The spirits sector is one of the few export sectors that is booming, and boasts a net balance of payments in our favour. This was confirmed on Monday by the European Commission when it published its agriculture trade results for 2013, writes Paul Skehan.
These showed a net trade balance of Euro 18.6 billion, of which Euro 8.6 billion comes from spirits exports. Indeed, despite an uncertain and changing export market, European spirits sales have again exceeded Euro 10bn in 2013. Exports have almost doubled over the last decade, with Whisky and Cognac categories remaining the strongest export performers.
The USA remains our largest export market (over Euro 3.3 billion exports in 2013). We also expect further opportunities in Canada, after the entry into force of the Comprehensive Economic and Trade Agreement (CETA), signed in 2013.
Asia is another important region and shows more than a 300% increase over the last ten years. However, persistent discriminatory tax treatment for our products in Thailand, and the restrictions on gift‑giving in China, are impacting negatively our exports to those markets. Russia remains our second largest market, despite a complex and unpredictable regulatory situation. We enjoy an overall positive trend in a number of MERCOSUR countries, and expectations are high for the Peru and Columbia markets, thanks to the Free Trade Agreements (FTAs). Last but not least, there is a significant increase in exports to a number of African markets. We are now starting to think of Africa as a new Asia.
These results reflect the increasing consumer demand for premium European products: but more can be done. We want to further increase exports significantly over the next five years. To achieve this, we call on the incoming European Parliament and Commission to continue to support a pro-active EU trade agenda, to ensure that EU companies have fair access to all markets.
With many mature markets in Europe currently facing difficulties, the European spirits sector depends on exports to continue delivering growth and jobs. Clearly, trade needs to top the EU agenda, but it should also include the right ingredients for a perfect cocktail mix: trade diplomacy, negotiations of Free Trade Agreements (FTAs) and recourse to WTO dispute procedures to gain market access.
Despite encouraging progress made last year in Bali, the DOHA Round’s prospects for success are uncertain. For this reason, negotiation of bilateral FTAs has become vital. India, for instance, is the largest Whisky market in the world, and yet less than 1% of consumption is imported. A goal for an EU-India FTA should be the abolition of the 150% import tariff. This would boost our exports.
spiritsEUROPE intends to, as before, share with the Parliament and Commission, our expectations for such FTAs: the elimination of import tariffs and non-tariff barriers, the abolition of tax discrimination – but also the protection of our know-how and brands through a reinforced protection of Intellectual Property Rights. Indeed, our sector represents 46 categories of different spirit drinks, and more than 300 European Geographic Indications (GIs) whose protection is always fundamental in FTA negotiations. These “GIs” represent two-thirds of our export value, and bring immense added value to the European economy in terms of growth and employment, as their production can never be moved outside their local area.
There is also a need to reinforce the market access strategy of the European Union. In particular, we need to support SMEs in gaining market share abroad. The EU should continue to develop its toolkit to dismantle unjustifiable barriers, and strengthen the rule-based trading system. That is why spiritsEUROPE plays an active role in the EU Market Access Partnership.
Last but not least, the EU must have the human and financial resources, not only to negotiate new agreements, but also to police existing ones. The EU also needs the tools, including at WTO level, to enforce the trade rules on market access. For instance, the launch of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA, represents an opportunity to outline regulatory best practices for distilled spirits. The ultimate objective is to remove non-tariff barriers, and prevent the adoption of new ones.
We are a sector that generates over a million European jobs; delivers an average of 55% of the sales price of a bottle of spirits to European tax authorities; and is a motor of European export growth. This all mixes a cocktail for export success. So it is for good reason we call on the Member States and the European Parliament to back a strong trade mandate for the incoming European Commission.
Paul Skehan is Director General of spiritsEUROPE