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.

Importation of Intoxicating Liquors Act

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Speaker, it is a pleasure for me to rise here today in the House to speak to this bill. I congratulate the member for Okanagan—Coquihalla for introducing this bill.

Like many other Canadians, before this bill was introduced, I did not realize that it was illegal to transport wine from one province to another. I guess that made a lot of us unknowing criminals. Maybe those are the unknown crimes that the Minister of Public Safety was talking about when he introduced his legislation. I am not sure, but a lot of us have been guilty of transporting wine from province to province unknowingly.

I recently visited my son, who lives in Revelstoke, and of course at family gatherings we had a bit of wine from the Okanagan Valley. I can assure members that it is really good wine, although some very good wines are also being made in Ontario, Nova Scotia and in Quebec.

With all of the “grapes of wrath” happening here on the omnibus bill and the harm to our workers, it is a relief to take a moment to look at some of the other grapes, an important and growing market of our country, that we see in B.C., in Niagara and Prince Edward County in Ontario, in Quebec and more.

Recently I had the occasion to have dinner across the river in Gatineau, and as is usual I was brought a bottle of wine and asked to taste it. In this case, the waiter brought some imported wine from another country, and I told him I would like to drink a good Canadian wine if possible.

He only had one bottle of Canadian wine in stock, which is quite unfortunate, but the bottle of wine he had was from the Okanagan Valley. It was probably the best wine I have ever tasted. I said it was unfortunate that he only had one bottle in stock. It was fortunate for me, but it was unfortunate that the other people in the restaurant could not get to taste this wonderful wine. I hear my colleague from British Columbia supporting this great wine from British Columbia.

We in the NDP are going to support this legislation. We want to get it to the finance committee for proper study and amendments. On many levels I like this bill, which would relax restrictions on interprovincial wine purchasing for personal use.

I will read into the record the amendment that we want to add. This amendment has to do with making the wine with 100% Canadian grapes.

The amendment would add these words: “The importation of wine from a province where the wine is made with 100% Canadian grapes, by an individual if the individual brings the wine or causes it to brought into another province in quantities, and as permitted by law of the latter province, for his or her personal consumption and not for resale or other commercial use.”

This amendment would help to promote Canadian wines. It would help the producers of Canadian wines. It may cause us to have to relabel the bottles of wine, but that is a small price to pay to promote the Canadian wine industry.

We would get good consumer choice. This would give Canadians a bigger choice in buying wines. Canadians would strongly benefit from a greater selection of wine, especially wineries from across Canada. There are many small wineries across this great country, and this would promote Canadian producers. We grow a lot of grapes in Canada, and this would certainly encourage wineries to maybe expand and create more employment. Nothing but good would come out of this bill.

For wine producers, a beneficial effect of the bill would be an expanded market for Canadian wineries. As I said, transporting more wine from one province to the next is certainly good for the wine industry.

Although we know we have very good wine in British Columbia, we also have some very good wines in Ontario, especially icewines, and one of the things that the bill would do is allow people from British Columbia to discover the great wines of Ontario. From Nova Scotia to British Columbia, the Canadian wine industry is emerging as internationally recognized cool-climate wine producers, garnering an impressive list of awards and praise from many of the world's most influential wine critics.

Just recently on Parliament Hill, we had some companies come out for a wine tasting evening. We tasted some of probably the best wines made in the world, wines that have won many awards. Some of these wines are known right around the world as being great wines.

On average, capital expenditures for industry have increased from about 12% annually. The softening of the law would allow for greater choice, while still preserving the provincial monopoly power for each liquor board. Of course, allowing liquor boards to bring more wines from outside their province would certainly help all wine producers right across the board.

Under current legislation, if an individual wishes to purchase wine that is available only in a province other than one in which he or she resides, the individual must make the purchase through a provincial or territorial liquor board, commission or corporation and must pay the associated taxes, markup rates and other special levies on alcohol. Again, as I said a while ago, most Canadians do not know that doing otherwise is against the law, so I am sure that this would help.

