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.

[Dan Paszkowski]

Absolutely. We've been pushing for this since 2007, so the private member's bill by Dan Albas and the support from Ron Cannan and a number of MPs from every side of the House made a historic change in amending that piece of legislation.

We've had limited success with the provinces, where, as I mentioned, we're approaching the one-year anniversary of the passage of Bill C-311. Manitoba and British Columbia are the only two jurisdictions that have opened up their borders to wine being shipped directly from a winery to a consumer. Nova Scotia and Quebec have passed enabling legislation for it. We believe that Nova Scotia is going to do the right thing and open it up as British Columbia has. In the case of Quebec, it's our understanding that they're going to do what Saskatchewan, Prince Edward Island, and Ontario have done and allow for a constituent to bring home one case per person per trip, which makes it extremely difficult.

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

Thank you, Mr. Chair.

Good morning, everybody. As noted, my name is Dan Paszkowski. I'm the president of the Canadian Vintners Association, better known as the CVA.

I'd like to thank you all for the occasion to provide the Canadian wine industry’s perspectives on various issues and challenges facing our sector, and the opportunities to improve our contribution to the Canadian economy, and the role government can play in the development and success of this vibrant industry.

The CVA is the national voice of the Canadian wine industry, representing all scales of production and accounting for more than 90% of the wine produced and sold across Canada. CVA members are engaged in the entire value chain: grape growing, farm management, grape harvesting, wine production, bottling, retail sales, research, and tourism.

The Canadian wine industry produces 100% Canadian and VQA wines as well as International Canadian Blended, ICB, wines. Both are significant economic drivers to the Canadian economy. We recently completed a landmark national economic impact study, which found that 100% Canadian and VQA wines contributed $3.7 billion, including tourism, to the Canadian economy, and wines blended in Canada from imported and domestic content contributed an additional $3.1 billion. This is an impressive figure—$6.8 billion combined—and is the result of 500 grape wineries and 1,300 independent grape growers across the country.

Wine is synonymous with value-added production. Canadian wineries capture greater revenue than most agrifood products, not only by crushing grapes and producing wine but also by packaging, marketing, and sales. From vineyard development and grape cultivation to the final sale, wine is a highly complex process that involves numerous suppliers, distributors, and service providers throughout the value chain, compounding the economic benefits. Our impact extends well beyond direct sales and employment, with strong linkages to tourism, retail sales, bars, and restaurants.

Our recent study, which was quite conservative in its figures, concluded that each bottle of Canadian-produced wine generates an average of $31 in economic impact. This includes more than $1.2 billion in contributions to government revenue through tax and liquor board markups. Furthermore, the domestic wine industry helps support more than 31,000 jobs and is motivation for more than three million tourists visiting Canadian wineries each year. Put into context, this is four times the number of visitors to the Vancouver Olympics.

The number of wineries in Canada has grown by 300% in the last decade, with more than 100 wineries opening in the last five years. Most are small businesses focused on premium wines. The investment made by the wine industry has been a direct response to the growing consumer interest in wine and wine tourism.

Wine is increasingly becoming the beverage of choice in Canada and presently accounts for 30% of the beverage alcohol market, up from 18% in 1995. However, Canadian wine industry sales account for only 30% of total wine sales while our foreign competition commands 70% of our domestic market.

At 30%, Canada has the lowest wine sales market share of any wine-producing country in the world. For example, South Africa owns 100% of its market, Argentina 99%, and the U.S. 68%, to name just a few.

ICB wines represent 25% of domestic wine sales, yet their market share has dropped almost 8% since 2000 while imports have grown 6%.

One hundred per cent Canadian VQA wines have experienced 2% growth in market share over the past decade, yet represents only 6% of total wine sales. Disappointingly, these premium wines represent less than 4% of total wine sales in 10 of 13 jurisdictions across Canada.

More than 200 million bottles of Canadian wine are sold each year in domestic markets, each contributing more than $31 in value to our economy. By comparison, a 2010 KPMG study prepared for the Wine Council of Ontario concludes that the sale of imported wine contributes a mere 67¢ per litre.

According to a 2012 Bank of Montreal report, Canada’s wine industry has experienced 3.1% growth on average since 2005, outpacing the overall economy.

The Canadian wine industry’s objective is to grow domestic wine sales in all available wine sales channels from coast to coast. With additional sales opportunities, the Canadian wine industry will build our market share beyond 30% towards a target of owning 50% of the domestic wine sales market.

