The U.S. trade deficit in distilled spirits expanded by nearly 60 percent during 1995-99, fueled by increased imports from the European Union (EU), says U.S. International Trade Commission (ITC) in its report, Industry and Trade Summary: Distilled Spirits.

The ITC, an independent, nonpartisan, factfinding agency, recently released the report as part of an ongoing series of reports on thousands of products imported into and exported from the United States. Following are highlights from the report:

• Regulations and taxes significantly affect distilled spirits in the United States. Federal and state laws strictly regulate most activities of the industry, including production, advertising, and distribution; federal, state and local taxes account for a significant percentage of the retail cost to consumers.

• Per capita consumption declined by more than 6 percent during 1993-97, consistent with a decades long trend of falling rates of consumption brought about by lifestyle changes, increased regulation, and stricter enforcement of driving-under-the-influence laws. Apparent consumption remained stable during the period.

• The United States is the world's third-1argest producer of spirits with production amounting to $3.4 billion in 1997. During the most recent measured 10-year period, nominal rates of production marginally increased; however, the real value of production, adjusted for inflation, fell by 26 percent, with the production value of bottled spirits falling by over 31 percent. With the exception of unprocessed whiskey, volumes of production for most spirits similarly declined.

• The U.S. and world spirits industry underwent major consolidation and restructuring during the 1990's. The three leading U.S. producers/suppliers are subsidiaries of multinational corporations. The top 10 world producers account for 70 of the leading 100 premium brands marketed. The U.S. wholesale distribution tier has also undergone rapid consolidation during the period.

• The United States ranked as the world's leading importer of distilled spirits with the value of imports totaling $2.4 billion in 1999, nearly three times the value of the world's second leading importer, Japan. U.S. exports of mainly bourbon and Tennessee whiskey, totaling $440 million, ranked U.S. shipments among the five leading exporting nations. The U.S. trade deficit for distilled spirits, amounting to almost $2 billion, expanded by 57 percent during 1995-99, with the United States registering trade deficits with eight out of the top 10 trading partners for spiritous beverages in 1999.

• Tariff levels for the world's leading trading nations, particularly the developed nations of the OECD, are relatively low compared to developing nations. The United States and the EU maintain duty-free rates on most categories of spirits as part of a distilled spirits "zero for zero" tariff accord.

The foregoing information is from the ITC report Industry and Trade Summary: Distilled Spirits (USITC Publication 3373, December 2000).

ITC Industry and Trade Summary reports include information on product uses, U.S. and foreign producers, and customs treatment of the products being studied; they analyze the basic factors affecting trends in consumption, production, and trade of the commodities, as well as factors bearing on the competitiveness of the U.S. industry in domestic and foreign markets.

This report will be available on the ITC Internet web site at www.usitc.gov. A printed copy may be ordered without charge by calling (202) 205-1809, or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may be faxed to (202) 205-2104.