Bill C-311 (Historical)

An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)

This enactment amends the Importation of Intoxicating Liquors Act to add an exception allowing individuals to import wine for their personal use to the provision that requires that all imports of intoxicating liquor be made by the province.

[Miles Prodan, Executive Director, British Columbia Wine Institute]

Good afternoon and thank you for this opportunity to state the B.C. wine industry's case before this committee.

The B.C. Wine Institute is an organization of voluntary members that represents 95% of all wine production in the province and is wholly supported through member sales. The BCWI represents the interests of B.C. VQA—that is 100% B.C.-produced wine—in the marketing, communication, and advocacy of their products to all stakeholders.

Specifically, the B.C. wine industry has enjoyed tremendous growth provincially over the past five years, with over $4 million of average growth annually, and almost 9% over the last five years. With approximately 10,000 acres of grapes planted in B.C., the B.C. wine industry is small. Compared to 15,000 acres here in Ontario and 40,000 in Napa, for instance, we are a cottage industry. This bill goes a long way in helping us to grow our markets. Of the total of 210 grape wineries currently licensed in the province—an additional 24 growers have indicated they will start a winery in the future—approximately 80% produce less than 10,000 cases, and the majority of those are family-owned agribusinesses making fewer than 5,000 cases a year.

As of January of this year, of the total provincial B.C. VQA wine sales, 25% were sold through the B.C. LDB and 24% were sold directly from wineries, with the remainder sold through private liquor stores, restaurants, and the rest.

While it is difficult to estimate how many direct winery sales are done through wine clubs, in-province direct delivery, etc., the majority of B.C. wineries offer such services, and it is an effective and efficient marketing and distribution strategy, specifically for the small operators. It is reasonable to assume that a minority of wineries may currently be illegally shipping wine directly to customers, but the majority do not and are at a distinct disadvantage to those who may be.

B.C. wine tourism has been experiencing tremendous growth over the last number of years, specifically since the 2010 Olympics. We've seen a tremendous number of wineries making significant capital investment in accommodation, restaurants, and the rest to augment the wine tourism industry in B.C.

Provincially, wine tourism was estimated to be worth $75 million in B.C., according to a study done in 2003. While all agree that it's substantially more than that, the number is pegged at $75 million. It is a significant attribute of B.C. tourism.

As you are aware, the Importation of Intoxicating Liquors Act provides no legal exemption in federal law to transport wine across provincial borders, even for small quantities purchased for personal use. The IILA makes it illegal for Canadian wine consumers to take wine that is not purchased in or consigned to the province across a provincial border. It also prohibits a consumer from directly ordering out of province after returning from a B.C. wine tour.

Since June 2011, several liquor boards have allowed a quantity “on your own person” into the province. While this is an improvement, it is only of benefit to residents of border communities, and provides limited benefit to wine consumers or tourists who may have travelled, say, from Nova Scotia to British Columbia to visit wine country once every couple of years.

We see Bill C-311 as having a tremendous impact on the wine business of B.C. The number of wineries in B.C. has grown by 281% in the last ten years. Today, many of those are small family-based wineries focused on small-lot wine. The investment made in the B.C. wine industry has been in response to a growing interest in B.C. wine and tourism.

[Shirley-Ann George, President, Alliance of Canadian Wine Consumers]

Thank you.

On behalf of Canadians, especially those who love wine, we are pleased that you have sought out the views of the Alliance of Canadian Wine Consumers. We represent a grassroots volunteer organization, more commonly known by our campaign name “Free My Grapes”.

We exist for a single purpose—that it should be legal for Canadians to directly buy from Canadian wineries and have the wine shipped across provincial borders for their personal consumption. We call this winery-to-consumer or WTC sales. Bill C-311, ideally with our proposed amendment, has our full support. I have five quick points to make, plus an important request on the amendment.

First, Canadians want interprovincial wine barriers removed. We believe there should be a single Canadian market and expect that everything should be available via the Internet. Bill C-311 will provide an opportunity for greater consumer choice, the ability to visit a winery and have the wine shipped home, to reorder this wine, to join wine clubs, and to go to a winery's website and order wines that you hear about through word of mouth or through local blogs.

