Latin American free trade deals welcomed

The growing market for Scotch whisky in Latin America has received a boost with the signing of two agreements to create fairer market conditions.

The European Union’s Free Trade Agreement with Colombia/Peru and its Association Agreement with Central America, ratified today by the European Parliament, will create a more level playing field for Scotch Whisky imports in these growing markets.

Direct Scotch whisky exports to Central and South America reached £489m last year, up 38% on 2010. Exports to Peru increased by 97% to £18m in 2011 and to Colombia they were up by 74% to £24m. However, Scotch whisky is still a relatively small part of the spirits markets in these countries, meaning there is great potential for more growth.

The Central America Association Agreement covers the markets of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

The main benefits of the agreements for Scotch Whisky are:

•    The gradual elimination of the tariffs on EU spirits, including Scotch Whisky. The tariff on whisky is currently 15% in Colombia and 9% in Peru. In Central America, tariffs range from 5% in Honduras to 30% in El Salvador.
•    New mechanisms to tackle discriminatory taxation, such as excise taxes that favour locally produced spirits in Colombia and Peru.
•    Robust legal protection for the Scotch whisky Geographic Indication (GI) – this recognises Scotch whisky as a product only made in Scotland.

David Williamson, deputy director of international affairs at the Scotch Whisky Association, said: “We have been pushing hard in favour of these trade agreements with Central America, Peru and Colombia. We are delighted they have now been ratified. The agreements will help deliver a more predictable and level playing field for Scotch Whisky producers.

“Tariff elimination, new mechanisms to tackle discriminatory taxes, and better legal protection for Scotch Whisky will all support industry growth in the region, and therefore the UK economy which is looking for an export-led recovery.”

14 December 2012 - Felicity Murray