New wine NAFTA deal sought
NAFTA might not offer a fair deal when it comes to the wine industry, but industries on the U.S. side aren’t the ones with reason to whine, says Wine Council of Ontario president Richard Linley.
While the American government hopes to allow its wine industries increased access to the Canadian markets as a result of North American Free Trade Agreement renegotiations, Linley hopes Canada’s negotiators led by trade expert Steve Verheul focus on getting a better deal for Canadian vintners — small family-owned farms in Ontario, up against huge California-based corporations in what he describes as a classic David versus Goliath story.
“Instead of playing defence, I’d say the governments should go on the offence on behalf of the industry and ask that these long-standing issues be addressed, especially from a taxation standpoint,” he says.
“The current situation already favours them (U.S. wineries) considerably.”
Grape Growers of Ontario chief executive Debbie Zimmerman hopes to ensure Canada’s representatives in the negotiations, beginning next week in Washington, D.C., have the data they need to demonstrate disparity between U.S. and domestic wine industries.
She says Ontario’s industry is “just a pimple on an elephant,” compared to the U.S. wine industry.
“You need to be realistic in your comparison of the Ontario industry as compared to the U.S. industry,” she says.
For instance, although Ontario vintners sold $2.3 billion of wine in the last fiscal year, California wines brought in $34 billion in the same time frame.
“That’s just California, and then you compare that to U.S. wine sales which are significantly higher.”
Meanwhile, wine grapes are growing on about 6,800 hectares in Ontario, compared to 18,000 hectares of grapes in Napa Valley, Calif. And Napa Valley, Zimmerman adds, is only about four per cent of the entire grape harvest for the state.
The David vs. Goliath comparison is even more profound on a national scale, giving the U.S. a $450-million trade surplus on wine.
The U.S. wine industry has a 67 per cent share of its home market, while Canadian wines only have about 32 per cent of domestic markets here.
U.S. wines also account for about 14 per cent of wine sales in Canadian stores, while the sale of Canadian wines in the U.S. is negligible.
Still, Zimmerman says the local industry has come a long way in the past few decades.
It has grown from a “juice grape” industry into a “mature grape and wine industry” in the years since the original NAFTA was negotiated in the early 1990s.
“We’re a thriving industry in that we’ve created 18,000 jobs and deliver millions in revenue to the governments of Ontario and Canada,” she says.
“It is without exception an industry that we expect the governments of both Ontario and Canada to defend at these trade talks. First and foremost there needs to be protection to ensure this industry remains growing as an Ontario industry as it has been.”
Niagara West MP Dean Allison says he has been contacted by several vintners and grape growers in his rural riding, concerned about the U.S. goals.
The federal Conservative representative said small familyrun wine producers like those in his riding “are the guys who suffer.”
“The Americans are absolute hypocrites on this issue,” Allison said. “I know that’s pretty strong language, but these guys have like 15 times more wineries than us.”
There are about 600 wineries across Canada. In comparison, at least 9,000 wineries operate south of the border.
“I would hope that we as a country are not prepared to give up a damn thing. This should not even be on the table. I find this so frustrating. Canada should take it off the table and say this is not even an option.
“They have so many more advantages down there, these guys are just being greedy,” he adds, raising his voice. “It’s so freaking frustrating.”
Although St. Catharines MP Chris Bittle says he has been a strong and public proponent of the Niagara wine industry, he says via email that “it would be inappropriate for me to comment publicly on what I would hope to see addressed negotiations.”
The Liberal representative says the government is “working diligently to ensure that a fair and equitable agreement is reached with Mexico and the United States.”
“Negotiations of this magnitude must be handled with the utmost care and I have full trust in the ministers and government officials tasked with representing us during this crucial process,” he says. “The government has the best interest of all Canadians at heart and will work diligently to ensure that we get the best possible outcome and continue the economic prosperity that NAFTA has brought to North America over the past 25 years.”
From a U.S. wine industry perspective, Canada’s industry has outgrown protectionist measures that date back to the original Canada-U.S. Free Trade Agreement (CUSFTA) in 1987.
Tom LaFaille, vice-president and international trade counsel for the Wine Institute — a California wine industry advocacy organization — argued the Canadian wine industry is now big enough that it should not be able to get away with such supports.
“We just feel that it’s important to end those practices, some of which may have been imposed when Canadian wine was in its infancy,” LaFaille says.
The U.S. government’s annual report on trade barriers highlights a complaint that would be shared by many Canadian consumers who have long chafed at limited access: in many parts of the country, province-run liquor control boards restrict the sale of wine, beer and spirits. Restrictions on listings, cost-ofservice markups, maximum or minimum price points, distribution policies, labelling requirements and making suppliers discount their prices to meet sales targets were all mentioned as things getting in the way.
The report says the U.S. government is reviewing the situation in Ontario, where about 70 grocery stores are now allowed to sell both domestic and imported wine, under certain conditions that include country of origin.
But considering the success the U.S. is already having on wine exports to Canada, Allison suspects the issue may have been added to the agenda to use as a bargaining chip when it comes to more contentious issues.
“I am very concerned that they would have the audacity to put this on the table as a negotiating tool. What are they trying to do? Are they trying to get us to play off supply management or something else?” Allison says.
“This is (U.S. President Donald) Trump being totally a distraction, for softwood, for dairy — any of these other kinds of things. No question about it.”
Zimmerman says Canada’s negotiators, led by Verheul, likely know that the inclusion of the wine industry within the discussions could be a bargaining chip.
“We want to make sure that they understand this industry is too important,” she says.