Boris, Sikhism and Booze
Today Boris Johnson embarrassed the country by talking in a Sikh Gurdwara about the whisky tariffs of India, offering the prospect of the 150% tariff being reduced to nothing with a free trade deal. Alcohol is prohibited in Sikhism, but as Boris may have known, this is treated as more of a guideline and in a social setting a wee dram or two might well be considered acceptable refreshment. He should also have known that a Gurdwara was not the place to promote whisky, especially with the phrase “they all like it” and talking about taking “clinkie” in luggage for relatives.
Setting aside the diplomatic faux pas, lets dig a little deeper into the tariff issue. Boris is right that India imposes a 150% tariff on imports of foreign whisky. This is to protect their domestic whisky (which is actually rum) production from imports. The Indian authorities would very much like to export their whisky (which is actually rum) to the EU, but they complain that the EU has rules preventing them from marketing it in the EU as whisky (because it is rum). I wonder if you can guess which member of the EU is the most insistent on the EU maintaining a firm line on this? The point here is that Boris isn’t offering a zero tariff on whisky, he is seeking a zero tariff on whisky. The tariff is paid by Indian importers to the Indian government when they import our whisky. Our producers face the tariff but don’t pay or collect the tariff. They just sell less because the tariff makes them noncompetitive against local whisky (which is rum). We need to offer something to get a trade deal, such as letting them sell rum in the UK labeled as whisky, alongside the Scotch. Did you guess the country yet?
So, do we have import duty on whisky (or rum)? In general no, we don’t. There is no import tariff. There is however alcohol duty. For spirits that is £28.74 per litre of pure alcohol, so a 70cl bottle of Directors Special at 42.8% would attract duty of £8.61 to be paid to HMRC by the importer when it leaves the bonded warehouse at the docks. Boris can’t offer wiggle room on this as part of a trade deal — it isn’t a trade matter, we can’t vary it based on country of origin, it simply isn’t an import tariff, it is an alcohol duty.
There are other things we can offer India as part of a trade deal, it isn’t whisky for whisky, there are other product lines where we could liberalise trade in terms of tariffs and non-tariff barriers, also social liberalisation reducing visa barriers and enhancing freedom of movement would be good things to offer. A deal can happen, however I am not filled with confidence that our foreign secretary even knows the difference between what is being sought and what is being offered.
On the plus side, the foreign office doesn’t negotiate trade, that will be the job of the department for international trade after we exit the EU (until we exit the EU that is the department for doing nothing). Does Liam Fox know the first thing about doing a trade deal? Does he know what he is offering and seeking? One day we may find out.