SCOTCH WHISKY (EXPORT CONTROL) (Hansard, 29 April 1980)

§ Mr. Dennis Canavan (West Stirlingshire)

I beg to move, That leave be given to bring in a Bill to control the export of Scotch whisky. The Scotch whisky industry is one of the most important industries in Scotland. It is directly responsible for the provision of over 25,000 jobs. It makes a significant contribution to our balance of payments. Last year, for example, whisky exports amounted to over £700 million in value. The industry also produces an unrivalled international market leader, at least it has done until now.

There is considerable concern within certain sections of the industry and within the trade union movement about the rapid growth of exports of whisky in bulk rather than in bottle. This has had a damaging effect and has further potential damaging effects on the industry and on employment prospects within the industry. The trend in bulk exports of blended whisky is that in 1972 bulk exports amounted to 15.8 million proof gallons, increasing to 21.8 million proof gallons in 1978.

It has been pointed out by many people within the trade union movement and elsewhere that this increasing trend means in effect the export of thousands of jobs from Scotland at a time when Scottish unemployment is at the intolerable level of over 200,000. Recently the Scottish Council for Development and Industry produced a document which estimated that possibly as many as 6,000 extra jobs could be created and an extra £99 million per year could be produced in overseas earnings if bulk exports were stopped completely and there was maximum replacement of these bulk exports by bottled exports.

These extra jobs would be, for example, in the glass manufacturing, bottling, capping, sealing, labelling and packaging industries. I think, for example of the "Cork and Seal" factory owned by UG Closures and Plastics in my constituency which employs about 700 people. Recently there have been some redundances there. In the neighbouring constituency of my hon. Friend the Member for Clackmannan 1170 and East Stirlingshire (Mr. O'Neill), there are threatened redundancies affecting about 200 workers in United Glass in Alloa.

Part of the problem has been the fiscal measures adopted by certain countries. For example, until recently the United States of America operated a Wine Gallon Assessment Act which meant, in effect, that the water content of an exported bottle of whisky was taxed as well as the spirit content, but following the GATT negotiations of last year the United States agreed to repeal the Wine Gallon Assessment Act. It is too early to say whether this will lead to a significant reduction in bulk exports to the United States. I noticed that there was a slight reduction in 1979 compared with 1978, but it is still at an unacceptably high figure of 12.3 million proof gallons of bulk blended whisky exports.

However, it is in respect of malt exports that most damage is feared. Here, too, the trend has worsened, and there has been an even greater percentage increase in bulk exports. For example, in 1971, the amount of bulk malt exported from Scotland was 3.3 million proof gallons, increasing to 9.6 million proof gallons by 1978. There has been a more than a tenfold increase over the past decade or so in bulk malt exports to Japan. In 1970 the figure was 631,000 proof gallons and by 1979 that figure had increased to 6.4 million proof gallons. It is still increasing. Contrary to some reports, 1979 showed an increase over 1978.

The question arises, what on earth are the Japanese doing with all this whisky? I do not mind the Japanese wanting a good dram, the same as anyone else, but it would be naive to imagine that the Japanese are importing all this bulk malt just to celebrate the Japanese New Year. What is happening is that Japanese companies such as Suntory are mixing bulk Scotch malt with their own inferior local spirits, calling the adulterated mixture whisky and using this so-called whisky to threaten the position of genuine Scotch whisky on the international market. This has gone on to such an extent that the Japanese are openly boasting that the highest selling single brand of whisky in the world does not originate in Scotland but is Japanese and is called "Old Suntory".

1171 If companies which are indulging in this trade continue in the way they are doing, it will kill the Scotch whisky industry. The culprit companies seem to be more concerned with making a fast buck out of the trade rather than thinking of the long-term future of the industry.

Some of the companies involved in the export of bulk malt are overseas companies or companies with an overseas connection, such as Seagram, Hiram Walker, and Whyte and Mackay, which is connected with Lonrho. There are also some United Kingdom companies which should know better which are involved in the export of bulk malt to Japan such as Stanley P. Morrison and Long John International. The five companies I have named are responsible for 80 per cent. of the bulk malt exports to Japan. Other more reputable companies do not indulge in this trade of bulk malt exports—for example, DCL, Teachers, and Langs, which has a small distillery in my constituency producing malt whisky called Glengoyne.

It is perhaps time that the whisky-drinking public started to be selective in the brands they take and operated a boycott against the companies I have named which are involved in the export of bulk malt which is undermining the industry. Of course, the consumer at the end of the day will suffer as well as the workers in the industry.

In December 1978 the distillery sector working group of the National Economic Development Council strongly urged companies engaged in malt exports to have regard to the long-term interests of the industry. It appears that voluntary restraint is not enough and that is why I am attempting to introduce this legislation. I have been informed that such legislation may be contrary to article 34 of the Treaty of Rome and EEC Regulation 2603/69, as amended. So what?

After yesterday's abortive summit meeting and the statement made this afternoon by the Prime Minister, it is about time we started taking unilateral action to save our industries under threat from Common Market membership. It is interesting to note that the French, who are also members of the Common Market, are not so shy about using protective measures to protect the cognac 1172 industry. There is a National Cognac Bureau, which is responsible for quality control and also for controlling bulk exports which can go only to approved merchants.

I accept that there may be considerable difficulties about an immediate and complete ban on all bulk exports of Scotch whisky. A reasonable target to aim at would be the 1971 level. I also propose the setting up of a Scotch whisky board consisting not just of representatives of the Government and the industry itself but of trade union representatives to bring in an element of industrial democracy. It would be the job of the board to monitor bulk exports with a view to reducing their level and replacing them with bottled exports.

I also propose to tighten the legal definition of Scotch whisky. The present statutory definition states that whisky must be matured in wooden casks for a period of at least three years and, in order to be called Scotch, the whisky must be distilled in Scotland.

I propose two further measures: first, that the Scotch must also be matured in Scotland and bottled in Scotland or bottled elsewhere under conditions approved by the Scotch whisky board; second, that blended Scotch should contain a maximum of 60 per cent. Scotch malt. The reason for that is to stop some unscrupulous person from getting round any future regulations about the export of bulk malt. Unless we tighten the definition of a blend, someone could take a mixture of 99 per cent. malt and 1 per cent. grain and call it a blended whisky, thereby getting round any future regulations on the export of bulk malt.

Such legislation, Mr. Deputy Speaker, would be in the interests of the Scotch whisky industry, of the workers employed in the industry, and of the consumers. It is only fair that if people ask for a dram of Scotch they should get what they ask for, whatever part of the world they happen to be in. I therefore ask the House to approve the introduction of my Bill.