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United States Challenges Canadian Trade Measures That Discriminate Against U.S. Wine

British Columbia Regulations Unfairly Exclude U.S. Wine from Grocery Store Shelves

 

WASHINGTON, DC – United States Trade Representative Michael Froman announced today that the Obama Administration has launched a new trade enforcement action against Canada at the World Trade Organization (WTO).  Today’s action challenges British Columbia’s (BC) regulations that discriminate against the sale of U.S. wine in grocery stores.  These regulations appear to breach Canada’s WTO commitments and have adversely impacted U.S. wine producers.  Today’s action marks the 26th trade enforcement challenge the Obama Administration has launched at the WTO.  The United States has won every one of those complaints that has been decided so far.

The BC regulations being challenged by the Office of the United States Trade Representative (USTR) discriminate against U.S. and other imported wine by allowing only BC wine to be sold on regular grocery store shelves.  These regulations exclude all imported wine from this new and growing retail channel for wine sales in BC.  Such discriminatory measures limit sales opportunities for U.S. wine producers and provide a substantial competitive advantage for BC wine.

“American winemakers produce some of the highest-quality, most popular wines in the world. When U.S. wine producers have a fair shot at competing on a level playing field, they can compete and win in markets around the globe,” said Ambassador Froman. “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. This Administration is continuing to fight to level the playing field for American producers and workers, so that we can continue to grow our economy and support quality jobs across the United States.”

"American winemakers have found increasing success in export markets like Canada," said Acting Agriculture Secretary Michael Scuse. "However, we could be doing even better.  In British Columbia the local wines get an unfair advantage because they can be sold on grocery store shelves, while U.S. wines cannot.  The United States simply seeks equal opportunities to market our wines, consistent with Canada's international obligations."

The discriminatory BC regulations negatively affect U.S. winemakers by effectively denying them access to BC grocery store shelves, a new and growing retail channel.

 

Additional Background Information about Today’s Challenge

The United States is challenging BC regulations that were amended in April 2015 to permit the sale of wine in grocery stores.  The amended regulations provide two options for grocery stores to sell wine.  Under the “wine on shelf” option, a grocery store may sell wine anywhere within the grocery store, but only BC wine may be sold on grocery store shelves.

Imported wine may only be sold in grocery stores under a “store within a store” option.  Under the “store within a store” option, wine sales must be conducted in a “wine store” that is physically separated from the grocery store, has controlled access, and separate cash registers from the grocery store’s cash registers.  As a “store within a store”, a grocery store may sell both BC wine and imported wine. 

Public reports indicate that a number of grocery stores are already selling BC wine on their shelves under the “wine on shelf” option.  However, we are not aware of any grocery stores selling wine pursuant to the more costly “store within a store” option.   BC’s regulations limit choices and raise costs for Canadian fine wine lovers.

Consultations are the first step in the WTO dispute settlement process.  If the United States and Canada are not able to reach a mutually agreed solution through consultations, the United States may request that the WTO establish a dispute settlement panel to examine the matter.

See a copy of the consultation request letter [here].

 

The Obama Administration’s Trade Enforcement Record

  • Since President Obama was inaugurated in 2009, USTR has filed 26 enforcement complaints (including this one) at the World Trade Organization (WTO) – more than any other WTO Member. The United States has won every single one of those complaints that has been decided by the WTO so far.
     
  • The Obama Administration has brought 16 trade enforcement challenges against China, three against India, and several other complaints against a series of major economies including Indonesia, Argentina, the Philippines, and the European Union. To ensure the greatest economic benefits for American workers and exporters, the Obama Administration has used our trade enforcement actions to emphasize opening these large, strategic markets to which the United States exports a diverse array of products and services.
     
  • The Obama Administration has also broken new ground on the enforcement of agricultural market access including challenges to China’s non-transparent and unpredictable administration of tariff-rate quotas for certain grains; China’s excessive government support for wheat, rice and corn; Indonesia’s barriers restricting importation of beef, poultry, and horticultural products (U.S. prevailed in 2016); India’s non-science-based measures on poultry and other products allegedly to protect against avian influenza (U.S. prevailed in 2015); and China’s unfair taxes on U.S. broiler chicken products (U.S. prevailed in 2014; compliance challenge pending).
     
  • Enforcement extends far beyond formal disputes. The Obama Administration has opened markets for American workers, farmers, and businesses by taking tough stands to resolve unwarranted trade barriers with trading partners. For example, we have eliminated restrictions in 17 countries since January 2015, gaining additional market access for U.S. beef in Brazil, Colombia, Costa Rica, Egypt, Guatemala, Iraq, Lebanon, Macau, New Zealand, Peru, Philippines, Saint Lucia, Saudi Arabia, Singapore, South Africa, Ukraine, and Vietnam. As a result, U.S. beef exports have doubled.  We also successfully engaged with the Philippines – including through the Special 301 process – to enhance protection of intellectual property rights. These and similar actions have helped expand exports and level the playing field for American goods and services.

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