Korean boost for Scotch whisky
- 16 September 2010
- From the section Scotland business
Scotch whisky is to gain from a free trade agreement between the European Union and South Korea.
The Asian country is already the world's seventh biggest importer of Scotch, worth £112m last year.
The removal of 20% import duty will be phased over three years and should boost that market.
The deal is part of a wider EU-South Korea trade agreement which is thought to be worth about £500m annually to the UK.
The EU-South Korea Free Trade Agreement was initialled last autumn, and a formal signing is to take place at a Brussels summit between the EU and the Seoul government on 6 October.
The agreement will also cover liberalisation of trade in goods and services, as well as rules on competition and state aid, intellectual property and public procurement.
At present, the Korean spirit, soju, has a 97% share of the spirits market in South Korea.
Scotch Whisky accounts for less than 1% of the spirits market, leaving substantial opportunity for growth.
The deal will also protect Scotch whisky against imitations being passed off as Scottish.
A spokesman for the Scotch Whisky Association (SWA) said: "Tariff elimination in South Korea has been a key SWA trade priority for a number of years and an issue we've pursued both in Brussels and Seoul.
"It is a welcome boost for Scotch whisky exports in what is already a major market for Scottish distillers."
The pact is thought to be worth about £500m annually to the UK and is expected to serve as a model for future trade negotiations in the absence of a full World Trade Organisation (WTO) deal.
The sticking point in negotiations had been Italy's concerns over the possible impact of the removal of trade tariffs on Europe's car industry.
But a delay in implementation from January until July 2011 seems to have won over the Berlusconi administration.
The Belgian foreign minister Steven Vanackere said after the decision: "This is the first of a generation of bilateral trade agreements that will bind Europe and Asia together in an ever closer economic bond."
The next stage of the process is for an official signing ceremony at an EU-Korea summit in October, before a final ratification by the European parliament in late October.
It is expected at this stage that MEPs will give the agreement a green light.