The UK and Canada have agreed to establish a new trade agreement next year, which will ensure tariff-free access to spirits such as Scotch whisky.
The UK and Canada have maintained their existing trading relationship, and will begin negotiating a new tailor-made agreement between the two nations next year.
The move was agreed in a video call on 21 November between UK prime minister Boris Johnson and Canadian prime minister Justin Trudeau, who was joined by Liz Truss, the UK’s international trade secretary, and Mary Ng, Canada’s minister of small business, export promotion and international trade.
The agreement ensures tariff-free trade on 98% of goods that can be exported to Canada. Without the deal, British consumers would have paid up to 8% in tax for Canadian goods that enter the market under the UK Global Tariff.
Trade body the Scotch Whisky Association (SWA) said the deal was “good news for Scotch whisky exports as it aims to secure fairer access for Scotch whisky to the Canadian market”.
Ian McKendrick, international director at the SWA, said: “Importantly, the agreement includes commitments to address practices by certain provincial liquor boards which currently limit market access for Scotch whisky. Over 50% of Scotch whisky exports to Canada are single malt Scotch whisky, making Canada a particularly important export destination for many smaller Scotch whisky distillers that only produce single malt.
“We look forward to future negotiations on a comprehensive Canada-UK bilateral free trade agreement which will provide a further opportunity to ensure Scotch whisky can compete fairly in the Canadian market. Canada is a whisky-loving nation, and with fairer access the industry is confident that we can grow direct exports of Scotch whisky in the years ahead.”
Canada is the 15th largest global export market for Scotch, with exports worth £94.4 million (US$126m) in 2019. The value of Scotch whisky exports to Canada grew by 5.7% in 2019.
‘Complex alcohol market’
Miles Beale, chief executive of trade group the Wine and Spirit Trade Association, also welcomed the move.
He said: “This is a good result for the UK wine and spirit industry. Canada is an important market that is growing for UK exporters, particularly our small and medium-sized gin and English wine exporters.
“This agreement doesn’t just confirm the continued removal of tariffs, but gives us some extra footing and mechanisms to engage with the Canadians on their complex alcohol market, which is controlled at a provincial level. It should allow UK businesses to be more competitive in the Canadian liquor board system and that’s a positive step in helping us to grow in the market.”
The value of Canadian spirits exports to the UK have grown by more than 20% since 2017, reaching US$3.3m last year.
The UK will continue to be covered by the EU-Canada free trade deal during the Brexit transition period. This new agreement will come into effect on 1 January 2021.
Last month, the UK government outlined a new geographical indication (GI) scheme to protect British products such as Scotch whisky once the Brexit transition period ends.
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Author: Nicola Carruthers