Wineries have reason to fear protectionist Trump
Could the timing have been any worse?
Last week, the U.S. Trade Representative’s office announced it was filing a challenge with the World Trade Organization over the exclusive sale of B.C. wine in our grocery stores. This week, U.S. President Donald Trump announced his intent to sign an executive order to tear up NAFTA. If I owned a B.C. winery, a stiff drink would seem in order.
Little of this is good news for them. If the U.S. does win such a challenge, and I believe it will, big wineries from around the world will have access to grocery shelves here. Those foreign wines will crowd those shelves to the detriment of the province’s small- and medium-sized wineries. They will do so because of price. Most B.C. wineries cannot produce wine as cheaply as the big imports, and while price in wine sales isn’t everything, it’s the biggest thing. The public will love it.
It’s not as if the provincial government didn’t have warning. The U.S. government and the powerful California-based Wine Institute both voiced their displeasure with grocery sales here even before those sales started, as had the governments and wine producers of Chile, Argentina, Australia, New Zealand and the European Union. All of them threatened in writing to enact a trade challenge if those sales went ahead.
Locally, a group of small- and medium-sized B.C. winery owners and private VQA wine store owners also warned a challenge was an eventuality.
One such opinion came in an analysis paper prepared by Faskin Martineau, a national law firm that specializes in international trade and business. Commissioned by the B.C. Private Liquor Store Association, the paper’s co-authors, Clifford Sosnow and George Cowper, wrote that there were permissible exceptions for the “unequal treatment” of local goods where exceptions were necessary for the protection of public morals, health or human life.
In this case, they didn’t find any permissible exceptions because, you know ... it’s wine. The sale of international wines in B.C. grocery stores could not be construed as “a unique risk” to the morals or health of B.C. consumers, other than possibly to their livers.
“Indeed,” they wrote, “the selective favouring of B.C. wine raises the presumption that such favouring is a disguised restric- tion on international trade.”
Winning the trade challenge, then, would be a long shot. Yet the provincial government maintained it could win because its policy was protected under international trade agreements. That ground they chose to make their stand on, however, has suddenly crumbled underneath them.
“The whole argument that a trade challenge wouldn’t be successful was hinged on the fact that it was protected under NAFTA,” said vintner Kim Pullen, owner of Church & State Wines, “and of course NAFTA is now fully on the table with Donald Trump coming to office. ... We knew (a challenge) was coming and a lot of us said it was going to happen. It clearly discriminates (against foreign wines). So what happens now?”
Retrenchment and consolidation, probably. Simon Wosk, a former private wine store owner in Richmond before he sold his licence to Save-On-Foods, believes the entire B.C. wine industry will change — not necessarily for the better — and the B.C. government will let it happen.
“I felt all along that eventually grocery stores would have wines from around the world. I also feel that any trade challenge will not go to decision as the B.C. government will announce that rather than incur a great deal of costs paid by taxpayers, they will give the taxpayers what they really want — wines from all over the world on grocery shelves.
“Wines from all over the world on grocery shelves may ultimately force small B.C. wineries to sell to large (wineries) and for the entire industry to ‘dummy down’ their quality in order to reach the lower price points of lowerquality import products.”
Here’s my prediction. Foreign wine will come to B.C. grocery stores. The buying public will welcome it. The provincial Liberals, who had campaigned on bringing B.C. wine to grocery stores as a boon to consumers, and which could not help but know that a trade challenge would happen, will make conciliatory noises toward the smalland medium-sized wineries that it helped destroy, and possibly throw some money their way. Or not. Either way, it will have delivered on a campaign promise.
The one big winner in this scenario?
The grocery stores. They will make a killing. And which grocery store chain had, until recently, a virtual monopoly on wine licences? Save-On-Foods, which owns 11 of the 14 grocery stores selling wine. (Loblaws owns the other three.) Save-On-Foods, of course, is owned by the Overwaitea Group, whose parent company is the Jim Pattison Group, whose chairman and CEO is ... well, need I say it?