As it stands right now, the industry and the public consider that the Importation of Intoxicating Liquors Act, also called the IILA, administered by the Canada Revenue Agency, is the cause of the restricted trade. In reality, the combination of the IILA and provincial legislation makes this trade illegal. It is the provinces' legislation that makes it illegal, so we should work with the provinces to change this legislation and support Bill C-311. I am sure this would help everyone, not only the—

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am also happy to rise today in support of Bill C-311, an Act to amend the Importation of Intoxicating Liquors Act.

As a couple of my hon. colleagues have so elegantly stated, under the current legislation, if an individual wishes to purchase wine that is available only in a province other than the one in which he or she resides, the individual must make the purchase through a liquor board or commission. The changes to the IILA will change that and allow the importation of wine from a province by an individual.

This bill also strikes the right balance between ensuring that the province maintains jurisdiction over this and at the same time changing the federal law to allow the province more discretion.

The bill is a good idea. It is simple, but those are often the best ideas.

I had the great fortune of growing up in the Annapolis Valley in Nova Scotia. I was forced to leave in the 1980s. There was not a lot of work so I made my way out to beautiful Burnaby, British Columbia. I just had the opportunity to go back for my mother's birthday a couple of weeks ago and I did go down to the Annapolis Valley. I have been back a few times. The sun was out, it was a beautiful Victoria Day weekend and we had some beautiful wine from the Annapolis Valley region.

What a change there has been since the late 1980s until now and how the addition of vineyards to the Annapolis Valley has really changed and vastly improved the area and has done a lot for the local economy. It has brought tourists back to the region. When the wine is combined with lobster, apples and the produce there, it cannot be beat. I was really glad to see that.

Again, small changes like this to existing legislation can really go a long way to boosting that industry a bit more.

What I also noticed in Nova Scotia was the co-operation between vineyards. I thought that was a really good idea. They have come together and decided to produce this wine in all vineyards called l'Acadie, which is a great white wine. It is those kinds of co-operative actions between the vineyards, in association with changes to a law like this, that will help those vineyards and this industry grow in Canada.

I did not know this and was a little alarmed to hear that only 6% of the wine consumed in Canada was grown and aged here, which is something we should work to fix. With having wine experience on both coasts, there is a lot we can do and a lot to promote.

With respect to the other coast, after having grown up in Nova Scotia, and I liked the wines there, the wines in British Columbia are outstanding. There are 210 wineries and 864 vineyards from what I have been able to research. I am not just excited about the product, which I enjoy with my wife Jeanette, but I am also excited about the economic impacts to this industry.

Therefore, when I was reading the bill, and I am happy to support it, I was also thinking of this theory by Jane Jacobs, the great scholar. People know she talks about cities. She also talks about the idea of import replacement, which is a terrific idea. Initially, we import some technology or product, local people get to like it and they start developing it themselves and often improve it. However, what is more important for our economy in terms of wines is that the locally-produced product starts to replace what we used to import. If that goes really well, we start importing back to the place from which we used to buy product. This is a possibility for the Canadian wine industry over the next little while and it is changes like this that will help.

This is an industry that has to be nurtured. The French, Italian and South African wines are massive vineyards that could easily swamp our smaller vineyards in B.C., Nova Scotia and Ontario. We really have to be conscious of the fact that we want to help this industry grow along, and the bill does help that.

Something else my colleagues might want to know is that while teaching at Simon Fraser, I had a couple of colleagues who were looking at the genome technology in wines. This is under study in a lot of countries, and it is basically altering grapes. It is not done naturally. The genes in the grapes are manipulated and that is able to change the taste of wines, the speed of aging and those kinds of things.

Professors Michael Howlett and David Laycock had a very large grant from Genome Canada to study this. They just had a recent book out called Regulating Next Generation Agri-Food Biotechnologies by the Taylor & Francis Group.

