UK-Australia trade deal could give major boost to Scotch whiskey producers

A UK-Australia trade deal could include a major boost for Scotch whisky producers with the removal of a 5% tariff on whisky exports, the Department for International Trade has revealed today (June 3).

The International Trade Secretary Liz Truss is seeking to remove the tariff, which makes it more expensive for distilleries to sell overseas, and is also pushing for improved legal protection for whisky in the Australian market during ongoing trade negotiations.

Australia is the eight biggest market for Scotch whisky exports, worth £113 million last year.

The Scotch Whisky Association said a tariff cut will help to boost sales and support distillers across Scotland – with Australia a prime market for premium single malt Scotch.

The industry currently supports more than 10,000 jobs in Scotland and more than 40,000 across the UK.

‘Next generation of trade deals’

A deal with Australia would be the first in a series of “next generation of trade deals” that the government wants to strike with large and fast-growing consumer markets beyond Europe.

These deals aim to slash tariffs on British exports like whisky, and boost trade and investment in future-facing industries like services, low-carbon technology and digital trade.

It could see a significant boost to Scottish industries like financial services, food and drink and manufacturing, supporting the 800 Scottish businesses who already export £321 million worth of goods to Australia.

Scotland sold £12.5 million worth of medicinal and pharmaceutical products to Australia in 2020, despite tariffs of up to 5%.

Scottish machinery and tractors could also benefit from a tariff reduction of up to 5%.

Any agreement would also be an important gateway for Scottish businesses into the wider Asia-Pacific free trade area, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which cuts tariffs on 95% of goods traded between members.

The CPTPP is a trade bloc worth £8.4 trillion in GDP – including the likes of Australia, Canada, Japan, New Zealand and Vietnam – that the UK wants to join later this year.