Canadians are unwilling to accept this archaic prohibition-based law that has been mocked in major national and local newspapers, radio, and even the national evening newscast. Canadians in every province and territory support our cause. They have signed our petitions, sent letters to MPs, and joined us on Facebook and Twitter. There's even been one individual, Terry David Mulligan, who has been willing to go to jail in his protest of this law.

Second, this is affordable. Our WTC request has been carefully crafted to minimize the impact on provincial revenues. Our analysis, based on ShipCompliant data—which has been tracking the U.S. impact of direct-to-consumer sales, where it is legal in 38 of 50 states to ship across state lines—only 0.6% of a single one per cent of U.S.-produced wine is shipped across state lines. If we apply these numbers to Canada and assume no economic benefit, which is an ultra-conservative projection, 0.6% of 1% translates into 0.001 to 0.015 of the liquor board revenues, ranging from a potential loss to provincial and territorial treasuries of $44 in Nunavut to $619,000 in Ontario. These amounts can be easily recovered through cost savings. For example, WTC and a change of just 1¢ per bottle of wine sold would result in a revenue increase for each and every province.

On the plus-side, we believe that taxes, jobs, and other economic benefits will result in the provinces, more than covering their costs, and that wine-producing provinces will gain significantly from increased tourism, wine sales, and grape sales. The high cost of shipping wine means WTC is only attractive for wines not locally available and will be largely used for higher-end wines. As in the U.S., all this translates to 98% of wines still being purchased locally.

Third, the vast majority of Canadian wines simply are not available to Canadians. A quick tour down the aisle of your local liquor store clearly demonstrates that very few of the 450-plus wineries are actually represented, and the limited shelf space in existing outlets means they never will be.

Fourth, the greatest benefit is going to go to small and medium rural businesses. U.S. experience shows that every state that has allowed WTC has had their local wine sales increase, and most small wineries cannot or will not sell their wines through liquor boards. Also, wine and culinary tourism will increase.

Finally, this bill does not undermine the need or the ability of provinces to properly regulate the sale of wine. Provinces will still set the regulations, such as limiting the changes to winery-to-consumer sales. They will still ensure the protection of minors through such vehicles as licensing shipping companies and demanding proof of age at delivery.

Earlier I mentioned one area of concern, and I will quickly conclude with this. The current amendment is worded in such a way that liquor boards could flaunt the will of Parliament and not actually make a single change. Given that they have been unwilling to work with Canadian vintners and establish a winery-to-consumer framework and that the provinces have refused to respond positively to Minister Gerry Ritz's invitation to discuss the needed changes, we have no reason to believe, with the exception of British Columbia, that they won't just ignore Bill C-311. This will disappoint and anger Canadians, who widely believe that Bill C-311 will make a difference, otherwise why would we be spending our collective time and our collective money working on it?

Our request is that you add the word “reasonable” before “quantity”, and remove the word “and” afterwards.

There is legal precedent that demonstrates that such a change would not create the concerns raised by Mr. Albas, and the provinces would still have the ability to set quantity limits. This change would only encourage them to go beyond the pointless two bottles per year limit that some have today. Mr. Hicken is capable of addressing this further.

In summary, we're asking you to vote in favour of Bill C-311 with the amendment.

Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

Orders of the day—we are televised—are pursuant to the order of reference of Wednesday, December 7, 2011, a study of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

This is our second session on this topic.

We have six witnesses before us here this afternoon: firstly, the Alliance of Canadian Wine Consumers; secondly, the British Columbia Wine Institute; next, we have Château des Charmes; we have the Grape Growers of Ontario; the Wine Council of Ontario; and our last presenter, Winelaw.ca.

I want to thank you all for being with us here this afternoon. We will allow you five minutes for an opening statement, and then we'll have questions from members.

We'll start with Ms. George, please.

Wine Industry

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Speaker, further to all party support that I have been honoured to receive in this House, I rise to present a duly certified petition of 157 signatures of people from my riding of Okanagan—Coquihalla who support my private member's bill, Bill C-311, to end wine prohibition in Canada.

Free trade in wine should not be a crime.

[Ivonne Martinez]

I have had discussions with AGLC, and they have informed me that yes, they would have to impose restrictions, much as many of the other provinces would, if Bill C-311 goes through.

[Ivonne Martinez]

Currently the process goes through AGLC and the liquor stores, and right now that is legal. What Bill C-311 proposes is that you would bypass both of those and would go directly to the consumer, and you are asking the provinces to limit the amount a person would be able to order.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

We should note that Mr. Jean may be the first Alberta MP to speak of liquor and bondage at committee.