We were reminded early on today this was an antiquated act that we were updating today, hopefully, if it goes through here and the next place, but we really have to be ready for the next generation of ideas about this. Therefore, I would suggest that at some point in the House or in an agricultural committee we could take a look at how genome technology affects this and other agricultural industries. It is important to get the policies right in these areas, to approach them from a neutral perspective and ask what is the best thing for Canada.

Again, coming back to this change, having been through the Annapolis Valley and in the vineyards in B.C., this is going to help, but not in a tremendous way though. That is why it is an appropriate place for a private member's bill. It is these types of industries on which we have to get a better handle.

To go back to the beginning of my 10 minutes here, I was talking about growing up in Nova Scotia. With the Acadians there was some tradition of growing wine, but it was not until we brought in experts from abroad that the wine industry in Nova Scotia began to take off, and it benefits all kinds of communities.

For example, in Nova Scotia now we have first nations involved in the wine industry. There is a very famous Okanagan vineyard Nk'Mip Cellars, which is growing by great leaps and bounds. This industry does show how often we look for traditional industries in order to supply economic growth and job development. However, sometimes it is the smaller kinds of industries that are on the edge that perhaps we have not thought of before, which would be areas of growth especially in areas that perhaps have had little economic development in the past.

The ability for personal transportation of wine across provincial borders is a good idea, but we may expand this as well. Again, maybe I can encourage my hon. colleague the next time he comes back with a private member's bill to talk perhaps about microbreweries. In British Columbia there are very famous microbreweries.

Not to belabour the Nova Scotian connection, but when I was a teenager there I used to babysit young kids. They moved out to British Columbia and started a great local brewery called Phillips Brewing Company. When I first moved to B.C. as well, I used to drive a truck for Shaftebury Brewing Company. These are the kinds of small industries that make a special product that people really enjoy. These are boutique products, but there is no reason why people in other provinces should not be able to enjoy them and be able to transfer them across provincial borders worry free.

If we think where the Canadian wine industry was 20 years ago, it was nowhere near 6% of the total of our wine consumption. It has grown to 6%, but I would encourage the government to encourage clustering and investing in clusters in regions where this growth is prevalent and perhaps could be nurtured a bit.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I will provide some summary remarks. I support this bill and appreciate the hard work of members in preparing and bringing forward this bill.

The prohibition on interprovincial liquor importation is governed at the federal level by the Importation of Intoxicating Liquors Act, the IILA, and, at the provincial-territorial level, by statutes that govern the importation, sale, transportation, warehousing and packaging of alcoholic beverages.

Bill C-311, which is an act to amend the Importation of Intoxicating Liquors Act for the purposes of personal use, proposes to amend the IILA by providing a new exemption to the prohibition on the interprovincial importation of intoxicating liquors, except for purchases made by provincial-territorial liquor boards, commissions or corporations. This bill would allow the importation of wine from a province by an individual if he or she brings the wine into another province for personal consumption. This importation would be required to be in quantities as permitted by the laws of that province or territory in which the wine is being imported.

Under current federal legislation, if an individual wishes to purchase wine that is available only in a province other than the one in which he or she resides, the individual must make the purchase through the provincial-territorial liquor board, commission or corporation and must pay the associated taxes, mark-up rates and other special levies on the alcohol. That is by way of summary.

In terms of some of the comments on this bill, I think the industry and the public consider the IILA administered by CRA, the Canada Revenue Agency, is the cause of the restricted trade. In reality, the combination of the IILA and the provincial legislation makes this trade illegal.

Pursuant to the IILA, all imports from one province into another must be made by the provincial liquor board or a private corporation designated by the province. This includes wine brought in by an individual from one province into another.

While the IILA does restrict interprovincial wine imports, provinces have the power to control the possession, sale, purchase and transport of wine within their respective jurisdictions. Provincial liquor boards impose a significant mark-up fee on wine produced or sold within a particular provincial jurisdiction. Most provincial legislations specifically allow a limited amount of wine for personal use to be brought into another province. For example, the Liquor Control Board of Ontario issued a news release in June of last year announcing a formal policy to permit up to nine litres of wine provided it accompanies the individual.

