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Scotch Whisky Association Fears Independence Impact On Exports

May 13, 2014 – Scotch Whisky Association chief executive David Frost is raising even more concerns over the impact of September’s Scottish independence referendum on the industry. In the association’s annual review, Frost did not come out openly against independence, but called on Scottish National Party leaders to provide more clarity on currency, taxation, and potential regulatory changes that would be imposed on the business community if the referendum succeeds. Frost joins a host of executives from Scotland’s industrial, financial, and energy sectors expressing worries about the impact on Scotland’s economy. In a telephone interview, Frost said the industry needs that clarity to protect the industry’s growth.

“Our member companies don’t have a vote…we’re not going to tell people how to vote, but also, we can make our products only in Scotland, so naturally we’ve been talking to our members pretty consistently since I took over in January, and I think before that” Frost said. “I’ve really been trying to set out what’s important to us in the business environment, what has made us successful and what we see as the potential risks if Scotland does vote for independence and what kind of reassurances we’d need to look forward.” He noted that the Scottish Government’s 600-page “white paper” on independence released last November only contained two references to the Scotch whisky industry, leading to uncertainty on the government’s plans for the industry.

Listen to Mark Gillespie’s interview with David Frost:

Frost joined the SWA January 1 after leaving the UK’s diplomatic corps and serving as Director for European Trade and International Affairs in the Department for Business, Innovation, and Skills. During his diplomatic service, he represented the UK at European Union headquarters in Brussels, and one of his biggest concerns is the question of whether an independent Scotland would be a member of the European Union. In the SWA’s report, Frost called EU membership fundamental to Scotch whisky’s success:

“We are able to export tariff-free across the single market, use EU to eliminate market access problems, and benefit from the EU’s clout in trade negotiations. Of course, everything in the EU is perfect and, in my view, many areas need reform. But even a temporary interruption of EU involving exclusion from the single market or the customs union, if this were a consequence of independence, would be damaging and difficult to manage.”

Scottish First Minister Alex Salmond and other government leaders have claimed Scotland is already a member of the EU as part of the United Kingdom, and that Scottish membership would be expedited if not automatic. That position has been refuted by European Union and European Commission leaders. including Commission President Jose Manuel Barroso of Spain, who has said an independent Scotland would have to apply for membership in the same manner as other candidate countries in a process that could take years. New members require unanimous approval from the current 28 EU member nations, and a single “no” vote could keep Scotland out of the EU. Spanish Prime Minister Mariano Rajoy has been very vocal in opposing any “fast-track” plans for Scotland, largely because his country faces its own secessionist movement in Catalonia.

“We’re a business that relies on predictability and stability,” Frost said. “I think you have to take seriously the remarks of President Barroso and others that it would be very difficult if not impossible for Scotland to join quickly…now, he is the President of the Commission, so you have to take that seriously. Reasonable people can differ, I think, about what actually might happen…the political framework will determine that, but the views of the President of the Commission and of the UK government, I think, are pretty persuasive ones.”

The referendum is scheduled for September 18. Should it pass, Scotland would leave the United Kingdom in March of 2016.

Editor’s note: This story was updated on May 15 following an interview with David Frost. 

Links: Scotch Whisky Association