Mr. Dunning, you say that Bill C-311 could hurt the Canadian wine industry. Is there anyone on your board who runs a winery?

[Ivonne Martinez]

Just to clarify, the wine, as stated in Bill C-311, is for personal use only—

[Dan Paszkowski]

With respect to the private order program, there are private order programs available through most liquor boards. It does take a significant amount of time for the wine to arrive. I think the websites rank it anywhere from three to six months. You require a one-case minimum, and typically not a mixed-case lot.

There are examples that I know of in which a consumer in Ontario, for example, wants a specific wine from British Columbia, but there is an agent in Ontario, so they cannot use the private order program; they're turned over to that winery's agent. The amount of paperwork that agent has to do to get that wine through the liquor board system is not worth his or her while, so it doesn't happen.

Yes, a private order program is there. Is it perfect? No, it's not perfect. Can it be improved? Yes, it can be improved. It can be improved to the point where many consumers will use it. That's no reason not to amend this bill and allow consumers to order directly from a winery.

With respect to trade laws, since 2005 the United States has been implementing a system of direct consumer delivery. They have not been challenged. I have spoken to the United States industry. I've spoken to the European industry as to whether Bill C-311 is open to challenge. As long as it meets national treatment obligations, there is no reason and no case for any country to challenge the outcome of passing this piece of legislation.

[Janice Ruddock]

I'll be really quick.

I want the committee to remember what my job is today. It's to speak on behalf of the Nova Scotia wine industry; it is not to discuss free trade agreements or the ramifications of using protected language in our bills. That's the key point. I know we're not able to put “100% Canadian” on it, but that is what we request.

To summarize, Bill C-311 is a step towards having more Canadians enjoy more Canadian wine if the spirit and the wording of the bill is to support the Canadian wine industry. We, as the Nova Scotia wine industry, are trusting it is.

Thank you for the opportunity, and I apologize; I just get so passionate about our Nova Scotia wines.

[Janice Ruddock, Managing Director, Winery Association of Nova Scotia]

Hello. My name is Janice Ruddock and I am the managing director of the Winery Association of Nova Scotia.

I want to thank the Standing Committee on Finance for the opportunity to attend this committee hearing in reference to Bill C-311, the bill to amend the Importation of Intoxicating Liquors Act.

Please allow me just a few minutes to introduce the wine industry in Nova Scotia. We have a 2020 vision: that in 2020 we will have 20 wineries and over 1,000 acres of grapes planted.

Currently there are 14 wineries, but I'm going to tell you that they have enough enthusiasm for 140 wineries. There are enormous dreams and plans in the Nova Scotia wine industry, and the core part of my job is finding the support to help these dreams come to life by promoting Nova Scotia wines wherever possible. Nova Scotians have one of the lowest per capita consumptions of wine in Canada, so obviously the opportunity to move into other regions of Canada is a very attractive possibility for the growth of the Nova Scotia wine industry.

The majority of our wineries are located in the scenic Annapolis Valley, which is one hour from Halifax and a tourist destination.

With a population of only 945,000—I'm not sure where Hanspeter got the other 55,000—who historically are not wine drinkers, we have to spend a considerable amount of resources just on educating people about wine—not Nova Scotia wine, but wine in general.

Our Nova Scotia signature grape is L'Acadie Blanc, and most wineries in Nova Scotia will produce a L'Acadie Blanc wine, which is the most wonderful accompaniment to our delicious seafood. If you want to, as Scott has mentioned, you will see that this evening. Nova Scotia is being recognized for its high-quality sparkling wines, plus our off-dry whites. We also make red wines and icewines as well.

With current 100% Nova Scotia wine not even filling the shelves of the 105 Nova Scotia Liquor Corporation stores, today our key priorities remain simply to increase the production of 100% Nova Scotia wines and to educate the consumers on Nova Scotia wines. We like to say, “Created under the same earth, sea, and sky, the wines and seafood of Nova Scotia are, quite simply, a match made in Nova Scotia heaven”. That is why our symbol is a wineglass and a lobster claw. This symbol is put on our wine that is produced with only 100% Nova Scotia grapes.

