Local Economy

How Trump’s New Trade Deal Pushes Aside BC Wines

‘We’re disappointed, but not surprised,’ says industry leader.

By Christopher Guly 3 Oct 2018 |

Christopher Guly is a member of the Canadian Parliamentary Press Gallery in Ottawa.

Dairy farmers got the headlines after Canada agreed to the new trade deal with the U.S.

But B.C. winemakers also complained about a side letter that was part of the new agreement. The letter said the province’s requirement that only B.C. wines could be sold in grocery stores had to end.

The British Columbia Wine Institute didn’t toast the deal.

However Andy Hira, a B.C. political scientist who has studied the wine industry, says the agreement shows the need to make the province’s winemakers more competitive.

As part of the new United States-Mexico-Canada Agreement, Foreign Affairs Minister Chrystia Freeland agreed to a request from U.S. Trade Representative Robert Lighthizer that the B.C. government would eliminate the measure that allows only B.C. wine to be sold on grocery store shelves, according to draft letters exchanged between both officials.

The change would take effect by Nov. 1, 2019.

“We’re disappointed, but not surprised,” said Miles Prodan, president of the Kelowna-based wine institute.

The U.S. negotiators had a “misconception of the depth of the opportunity” for U.S. and other foreign wines in B.C. grocery stores, he said.

Wines from around the world are already sold in about 1,100 public and private liquor stores throughout the province. Only 29 grocery stores have obtained the required licences to sell wine, Prodan said.

“In my humble opinion, they’re not satisfied with the 1,100 they already have access to, and now also want access to the 29 where shelf space is limited,” said Prodan.

“If you’re going to put one bottle of foreign wine on a shelf, you’re going to have one less bottle of B.C. wine, and it’s going to have an impact, particularly on the smaller wineries in the province competing with foreign wineries.”

Hira, a political science professor at Simon Fraser University, said B.C. wine producers already benefit from tax breaks from the provincial government. Australia, Chile and Spain have raised complaints at the World Trade Organization over pricing and the way B.C.’s Liquor Distribution Branch favours local wines.

“Wine importers are concerned about what they perceive to be an uneven playing field in B.C.,” said Hira, who co-authored a 2011 research paper on B.C.’s wine industry and edited the 2013 book, What Makes Clusters Competitive? Cases from the Global Wine Industry.

The Canada-U.S. agreement will also see the U.S. withdraw its WTO dispute with Canada over wine rules. Argentina, Australia, the European Union and New Zealand are still seeking consultations with Canada.

Hira said an end to the U.S. complaint over unfair competition would be “a pretty big deal” and should be considered a significant concession. B.C. wineries might lose some market share once international producers will be able to have their wine sold on grocery-store shelves, he said.

The wine institute’s Prodan noted the 29 licensed grocery stores in the province account for less than two per cent of wine sales in B.C., and that there are no plans by the B.C. government to increase the number of grocery stores.

And the U.S. has amassed a $450-million trade surplus with Canada in wine sales since the Canada-U.S. Free Trade Agreement came into effect in 1989, he said.

In a news release Monday, the provincial government said that it would work with the federal government to resolve the wine-in-grocery-stores issue “in a manner that best protects our wine industry.”

Prodan said the governments should start by eliminating provincial barriers.

“When can we start the conversation about Canadian free trade and having wineries able to freely sell and send B.C. wine to a province like Ontario?” Prodan asked.

“It makes no sense that we can’t share 100-per-cent Canadian-made products with other Canadians — and that’s the issue we need to address.”

“It’s not so much about giving Americans access to our market. It’s more about giving Canadians better access to the Canadian market.”  [Tyee]

Read more: Local Economy, Politics

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