NEW AGREEMENT, NEW NAME
USMCA replaces NAFTA
More choice for wine lovers in grocery stores means more competition for B.C. wineries.
That’s among the impacts on wine consumers and producers in B.C. of a newly negotiated trade agreement between the United States and Canada.
The deal is called the United States-Mexico-Canada Agreement (USMCA) and is intended to replace the North American Free Trade Agreement (NAFTA).
Miles Prodan, president and CEO of the B.C. Wine Institute, said the new agreement would mean consumers have more choice over the country of origin of wine they buy in the 29 grocery stores that currently sell only B.C. wine.
But he’s not sure how the mix of wines will change.
“The problem for us is that there is only so much shelf space,” Prodan said.
“To put on some foreign wine means someone else will have to come off. How that’s determined needs to be thought through and that’s part of the discussion over the next 13 months.”
Prodan pointed out that the USMCA section on wine in B.C. grocery stores recognizes what he called grandfathered industry licences that predate NAFTA.
In the early days of the B.C. wine industry, he said, wineries were issued licences to sell wine. But few of them opened their own stores, and over time the licences were amalgamated and given to the B.C. Wine Institute to manage for the benefit of the province’s wine industry.
Of the 29 grocery stores that sell B.C. wines, 17 are grandfathered and managed by the wine institute; the other 12 are operated by the grocery stores. There are 1,100 public and private liquor stores in B.C. that sell wine from B.C. and around the world.
“When we had the original NAFTA agreements, and Americans were given bigger access to the Canadian market, NAFTA recognized that those industry licences needed to be grandfathered,” he said. “The fact that they have continued to be recognized is important.”
There are 185 wineries belonging to the institute, representing 94 per cent of all wine produced in B.C.
B.C. Trade Minister Bruce Ralston said the province was kept in the loop on negotiations between Canada and the United States over the wine provision and will comply with the Nov. 1, 2019 deadline.
Ralston said grocery stores licensed to sell B.C.-only wine will need time to transition.
He blamed the previous Liberal government for the B.C.-only wine rule.
“Some of the industry observers and participants here warned the government that the measure was not trade compliant, however much it might advantage British Columbia wine in the short term,” Ralston said. “It’s something where a day of reckoning was coming.”
It’s unclear if the agreement would set a precedent for other countries to argue to have their wines on B.C. grocery store shelves.
“That remains to be seen,” said Ralston, who added that Australia, for example, could take its World Trade Organization complaint on the wine issue to the Canadian government to try to negotiate a similar deal.
Ralston said American wine sales have risen 32 per cent in B.C. in the last four years, but he’s not necessarily worried the cheaper product will crowd out British Columbian wineries.
“People are aware of the variety and the quality of B.C. wine. B.C. wine has come of age, it’s a product that people want to buy and will choose,” said Ralston.
“I’m confident that B.C. wines can compete with wine from anywhere in the world and can continue to do well and grow.”
On the dairy side, USMCA opens up to 3.6 per cent of the Canadian market to U.S. producers.
Trevor Hargreaves, director of producer relations and communications for the B.C. Dairy Association, said the new agreement could cause some dairy farmers to sell out or go out of business because they no longer have faith in the industry.
The dairy industry in the U.S., Australia and the U.K., he said, are all struggling with record bankruptcies and lower and lower prices because of over production.
In the U.S., for example, milk production receives federal government funding of up to 40 per cent, which is equivalent to about $1 trillion over 10 years, Hargreaves said.
“It props up agricultural industries in the U.S. that are no way sustainable and gives them a total predatory economic advantage,” he said.
“I recognize that (the Canadian government has) been working very hard to defend this industry but at the end of the day, they’ve thrown us under the bus to get the deal signed.”