Latest interprovincial wine-trade proposals not much to cheer about

Opinion: A country that is pushing the merits of free trade needs to put its (or consumers’) money where its mouth is

There are 700 wineries in Canada producing at least 6,000 individual labels annually.Getty Images/iStockphoto

By Perrin Beatty and Dan Paszkowski

Canadians can buy almost any good from another province, but not wine. With the exception of Manitoba, the laws against out-of-province direct-to-consumer shipments stand firm due to liquor retailers who want wine (as well as beer and spirits) sales to go through them as much as possible.

In 2012, the federal government took steps to remove the wine barriers by amending the Importation of Intoxicating Liquors Act (1928). The amendments were unanimously passed in Parliament, and allowed wine to be personally transported or couriered into any province or territory for personal consumption, as defined by the jurisdiction.

The response from the provinces to protect revenues from their liquor board monopolies was lightning quick. Laws and policies across the country were amended to restrict to low levels the personal-use volume exemption for wine that is transported on one’s person. New Brunswick has the lowest Canadian personal-use exemption, of one bottle, while Alberta set an unlimited volume.

New Brunswick has the lowest Canadian personal-use exemption, of one bottle

Additionally, the volume exemptions were restricted to personal transport. Courier delivery from an out-of-province winery remains against the law, punishable by a fine of up to $100,000 and/or six months in jail (varies by province).

Fast forward to the passage of the Canadian Free Trade Agreement in 2017, a deal touted by governments as the most comprehensive internal trade agreement in this country’s history. Despite this “comprehensive” agreement, provinces and territories could not find common ground on removing barriers to the interprovincial trade of alcohol. Instead, they set up an Alcoholic Beverages Working Group with a 12-month mandate ending July 1, 2018, to provide recommendations on removing barriers to interprovincial alcohol trade.

At a time when Canada is facing historic international trade challenges, the working group did not recommend that provinces establish a direct-to-consumer system, which is available in every other wine-producing country around the world. Rather, the working group recommendation was that provincial and territorial governments “significantly increase personal-use exemption limits when crossing provincial/territorial boundaries.”


Bottles of B.C. wine are displayed at a liquor store in Cremona, Alta., on Feb. 7, 2018. Jeff McIntosh/CP

In late July, at Council of the Federation meetings, premiers agreed in principle with this recommendation. While the limits will be reviewed by individual provinces and territories over the coming months, media reported a possible doubling of the volume that residents can currently carry home on their person. This agreement is not a policy breakthrough for consumers or for Canadian wineries. It means that a Kitchener, Ont., resident will only have the option to travel 550 kilometres to Quebec or 2,000 kilometres to Manitoba to bring home not one, but two cases of wine.

Direct-to-consumer wine sales fill the gaps where the liquor retail system in Canada does not adequately meet consumer demand. There are 700 wineries in Canada producing at least 6,000 individual labels annually, all vying for limited shelf space in brick and mortar stores. Why not allow 100-per-cent Canadian premium wines that are not sold in provincial retail stores to be sold direct-to-consumer? This would represent only two per cent of nationwide sales, leaving 98 per cent of wines still to be sold in traditional retail.


Frontenac grapes are picked at the Kin Vineyards in Kinburn, Ont. Jean Levac/Postmedia News

With imports representing 70 per cent of wine sales across Canada, and free-trade agreements allowing 91 per cent of wine imports to enter tariff-free, a country that is pushing the merits of free trade must put its (and consumers’) money where its mouth is, by removing the barriers to internal wine trade. Federal Minister of Internal Trade Dominic LeBlanc was quick to respond to the premiers’ communiqué by stating “more can be done by the provinces and territories to enhance trade in alcoholic beverages within Canada, including expanding direct-to-consumer sales of alcohol across the country.”

The premiers’ decision on alcohol exemplifies Canada’s track record on internal trade: small incremental changes presented as significant progress. Not addressing the largest single internal barrier to wine trade and avoiding the expansion of direct-to-consumer sales makes it clear that governments still have a lot of work ahead to break down interprovincial trade barriers in Canada.

— Perrin Beatty is President and Chief Executive of the Canadian Chamber of Commerce. Dan Paszkowski is President and CEO of the Canadian Vintners Association

 

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