Canada:Wine Free Trade Studied, Highlights Internal Controls Issue

http://www.torontosun.com/2012/06/01/open-borders-for-smaller-wineries

While Libs are identified with external free immigration and trade, many countries have internal restrictions that Libs are working on–e.g. free travel withing China, or free trade in local wines in, of all places, the US or Canada (whose winemakers can more easily export to China). This article explains current discussion and slow re-opening underway.

..Here’s the situation: For most of Canada’s small (usually family-run) wineries, selling through the various government liquor distribution monopolies is very challenging – and costly. Indeed, smaller wineries lack the volume and supply required of large-scale government liquor store distribution. They often have to eat into their profits in order to put their bottles on the shelves.

As a result, many small wineries have no other choice, in practice, but to sell their wine directly to customers. They can do this by offering their red, white or rose to people who visit the winery, or sell their products to restaurants, for instance. But the wine must stay in the province where this transaction is being done, which reduces the number of potential customers. (Keep this in mind when you visit a winery in B.C. or Quebec during your summer vacation: You’ll technically break the law if you bring back a bottle with you!)

Does it make sense that Canadian wineries can more easily sell in Asia or Michigan, than in other Canadian markets that do not have significant wine industries such as Alberta, Saskatchewan or Manitoba? Yet, that’s what’s currently happening. According to the office of MP Dan Albas, many small wineries have increasingly targeted customers in the United States, or more lucrative wine markets in Asia, for direct sales.

Who’s to blame? Regulation. More specifically, the 83-year-old Importation of Intoxicating Liquors Act, which makes it illegal for wineries to sell directly to consumers in other provinces.

Dan Albas is proposing an amendment to this legislation. That would allow for the direct sale of wine across provincial borders for personal consumption. In other words, you could import wine from other provinces in person, or order cases of wine through the Internet. According to the MP’s office, the bill has so far received overwhelming support from the public as well as from all political parties. So far, it has moved relatively quickly through the House of Commons.

Hopefully, the bill will be sent to the Senate prior to the House of Commons break at the end of June…

Michel Kelly-Gagnon is president of the Montreal Economic Institute (www.iedm.org). The views reflected in this column are his own.

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