Nova Scotia has great wines. We've been recognized with international accolades. For example, Prestige Brut, from L'Acadie Vineyards, was the only entry from North America to win a medal in the ninth international competition for the world's best sparkling wines.

Nova Scotia wines are very hard to duplicate. They add diversity and uniqueness to the Canadian wine industry, and aren't diversity and uniqueness what Canada is all about?

Therefore, the ability to ship our unique wines across Canada will give Canadian consumers an opportunity to sample truly unique and truly Nova Scotian wines. This year, we are formally launching a Nova Scotia signature wine called Tidal Bay, which again is unique to Nova Scotia. Only 14 months ago, Nova Scotia saw our own wine regulations come into effect. We have been asked whether it's VQA Nova Scotia; it is not, at this point in time, but we certainly are investigating the opportunity.

More to the point on Bill C-311, as you can appreciate, as a growing wine industry in a province of 945,000, the Nova Scotia wine industry is always interested in developing new channels of distribution for our products. Therefore, the Nova Scotia wine industry would support the opportunity for individuals to order or transport Nova Scotia wines across Canadian provincial boundaries.

We have only one request, though—and keep in mind that I am here on behalf of the Nova Scotia wine industry—which is that Bill C-311 reflect or be adapted to incorporate “100% Canadian” in front of the word “wine”. The fledgling 100% Canadian wine industry lacks the awareness that imported wines to Canada have among wine drinkers. Imported wines to Canada increased by 8.8% for the 10-year period from 1996 to 2006. We are concerned that without the definition of “100% Canadian” in front of the word “wine” in Bill C-311, there will be an opportunity for wines of all countries to be moved across provincial borders.

Nova Scotians, being price-sensitive shoppers, will have the opportunity to order imported wines that are under a different business model from our Canadian wines, and there is also a high awareness of the country of origin among our fledgling wine drinkers. No doubt Nova Scotia wine consumers would be thrilled with this opportunity.

[Dan Paszkowski, President and Chief Executive Officer, Canadian Vintners Association]

Thank you, Mr. Chair.

My name is Dan Paszkowski, and I'm the president of the Canadian Vintners Association. On behalf of CVA members, I am grateful for the invitation to appear here today. I'm pleased to discuss Bill C-311, a proposed amendment to the Importation of Intoxicating Liquors Act .

CVA membership represents roughly 90% of all wine produced in Canada. We strongly support Bill C-311 and are encouraged by the support that direct-to-consumer wine delivery has received from consumers across Canada and from all parties in the House of Commons.

Canada has more than 400 grape-based wineries and 1,000 grape growers producing in six provinces. We have 196 grape wineries in British Columbia, 125 in Ontario, 70 in Quebec, and 22 across the Maritimes. The majority of Canada's wineries are small-volume, premium-focused operations that have significant capital invested in their vineyards, wineries, sellers, retail operations, tasting rooms, and increasingly in cellar door restaurants.

We are a young and growing industry. Each vintage, more wineries are opening and more wines are available for sale. While growth is positive, we are challenged by our limited sales channels and the physical brick-and-mortar limitations of provincial liquor board retail stores. In 2011, VQA 100%-Canadian wine sales represent a mere 6% share of the wine market nationally.

Consumer demand for our wines is thriving, and consumers expect to be able to purchase the wines they want in the manner of their choosing: from retailers, at the winery, and remotely by telephone or online.

In our support for direct-to-consumer wine delivery, we have engaged in discussions with consumers and wineries across Canada; with legal and trade experts; with federal and provincial regulators, liquor boards, and elected officials; and with NGOs focused on alcohol in moderation.

In response, we are recommending two minor amendments to the bill that we believe will enhance its clarity, satisfy consumer demand for choice in wines and how they are delivered, satisfy regulatory requirements, and create a new source of government tax revenues. In the interests of time, the amendments we are recommending are included in our written submission.

To comply with our international trade commitments, Bill C-311 must meet national treatment obligations. As such, imported wines must be afforded the best treatment provided domestic wines, but only once they have landed in Canada. Bill C-311 meets this obligation, but to be clear, it does not permit foreign wineries to ship directly to Canadian consumers.

Bill C-311 essentially legalizes the following: out-of-province tourists can buy wine at a winery and transport it home either on their person or by having it delivered; out-of-province consumers can order wine online directly from an out-of-province winery and have it delivered. This would permit Canadians to bring back or have delivered wine that was purchased outside of the consumer's home province. As is normally the case, these purchases would be taxed in the province in which the transaction takes place.

