Small US brewers exporting to the EU are eligible for reduced tax rates in both territories but EU exporters to the US get no such support, a discrepancy the EU wants to remove, as Simon Spillane from Brewers of Europe tells us in this podcast recorded in Brussels late last week.
Ahead of the fifth round of talks between the EU and US in Arlington, Virginia this May, trade confederation Brewers of Europe (membership of which comprises 29 national associations) welcomed support for the measure from German chancellor Angela Merkel.
After meeting President Obama on May 2, Merkel defended TTIP from sceptics at a press conference and said such free trade deals bring lower prices and a greater variety of products – German brewers have problems exporting to the US because of burdensome regulations, for instance, she said.
‘Ensuring a level playing field’
“The sixth round of talks is coming up in July, and the issue that we as Brewers of Europe have is to ensure a level playing field for small brewers exporting to the US, where currently the US small brewers benefit from a reduced rate, but the EU brewers don’t,” Spillane told BeverageDaily.com.
Spillane said that in the US a brewer typically pays $18/US barrel but smaller brewers pay a reduced rate of $7/US barrel.
“However, the European brewers aren’t able to benefit from that – it only applies to domestic producers and that’s something we wish to see levelled out,” Spillane said; Brewers of Europe insists any short-term US tax losses would be more than offset by increased EU beer imports.
“Especially as in the EU we have a directive on reduced rates, whereby member states can apply a reduced rate for smaller brewers. 21 European countries do that, both for American brewers importing into the EU but also for domestic producers here,” he added.
Spillane said there didn’t seem to be opposition to the tax-lowering proposal, explaining that TTIP discussions seem to be revolving around how to apply the ruling technically – to help brewers producing up to 2m US barrels a year. “The US wishes to ensure that the right brewers benefit from the rate,” he said.
‘Fascinating divergence in EU beer styles’
Brewers Europe says 250 brewers from 26 out of 28 EU countries already export to the US, and the majority of Europe’s 5,000 breweries meet the US small brewer definition, with annual production up to 2m US barrels.
“Currently, eight million hectoliters of beer per year is exported to the US by small European brewers – at the moment there’s around 390m hectolitres of beer produced in the EU each year,” Spillane said.
Turning to the growth of small breweries in the EU, Spillane said the bloc’s overall beer production had fallen circa. 8% since 2008 – despite significant growth in the five preceding years.
“But over the past 10 years there’s been a significant growth in the number of breweries in the EU. Where we used to talk about 3,000-3,500 breweries and now we’re looking at 4,500-5,000 breweries,” he said.
“For us this reflects a growing interest in beer among consumers. And also there’s a fascinating divergence in terms of the beer on offer to consumers these days,” Spillane added.