Session 2012-13
HC 643 The foreign policy implications of and for a separate Scotland
Written evidence from The Scotch Whisky Association
1. Introduction
1.1 The Scotch Whisky Association (SWA) is the industry’s representative body, with a remit to protect and promote Scotch Whisky worldwide. Its 51 member companies – Scotch Whisky distillers, blenders and bottlers – account for over 90% of the industry.
1.2 Scotch Whisky is Scotland’s leading single product export and the UK’s largest FMCG export. Annual shipments in excess of £4.2bn at Customs valuation represent almost a quarter of total UK food & drink exports and 80% of Scotland’s food and drink exports.
1.3 The SWA works closely with a range of UK Government departments on international trade policy and market access issues, as well as EU Single Market matters.
1.4 The Association takes no position on constitutional arrangements within the UK. We do, however, have a particular interest in the impact of potential change to the UK constitutional framework on efforts to promote British business abroad, as well as membership of and standing in international bodies, as we made clear in our submission to the UK Government and Scottish Government consultations on a referendum (attached). Our comments are confined to these two aspects of the current inquiry.
2. International Priorities
2.1 The Scotch Whisky industry is export-oriented, with nine out of every ten bottles sold overseas. International growth and optimism about future export potential has supported in excess of £1bn of new capital investment over the last five years. A further £1.5 billion is in the pipeline over the next five years.
2.2 The industry’s international priorities include improved and fair access to Brazil, China, Colombia, India, Mexico, the Russian Federation, South Korea, Thailand, and Turkey. We seek to ensure there is an appropriate regulatory environment within the EU’s Single Market, as well as the accession countries. Negotiations within the WTO and EU free trade agreement framework are also important priorities.
2.3 Scotch Whisky exports are negatively impacted by tariff and non-tariff barriers to trade. An SWA analysis (2010) identified around 660 separate barriers to the trade in Scotch Whisky in 186 markets. Issues include high import tariffs and discriminatory taxes, as well as restrictive certification, labelling and licensing rules. Inadequate intellectual property protection can also undermine potential growth.
2.4 These international priorities are pursued with and through the UK Government whose influence with the European Union institutions ensures that they are handled to best effect on an international level with the countries concerned.
3. UK framework
3.1 Efforts to improve the export environment, and to promote fair market access, are of the highest priority to the industry. The SWA and its member companies are proactive in seeking to remove trade barriers, as well as supporting trade liberalisation that promotes Scotch Whisky.
3.2 The industry works closely with the UK Government on such issues, including with FCO, BIS, UKTI, DEFRA, and the British Embassy network. The generally high quality level of support received over many years supports the industry’s market access ambitions. Working together, the industry and government can point to numerous trade barriers that have been removed, supporting the competitiveness of the sector.
3.3 Within the EU, UK participation in a number of fora is important. Effective and influential representation on the EU Trade Policy Committee and Market Access Advisory Committee, for example, is key to progressing market access problems confronting Scotch Whisky. Ensuring the UK’s trade voice is heard within the EU is vital given the lead role of the European Commission and the EU’s overseas delegations on trade issues.
3.4 Such representation assists in securing a high profile for UK industry priorities in the on-going free trade agreement negotiations between the EU and major developing trading partners such as India, ASEAN and Mercosur.
3.5 The global footprint of the British Embassy network, with its excellent local connections and knowledge, as well as commercial diplomacy expertise, supports the industry’s market access agenda. The Embassy network does important work in ensuring a co-ordinated response in-market, through the local EU market access teams, to trade issues that arise.
3.6 The support received from UK departments and the UK Permanent Representation in Brussels on EU internal market issues is invaluable, for example in relation to complex dossiers regarding product labelling. Assistance on EU accession candidate issues has been welcome.
3.7 Whilst it is the EU which leads on relevant issues, the UK Mission in Geneva, which is well staffed and well respected, plays an important role in relation to trade negotiations and World Trade Organisation issues (including technical barriers to trade and trade policy reviews), as well as the World Health Organisation.
4. Scottish framework
4.1 The Association aims to keep the Scottish Government and public agencies updated on industry trade policy priorities. At present, there is limited involvement in pursuing such issues, reflecting where responsibilities for external trade lie under the devolution settlement. There is some co-operation on trade promotion activities with Scottish Development International when SDI are represented in third country markets.
