Finance Committee on April 3rd, 2012

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Another question I have is regarding grape growers. From the production side, do you feel that by opening the market and the fact that we are sort of opening it to blending—where you have competition from imported wine going through the provinces—do you feel that's an issue for Canadian grape growers?

[Debbie Zimmerman]

I want to make it clear, first and foremost, to assure the committee today, that we support the bill. What we've asked specifically to be added to the bill is that if this bill is amended, that it only be amended to allow for 100% Canadian-made wine. I recognize that may be a WTO challenge, but I've been assured—if you read the comments from the last hearing, and you were here—that in fact everybody is saying it won't be a challenge and we don't need to worry about it. Well, if we don't need to worry about it, why not add it to ensure that it happens?

That is our request. We do support the bill. We have over 600 members. We manage 15,000 acres of grapes and we do support the bill from that perspective. We're just raising that issue and saying we don't want to increase the competition of imported product. In Ontario today, as has been stated by the WCO, we have three-quarters of our marketplace that's owned by the importers. If we give up any more market share, we're not going to be successful in the province of Ontario.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Cannan, please.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thank you to all the witnesses who have been here today.

It's been a journey that many of us embarked on and I want to thank Shirley-Ann for starting Free My Grapes. I don't think you ever envisioned this after retiring from the Canadian chamber, that you'd be on this labour of love. I thank you for volunteering your time for the last several years and working with my legislative assistant, Lynne Nicolson and setting the ground work. I join with Dean Allison and my colleague Dan Albas, who is a sponsor of this bill, and all members of the House who appreciate all the efforts of the local, provincial wine institutes as well as the Canadian Vintners Association.

So I would ask Ms. George this, first of all. You mentioned the impact of “reasonable”. Why is that so important as an amendment?

[Shirley-Ann George]

As I stated, we have evidence from the actions that have been taken to date by the liquor boards that they're unwilling to make the needed changes. So in the way it's worded now a province could literally set the limit at zero or at a thimbleful, and that would meet the requirements of Bill C-311. If the word “reasonable” was added, then the provinces would be forced to ask themselves the question and be able to defend why an amount is reasonable. They could still set a limit that we might feel is too low, but we feel that it is more likely that they will set a limit that they can defend to the public, which is very much in support of this change.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

Mr. Hicken, I well appreciate your articles in support of work with Terry David Mulligan over the years, and I appreciate his passion for the bill.

I have two questions. What is your definition of minimum reasonable amount? Could you speak to Ms. Zimmerman's request about having 100% Canadian wine?

[Mark Hicken]

On the minimum reasonable amount, you can look to the United States. That's open to debate obviously. My personal definition would be one or two cases per month per person. That would be my personal definition. That's probably a legal issue you need to discuss in greater detail. But I think it's very important, as Shirley-Ann said, to add that to the bill because I think the history has been that the liquor boards are not particularly receptive to the changes that are needed.

If you look to the experience in the United States on the same issue, there have been a lot of attempts by individual states to seriously limit the ability of wineries to ship into a state, by imposing very strange low limits or other requirements that are difficult for wineries to satisfy. I guess that's my answer to the first question.

On the second question, it's my opinion that the amendments to the bill, as they are currently written, or the amendments that include “reasonable” would be trade agreement compliant. With great respect to the passion exhibited by Ms. Zimmerman, I do not think you could make the bill apply solely to 100% Canadian wine. I do not think that would be trade agreement compliant. I think that would be a clear violation of GATT and NAFTA. You'd have some serious problems with trade agreement compliance if that were done.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Having been a member of the International Trade Committee for the last six years, that would be my understanding as well.

Mr. Prodan, coming from British Columbia, I appreciate you coming out here, and also Josie Tyabji, you presented to the red tape reduction committee that my colleague Ms. McLeod hosted in Kamloops.

Maybe you could just elaborate on the impact this private member’s bill would have on the small vintners, not only in British Columbia but across Canada, those that are producing 3,000 or 4,000 cases and cannot supply to the liquor boards today.

[Miles Prodan]

Thank you.

Absolutely. I think, as my colleagues have said, we're a small producing region and a small producing country. The tourism aspect of this industry is critically important and there's a lot of value added there.

The fact is that in B.C., the liquor control board is very supportive of our registry, and so are other liquor control boards across Canada. The fact is, though, that with the small amounts we produce, it just is not reasonable for any of those small producing wineries, which make up the bulk of wineries, to sustain the allotment required to go into those liquor control stores. It's just not a viable way to grow their businesses.

If we want to grow, and we do, it's important that we have access to the customer. Direct-to-consumer is the only feasible and practical way to do so.

[The Chair, Conservative, James Rajotte]

Thank you. Thank you, Mr. Cannan.

