Corn, wheat, and rye were among the main crops grown during the earliest days of this country. Many families who grew these also produced their own distilled corn mash which came to be known as Bourbon and Whiskey. It is said that these distilled spirits were so popular in colonial times that they were drunk more often than water.
Over the years, distilled spirits grew in popularity, eventually being used by the Department of the Treasury to help pay for the Revolutionary War through excise taxes.
It is fitting then that with the help of the Alcohol and Tobacco Tax and Trade Bureau (TTB), these distinctively American spirits are bringing new jobs to our nation through a new free trade agreement between the U.S. and South Korea. When this agreement is implemented, it is expected to increase the export of Bourbon and Tennessee Whisky.
TTB representatives advised the United States Trade Representative (USTR) during a key part of the negotiations for the agreement involving distilled spirits. TTB is a Bureau of the Department of the Treasury and is the primary agency responsible for regulating the trade of alcohol.
The USTR is the primary agency responsible for negotiating trade agreements. Because of our unique understanding of the alcohol industry, we regularly assist USTR in international negotiations. Other agencies such as the Department of Commerce, the United States Department of Agriculture, and the Food and Drug Administration provide technical expertise to USTR on their respective areas of jurisdiction. USTR takes this technical expertise under advisement in developing language in the trade agreements.
Our role in the negotiations directly impacted Tennessee Whiskey and Bourbon because it helped secure their status as distinctively American products. Making sure these spirits are only produced in the United States will preserve their true heritage and make sure they are distilled in keeping with the recipe and process that makes these high quality spirits.
During the negotiations for the U.S.-Korea Free Trade Agreement (FTA), we advised USTR and the Department of Commerce on classification and standards of identity related to Bourbon and Tennessee Whiskey. We also did this for Andong Soju and Gyeongju Beopju which means they will gain distinctive status in the United States as products that can only be produced in South Korea.
This recognition provides the industry with an important anti-counterfeiting tool because it ensures that only spirits produced in the United States, in accordance with our laws and regulations, may be sold as Bourbon and Tennessee Whiskey in South Korea. The same will apply to Soju here in the United States.
When the FTA goes into effect, South Korea will eliminate the current 20 percent ad valorem (Latin for according to value) tax on Tennessee Whiskey and Bourbon, immediately making them duty free.
The U.S. International Trade Commission estimates that cutting the ad valorem tax will increase exports of American goods by $10 billion to $11 billion and will secure at least 70,000 American jobs supported by those exports. (See Discover New Opportunities for Made in America Exports at USTR.gov for more information.)
In order to promote economic growth and increase U.S. jobs, it is critical that we work to facilitate U.S. exports. We expect the implementation of the U.S.-Korea FTA will bring significant benefits to U.S. spirits producers. This in turn will increase U.S. exports and help reduce unemployment. We at TTB are proud of the role we have played in contributing to these developments.