5. Conclusion
5.1 In responses to both the Scottish Government and Scotland Office consultations on a future independence referendum, the SWA has underlined a need for clarity on various issues arising from potential constitutional change. We have sought to point out the sort of areas touching on our members’ business environment that would need to be considered.
5.2 Given the Scotch Whisky industry’s economic contribution to the trade balance and its position as an immediately recognisable UK export, we believe that areas which should be considered include the geographic spread of future overseas representation, the influence and impact on trade policy and market access expertise, membership of the EU and the level of engagement with its trade policy mechanisms, as well as the capacity for broader interaction with bodies such as the WTO and WHO.
5.3 The Association believes there would be an onus on the UK and Scottish Governments to ensure that any future change to constitutional arrangements does not impact on export-oriented sectors, such as Scotch Whisky, that rely on effective trade policy mechanisms and overseas representation.
The Scotch Whisky Association
September 2012
Scotch Whisky Association’s response to the Scotland Office consultation
March 2012
SCOTLAND’S CONSTITUTIONAL FUTURE: CONSULTATION
The Scotch Whisky Association is happy to respond to the UK Government’s consultation on Scotland’s constitutional future. We do so to underline the urgency for clarity, as seen from a business perspective, on the many issues arising from a referendum on Scotland’s constitutional future. This response addresses the issue of independence and not the wider issue of further devolution of powers to Scotland.
The Scotch Whisky industry is a major business in the UK; it is embedded in Scotland, providing employment for around 35,000 people and contributing massively to the prosperity of the United Kingdom and Scotland. Its operations and jobs are at the heart of many communities across Scotland.
In planning for future success, industry needs political and economic stability, the prospect of sustainability and certainty about the future business environment. There is an urgent need for both the UK and Scottish Governments to set out unequivocally what independence, if that was the choice of the electorate, would mean for Scotland and companies doing business there. These include the timing of the referendum on independence, the structures of government and financial/economic administration, Scotland’s overseas representation, membership of the European Union and the World Trade Organisation, all of which are critical to the Scotch Whisky industry in its overseas markets. The sustainability of the industry matters to Scotland’s prosperity and to the success of the companies and the jobs they generate in Scotland.
The Scotch Whisky industry urges both the UK and Scottish Governments to address the issues that relate to doing business in Scotland, so that an informed debate can take place, where legitimate questions can be advanced without being characterised as taking a particular position and where political considerations are clearly delineated from matters of fact.
We look forward to engaging with both the UK and Scottish Governments on the important issue of Scotland’s constitutional future which is critical to the Scotch Whisky Association and its member companies, whose employees depend on a successful and growing industry for their livelihood.
Scotch Whisky Association’s response to the Scottish Government’s consultation
March 2012
SCOTTISH GOVERNMENT CONSULTATION : YOUR SCOTLAND, YOUR REFERENDUM
The Scotch Whisky Association is happy to respond to the Scottish Government’s consultation. We do so to underline the urgency for clarity, as seen from a business perspective, on the many issues arising from a referendum on Scotland’s constitutional future. This response addresses the issue of independence and not the wider issue of further devolution of powers to Scotland.
The Scotch Whisky industry is a major business in the UK; it is embedded in Scotland, providing employment for around 35,000 people and contributing massively to the prosperity of the United Kingdom and Scotland. Its operations and jobs are at the heart of many communities across Scotland.
In planning for future success, industry needs political and economic stability, the prospect of sustainability and certainty about the future business environment. There is an urgent need for both the Scottish and UK Governments to set out unequivocally what independence, if that was the choice of the electorate, would mean for Scotland and companies doing business there. These include the timing of the referendum on independence, the structures of government and financial/economic administration, Scotland’s overseas representation, membership of the European Union and the World Trade Organisation, all of which are critical to the Scotch Whisky industry in its overseas markets. The sustainability of the industry matters to Scotland’s prosperity and to the success of the companies and the jobs they generate in Scotland.
The Scotch Whisky industry urges both the Scottish and UK Governments to address the issues that relate to doing business in Scotland, so that an informed debate can take place, where legitimate questions can be advanced without being characterised as taking a particular position and where political considerations are clearly delineated from matters of fact.
We look forward to engaging with both the Scottish and UK Governments on the important issue of Scotland’s constitutional future which is critical to the Scotch Whisky Association and its member companies, whose employees depend on a successful and growing industry for their livelihood.
21 September 2012