I know the hon. member who introduced this bill referred to the history, but I will add to it. The current law, which is section 3(1) of the IILA, stems from 1928 during the post-prohibition era when the various Canadian provinces were making the transition from prohibition to liquor board systems for liquor distribution. It created a restriction on both the transport of liquor across the provinces and provincial borders and the shipment of liquor between provinces unless the liquor was purchased by the liquor board in the destination province.

What we are looking for? I will go back to the bill. This bill would permit consumers to directly purchase wine in reasonable amounts for personal consumption, which is defined by each province and territory. It would address the legal issues related to interprovincial wine tourism and enable wineries to directly ship, including online, to consumers in provinces in compliance with provincial limits.

We support the bill as it stands, but we do have some suggestions for change as it moves forward. We support the matter of consumer choice. Canadians will certainly benefit from a greater selection of wine, especially smaller wineries across the country. The government needs to support the growing domestic industries, particularly in emerging wine-producing regions from Nova Scotia right across the country to British Columbia.

The Canadian wine industry is emerging as an internationally recognized cool climate wine producer, garnering an impressive list of awards and praise from many of the world's most influential wine critics. There are others that are onboard with the bill, including the Canadian Vintners Association, the Alliance of Canadian Wine Consumers and many wineries across the country.

I do want to make special note of British Columbia and the wine-making and wine-growing industry in our province. Vineyards, certainly in the interior of British Columbia, the Okanagan, Osoyoos, Kelowna and many other parts of the province, including Vancouver Island, which is certainly emerging as a wine-growing region, the Fraser Valley and pockets of the Fraser Canyon are becoming known for their wine or icewine.

There is also the idea of tourism and the importance of tourism in British Columbia as it relates to the bill, which would allow wine to be transported out of the province. B.C. is well-known for bringing in individuals from outside of British Columbia, from other provinces and territories, and also from other parts of the world. The United States, Europe and many other places around the world come to British Columbia for our fine wine and to enjoy what we have in that amazing part of Canada.

In summary, I will again lend my support to the bill. I strongly support the move to make an historical amendment to allow wine to be transported from province to province. I would like to see an amendment that would look at the labelling, which would include where the wine is made. That would enhance the bill.

Knowing where the wine comes from is quite critical. Consumers are not only enjoying wine, but they are becoming more sophisticated in knowing how the grapes are grown and where they come from. This is an important aspect that should be considered and included in the bill today.

Again, I thank the hon. member and previous members for their work on getting the bill to this stage.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Speaker, I am happy to say a few words in support of Bill C-311. I would like to thank my colleague for Okanagan—Coquihalla for taking the initiative to introduce the bill.

I know there is pressure to fast-track the bill through Parliament, and I understand that. However, it should be noted that this issue is not new. The Canadian Vintners Association has been requesting more flexibility in our liquor laws for a number of years.

I became involved a few years ago. I wrote the minister on September 2010 and received a very favourable response. At the time, he mentioned that he was soliciting input from provinces and territories to enter into a consensus-building approach to explore the impact of the limitations in place under the act. Subsequently, we had more communication. It is my understanding that this was in the process.

To those who say that we need to go very quickly, I understand that. However, we should put this in context: this issue has been under consideration for a while. Theoretically, the government could have introduced legislation long ago and resolved the issue. That did not happen and we are here today debating this important bill.

Hopefully we can move it forward today. It would certainly be very appropriate if we could change this law before the summer tourist season.

Why is this bill important?

First, it would allow consumers to buy a reasonable quantity of wine directly for personal consumption. The quantity would be defined by each province.

Let us not forget that it is illegal for me, for example, to go to a winery in Ontario, buy a bottle of wine there and take that bottle home with me to British Columbia. It is absurd.

