The Spirits of 3 Countries

The Spirits of 3 Countries

In the middle of the media and political circus centered around the Kavanaugh confirmation process, there may have been an important piece of news for distilleries that went unnoticed. NAFTA has been renegotiated and is now called the United States Mexico Canada Agreement or USMCA.

 The basic concept of the USMCA is the same as NAFTA, in that it is a trade agreement between the US, Canada, and Mexico. However, the USMCA isn’t just a reskinned version of the old deal. It has new provisions that will have a huge impact on the alcohol industry.

The impact on craft distillers is good, by and large. It does some things that needed to be done or should have been done long ago, but got lost in the bureaucratic bog of NAFTA’s rules. That said, there are always those who fall through the cracks. I’m sure there will be some niche markets or the like which will need to bite the proverbial bullet and change how they do things.

Product Recognitions

When it comes down to it, making and marketing spirits isn’t just about what’s in the bottle. It’s also about how it’s made and where it’s made along with all the related history. The USMCA has provisions in it to recognize this fact, in regards to spirits. It offers distinct recognition to products like Tennessee Whiskey, Bourbon, Mezcal, Tequila, and the fast growing American Rye Whiskey.  It is now illegal to mislabel or misrepresent a product so that it tricks consumers into thinking it is one of these products. This will make authenticity mean something again.

Sorting Out the Messes and the Future

The North American liquor industry took a turn into the realm of uncertainty when President Trump pulled out of NAFTA. American craft distilling, as a whole, rely quite a bit on exports as did Canada’s and Mexico’s. Adding to this uncertainty was the tariffs and retaliatory tariffs. Canada imposed a 10% tax on US whiskeys, and Mexico a 25%. As of this moment, some of those tariffs between the US, Canada, and Mexico are still in place, but the USMCA bodes well for the tariffs going away and the return of duty-free trade.

It is unclear how the USMCA will affect overseas markets, in the long term. One theory behind the deal and reason why the USMCA was done was to create a stronger trading block when it comes to negotiating trade agreements with other nations. Instead of it only being the US negotiating terms alone, it will be the US, Mexico, and Canada negotiating for pretty much all of North America. With any luck, the USMCA will mean better deals when it comes to exporting to European and Asian markets.

 It’s pretty clear that the USMCA will help the continued growth of the craft distilling industry – a good thing considering how big a contributor a distillery is to local economies. Craft distilleries also represent unique cultures and traditions of the places they operate. Once all the details are finally hammered out, this amazing industry can continue its boom.