Scotch industry welcomes EU-Vietnam deal

The Scotch Whisky Association has praised the free-trade agreement announced between the EU and Vietnam, saying it will help producers expand their business in the country.

The agreement will help Scotch producers expand in Vietnam while protecting GI status (Photo: Pixabay)

The EU and Vietnam have reached a deal “in principle” after two and a half years of what the European Commission describes as “intense” negotiations.

A “mutually beneficial and balanced package” has been agreed that will remove nearly all tariffs on goods traded between the two economies, including alcohol products.

Welcoming the news, David Frost, Scotch Whisky Association (SWA) chief executive, said: “Vietnam is a growing market for Scotch Whisky. We welcome the country’s free trade agreement (FTA) with the European Union which should encourage our future expansion.

“There were issues to be addressed in the market, including the 45% import tariff on spirits,” continued Frost. “The agreement will help as it will gradually phase out the tariff and it will tackle other trade restrictions.”

Last year, direct exports of Scotch to Vietnam totalled £3.5 million, up more than 9% on the previous year, according to the SWA.

Scotch hasn’t been performing well in other parts of Asia recently. In 2014, volumes of Scotch exported to Singapore – an important feeder-market into China – dropped by 41%.

The agreement makes specific mention of Geographic Indications (GIs), which protect products like Champagne and Rioja as well as Scotch Whisky from poor-quality imitations. This protection will be improved in Vietnam if the agreement goes ahead, the Commission said.

Negotiating teams from the EU and Vietnam will continue with the process of finalising the legal text of the free trade deal, which will then go on for approval by the Council and the European Parliament.

In 2014, the EU was the second largest trading partner for Vietnam after China and its fellow southeast Asian nations, representing 10% of total Vietnamese trade.

The EU was Vietnam’s second export destination after the US, with the EU purchasing as much as 18% of Vietnam’s global exports.

Total bilateral trade in services amounted to €2.9 billion (£2.04bn) in 2013.

Cecilia Malmström, EU Trade Commissioner, said, “This finely balanced agreement will boost trade with one of Asia’s most dynamic economies.

“It sets a new, better and modern model for free trade agreements between the EU and developing countries, and establishes a good standard for the trade relationship between the EU and South East Asia as a whole”.