This is good for the Canadian wine industry and good for Canada. Based on our economic study, we know that every $1 million increase in Canadian wine sales will lead to a further $3.1 million increase in gross output, including revenues, taxes, jobs, and wages across the wine industry value chain. This is an excellent, savvy investment in our economy.

Canada is one of the fastest growing wine retail markets in the world, with per capita wine consumption increasing by more than 37% over the past seven years. Supportive federal government policy can assist the domestic wine industry in becoming more competitive and increasing its share of retail wine sales in Canada.

The following three areas should be considered in support of adding further value to Canada’s wine economy.

First is Growing Forward 2. We need to support a domestic market promotion campaign, including major city premier wine tasting events, to build knowledge and relationships with consumers, restaurants, and retailers. We should recognize a national wine week, providing an annual opportunity to celebrate Canadian wines and wine tourism across Canada. Furthermore, we should partner with the Canadian Tourism Commission to build on the synergies between wine and tourism, including studies, marketing, and promotions.

Second is direct-to-consumer delivery. There should be federal engagement with provincial governments to remove interprovincial barriers to wine trade, in support of federal Importation of Intoxicating Liquors Act amendments, the act that passed in June of last year.

Third is tax and regulation. We need to review the tax treatment of Canadian grape content in domestically produced blended wines to support and encourage greater inclusion of domestic ingredients. We should ensure that the proposed repeal of container size regulations takes place to reflect the competitive impacts on the Canadian wine industry. And we should index the small business tax deduction qualifying asset base thresholds to reflect inflation dating back to its origin in 1994, while indexing future asset test thresholds for inflation annually.

In conclusion, Canada’s wine industry is ripe for success. We are a value-added success story, a model for the agricultural sector, with domestic prospects to sustain our growth ambitions and new opportunities for wine country tourism, new jobs, and enhanced government revenues.

We believe that Canadian wine should occupy the majority of the shelf space in our domestic liquor outlets, not because stores are forced to do so but because Canadians prefer Canadian wine and demand it. We've seen VIA Rail shift to 100% Canadian wines on their menus, but our national airline, Air Canada, lacks a policy to guarantee a Canadian wine option on its flights. This is a disgraceful message to send Canadians and international visitors.

The CVA believes that Canadian wine can and should represent at least 50% of wine sales in Canada, but this will require government's concerted support and investment. The return on that investment is exponential for our local communities and national economy.

I'd like to conclude by inviting each one of you to become an ambassador for Canadian wine. So next time you travel, look for Canadian wine and demand it. Request Canadian wine at the meals and special events you attend, offer it to your guests and serve it with pride. Speak with your provincial counterparts about direct-to-consumer regulations to allow for the full implementation of Bill C-311. And finally, support Canadian wineries through tax and regulatory incentives, which, in the end, increase overall tax revenues through gains in market share.

Thank you. I look forward to your questions.

[Patrick Gedge]

Interestingly enough, much of the regulation in our industry comes at the provincial level. The federal government has actually addressed a number of issues over the past number of years that have helped us, including Bill C-311 recently, which was quite special.

From our standpoint, our focus is very much in terms of trying to incentivize the industry, to be able to compete with all countries in the world. That's why one of our focuses in terms of our presentation is related to the excise tax exemption on the Canadian content in International Canadian Blend wines. That is important for two reasons. One reason is that it will continue to increase demand for Canadian grapes, and as we were talking earlier, that is the fundamental of our industry growing into the future—it's pretty hard to make wine without grapes. Anything that incentivizes us to purchase more Canadian grapes will, in turn, help stimulate the entire value chain for our industry.

Then the second part is that an excise tax exemption for the Canadian portion of ICB wines will allow the wineries to be more competitive against foreign imports, and then hopefully, over time, we would increase our 30% market share to 31% market share, to 32% market share, to 33% market share, and trust me, even a 1% or 2% change in market share has real significance in terms of the growth of our industry and the types of dollars that we talked about earlier.

[Pablo Garrido]

I'm from Toronto.

I haven't started moving outside the province. It's my understanding that Bill C-311 was meant, really, to encourage Canadian consumers and Canadian winemakers to connect and be able to purchase wine across provincial borders. It's my general understanding, and I don't pretend to be an economist, that because of international trade rules we can't treat Canadian products preferentially, so that eventually the same rule will apply to wines from all countries that are bottled in Canada.