While there is limited concern with tourists bringing wine back home with them after an out-of-province trip, provincial governments and liquor boards have expressed concern about the prospect of Bill C-311 extending direct delivery to out-of-province winery wine clubs, online purchases, or liquor board retail stores.

Interprovincial wine shipments from a winery to an adult consumer would require the winery to collect all taxes, levies, and fees on behalf of the province in which the consumer places the order. It It is important to note that in November 2011 the chair of the New York State Liquor Authority testified that direct-to-consumer wine shipping has generated higher local and state sales tax revenues, providing benefits to the state, consumers, and local wineries.

The Province of Ontario, as do most wine-producing provinces, allows its wineries to sell directly to in-province consumers. This has not led to a displacement of wine sales through the Liquor Control Board of Ontario, whose share of retail sales increased from 83% in 2006 to 84% in 2010.

It has been argued that Bill C-311 will stimulate arbitrage opportunities based on varying provincial tax structures across Canada. Differences in tax rates and wine prices are nothing new in Canada, and Bill C-311 will not eliminate provincial authority addressing these concerns.

Finally, the intent of Bill C-311 aligns perfectly with regional efforts to break down trade barriers between provinces. The Trade, Investment and Labour Mobility Agreement between British Columbia, Alberta, and Saskatchewan, the Quebec-Ontario Trade and Cooperation Agreement, and the Partnership Agreement on Regulation and the Economy between New Brunswick and Nova Scotia are examples of efforts by Canadian provinces to seek new partnerships, expand trade opportunities, and collaborate on issues of mutual importance.

In closing, with a few minor amendments Bill C-311 will provide Canadian wineries with a new sales channel that will create a stronger internal market for Canadian wine, a solid base for the industry to sustain its growth ambitions, new opportunities for wine country tourism, new jobs, and enhanced government revenues.

Thank you.

[Rowland Dunning, Executive Director, Canadian Association of Liquor Jurisdictions]

Thank you, Mr. Chair.

Good afternoon. I'm Rowland Dunning, executive director of the Canadian Association of Liquor Jurisdictions, or CALJ for short. CALJ represents provincial liquor authorities in all ten provinces and the three territories. Thank you for the opportunity to speak today.

CALJ's members believe that Canadians deserve easy and comprehensive access to the fine wines produced across this country. How much access do consumers have, you might ask?

Well, they have a broad choice of Canadian wines in their province's or territory's retail stores, amounting to $1 billion in sales just last year, and they can order any Canadian wine any time through private or special ordering services, which we have outlined in our submission.

Provinces are ensuring these programs become even better and faster. They can take wine home with them on their person and for their personal use when they visit wineries in other provinces. In short, Canadian consumers already have good access to Canadian wine, and that's why we think the proposed amendment is unnecessary. In fact, the only reason Bill C-311 exists, and the only reason we're all here today, is that some wineries feel they shouldn't have to pay provincial markups on these sales.

We would be happy to elaborate on these liquor board supports for Canadian wine and on the private order systems that allow consumers to order any wine from any Canadian winery through their home province's liquor retailer.

Every province and territory does apply a markup or a commodity tax to the sale of alcohol to raise revenue and to help pay for government services such as health care, education, and other important priorities.

Yes, a portion of our markup revenue covers the cost of retailing, but most of it goes to provincial spending priorities as well as to helping offset the social, health care, and law enforcement costs that arise when alcohol is not used responsibly.

We're all for tourists visiting wineries in other provinces and taking wine home with them. However, we do have concerns with direct sales into other provinces, since this is a new and distinct retail channel. The impact on our businesses and provincial revenues from allowing direct sales could be substantial. In some U.S. states and the U.K., direct sales account for 4% to 5% of total wine sales. This is the equivalent of about $300 million in annual wine sales in Canada.

Proponents of the bill say the liquor boards could still collect a portion of their markups by adopting a permit system like that used in some U.S. states. These are cumbersome systems whereby out-of-state wineries and even consumers have to register with tax authorities and purchase permits. Our existing private ordering services are much simpler. Why would anyone want to change from the simple and convenient Canadian service to the bureaucratic American system unless they wanted to avoid legitimate provincial charges on wine sales?

