TPP would benefit whiskey, auto, and country music exports from TN

Visiting Nashville, Tennessee, U.S. Trade Representative Froman said the TPP would benefit exports of Tennessee whiskey makers, auto producers and the country music industry, as he continued the administration’s campaign to build support for Congressional approval of the TPP during the “lame duck” session. Tennessee’s whiskey exports were valued at $691 million in 2015, making up 65% of all U.S. whiskey exports. Import duties on spirits of up to 45% would be slashed under the agreement.

The trade deal would also eliminate tariffs of up to 70% for U.S.-made vehicles, 50% on engines and 40% on poultry, Froman said. It would also establish intellectual property standards that would protect songwriters and musicians.

Froman said that 80% of goods imported from the TPP countries are already duty free and that applied tariff is 1.5%.

“So if we’re going from 1.5% to zero, and the rest of the world is going 70 % to zero, that’s a pretty good deal,” he said.

Read more …

http://www.newsobserver.com/news/business/article111163307.html

Details: check out the ITC report at the below link. Specific information is below.
https://www.usitc.gov/publications/332/pub4607.pdf,  pp 197 – 201

Alcoholic Beverages

Assessment

Through a combination of tariff elimination, an annex setting parameters for labeling requirements, and new protections for bourbon and Tennessee whiskey, TPP would expand U.S. exports of alcoholic beverages while having a minimal effect on U.S. imports. The elimination of tariffs through TPP in non-FTA partner countries, in particular Japan and Vietnam, is expected to boost U.S. exports of alcoholic beverages. One of the primary benefits of TPP to U.S. exporters would be the ability to compete on equal terms with other TPP countries that already have preferential access in certain markets that has enabled them to export significant volumes of these products. In addition, an addendum to the TPP’s TBT chapter—”Annex 8-A: Wine and Distilled Spirits”—would establish parameters for labeling that would provide certainty and regulatory coherence for U.S. wine and spirits exports, reducing costs and likely leading to increased exports.344

Under TPP, U.S. tariffs on imports of all alcoholic beverages would be eliminated in 10 years or less. The impact is likely to be minimal, however, because products from Australia and Chile, two large global wine suppliers, already enter duty free through the U.S.-Australia and U.S.- Chile FTAs. In addition, the majority of wine imported from New Zealand currently enters the United States at very low tariff rates (6.3 cents/liter). The impact on spirits imports would also be minimal because new FTA TPP partners are not large suppliers to the U.S. market and most spirits already enter the United States tariff free.

Overview of U.S. Trade with TPP Partners
screen-shot-2016-10-29-at-18-45-41 The United States is one of the world’s largest exporters of alcoholic beverages. Between 2013 and 2015, TPP countries accounted for more than 40% of total U.S. alcoholic beverage exports (table 3.28 above), with NAFTA markets accounting for 65% of total exports to TPP countries. Japan is the third-largest export market for U.S. wine and the sixth-largest export market for U.S. spirits, and accounts for the majority of wine and spirits shipments to new FTA partner countries within TPP. Between 2013 and 2015, U.S. exports of wine and spirits to Japan averaged $103 and $104 million, respectively. Vietnam is also an important export market for both wine and spirits, and U.S. wine exports to Vietnam have risen rapidly, from $5.7 million in 2010 to $11.6 million in 2015. New TPP partner Malaysia has also been a growing market for U.S. wine exports, although demand is restricted by cultural practices limiting consumption of alcohol. U.S. beer exports are primarily destined for NAFTA markets, but two existing FTA partners, Chile and Australia, are also important export markets for this product.

U.S. exports of alcoholic beverages face high tariffs and technical barriers to trade in major export markets. For example, Vietnam’s current tariff of 45% on whiskeys and Japan’s 15% tariffs on bottled wine restrict U.S. exports to those markets. In addition, current labeling and certification requirements in export markets at a minimum add costs for U.S. producers, and have the potential to prevent trade altogether.

Summary of Provisions

Concessions Made by Key TPP Partners to the United States

The TPP Agreement would eliminate tariffs on alcoholic beverages in new markets where the United States does not have an FTA. Japan would eliminate all tariffs on wine products in 11 years or less. For bottled and semi-bulk wine, Japan currently charges a minimum duty of 67 yen ($0.60) per liter for product with a value of 447 yen ($3.97) per liter or less, or a 15% ad valorem tariff up to a maximum tariff of 125 ($1.11) yen per liter.345 Japan will cut both the minimum duty and the 15% ad valorem duty by one-third as soon as the agreement enters into force, and then phase out the minimum duty in six years and the ad valorem duty in eight years. Japan’s 45 yen ($0.40) per liter tariff on bulk wine will be eliminated immediately at entry into force, and the 182 yen ($1.62) per liter tariff on sparkling wine will be reduced by one-third at entry into force and eliminated in 8 years. Japanese tariffs on beer and most spirits are already zero, but the remaining tariffs on products such as sake will be eliminated in 11 years or less.

Malaysia, Vietnam, and New Zealand will also eliminate all existing tariffs on wine, spirits, and beer. In Malaysia, tariffs on wine, spirits, and beer will be eliminated in 16 years. Tariffs on wine, spirits, and beer in Vietnam are currently prohibitive, ranging from 35% on beer to 59% on wine. Vietnam will eliminate all tariffs on alcoholic beverages in 12 years. New Zealand will also eliminate a 5 percent tariff on U.S. liqueurs, vodka, gin, and wine at entry into force.

Chapter 3: Food and Agricultural Products

Outside of tariff reductions, other provisions in TPP would provide additional benefits for the U.S. alcoholic beverage sector. As mentioned above, the “Wine and Distilled Spirits” annex to the TBT chapter, sets parameters for labeling and certification requirements that would create transparency, regulatory coherence, and certainty for U.S. exporters. Provisions in the annex would, among others, eliminate most certificate requirements, ensure that the size of samples taken by customs to assess conformity is the minimum necessary, streamline labeling content including declarations of alcohol content, and make sure that descriptive (traditional) winemaking terms are not prohibited on labels. In addition to the immediate resolution of certain TBT issues, the annex establishes a framework for the region and any additional countries interested in joining TPP in the future. This is especially valuable for the U.S. wine and spirits sectors because TBT issues currently restrict trade in many other important export markets outside of the TPP region.

In addition to this annex, TPP would also provide distinctive product recognition for “bourbon” and “Tennessee whiskey” through bilateral letter exchanges with Japan, Malaysia, Vietnam, and New Zealand. As a result, these countries will prohibit the sale of bourbon and Tennessee whiskey if it has not been produced in the United States and in accordance with U.S. regulations.

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