B.C. to defend wine industry against U.S. trade action

(British Columbia Wine Institute photo)

Vancouver | Reuters — The British Columbia government said Wednesday it would defend its wine industry against a trade challenge from the U.S., and was confident it was not breaking any international trade rules.

Earlier Wednesday, the U.S. said it started action against Canada at the World Trade Organization, accusing B.C. of discriminating against U.S. and other imported wine by allowing only local wine to be sold in grocery stores.

“Trade agreements such as NAFTA allow for a number of private wine outlets that sell only B.C. wine,” Shirley Bond, B.C.’s minister for jobs, tourism and skills training, said in a statement.

“We are confident in the approach we have taken,” she said.

Grocery stores have become a growing retail channel for wine sales in B.C. since the province changed its rules in April 2015 to expand wine distribution. Only retailers who won licences in a provincial auction are allowed to sell wine.

The spat coincides with growing uncertainty in trade relations between Canada and the U.S., its biggest trading partner.

U.S. president-elect Donald Trump has promised to either renegotiate or scrap the North American Free Trade Agreement and overhaul trade policy after he takes office Friday.

“The discriminatory regulations implemented by British Columbia intentionally undermine free and fair competition, and appear to breach Canada’s commitments as a WTO member,” United States Trade Representative Michael Froman said in a statement.

“Canada and all Canadian provinces… must play by the rules, he said.

Reporting for Reuters by Nicole Mordant in Vancouver.

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  • Barry Clark

    The US federal excise taxes on beer, wine, and cider are higher for imports than for small/medium domestic producers. The Craft Beverage Modernization and Tax Reform Act came close to passage in the US last year. It and similar bills are expected to be reintroduced in the current session of Congress. They would further tilt the playing field against alcoholic beverage imports in the US. Here is one example from the CBMTRA. It would reduce the excise tax on domestic spirits producers by 80% for the first 100,000 proof gallons/year. The US and EU complained to the WTO about Colombia’s tax rates on booze. In defending against the complaint, Colombia could at least say that the different tax rates are based on the alcohol content, and not on national origin. The US does not even have that argument to justify the discrimination of taxing imports at five times the rate of domestic spirits producers.

    US states also discriminate. New York is an example. It has excise taxes on booze sold in NY. But it also had the Beer Production Credit on state taxes for NY breweries. Last year, it expanded it to include other types of booze and renamed it the Alcohol Production Credit. Similarly, last year New York City gave its breweries a beer production credit, which is in addition to the state credit.

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