The Trump administration has requested that the World Trade Organization establish a dispute settlement panel to examine unfair regulations governing the sale of wine in grocery stores in the Canadian province of British Columbia. The Office of the United States Trade Representative is challenging British Columbia regulations that discriminate against U.S. and other imported wine by allowing only British Columbian wine to be sold on regular grocery store shelves.

“We want customers in British Columbia to have the opportunity to buy our great American wine. The practice of discriminating against U.S. wine is unfair and cannot be tolerated any longer. Our wine producers rely on export markets and they deserve fair treatment, especially by our northern neighbors in British Columbia,” Agriculture Secretary Sonny Perdue said.

“Canada is an important market for U.S. winemakers,” said Trade Ambassador Robert Lighthizer. “Discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off of grocery store shelves, and that is unacceptable. Canada and all Canadian provinces, including BC, must play by the rules. The Trump Administration will continue to hold our trading partners accountable by vigorously enforcing U.S. rights under our trade agreements and by promoting fair and reciprocal trade through all available tools, including the WTO.”

The British Columbia regulations exclude all imported wine from grocery store shelves, a new and growing retail channel for wine sales in British Columbia. Such discriminatory measures limit sales opportunities for U.S. wine producers and provide a substantial competitive advantage for British Columbia wine. These regulations appear to breach Canada’s WTO commitments and have adversely affected U.S. wine producers.

Background

The regulations 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 British Columbia 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 has separate cash registers from the grocery store’s cash registers. As a “store within a store,” a grocery store may sell both British Columbia wine and imported wine.

In 2017, U.S. wine exports to British Columbia totaled $56 million, and U.S. wine had a 10% percent share of the British Columbia market. A number of grocery stores are already selling British Columbia wine on their shelves under the “wine on shelf” option. However, we are not aware of any grocery stores selling wine pursuant to the “store within a store” option.

The United States held consultations with Canada in 2017, but those consultations did not resolve the dispute. Requesting the establishment of a panel is the next step in the WTO dispute settlement process.

Source: USDA