Mr. Regan, you have five minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

I'd like to ask if any of the witnesses have a different position or perhaps some legal advice, from what Mr. Hicken has indicated. In relation to the clause on the importation of 100% Canadian wine and limiting this bill to 100% Canadian wine, does anybody else have a view on that? Mr. Hicken's view is that it would not be trade compliant, and you'd be challenged at WTO. Do others have a different view, and do you have a legal opinion to that effect?

[The Chair, Conservative, James Rajotte]

Mr. Bosc, go ahead.

[Paul-André Bosc]

I'm a wine producer, not a lawyer, but I am interested in a bill that is trade compliant. If that has to permit some imported wine to be traded, so be it. If that means blended wines, so-called ICB wines, or international-Canadian blends, are traded, so be it.

The fact is that the overwhelming majority of wine trading in this channel in the U.S. is premium and super-premium authentic wine. This is tourist-generated. Commercial ICB wines are available in any liquor store in the country. Go down to your corner liquor store and buy it. Why would you pay an extra $3 to $5 a bottle to ship it from the other side of the country? It's not an effective distribution channel. But for wines that are hard to find, that are premium, that are made by small family businesses having limited distribution across the country, this could potentially be a very important channel for those types of businesses.

We know that is the case in Europe and the United States, among other countries. Our colleagues tell us that this is a really important aspect of their business.

[Geoff Regan, Liberal, Halifax West, NS]

That is the case, so to speak. The case? Never mind.

Ms. Zimmerman.

[Debbie Zimmerman]

Thank you. I think we're here today because we felt it was important to raise this issue. Obviously we're a Canadian-grown industry. What's important for us is that we continue to have that opportunity to grow in our own marketplace.

The reason I raised the concern, and I think it's a very valid question, is that we don't want to see someone in Ontario who thinks they can order their fine wines from Europe from an LCBO in Alberta, and starting to eat into our marketplace.

That is our concern. That's one of the reasons we raised it today. If there were a way in which this bill could have been crafted—obviously we're sitting in the House of Commons in Ottawa, in Canada—to include 100% Canadian-grown grapes, we would have liked to have seen that consideration.

Those are the things we felt we needed to raise for our future issues. It is important, and if we could have prevented that we would have liked to see that in the bill. We've raised it a number of times.

[Geoff Regan, Liberal, Halifax West, NS]

To help me understand the economic impact the bill might have on wine producers in various provinces, can you tell me what we're talking about here? I would think in most cases where wine is purchased in one province and brought to another, you are talking about a case, but you aren't talking about a hundred cases.

What can you tell us about the economic impact? Can you put a dollar value on it?

[Debbie Zimmerman]

I can defer to my wine partners on either side of me, but I would say we don't anticipate that this is going to be a massive amount of wine. This will be particular to each province.

[Geoff Regan, Liberal, Halifax West, NS]

I see that Ms. Dawson is anxious to answer.

[Hillary Dawson]

Yes. We recently finished a study in Ontario on the economic impact of the sale of VQA wines, and we looked at their impact on the economy over and above taxation. For every litre of VQA wine that is sold in Ontario, it's $12.29 in added economic value for both the province and the country. From our perspective the net-plus side of each and every sale far outweighs any downside that any of the liquor boards could forecast.

If you think about it, certainly in our province, in B.C., and Nova Scotia for sure, these industries aren't just wine stores. They're tourism. They're agriculture. They're manufacturing. They're all the things. There are all these elements built into rural economies across this country.

I think the impact would be significant.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Ms. George.

[The Chair, Conservative, James Rajotte]

Very briefly.

[Shirley-Ann George]

Very briefly, the questions that have been raised by Ms. Zimmerman are absolutely legitimate questions that we would expect small businesses to ask. However, we do have U.S. experience to draw on.

I'll read a quote to you:

Many U.S. states have opened their borders, and in no case have they seen a decline in sales because of that.

Experience has shown that while there may be some increases in other wines, Canadian wines will in fact benefit.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Regan. We'll go to Mr. Allison.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you. I'd like to thank my colleagues for letting me substitute in to talk about this very important issue.

Because I don't have a lot of time, I'm going to go to Ms. Dawson and Ms. Zimmerman. I'm glad we touched back on value-add. I know that Mr. Prodan talked about it. I think we need to emphasize what value-add VQA wines do for the wineries and the local economies.

Can you comment on that again, Ms. Dawson? I don't think that can be underscored enough.

[Hillary Dawson]

I try to stress how diverse an industry the wine industry is. I know in your community, say, in the town of Lincoln, wineries are the biggest industrial taxpayers in that community. They're very significant and they're there to stay.

People have tens of millions of dollars of investments in capital and manufacturing in those communities. We need to create a commercial environment for them to be able to grow and to service a very discerning customer. They're very frustrated that they're one of the very few channels where people cannot do what they do normally, which is to shop direct, call from home, go on the Internet, and carry on these very modern commercial relationships.

It's frustrating. The investments are there. The ability to grow is there. The demand from the customer is there. We're just trying to maximize on those opportunities to the benefit of Ontario and Canada.