Tariffs and checks threaten all-island whiskey sector
Blended Irish whiskey faces heavy tarrfis if the Rules of Origin are not reformed. File Picture.
The Irish Government has been called upon to “champion” the reform of the EU Rules of Origin so that Ireland’s all-island drinks industry can be protected under the Northern Ireland (NI) protocol.
The calls were made by William Lavelle, head of the Irish Whiskey Association who was speaking during a Seanad Special Select Committee meeting on the Impact of Brexit on the Food and Drinks sector and the Impact of EU Rules of Origin on Trade, yesterday.
Mr Lavell said that 95% of the whiskey made in the 32 counties is blended, meaning it's made up of components from distilleries on both sides of the border.
From a bottling perspective, there is whiskey that is fully produced in either NI or the Republic of Ireland (ROI) that then goes across the border to be bottled.
The problem, he added, relates to trade with the rest of the world (outside of the EU and outside of the UK).
“This is governed by trade agreements and there are Rules of Origin (EU) in those agreements which determine which whiskies benefit.
“We have a situation now where Irish whiskey produced fully in ROI will qualify for the benefits of EU free trade agreements.
"Irish whiskey produced in NI will qualify for the benefits of UK trade agreements but the Irish whiskey produced on all-island basis will fall between the cracks and may not qualify for the benefits of either trade agreements.
“This is because the Rules of Origin have remained unchanged for 40 years and contain a strict definition of what qualifies.”
Mr Lavell highlighted how Irish whiskey produced completely in ROI has zero percent tariff to South Africa and NI whiskey has zero tariff under the UK trade agreement to South Africa but a blended whiskey will attract a tariff of 154% per litre.
“The NI Protocol is really important here; it protects cross border supply chains from tariffs and checks but those supply chains indicate that certain trade agreements and certain markets are being made more difficult because you cannot then rely on those supply chains to export.
“So, a distillery in ROI buying malt whiskey from NI will find it very difficult to export to South Africa because it will be hit with tariffs.”
Mr Lavell told those gathered that the Association has seen companies in ROI stop extending their products across the border to be bottled because by bottling it on the other side of the border there is the potential to gain tariffs.
“The failure to update the Rules of Origin is undermining the all-island economy by making cross border supply chains unviable,” he continued.
He said a much more "flexible approach" to changing the Rules of Origin was needed by the EU.
“The EU is currently negotiating trade agreements with Australia; it’s the first negotiation post Brexit, so why can’t the EU move on the Rules of Origin that are suitable for now?
“The Irish Drinks industry operates on an all-island basis and therefore is highlighly committed to the ongoing maintenance of the Protocol.
“There are 23,000 truck movements of alcohol across the border every year and the Protocol plays a critical role in protecting those cross-border supply chains from checks and tariffs.
“Negotiation is critical here and we need the Irish Government to be a champion for the reform of Rules of Origin in this new post-Brexit environment.”
