trending Market Intelligence /marketintelligence/en/news-insights/trending/eljioqx1edgranknosycog2 content esgSubNav
In This List

US asks WTO to investigate 'unfair' Canadian wine regulations

Blog

Using ESG Analysis to Support a Sustainable Future

Video

S&P Capital IQ Pro | Powered by Expert Insights

Blog

Q&A: Streamlining Analytics for TCFD Reporting

Blog

Evergrande and the wider impact: a sentiment analytics based perspective


US asks WTO to investigate 'unfair' Canadian wine regulations

Trade tensions between the U.S. and its northern neighbor continued to mount May 25 as the U.S. asked the World Trade Organization to investigate regulations in British Columbia that it says stifles the sale of American wine in the Canadian western province.

U.S. Trade Representative Robert Lighthizer and U.S. Department of Agriculture Secretary Sonny Perdue said in a May 25 news release that regulations in British Columbia enacted by the province in 2015 violate WTO commitments, limit sales for U.S. winemakers and provide a distinct advantage to British Columbia wine producers.

The regulations, amended in April 2015 to permit the sale of wine in grocery stores, allow only wine from British Columbia to be sold on regular grocery shelves, according to the Office of the U.S. Trade Representative, or USTR. Imported wines, including those from the U.S., however, can only be sold in grocery stores under a "store within a store" option that is physically separated from the grocery store. As a result, the Trump administration asked the WTO to establish a dispute settlement panel to see whether the regulations violate Canada's commitments to the global trade body.

"Canada is an important market for U.S. winemakers," Lighthizer said. "Discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off grocery store shelves, and that is unacceptable."

The Canadian embassy in Washington told S&P Global Market Intelligence in an email that it was "aware of USTR's concerns."

"We take our international trade commitments very seriously," Colin Shonk, a spokesperson for the embassy, said in an email. "We will continue to work closely with the provinces and territories on this issue, as the distribution and sale of alcoholic beverages in Canada falls under provincial authority. We will always stand up for Canadian industry and defend our workers."

The U.S. held consultations with Canada on the matter in 2017, but a resolution was not reached, leaving a WTO panel establishment request as the next step in settling the dispute.

According to the USTR, $56 million worth of U.S. wine was exported to British Columbia, which is close in proximity to California and other wine-producing states in the western U.S., in 2017, accounting for a 10% share of the province's market.

According to the Wine Institute, a trade group, Canada is the largest U.S. wine export market, with $444 million worth of California wines sold to the province in 2017.

"The practice of discriminating against U.S. wine is unfair and cannot be tolerated any longer," Perdue said. "Our wine producers rely on export markets and they deserve fair treatment, especially by our northern neighbors in British Columbia."

The wine dispute comes amid heightened trade tensions between the two close allies. The U.S., Canada and Mexico were unable to meet a May 17 deadline for a renegotiated North American Free Trade Agreement, a key date that Speaker of the House Paul Ryan, R.-Wis., cited as essential in order for the revamped trade deal to be considered by the current U.S. Congress. Negotiators failed to resolve disagreements over thorny issues including automobile rules of origin and wages for auto workers.

The United States' 25% and 10% tariffs on imports of steel and aluminum, for which Canada received a "final" 30-day exemption extension, are scheduled to go into effect June 1, barring a last-minute NAFTA deal that President Donald Trump has said would provide the neighboring countries permanent exemptions.