January 17 2018
Today the Australian Government announced that it has initiated formal World Trade Organisation (WTO) dispute settlement action against Canada’s discriminatory measures affecting Australian wine.
This is the first step in commencing formal consultations with Canada regarding measures Australia believes impose arbitrary and disadvantageous restrictions on the sale of imported wine in Canadian grocery stores, inconsistent with Canada’s WTO obligations. This step responds to concerns from WFA regarding the Canadian measures, which negatively impact trade with Australia’s fourth largest export market for wine, currently valued at $A185 million.
This action is critical, as the United States were also negotiating a settlement under NAFTA (North America Free Trade Agreement) which could have provided them with preferential access to the Canadian market in line with that provided to the domestic industry.
There are a number of issues, which we and other foreign wine producers face, in importing wine into Canada. Local provincial liquor control boards control Canadian alcohol sales. As a result the laws and regulations governing the sale of alcohol differ across the provinces similarly to our states. In recent years there have been a number of laws or regulations imposed across the provinces, which discriminate in favour of locally produced Canadian wine and disadvantage imports.
Key issues affecting sales of Australian wine in Canada include:
Background of WTO wine action against Canada
As a result these issues the United States in January 2017 launched trade enforcement action against Canada at the World Trade Organization (WTO). The action focused on laws which were being applied in the province of British Columbia in relation to measures applied to grocery stores which discriminate against the sale of U.S. wine in stores. WFA had been encouraging the Australian Government to join the US challenge as a co-complainant and expand the scope of the challenge to include a range of other provincial laws which disadvantage our producers.
In February 2017 The Australian Government joined the US WTO action as a third party observer along with the EU, New Zealand and Argentina. As Australia was only a third party observer, there was no opportunity to influence the scope of the action.
Later in 2017 North American FTA (NAFTA) negotiations commenced and there was a risk that the issues could be resolved though NAFTA, which would leave Australia and other observers outside of any negotiated arrangements which would only apply to the US. We again sent a letter to the Trade Minister’s office advising that we strongly recommend action be taken to ensure Australian wine doesn’t miss out.
New Australian WTO action
In December 2017 the Australian Government contacted us and advised that Australia had decided to launch a new trade enforcement action against Canada and were seeking our support. Over December and Early January WFA have been providing advice in relation to the laws and regulations which are considered to be disadvantaging us in Canada. The new Australian-led action will address the same concerns that were lodged by the US trade action earlier in 2017 regarding discriminatory regulations, which restrict trade of foreign wines in retail outlets in British Colombia. In addition, the Australian action will also address regulations considered discriminatory in the provinces of Quebec, Ontario and Nova Scotia. It challenges over 25 laws and regulations in the provinces and will involve an extensive legal undertaking. This is the first time since 2003 (15 years) that Australia has initiated its own WTO action.
The WTO dispute stages
The WTO provides a rules based system that is vital to ensuring countries around the world ensure their regulations are fair and non-discriminatory. If members feel that another Country’s regulations are discriminatory they can launch formal dispute action against them. The process can take 3 years to complete and involves:
WFA is very happy the Australian Government has decided to take our advice, and actively taking steps to resolve numerous trade barriers in support of the sales of Australian wines in Canada.