U.S. challenges program that puts B.C.-only wines in grocery stores

The Obama administration has launched a trade enforcement action against Canada at the World Trade Organization, stating that B.C.'s liquor regulations discriminate against the sale of U.S. wine.

In April 2015, the province introduced legislation allowing the sale of some B.C. wines in designated grocery stores.

U.S. Trade representative Michael Froman wrote in a news release the regulations breach Canada's WTO commitments by giving local B.C. wine an unfair advantage.

"The discriminatory regulations implemented by British Columbia intentionally undermine free and fair competition and appear to breach Canada's commitments as a WTO member. Canada and all Canadian provinces, including BC, must play by the rules," Froman said.

B.C. defends policy

There are currently 14 grocery stores across the province that exclusively sell wine produced in B.C.

A total of 671 private liquor stores and more than 200 provincial liquor stores sell wine imported from across Canada and around the world.

Jobs Minister Shirley Bond said the province will defend B.C.'s current wine policy against the challenge.

"We're going to continue to support the B.C. wine industry and and we're confident that we are complying with B.C. and Canada's international trade obligations," she said. 

She said that Canada's current obligations allow for flexibility in how local wines are distributed.

"Trade agreements such as NAFTA allow for a number of private wine outlets that sell only B.C. wine, and we are confident in the approach we have taken," she said.

According to Bond, the B.C. wine industry pumps $2 billion into the province's economy every year, with over 10,000 people currently working in the industry.

Wine advocates speak up

Tom LaFaille, vice-president of the Wine Institute, which represents over 1,000 California wineries, said he supports the challenge.

"It's a fundamental principle in international trade that one country can't unfairly discriminate against importing producers to benefit their local industries," he said. 

"We're worried these bad trade barriers have a contagious effect and could be adopted by other provinces."

Miles Prodan, president of the B.C. Wine Institute, said he believes the challenge is based on a misunderstanding of the province's current policy.

He said that American wines are not legally banned from grocery stores, but currently lack access to them because of liquor licensing restrictions.

"The policy was not designed to discriminate against certain wines but to increase choice and convenience for B.C. consumers," he said. 

"B.C. wines only make up 17 per cent of all wine sold in the province, so everything else that's sold is imported — so they're not harmed by this," he said. 

The U.S. has launched 26 enforcement complaints at the WTO since 2009 and has won all of those that have been decided.