Australia takes Canada to WTO over wine rules

Geneva | Reuters — Australia has complained at the World Trade Organization about Canada’s rules on wine sales, expanding a similar U.S. complaint against one province.

In October, Washington accused British Columbia of providing an unfair advantage to local vineyards by giving their wine an exclusive retail channel in grocery store shelves and cutting out U.S. competition.

Australia’s complaint, published by the WTO on Tuesday, expanded the U.S. argument, saying that not only B.C. but also Ontario, Quebec and Nova Scotia, as well as the Canadian government, had policies on wine that broke WTO rules.

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“It appears that a range of distribution, licensing and sales measures such as product mark-ups, market access and listing policies, as well as duties and taxes on wine applied at the federal and provincial level may discriminate, either directly or indirectly, against imported wine,” Australia said.

The dispute is the first brought by Australia against Canada in the history of the WTO, and follows a rise in trade tension between Canada and the U.S.

The North American neighbours are tussling over the future of the NAFTA trade agreement they share with Mexico, and last week Canada launched a surprise attack on U.S. trade policy, initiating a wide-ranging WTO complaint.

Australia Trade Minister Steven Ciobo said that lodging the complaint was “unrelated” to Canada’s surprise last-minute reservations that stalled the Trans-Pacific Partnership trade negotiations in Vietnam last November.

“These are unrelated events the fact is that we have continued to see an erosion of, for lack of a better term, liberalized market access into Canada,” he said in an interview with Australian Broadcasting Corp. radio on Wednesday.

“We are aggrieved over the domestic (wine) regulations that they have in place. It sends a very clear shot across the bow to Canada.”

The Canadian federal government “works closely with all provinces and territories to ensure their liquor distribution and sales policies are consistent with our international trade commitments,” said Pierre-Olivier Herbert, spokesman for Canada’s international trade minister.

Canada will also give “careful consideration” to consultation requests from any WTO member, Herbert added.

Australia has seen exports of bottled wine to Canada almost halve between 2007 and 2016, from $224 million to $119 million, although sales to Britain and the U.S., once its top export markets, have fallen by even more (all figures US$).

Despite a growth in sales to China, now the top export destination, and to Hong Kong, Australian wine sales overall fell from $2.5 billion in 2007 to $1.7 billion in 2016.

Under WTO rules, Canada has 60 days to settle the dispute with Australia. After that, Australia could ask the WTO to adjudicate, with a view to forcing Canada to change its laws or risk trade sanctions.

— Tom Miles is the chief correspondent for Reuters’ Geneva bureau; additional reporting by Leah Schnurr in Ottawa and Tom Westbrook in Sydney.