I could potentially sell it to someone in Alberta. There is movement, and I assume it will be swift movement, afoot by the provincial bodies to ensure that they still can protect their territory as far as the duties and the markups that would be applied in their province are concerned.

[Pablo Garrido, Owner, Savia Wine Agency]

Good afternoon, honourable members of Parliament, committee staff, and fellow participants. Let me say how much I appreciate the opportunity to address you this afternoon. The topic of a potential agreement between Canada and Japan touches areas very close to my heart.

My name is Pablo Garrido. I am the owner of Savia Wine Agency, an agency that specializes in importing Japanese wine to Ontario. If you are not familiar with Japanese wine, don't worry; you are not alone. While the more famous Japanese beverages of sake and beer have admirers the world over, Japanese winemakers are working diligently, with ever-evolving passion, to produce wines which I believe will one day come to rival wines produced in better-known regions. For context, I believe that Japanese winemakers stand where Ontario winemakers were approximately 15 years ago, producing wonderful product yet still working hard to convince consumers that the content in the bottle is worth the price.

I started Savia Wine Agency as a means of marrying my passion for wine with my love of Japan and my exceptional good fortune of being Canadian. With a list of contacts and a plane ticket to Tokyo as my starting point, I have learned quite a bit about myself, the adventures of starting a business, and the intriguing world of tariffs and duties as they apply to alcoholic beverages.

My first lesson came early on, during my initial trip to visit my supplier and wineries. I was returning to Canada with eight bottles of Koshu wine that I planned to use as samples. The combination of duties, excise tax, and provincial liquor markup equalled over $114.00, or 70% over and above the purchase price of the bottles in Japan. While I cannot pretend to be familiar with the duties paid by other industries entering Canada with trade samples, I have to believe that the duties wine agents pay reside somewhere close to the top.

To provide a window into the finances of my business, I charge a commission on a bottle of Koshu wine from Japan of about 10%, or $4 per bottle, totalling $24 per case. Given the aforementioned cost of providing samples to my customers, I need to sell more than four cases simply to recover my sample bottle costs. What these figures demonstrate is that my agency is a labour of love, but one that I cannot afford in the long term.

In addition, as a means of ensuring that we maintain a sense of social responsibility in regard to alcoholic beverages, many liquor boards across Canada maintain a floor on prices to ensure that pricing does not encourage the growth of damaging habits. These pricing practices, while laudable, do present challenges. For example, Ontario levies a markup of 39.6% on wine. I believe that a more fluid duty and tariff policy could help minimize the impact of provincial markups, ultimately helping businesses such as mine bring Canadians greater access to wines they have never experienced before.

With this experience in mind, you can imagine how my interest was piqued when earlier this year the House of Commons unanimously passed Bill C-311. This legislation, presented by Conservative MP Dan Albas, meant the removal of restrictions which, until now, had shackled the interprovincial trade of wine in this country. It brings to mind the type of access Canadian winemakers need in every market.

I recall staying up late into the evening to watch the vote, realizing that a House that appears divided will readily unify under the common goal of greater access to wine.

Using the new legislation governing interprovincial trade as the springboard, I believe that Canada has taken a progressive and significant step forward, signalling a new future-focused era in the trading of wine. With Prime Minister Harper demonstrating through words and action that Canada will no longer stand idly by as the wheels of international trade turn, Canadians can show that as a nation and as a valuable trading partner, we are forward thinking when it comes to the application of duties and tariffs on alcohol-based products.

For our federal government, there stands a unique opportunity to show the average Canadian that trade agreements do not just apply to and satisfy the traditional industries of nations. By addressing the trade barriers for less traditional products and services, such as wine and soap, governments can show the electorate that free trade does indeed greatly benefit small- and medium-sized companies alike.

A perfect example of the benefits of progressive trade was brought into focus for me by the honourable Mr. Keddy who, during a presentation to the Toronto chapter of the Japan Society, told the story that when free trade with the United States was announced, Canadian wineries feared that an influx of American wine would eat away at their market share. Over time, that isn’t exactly what has happened. In fact, in 2011, BMO Nesbitt Burns published a report showing that the United States is now the largest export market for Canadian wine, taking over 40% of total exports. By comparison, according to an Agriculture Canada report on the Canadian wine industry in 2007, the United States only accounted for 13.6% of all wine imported into Canada.

