Written submission from Scotch Whisky Association (UKT0029)

Introduction:

The Scotch Whisky Association (SWA) is the trade association of the Scotch Whisky industry, representing the views and interests of over 90 member companies who together comprise 97% of Scotch Whisky production. With 90% of production exported, Scotch Whisky is the UK’s largest food and drink export, accounting for 22% of UK and 74% of Scottish food and drink exports in 2023. It is the world's number one internationally traded spirit.

Exports underpin the Scotch Whisky industry’s success, delivering substantial benefits across Scotland and the wider UK economy. By generating thousands of jobs, attracting inward investment, and sustaining critical supply chains—from farmers to cask cooperages—the industry supports rural communities across Scotland and drives government revenues. In 2022, the economic contribution of the sector reached £7.1bn, with the industry supporting 66,000 jobs across the UK, of which 41,000 were in Scotland.[1] The Scotch Whisky industry generates £3 in every £100 of Scotland’s total Gross Value Added (GVA), and is the second most productive sector in Scotland, ranked just behind energy including renewables.

Summary:

The SWA welcomes the opportunity to contribute to the Business and Trade Committee’s inquiry into the UK-India Comprehensive Economic and Trade Agreement (CETA); the US-UK Economic Prosperity Deal; and the outcomes following the recent UK-EU Summit in May 2025.

• The UK-India CETA is a major accomplishment for the UK government, with the potential to significantly boost whisky exports over the next decade. The tariff reductions on Scotch Whisky will enable more small and medium-sized distillers to access a growing emerging market. This, in turn, will contribute to government revenue and increase jobs throughout our supply chain. Realising these gains will depend on the swift ratification and effective implementation of the CETA, ensuring it delivers for all Scotch Whisky exports and is supported by targeted efforts to address market access barriers at both federal and state level.
• Despite the US-UK trade deal delivering for some sectors, Scotch Whisky continues to face a damaging 10% tariff.  This is estimated to reduce exports by £4 million in customs value every week.  The US is Scotch Whisky’s most valuable export market- worth £971 million in 2024- and is particularly important for our small and medium-sized distilleries. Single Malt Scotch Whisky and Scotch Whisky liqueurs also face a looming additional 25% tariff, potentially re-applied by the US in July 2026 as a result of the longstanding Large Civil Aircraft Dispute. This could raise the applied tariffs to 35% on Single Malt Scotch Whisky, disproportionately affecting our small and medium-sized distilleries who depend on the US market. To protect our industry’s immediate performance, the US-UK trade deal needs to include a return to the zero-tariff arrangement on spirits.
• The EU is Scotch Whisky’s largest export region by volume and second largest by value - worth £1.5 billion in 2024. The launch of negotiations under the EU-UK Common Understanding has limited impact on the Scotch Whisky industry, as spirits are out of scope of negotiations, which helps avoid the risk of potential alignment in difficult areas where greater flexibility is desirable (such as the Spirits Drink Regulation).[2] We continue to review the implications of the UK’s intention to seek dynamic alignment with EU food and drink labelling regulation, as well as other potential opportunities to address trade frictions. We consider the upcoming 2026 review of the EU-UK Trade and Cooperation Agreement (TCA) as an opportunity to contribute tangible benefits in targeted areas which deliver for our industry.

UK-India Comprehensive Economic and Trade Agreement:

The signing of the UK-India CETA in July 2025 marked a historic achievement in strengthening our trade partnership with one of the world’s most significant emerging markets. The SWA has long championed a free trade agreement with India and welcomes the UK government’s dedication to achieving this major milestone. India’s overall demand for imports is projected to grow by 144% in real terms between 2021 and 2035, reaching £1.4 trillion, presenting real opportunity for growth for our industry.[3] In 2024, India emerged as the leading export destination for the Scotch Whisky industry by volume, with shipments exceeding 191 million bottles and generating £248 million in revenue.

