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Pacific trade pact overshadowed by domestic pressures, says WSTA

Published:  31 March, 2023

Confirmation that the UK has signed up to the Asia-Pacific trade pact will open new markets down the line for some in the drinks trade, but will offer little sustenance in the short term.

Yesterday’s announcement (30 March) that the UK will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), covering 11 Asia and Pacific nations, is designed to ease barriers to trade between the nations concerned.

However, with the government’s own estimate that joining this combined market of around 500 million people will add just 0.08% in terms of a boost to the British economy, the Wine & Spirit Trade Association (WSTA) was quick to turn the focus back to the plight of many in the UK drinks trade.

    • Read more: Budget misery for UK drinks trade

“It’s positive that the UK is joining CPTPP and opening up more and better trading opportunities with some of the fastest growing economies in the world. There are some important markets among them – for both imports and exports of wines and spirits and the partnership is likely to grow,” said the WSTA’s CEO Miles Beale.

“But it doesn’t help right now. Our concern is how many British businesses will be around to benefit from CPTPP at a future point. UK businesses and consumers in the alcoholic drinks sector are enduring tough times – including at our government’s own hand.”

Keeping the focus on the domestic situation, Beale highlighted the “largest tax increase on spirits since 1981 and wine since 1975”, damaging consumer confidence while increasing costs to businesses, with SME’s being particularly hard hit and “facing an uncertain future”.

The WSTA has continued to lobby hard over the combined hit to UK drinks businesses, in what has been described as a ‘double-pronged tax hike’ following the UK’s Spring Budget on 15 March.

It was announced that the freeze on alcohol duty increases would end on 1 August 2023, to be replaced by an inflation-linked rise in duty pegged to 10.1% RPI, amounting to a near 20% tax rise of 44p per bottle of still wine and £1.30 on a bottle of fortified wine, up some 44%.

Concurrently, a new alcohol duty regime, also to be enforced from 1 August, will tax alcohol in multiple bands according to rising abv, leading to a further price rise for some 90% of wine sold in the UK.

At the time, Beale said: “This Budget directly contradicts what this government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.”

It has also been pointed out that UK duty rises will nullify the benefit of much-touted new FTAs (Free Trade Agreements) with countries such as Australia. Modest savings of 0.6-0.7 pence following the removal import tariffs will be more than offset by a predicted 70 pence rise in price per bottle. 

The CPTPP was established in 2018, and includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The UK is to become its twelfth member.