In the same report, a key passage supports the honourable Mr. Keddy’s assertions by stating:

The wine industry responded to the challenge of trade liberalization by focusing on premium wines and introducing new products such as Icewine, for which Canada is recognized as a world leader. At the same time, wineries introduced new high-quality grapes and products that reflect changing consumer taste profiles.

Taking into account the fears that Canadian wine producers had expressed with free trade with the United States, consider this contrast for free trade with Japan. The largest winery I represent produces wine with grapes grown on approximately 14 acres. Henry of Pelham winery in Niagara produces wine from grapes grown on 170 acres. By sheer volume potential, Canadian winemakers can only stand to gain from easier, lower cost access to the world's third largest economy, representing over 127 million consumers, where Canadian wine exports have seen a drop of nearly 17% since 2006, according to an Agriculture Canada report tabled in May of this year. Thus, in Japan I believe Canada has found an exceptional partner and opportunity, the ideal nation to begin building a new legacy of successful international trade in wine.

For Japanese winemakers, such as those I represent, lower market entry costs for their products brings the potential not only for increased sales but for greater exposure, a key goal, especially for Koshu wine, a white wine that is grown using the indigenous Koshu grape of Japan. In fact, this export recognition is so important that in 2009 a group of wineries from the Yamanashi prefecture, Japan's main wine-growing region, created a trade association called Koshu of Japan.

On their website, the wineries state their main goals as overseas promotion, new product development, and publicity. In search of this exposure the group has held annual tasting events in London. One of my personal goals is to convince the trade association to include Canada in their next trade mission. An economic agreement between our two nations, with attention paid to expanding trade in alcoholic beverages would certainly demonstrate in tangible terms Canada's desire to delve into all sectors of trade markets the world over.

Canadian restaurants would also benefit from having access to unique wines at a price point that could more easily win over Canadian consumers. During a fundraising event after the horrendous earthquake and tsunami of March 2011, I recall meeting a senior representative of a major Canadian importer of Japanese goods. During the discussion he mentioned that he had indeed looked into importing Japanese wine into Canada, but the overall costs were an impediment to both sides producing a desired result. A move toward an economic agreement between Canada and Japan would effectively address current challenges to market expansion.

In addition, I believe that in Japan we are currently seeing a nation where traditional industry powerhouses are facing immense pressures. For example, Sharp Electronics as part of its recent restructuring is considering selling its LCD production facilities in Mexico and Taiwan and cutting 5,000 jobs for the first time in 60 years.

Indeed, I see changing and challenging times for Japan. We could very well be witnessing the redefinition of what Japan will be best known for in the future. A strategic, well-designed economic partnership with Canada could prove to be an exceptional catalyst for both nations in realizing their full future trade potential.

Thank you for your time and attention, and for the invitation to be here today.

Message from the Senate

[The Speaker, Conservative, Andrew Scheer]

I have the honour to inform the House that when the House did attend His Excellency the Governor General in the Senate chamber, His Excellency was pleased to give, in Her Majesty's name, the royal assent to the following bills:

Bill C-26, An Act to amend the Criminal Code (citizen's arrest and the defences of property and persons)—Chapter 9, 2012.

Bill C-40, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2013—Chapter 10, 2012.

Bill C-41, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2013—Chapter 11, 2012.

Bill C-288, An Act respecting the National Flag of Canada—Chapter 12, 2012.

Bill C-278, An Act respecting a day to increase public awareness about epilepsy—Chapter 13, 2012.

Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)—Chapter 14, 2012.

Bill C-310, An Act to amend the Criminal Code (trafficking in persons)—Chapter 15, 2012.

Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts—Chapter 16, 2012.

Bill C-31, An Act to amend the Immigration and Refugee Protection Act, the Balanced Refugee Reform Act, the Marine Transportation Security Act and the Department of Citizenship and Immigration Act—Chapter 17, 2012.

It being 2:15 p.m., the House stands adjourned until Monday, September 17, 2012, at 11 a.m., pursuant to Standing Orders 28(2) and 24(1).

The House resumed from May 31 consideration of the motion that Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), be read the third time and passed.

Wine Industry

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

Madam Speaker, it is a privilege and honour to rise this morning to table a petition on behalf of numerous constituents of Kelowna—Lake Country. These wise folks realize it is time to free our grapes and to allow the archaic 1928 Importation of Intoxicating Liquors Act to be amended. They are in support of Bill C-311 by my hard-working colleague from Okanagan—Coquihalla.

Tomorrow we hope to bring this archaic legislation to the 21st century.