The CETA delivers significant reductions in the tariffs facing Scotch Whisky entering India; from entry into force, the tariffs will be halved from 150% to 75%, and then over the subsequent 10 years decrease to 40% in even staging. These reductions will apply to both bottled and bulk exports, with no minimum import price threshold.  The agreement also delivers substantial benefits for India, with projected increases in federal and state revenues exceeding £3 billion annually. It further enhances Indian consumer choice by opening the market to a wider range of small and medium-sized Scotch Whisky producers from across Scotland.

However, these gains can only be fully realised through the swift ratification, entry into force, and effective implementation of the agreement. A key concern for our industry is ensuring the inclusion of all our product’s relevant tariff codes within the tariff liberalisation schedule. This includes those utilised for the export of bulk whisky products. The principle of the deal is that all Scotch Whisky exports should benefit from the liberalisation of the tariff down from 150% to 75% and then 40% over ten years. Tariff code 22089099, which is currently used for the majority of bulk Scotch Whisky exports for regulatory reasons, was not liberalised to the same extent as the Scotch Whisky specific tariff codes, despite industry raising the importance of this.

As things currently stand, this potentially means a significant proportion of Scotch Whisky exports will not benefit from the agreed tariff liberalisation, undermining the opportunities of this deal for the industry, as well as for the Indian industry which utilises bulk Scotch Whisky, either for bottling in country or as an ingredient in other products. The SWA underscored the importance of these specific inclusions throughout the negotiation process. This highlights the need for close, consistent, and meaningful business engagement throughout all stages of negotiations, including access to draft text, in order to avoid such situations from arising. It is vital that the UK government makes every effort to ensure that all Scotch Whisky exports benefit from the liberalised rates under this deal and support the industry in accessing those liberalised codes in order to fully realise the claimed benefits of this deal to the industry and wider economy.[4] We have asked DBT to ensure that this important technical point is addressed satisfactorily to ensure that the intended purpose of the agreement be fulfilled.

Separately, the industry welcomes other provisions in the deal which will support market access. This includes provisions which allow the bottling of products in transit, and commitments to support transparency, good regulatory practice, and customs facilitation. One area where we are seeking clarification is around the protection of existing Geographical Indications (GI): Scotch Whisky has had GI protection in India since 2009, and it is important that our current protection is not adversely affected by the provisions for GIs under the deal.

Crucial to effectively implementing the agreement is safeguarding the CETA’s tariff reduction at state-level and enhancing market access at both federal and state level. India’s federal system empowers individual states to autonomously set excise rates on alcohol, along with pricing controls and other non-tariff measures. These state-level barriers to trade threaten the true potential of the CETA. Given this context, it is vital that the UK government advances work on reducing state-level barriers in India. The SWA looks forward to working with the UK government on ensuring that state-level regulations do not erode the value of the CETA.

Furthermore, the UK government should leverage the CETA framework to resolve longstanding federal-level technical barriers to trade which face our industry, such as unnecessary and costly conformity testing and sampling requirements. The SWA has constructively collaborated with the UK government at all stages on this trade deal and looks forward to continuing working with the UK and Indian governments in the months ahead to implement it, delivering a big boost to two major global economies during turbulent times.

US- UK Economic Prosperity Deal:

Scotch Whisky has faced a damaging 10% tariff since April 2025, costing our industry £4 million a week in customs value (£200 million a year). The US has long been the Scotch Whisky industry's largest and most valuable export market, with exports worth over £971 million in 2024, accounting for 20% of our total export value. The US is a global leader in spirits consumption and nearly 36% of all Scotch Whisky sold in the US last year was Single Malt, making the US a particularly important export destination for small and medium-sized distilleries.

Over the recent years, small and medium-sized distilleries across Scotland have been disproportionately affected by US tariffs. In 2018, after the EU imposed rebalancing tariffs under the Large Civil Aircraft dispute, the US responded with a 25% tariff on Single Malt Scotch Whisky and Scotch Whisky liqueurs. This cost the industry over £600 million in lost exports during the 18 months the tariffs were in place. Although those tariffs are suspended until June 2026, if the tariffs return and are added to the existing 10% baseline tariff, the industry would face a cumulative 35% tariff on its most valuable export destination. This would cause further damage to the industry, particularly for small and medium-sized distilleries, which only produce Single Malt and for which the US remains a key market.

