Europe’s brewers are calling for a level playing field on tax relief for small brewers to be included in trade negotiations between the EU and the US next week.
The fourth round of talks are due to take place under the Trans Atlantic Trade & Investment Partnership (TTIP).
Currently small US brewers exporting to the EU are eligible for the reduced tax rate both in the US and the EU, whilst a European brewer exporting to the US gets no such break.
Just as small brewers from the US can receive significant discounts when exporting to the EU, the ambition is that small brewers from the EU benefit from the same discount in the US as the domestic brewers. In the US, whilst the larger breweries pay a federal excise tax of $18 per barrel, small brewers pay just $7 per barrel on the first 60,000 barrels they brew.
Research from Ernst & Young published in February 2014 showed that the $100bn US market is the largest export market for Europe’s brewers, with 26 out of 28 EU countries exporting there. Based upon the two million US barrel threshold, the majority of Europe’s 4,500 breweries could be eligible for the same level of discount as domestic US brewers.
According to Brewers of Europe, the continent-wide umbrella trade body, the “discriminatory” excise duty system in the United States, whereby only domestic breweries can benefit, currently disadvantages the 250 or so small European breweries that already export to the country.
“It also discourages hundreds more European beer brands from entering the market, the higher excise duty for imported beers damaging European brands’ export potential.
“A levelling of the playing field is likely to be of particular benefit to low-volume, high value exports and make a major difference in the viability of European exports, which already sell at a premium. The move is likely to give a boost to EU exports, be relatively low cost to the US, enhance consumer choice for American beer drinkers and encourage greater collaboration between trade partners on both sides of the Atlantic.
“Furthermore, with two million jobs already created by beer in Europe and over €50 billion in value added to the EU economy annually, and with the European Commission expecting the TTIP to result in more jobs and growth, bringing down non-tariff barriers such as this can help Europe’s brewing sector play a key role in Europe’s recovery.”