August 7, 2020

The National Post somehow missed “the forest for the trees” in “When it comes to wine, to tax, or not to tax is never the question, August 1, 2020”. https://nationalpost.com/

It was self-evident in 2006 when a newly elected Conservative government came to power, one which claimed to believe in free markets and rules-based trade, that a federal excise duty exemption for certain Canadian wine (and beer) was trade illegal.
However, it was only in 2017 after the current Liberal Finance Minister Bill Morneau introduced an annual automatic increase in excise duties on all other beverage alcohol products that some of Canada’s leading trade partners, led by Australia but supported
by Argentina, Chile, the EU, New Zealand and the U.S., felt compelled to file a formal trade dispute in Geneva under the WTO Agreements.

While Australia enjoyed a very broad range of potential provincial alcohol measures it could have included in its formal WTO challenge, it chose to cherry-pick a few select measures in Ontario, Quebec and Nova Scotia as illustrative examples of the kind of systemic policy discrimination that is embedded throughout the Canadian beverage alcohol market (often referred to as interprovincial trade barriers).

Brazenly, some provinces attempted to defend these blatantly discriminatory measures in Geneva by suggesting these were not targeting imports in that products from the other 9 provinces were treated as poorly as those from overseas. While it is absolutely
true that many provinces openly discriminate against alcohol beverages produced in other provinces, thankfully this is not an acceptable defence under the WTO rules.

Now that Canadian wines must also pay the same federal excise duties as imported wines, it makes more sense than ever that the next federal Budget repeal the rigid, undemocratic annual automatic annual increases in beer, wine and spirits excise
duties.

Moreover, all Canadian provinces should commit to providing all alcohol products the best policy treatment afforded to products made by manufacturers licensed within their borders. This obligation, enshrined within the WTO, should be replicated in the CFTA, Canada’s latest internal free-trade agreement. In the absence of such meaningful provincial liquor policy reform, the federal government must follow through with its commitment to use its powers under section 91(2) of the Constitution Act, 1867 and
Supreme Court decisions on the regulation of trade and commerce to compel provinces to end policies that discriminate against alcohol products produced in other provinces.

The real loser under Canada’s parochial liquor policies are actually Canadian consumers with less selection and higher prices and somewhat ironically, Canada’s globally competitive beer, wine and spirits producers and the local farmers that supply our
grapes, barley and cereals grains.