Vancouver Sun

U.S.-Canada dispute over wine sales on table at NAFTA talks

‘It’s like a David vs. Goliath scenario’

- JOANNA SMITH

U.S. Trade Representa­tive Robert Lighthizer has an issue with getting agricultur­al products to Canada, and it might not be the ones you think.

“It’s an extraordin­ary problem for those people who are affected,” Lighthizer said June 22 when he appeared before the House of Representa­tives ways and means committee to talk about trade priorities. “And there is no justificat­ion for it.”

Much of the spotlight on Canada-U.S. trade leading up to the new North American Free Trade talks has been on dairy products. This time, though, Lighthizer was not talking about cheese, but what you pair it with: wine.

Two days before President Donald Trump entered the White House, the U.S. launched an aggressive trade challenge by asking the World Trade Organizati­on to examine how the B.C. government was allowing only wine produced within the province to be sold in grocery stores.

Lighthizer told the committee in June that WTO consultati­ons — the first stage of the process — had not resolved things, so the administra­tion was thinking about whether to press ahead with a dispute settlement panel in Geneva.

Then he mentioned another, perhaps friendlier, way to go: the new NAFTA.

“In this case it would make more sense to negotiate and do it in a less hostile way,” he said.

A month later, Lighthizer published the list of goals the Trump administra­tion has for a renegotiat­ed trade deal with Canada and Mexico, in advance of the first round of talks on Aug. 16.

Canadian wine got a mention in the accompanyi­ng news release.

The move to allow only B.C. wines to be sold in B.C. grocery stores, which the U.S. argues is discrimina­tory, is not the only issue the Trump administra­tion has with the way Canada imports and sells wine.

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-of-service 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 said 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.

It also suggested a recent move to allow Quebec wine to be sold in Quebec grocery stores could give craft wineries an unfair advantage.

The fledging Canadian wine industry won some concession­s in the 1987 Canada-U.S. Free Trade Agreement (CUSFTA), which meant they were allowed to grandfathe­r in some protection­ist measures to support domestic wines in exchange for opening up the Canadian market to more U.S. wines.

Those protection­s were integrated into NAFTA.

Tom LaFaille, the vicepresid­ent and internatio­nal trade counsel for the Wine Institute, an advocacy organizati­on for the California wine industry, 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,” said LaFaille.

The Canadian Vintners Associatio­n, meanwhile, is treading carefully when it comes to NAFTA.

Asha Hingorani, the director of government and public affairs for the industry associatio­n, said the organizati­on is keeping the details of its position secret until talks begin, but said the complaints coming from the U.S., which has a $450-million wine trade surplus with Canada, should be put into perspectiv­e.

“Our industry generates $9 billion in economic impact to the Canadian economy and we produce 37,000 jobs, but compared to the size of the U.S., it’s like a David vs. Goliath scenario.”

 ?? BOB TYMCZYSZYN / POSTMEDIA NEWS ?? The U.S. has launched an aggressive trade challenge over B.C.’s policy of only B.C. wines in its grocery stores.
BOB TYMCZYSZYN / POSTMEDIA NEWS The U.S. has launched an aggressive trade challenge over B.C.’s policy of only B.C. wines in its grocery stores.

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