A year ago, as the Penticton city council was debating allowing wine to be sold in local grocery stores, one of the arguments against it was the possibility of U.S. trade protest.
That prediction came to pass earlier this month when the Office of the United States Trade Representative filed an action in response to provincial regulations allowing grocery stores to sell wine, but only B.C. VQA bottles.
If successful, the challenge under international trade agreements could transform or even put a cork in the centrepiece of the B.C. government’s liquor policy reforms.
The VQA-only licence allows stores to bypass the rule they be at least one kilometre from liquor stores, as well as avoiding the ‘store within a store’ model set out for non-B.C. wine.
The trade action follows on the heels of a California Wine Institute complaint to the USTR on Oct. 27 that called B.C.’s wine regulations “blatantly discriminatory.”
Rob Ingram, CEO of Terrabella Wineries, was part of the Responsible Liquor Alliance of B.C., representing 21 small South Okanagan wineries, which expressed concern about city council’s decision not to block the policy in Penticton.
“I was part of a group that felt very strongly about it because there had been some very good research on it. Those documents were shared with the government and they were shared with the B.C. Wine Institute,” said Ingram.
But after more than a year of wines in B.C. grocery stores, Ingram said the move has been good for the industry.
“This (trade complaint) is just another unintended consequence from a very complicated file,” said Ingram. “I honestly believe their hearts are behind getting this done right, eventually.”
“I don’t think it is going to be a problem,” said Ingram.
Jobs Minister Shirley Bond said that trade agreements such as NAFTA allow for a number of private outlets that sell only B.C. wine.
“The B.C. government is confident that we are complying with B.C.’s and Canada’s international trade obligations,” said Bond.
“The discriminatory regulations implemented by British Columbia intentionally undermine free and fair competition, and appear to breach Canada’s commitments as a World Trade Organization member,” said U.S. ambassador Michael Froman.
Ingram says an increase in demand for B.C. indicates the success of the grocery store sales policy.
“We ran out of wine in about September of last year. We grew our sales hugely,” said Ingram, adding that he is hearing the same from other producers.
“We’ve suddenly gone from a surplus of grapes, as recently as a year ago, to there being a shortage,” said Ingram. “I think some of that is brought on by the food stores.”
With the provincial government announcing that 90 per cent of the Liquor Review report recommendations have been implemented, Ingram said the move to modernize liquor regulations has been beneficial.
“They’re not perfect, but they seem to have been done with the interests of all manufacturers in the province, whether you are a craft brewery or a winery,” said Ingram. “They really are leaning to opening up that environment and opening up more manufacturing jobs in the alcoholic beverage industry.”
With files from Katya Slepian/Black Press