This bill would also address the legal issues surrounding interprovincial wine tourism and would allow wineries to ship their products, including products ordered online, directly to customers in other provinces, according to the limits set by those provinces.

So to support this bill is to support choice for consumers. It would greatly benefit Canadians to have a wider choice of wines, particularly from small wineries all over Canada.

We must remember that the Canadian wine industry is beginning to make an international reputation for itself as a temperate zone wine producer. It has won an impressive number of awards and has earned the praise of a number of the world's most influential countries in terms of wine appreciation.

Making this act more flexible would broaden the choice, while still maintaining the monopoly enjoyed by each province's liquor board.

While I am here I will give a plug to our B.C. government liquor stores and their employees. It is my understanding that the passage of Bill C-311 will not in any way interfere with our provincial liquor boards to serve citizens in our communities. Our government liquor stores are first-class with a wide variety of products and employees who are knowledgeable and proud of what they do. We should also not forget that they play a major role, with their half-decent wages, in contributing to the economy, especially in our small communities. Good union jobs in our small communities are the best guarantee of the survival of a small business. Government liquor store employees contribute significantly to the economy of the communities in which they live and work.

It is important, especially for our small rural communities, for everyone to rally in support of retaining well-paying jobs. I have spoken with representatives of chambers of commerce and labour about the idea of presenting a united front the next time there are proposed government cutbacks that threaten our workers and the way of life in our small communities.

I thank the Canadian Vintners Association, the Canadian Chamber of Commerce and all the wineries in my riding, the riding of the member for Okanagan—Coquihalla, in Kelowna and right across the country. I have tasted fine wines in Ontario, too. These wineries have rallied in support of this legislation.

Hopefully very soon, ideally this summer, the summer tourists will be able to visit wineries in other provinces, buy a few bottles and take them home with them legally.

I thank my colleague from Okanagan—Coquihalla again for spearheading this important issue.

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

moved that the bill be read the third time and passed.

Mr. Speaker, I would like to begin tonight with sincere thanks, not only to my colleagues in caucus, but to all members of the House for the unanimous all party support they have shown for Bill C-311. Tonight we have a chance as parliamentarians to change history, to right a wrong that was created 80 years ago and to help a relatively small but thriving wine industry that we as Canadians should all be very proud of. This is an issue that unites all Canadians. In Nova Scotia, Quebec, Ontario, British Columbia, and all across this great country, many citizens are watching and hoping that common sense and doing the right thing will guide us this evening. I will keep my comments relatively brief as this is a time-sensitive issue.

First, I would like to provide members of the House with a brief update on Bill C-311.

My bill proposes an amendment to the Importation of Intoxicating Liquors Act. This amendment creates an individual exception respecting location.

During the committee stage review we heard first hand the immense frustrations from many of our Canadian wineries. Canadian wineries can legally ship wine directly to customers in Hong Kong and Japan, but not legally to customers in Calgary, or anywhere else in Canada.

Even closer to home, if we were lucky enough to leave the House tonight and cross over into Gatineau to buy wine and return back into Ottawa, we would have broken this out-of-date Prohibition era federal law. For a first offence we could be subject to a fine of up to $200 and or imprisonment for up to three months. If we were on vacation in the beautiful Annapolis Valley in Nova Scotia, or the Niagara region of Ontario, and brought back wine with us to our home province, we would have also broken this outdated law. Canadians are quite rightly often shocked by this.

There are over 130 VQA wineries in Ontario and none of them can legally sell one bottle of wine to Saskatchewan. There are over 200 wineries in British Columbia and not one can legally directly sell or ship one bottle of wine to Alberta. They can sell to Asia, yes, but not to Alberta. The fact is, it is easier for Canadian wineries to sell outside Canada directly, as they cannot legally do so within the borders of our own great country. This is something that needs to change.

There are currently nearly 50 wineries in Quebec. Times have changed, and it is high time to change the legislation.