Our industry continues to support the UK government’s measured and pragmatic approach to negotiating with the US, particularly its decision not to apply retaliatory tariffs on US imports. However, it must redouble its efforts to strike a deal to return the zero-tariff agreement which has been in place between the US and the UK since 1997. Between 1997-2017 (before the introduction of US tariffs on Single Malt Scotch Whisky, and UK tariffs on American whiskies), bilateral trade in whisk(e)y increased 212% (from $453 million to $1.41 billion). This growth supported jobs, boosted investment, and widened consumer choice across both markets.

Prioritising the UK’s largest food and drink export within the US negotiations is essential for the preservation of the industry’s immediate performance. This will ensure that our industry is in the best position to take full advantage of future trade agreements, including the UK-India CETA, contributing to the government’s growth strategy by increasing government revenue and job creation throughout our supply chain.

EU-UK Common Understanding Framework:

The EU is Scotch Whisky’s largest regional export market by volume, with 488 million bottles exported to the region in 2024, and second largest by value with exports worth £1.5 billion. The region is home to multiple mature markets for Scotch, including France, Spain, and Germany, all of which are in the top ten global markets by both volume and value. 

At the EU-UK Summit held in May 2025, a Common Understanding on a renewed agenda for cooperation was announced. This included commitments to work on an EU-UK Sanitary and Phytosanitary (SPS) Agreement.

While spirits will not be directly in scope of this SPS Agreement, the SWA continues to welcome efforts by the UK government to reduce the bureaucracy involved with exporting to the EU, such as the broader phasing out of health certificate requirements at the EU border. There are benefits of ensuring spirits are not in scope as a sector, for example in preventing the risks of unhelpful regulatory alignment e.g. the Spirits Drink Regulation.

The SWA would welcome proactive collaboration and transparency from the UK government as details of the SPS Agreement, in particular proposals to seek dynamic regulatory alignment with EU food and drink labelling rules, develop during negotiations.[5] We continue to analyse the repercussions of such alignment for our industry. It may bring some benefits relating to harmonisation of labelling, however, it is vital that the UK government has a credible mechanism for influencing the future development of these rules in the EU to ensure that the interests of vital UK industries are protected. Additionally, as we understand that the UK intends to align with EU food labelling rules, the UK government should avoid taking any action that might result in domestic laws contradicting the position in EU legislation, for example when considering any labelling proposals under the UK government’s 10-year health plan.

As spirits are out of scope of the EU-UK SPS Agreement, we believe that the upcoming EU-UK  TCA review in 2026 presents an opportunity to obtain targeted benefits directly related to our industry, such as securing the mutual recognition of conformity assessment requirements (e.g. for metrology standards) and seeking to ensure a more consistent application of customs procedures across the EU Member States.

Conclusion:

The Scotch Whisky industry is a world-class exporter and an important source of government revenue and job creation for the UK. Our industry supports the UK government’s ambition to conclude further trade deals with international partners. Reducing tariffs on Scotch Whisky in foreign markets is an important step in supporting the sustainable growth of our industry over the long run. However, immediate concerns continue to place significant pressure on our distillers, particularly smaller ones. Our industry continues to grapple with a range of adverse external factors stemming from today’s global trade uncertainties, which have negatively affected international performance. Domestically, an increasingly burdensome excise tax regime and other domestic pressures further compounds these challenges, particularly during a period of economic vulnerability for the sector. Immediate action is essential to safeguard the industry's short-term resilience and ensure it is well-positioned to capitalise on emerging opportunities from new UK trade agreements, including the UK-India CETA. Continued close cooperation and dialogue with industry on both negotiation and implementation of trade deals is key for the increased success of Scotch Whisky, Scotland, and the United Kingdom.

August 2025