Global Trade Alert

On 10 November 2006, the European Commission introduced a regulation that allows for the refund of cereals used in the distillation of whiskey. A coefficient is fixed annually for each member state concerned. Originally this scheme applied to whisky from the UK, Ireland, and Spain. In recent years, however,this scheme applies to the UK only. On 2 December 2008, the EC set out yearly coefficients for the first time. 
 

The coefficient. ' is to express the ratio between the total quantities exported and the total quantities marketed of the spirit drink concerned, on the basis of the trend noted in those quantities during the number of years corresponding to the average ageing period of the spirit drink in question' (Regulation 1064/2013, preamble (1))
 
The EC justifies the refund scheme by stating that:'the price of cereals at the moment of export is not linked to the price of cereals at the moment of production ... since those spirit drinks are also subject to compulsory ageing of at least three years.' (Regulation 1670/2006).

 
The yearly coefficients for UK whisky exports fluctuate considerably and are as follows:
 
The coefficients for the marketing year 2008/2009 are:
Malt whiskey: 0.235 Grain whiskey: 0.234 

The coefficients for the marketing year 2009/2010 are:
Malt whiskey: 0.196 Grain whiskey: 0.197
The coefficients for the marketing year 2010/2011 are:
Malt whiskey: 0.300 Grain whiskey: 0.255

The coefficients for the marketing year 2011/2012 are:
Malt whiskey: 0.296 Grain whiskey: 0.229

The coefficients for the marketing year 2012/2013 are:
Malt whiskey: 0.229 Grain whiskey: 0.152

The coefficients for the marketing year 2013/2014 are:
Malt whiskey: 0.667 Grain whiskey: 0.515
 
This measure discriminates in favour of whisky producers from the UK by defraying some of their production costs. Another element of discrimination introduced is that the export rebates cannot be claimed for exports to the EEA countries including, therefore, some non-EU members.
 
The affected trading partners are two known exporters of whisky.