All across Canada I have heard overwhelming support calling for this change. We have an opportunity to make history. We can put an end to this out-of-date and unjust law and allow our outstanding Canadian wineries to be able to sell directly to Canadians. All we need to do is support sending Bill C-311 on to the other place.

Before I close, there are a few comments that I ask all members of this House to be mindful of.

Our Canadian wine industry needs our help. “Made in Canada” VQA wine productions make only 6% of the Canadian domestic wine market. “Cellared in Canada” occupies a further 26% share. This means that 68% of our wine market is served by imported wines. Anything that we can do to help increase our wine production would mean more jobs here in Canada. That is why I am asking for members' support for Bill C-311.

The reason I am keeping my comments relatively brief is one of time. If members of this House can support sending Bill C-311 on to the other place this evening, this would have an immediate impact in helping our Canadian wineries capitalize on this year's grape cycle. If we cannot find a way to support the bill tonight and end up with a second hour of debate, we will in effect enter into another growing cycle. That would be an opportunity lost for hundreds of small Canadian wineries that are hoping today is the day we come through for them. I have not met a single winery owner who does not intend to reinvest and expand his or her wine operation in some way as a result of the bill. That would not only help the wine industry, it would also help support our local economy.

Tonight, the fate of Bill C-311 is in members' hands. We have a chance to change history and take a small but important step that would open up the Canadian marketplace for our small Canadian family-run wineries. I ask that we take this step together and request members' continued support for Bill C-311.

The House resumed from April 4 consideration of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use), as reported (without amendment) from the committee.

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

Mr. Speaker, I am very pleased to present 90 names from a certified petition from members of my riding of Okanagan—Coquihalla in clear support of my private member's Bill C-311 to end the current wine prohibition in Canada.

Free trade in wine should not be a crime. I am very happy to represent my riding today.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the eighth report of the Standing Committee on Finance in relation to Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).

The committee has considered the bill and has agreed to report the bill back to the House without amendment.

[The Chair, Conservative, James Rajotte]

Thank you, colleagues. Bill C-311 has been dealt with.

Mr. Hoback.

[The Chair, Conservative, James Rajotte]

I call the meeting back to order. I'd ask colleagues to find their seats, please.

Witnesses are free to sit and observe the committee.

Colleagues, we do have Bill C-311. We also have a motion by Mr. Mai.

I'm just informed that we have bells at 5:15. I thought we had a little more time than that, but we're on compressed time.

We all know Bill C-311. We have one clause.

I have no amendments, as the chair.

Is there any discussion on clause 1 of Bill C-311?

(Clause 1 agreed to)

Shall the title carry?

[The Chair, Conservative, James Rajotte]

For instance, if the change were made and Alberta put in restrictions, the Alberta government would have to defend that to me as a citizen of Alberta—if Bill C-311 were passed as currently written.

[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.

[Mark Hicken]

Sorry.

The second issue that I'd like to deal with flows from the previous one. I'd like to illustrate why we need reform at the federal level by using examples of what the provincial liquor boards have done recently. Following a lot of media attention on this issue—mostly generated by Terry David Mulligan's cross-border run between B.C. and Alberta—a number of liquor boards have taken the position that it is in fact legal for individuals to personally transport wine between provinces, but that it is not legal for wineries to ship directly to consumers. For example, Alberta and Prince Edward Island have interpreted their own provincial laws to this effect, and the LCBO issued a policy statement in June 2011, also to this effect.

In my opinion, the LCBO policy statement is simply wrong in law. The Importation of Intoxicating Liquors Act, or the IILA, makes absolutely no distinction between the personal transport of alcohol and its shipment. Both of those actions are equally prohibited, and in my legal opinion, it is beyond the constitutional jurisdiction of a provincial liquor board to override a federal criminal prohibition by using a policy announcement.