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

Mr. Speaker, Canadian wine producers are eagerly awaiting the passage of Bill C-311, my legislation that would allow Canadians to bring a bottle of wine across provincial borders. It is absolutely vital that we get this popular bill passed before the summer so Canadian wine producers can market and grow their businesses.

Unfortunately, the NDP members have decided to put their own partisan political interests ahead of those Canadian businesses by unnecessarily delaying this legislation.

Could the Minister of Justice please inform the House of the government's position on my legislation?

Importation of Intoxicating Liquors Act

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, if you seek it, I believe you would find unanimous consent for the following very worthwhile and sobering motion. I move:

That, notwithstanding any Standing Orders or usual practice of this House, the motion for the third reading of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), standing on the order of precedence on the order paper, be deemed put and a recorded division deemed requested and deferred until Wednesday, June 6 at the end of government orders.

(Bill C-311. On the Order: Private Members' Business)

May 29, 2012—Third reading of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use)—the Member for Okanagan—Coquihalla.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon, we will continue with the NDP's opposition day motion.

Tomorrow, we will finish report stage on Bill C-31, the Protecting Canada's Immigration System Act. Including second reading, this will be the eighth day of debate on the bill, in addition to many committee meetings. As the Minister of Citizenship, Immigration and Multiculturalism told the House on Tuesday, this bill must become law by June 29.

On Monday, we will resume the third reading debate on Bill C-25,, the pooled registered pension plans act. Following question period that day, we will mark Her Majesty the Queen's jubilee and pay tribute to her 60 years on the throne. After that special occasion, we will get back to the usual business of the day, debating legislation. Bill C-23, the Canada–Jordan economic growth and prosperity act, will be taken up at report stage and third reading.

Jumping ahead to next Thursday, we will resume debating Bill C-24, the Canada–Panama economic growth and prosperity act, at second reading. I would also call Bill C-25 that day if the debate does not finish on Monday.

Finally, June 5 and 6 shall be the seventh and eighth allotted days, both of which will see the House debate motions from the NDP.

I can confirm notice of a motion for unanimous consent regarding the private member's bill, Bill C-311. This is the bill to amend the Importation of Intoxicating Liquors Act that the NDP filibustered the other day. I understand the NDP has now agreed that was a mistake and it is willing to allow it to proceed to a vote at this time. Therefore, we anticipate we will be consenting to that motion to undo the damage that the NDP unwisely did when it filibustered the bill previously.

Wine Industry

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

Madam Speaker, I rise today to bring attention to the House a petition that I received from my constituents in my riding of Niagara West—Glanbrook. The petitioners call upon the House of Commons and Parliament to vote in favour of Bill C-311, an act to amend the importation of intoxicating liquors act (interprovincial importation of wine for personal use).

With over 40 wineries in my riding of Niagara West—Glanbrook, this piece of legislation is near and dear to me and my constituents. I echo the sentiments of these petitioners and urge all of my hon. colleagues to vote in favour of the bill.

There is a pressing need to modernize the 1928 federal Importation of Intoxicating Liquors Act with a personal exemption for the purchase and shipment of wine across provincial borders. Allowing interprovincial importation of wine for personal use would greatly benefit not only the hard-working men and women of my riding but also Canadians from coast to coast who would soon be able to experience the extravagant array of wines grown not only in Niagara Peninsula but across our great nation.

The Economy

[Gail Shea, Conservative, Minister of National Revenue]

Mr. Speaker, I want to thank the member for Okanagan—Coquihalla for his work on the bill, and also our colleague from Kelowna—Lake Country for his tireless effort on this issue.

Bill C-311 is a positive step toward reducing unnecessary interprovincial trade barriers and toward promoting jobs and growth in the wine industry.

We are truly disappointed in the NDP members for playing silly political games and needlessly delaying passage of a bill that they claim to support. They tell the wine industry one thing, and then their actions in the House display something else. They are clearly not equipped to govern.

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

Mr. Speaker, last evening in the House of Commons, NDP MPs, many of them from British Columbia, deliberately ran out the clock on debate rather than support the effort to send Bill C-311 to the other place.

In doing so, the NDP has forced a second hour of debate that could potentially not occur again until late October. Given that wine agri-tourism season runs from now until early October, these unreasonable delaying tactics will in turn delay our Canadian wine industry from implementing planned expansions that create jobs and support our local economy.

Does the government recognize the need for this important legislation?