Here's something else to seriously consider. Beyond being unnecessary, we think the bill may actually pose a threat to the overall well-being of the Canadian wine industry. Canada's international trade agreements require equal treatment of imported and domestic wines. CALJ's members are frequently reminded of this obligation by federal trade officials, and Canada's trading partners pay close attention to liquor boards, particularly the sale of wine.

I'm sure you all know that wine has been a focus of discussions between Canada and the EU during the current CETA negotiations. In fact, it is our understanding that the EU have asked DFAIT about this bill and its international implications and have not received a response. CALJ's members do a lot to support Canadian wine, supports our international trading partners readily assert are not entirely consistent with our trade obligations.

In the eighties, Canada lost a trade challenge about wine, and the focus of that challenge was differential markups between domestic and imported products. Proponents of Bill C-311 suggest it is consistent with our international trade obligations, as it allows for the direct sale of Canadian and imported wines; however, foreign wines would have to be sold by Canadian retailers and would be subject to provincial or territorial markups, while Canadian wines sold directly by wineries would not.

We're right back at the problem that caused the trade challenge in the eighties regarding differential markups. We believe this would be so large a concern that Canada would immediately face complaints from its trading partners. Even if direct sales from Canadian wineries paid full markups, it appears to us that foreign wineries would have to be allowed to make direct consumer sales as well.

In any trade dispute, Canada would face complaints not only about the new provisions allowed by the bill but also about all of the measures that support Canadian wine. In such a dispute, Canada and Canadian wine have much to lose.

In summary, and on three key messages that I would like to bring to this committee's attention, CALJ believes Bill C-311 is both unnecessary and potentially harmful to the Canadian wine industry.

First, it could create an unfair system whereby some wineries would pay provincial charges and others would not. Second, it could significantly undermine provincial revenues. Third, it could result in trade complaints that would significantly damage the domestic wine industry.

Thank you for allowing us the opportunity to present our views on this matter.

[Ivonne Martinez, President, Alberta Liquor Store Association]

Thank you very much.

I'm here from Alberta, which apparently is the only province that has a system that is different from the rest of Canada. With that in mind, I'll let you know that the Alberta Liquor Store Association, or ALSA for short, represents 1,200 private liquor retailers throughout Alberta, which again is the only province in Canada with a privatized retail liquor industry. The majority of these stores are independently owned or family owned, and all of them would be affected by passage of Bill C-311.

The Alberta Liquor Store Association appreciates the intent of the bill. We don't have a problem with the bill itself. We do appreciate that increased interprovincial trade is needed; however, the implementation of the bill may have many unintended consequences.

The Alberta model is an open market model. Currently, liquor retailing in Alberta is a $2 billion industry that provides thousands of jobs in private sector investments in communities across the province. Provincial revenue from sales of alcohol last year alone was $700 million. Currently, there are over 17,000 liquor products available in Alberta to anyone who wants to go to a liquor store and buy them. Mr. Albas will be happy to know that there are over 1,200 types of B.C. wines available in Alberta, and last year we sold 10 million bottles of B.C. wine alone in Alberta, so the industry is thriving very well.

To address a point, Alberta does not have limits on the quantity of wine products that people can bring with them across provincial borders for their own personal consumption or limits on their frequency of travel, meaning that you can go back and forth to B.C. as many times as you like and bring back as much wine as you like, as long as it's for your personal consumption and you bring it with you. As a matter of fact, Albertans are able to order wine directly from wineries right now, whether from B.C., Nova Scotia, or France. All they have to do is just do it through a local store and go through the AGLC, which is a regulatory body in Alberta. Wine can actually be delivered to your front doorstep, if that is desired.

As I mentioned, we do have some concerns with the bill, the main one being that it would bypass a regulatory body in Alberta, which would then lose the revenue from this domestic liquor product. Most importantly for my stakeholders, it would bypass retail stores, which would also see a decline in sales. Should the Alberta government increase taxes on the rest of the liquor products to make up for this loss of revenue, it would present a compounded negative effect to store owners and their margins of profit.

