WTO Challenge Update

Original article from Wine Growers Canada

WTO Update

Dear Canadian Wineries,

As you are aware, for more than 2 years, Wine Growers Canada has been working tirelessly with federal officials to protect the excise duty exemption on 100% Canadian wines implicated in the WTO challenge put forward by Australia against Canadian wine measures. Unfortunately, the Australian government refused to accept any offer which would protect and maintain the excise exemption which was implemented in Budget 2006.

Based on advice by Global Affairs, Canada agreed to a negotiated settlement on the excise exemption, as well as measures in Ontario and Nova Scotia, the details of which were made available this morning.

As part of this agreement, the Government of Canada has agreed to repeal by June 30, 2022, the federal excise duty exemption on 100% Canadian wine as set out in subsection 135(2) of the Excise Act, 2001.

Federal lawyers and senior officials made it clear that Canada's success at protecting the excise exemption at the WTO was extremely low, and the negotiated settlement will provide 2-years to remove the excise exemption, double the time which would be made available under a WTO ruling. WGC has also made it clear that the Canadian wine industry requires a commitment to an excise exemption replacement program given the financial impacts of losing the excise exemption and the uncertainties which have been created by the CETA, CPTPP, NAFTA trade agreements and now the COVID-19 pandemic.

Finance Minister Bill Morneau confirmed with WGC that the Government is prepared to support the wine industry in managing the impacts of this trade challenge, and are actively investigating options that align with Canada’s international trade obligations, with a view to ensuring the long-term success of the industry.

In line with this commitment from the Finance Minister, WGC has asked the federal government to implement a replacement program in the next federal budget to address both the loss of the exemption, but also as a recovery package to address the devastating impacts of COVID-19.

Moving forward WGC will continue to work with the federal government and our provincial wine associations to secure the best outcome for our industry.

Ensuring we have a replacement program that provides greater value for all Canadian wineries will continue to be WGC’s top priority. We have a strong working relationship with the federal government and will continue to advocate on behalf of all Canadian wineries across Canada.

We will keep you informed of all advocacy initiatives and trust that we can count on your support to ensure the best outcome for the future of our industry.

In the coming weeks, WGC will be organizing a virtual town hall for all wineries in Canada to participate. This town hall will provide a detailed briefing on the trade challenge and the excise exemption. WGC will also develop a form letter campaign for Canadian wineries to write the federal finance minister for an immediate replacement program and support continued investment and job growth across the Canadian wine industry.