small, medium, and large distillers located in 44 states.

The top 10 states exporting U.S. spirits were: 1) Tennessee ($817.8 million); 2) Kentucky ($507.3 million); 3) Florida ($344.6 million); 4) Texas ($249.4 million); 5) Illinois ($114.2 million); 6) Indiana ($89.1 million); 7) Arkansas ($67.3 million); 8) New York ($65.4 million); 9) California ($52.7 million); and 10) New Jersey ($28.1 million). (U.S. Census Bureau)

The U.S. spirits sector supports the direct and indirect employment of an estimated 1.7 million people across America. In 2022, 2.73 billion pounds of grains were used to produce U.S. whiskey, brandy, rum, gin, and vodka, up 133% over the last decade.

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.
• Indonesia, Chile, India, Malaysia, Korea, Australia, 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.