Underage drinking is also an issue for my members. Social responsibility is something that we take very seriously. As stated in the Importation of Intoxicating Liquors Act, alcohol is indeed a controlled substance, and by allowing direct sale to consumers, Bill C-311 would bypass provincial regulation, making the market vulnerable to underage drinking without any means of monitoring. Anybody, any kid, can grab a parent's credit card and basically order wine, and it can be delivered to the doorstep without having anyone ask for ID.

Bill C-311 says that the province can impose limits on the quantities of wine a person can bring into the province. As Alberta would lose its revenue on domestic wine with Bill C-311, it stands to reason that the provincial government would impose restrictions on quantities that one can bring into the province. In other words, we would be imposing restrictions on a market that is currently open and without barriers, going backwards in some ways.

Bill C-311 would provide a precedent for other domestic liquor products such as beer and spirits to follow in the same path of being able to be sold directly to consumers. ALSA is of the view that Bill C-311 would be the beginning of a slippery slope for all other liquor products to be granted the same rights. Right now in Lethbridge there's a distillery that makes rum, so from the Alberta perspective we would be pushing the idea that they should be able to sell directly to consumers as well.

Bill C-311 could potentially create serious problems with Canada's various trade agreements, including NAFTA and GATT, which call for Canada to treat domestic wine and imported wine the same in terms of tax treatment. As B.C. wines already receive preferential treatment over other wines, this would create an even bigger platform for challenges under our trade agreements.

In conclusion, we again would like to emphasize that we appreciate the goal of this bill. However, we believe that the intended outcome of this bill can be better achieved by working under the federal-provincial agreement on internal trade. In this manner, the Canadian government can achieve its goal of better interprovincial trade in wine products while engaging and consulting all the parties necessary within government, provinces, and the liquor industry to ensure a successful outcome.

Thank you.

[Hanspeter Stutz, As an Individual]

Thank you, Mr. Chair.

Thank you for giving me the opportunity to express my thoughts in reference to Bill C-311. I wish to emphasize that this is my opinion in regard to this issue and has nothing to do with the opinion of an organization.

First you have to realize where I am coming from. One of my toughest challenges as an immigrant from Switzerland and a producer of alcoholic beverages is the existing—or not existing—rules and regulations here in Canada. The interprovincial barriers are one big issue, the lack of Canadian wine regulation the other, but I understand this is not the right place and time to talk about a Canada wine standard.

We want to talk about an open—or let's start with a more open—domestic market. Since you are the Standing Committee on Finance, I assume that the growth of the economy is one of pillars in your mandate.

Let's go back to Nova Scotia.

The local farm area in Nova Scotia disposes of around 50,000 acres of unused farmland. The prices are still reasonable, because there is no shortage yet. The opportunities in Nova Scotia are obvious when you consider the following comparison of the cost of land: one acre of farmland in Nova Scotia costs between $2,500 and $4,000. One acre of farmland in Switzerland is between a rocketing $30,000 and $50,000.

Of course, we could grow vineyards along the north mountain, about 50 kilometres in length, but the question would come up very quickly: where could we sell all this additional wine, with a Nova Scotia population of approximately one million people?

This point is underscored by the present barriers we face as wine producers in selling our products in other provinces. It is easier for our winery to ship 20 cases of wine to Beijing, Germany, Dubai, or Switzerland than to ship one case to our neighbour, New Brunswick. Surely this is counterproductive to our joint goals and objectives. We are in the 21st century and we need a completely open domestic market for private and commercial trade with respect to licensees.

I support what you will hear of Janice's Ruddock's concerns about—I call them the big boys. We have to review these rules and regulations. We have to add the wording “100% Canadian” in front of the word “wine” in the bill.

Furthermore, we should limit the import of foreign products and concentrate on the marketing of our own. No wine region in the world has this policy, and we are the laughingstock of many wine-producing countries. We should strive to be world class, but with our present policies limiting our marketing opportunities, this cannot happen.

Your help is needed on this issue.

The innovative and creative small or medium-size winery has a certain disadvantage in this current environment, and the big guys are clearly laughing at us. Canada has outdated rules and regulations where wine importing, wine growing, winemaking, and wine marketing are concerned. Our competitors abroad could not be happier about all the red tape we are facing. The red tape has to go.

The wine industry in Canada has changed dramatically and has the potential to continue changing, but the rules will need to change. Your Standing Committee on Finance is challenged and should take action to change this antique modus. We should be one proud nation of wine producers. Think Canadian and out of the provincial boxes.

Thank you.