It's arguable whether a province could change the effect of the IILA by passing its own provincial laws dealing with importation. However, I've included a quotation in my brief that shows you that as recently as 2009, the Alberta Gaming and Liquor Commission took the position that a provincial government could not do so, even though Alberta's own provincial laws clearly permit personal importation.

As a result federal action is needed, because we now have a situation with extremely problematic legal consequences. Firstly, provincial governments and liquor boards appear to be so embarrassed by the current law that they are making bizarre distinctions between the personal transport of wine and its shipment, when there is no basis in the relevant laws for those distinctions.

Secondly, provincial governments, such as Ontario, are trying to override the federal law using policy announcements, which in my opinion is untenable.

Thirdly, there are conflicts now between federal and provincial law, such as in Alberta, which produce unfair levels of uncertainty for both consumers and wineries.

The third issue that I was going to deal with is the likely effect on provincial liquor revenues if the amendments proposed by C-311 were adopted. I'm just going to say that I completely agree with the earlier comments of Shirley-Ann George on that issue.

My final point is that if amendments to the bill are possible, I think that the House should consider adding a definition of a minimum reasonable amount for personal consumption into the exemption. As it's currently worded, the bill leaves those definitions to the provinces. If that happens, that will likely result in a patchwork quilt system of regulation, like the United States currently has, or as Shirley-Ann said earlier, it may result in very little change at all to the current situation.

If we had a national minimum standard, then wineries could ship to that standard without any additional regulatory burdens. Provinces would be free to legislate their own choices above those minimum standards. Such a system, if it was put into place, would be better than the American system and would be much closer to what is in place in the rest of the world, such as in France, as Mr. Bosc mentioned earlier.

Those are my comments for now. I'd be happy to answer your questions.

Thanks.

[Hillary Dawson, President, Wine Council of Ontario]

Good afternoon.

I'm Hillary Dawson. I'm president of the Wine Council of Ontario. On behalf of our membership, I'm very honoured to be invited to come and participate in these committee hearings today.

The Wine Council of Ontario is the champion of Ontario's high-quality, authentically local vintners quality alliance wines, and of promoting wine country as a destination. As a non-profit trade association, the WCO represents 80-plus wineries from across the designated viticulture areas of the province. Our members are grape growers, manufacturers, and leaders in tourism in their communities. We're the future of Ontario's wine industry, which is a source of new investment, jobs, and award-winning wines. Additionally, the Wine Council of Ontario promotes the unique qualities of Ontario's locally grown wines through its consumer-facing brand Wine Country Ontario.

The Wine Council of Ontario is a strong supporter of Bill C-311 and has been encouraged by the support that this bill has received from all parties in the House. Clearly, there is consensus that modernizing our commercial relationships with our customers is an idea that's time has come.

One of the reasons that my member wineries have a strong interest in the passage of this bill relates to the challenges of our marketplace. VQA wineries in Ontario currently have the following sales outlets for their wines. First is sales through the LCBO. The LCBO is the sole avenue for mass distribution of wines in Ontario. It has two lines of business: LCBO wines, which it sells in larger volumes at lower price points, and Vintages, which is the key vehicle for sales of premium-priced wines. Though the LCBO is an excellent retail partner and a big supporter of VQA wine sales, Ontario's VQA wineries are mainly challenged by the lack of opportunities to connect with the consumer at the premium price level.

On average, Vintages has been releasing less than 200 VQA wines per year through this channel. Additionally, these releases can be as few as 20 cases, but generally are in the range of about 125 cases. As a result of these realities, VQA wineries are very focused on other avenues to sell premium-priced VQA wines.

Another important channel is sales to other provinces through liquor boards. The Wine Council of Ontario and its winery members have been actively engaging interested liquor boards across Canada to grow the presence of VQA wines on shelf. Channels, like the Manitoba Liquor Control Commission, have partnered with the industry to create promotions for VQA wine, which have led to sustained listings in that market.

It should be noted that these opportunities work best when there are market conditions for both winery and retailer that drive positive results. Not all provinces are interested in developing this market in this way, but the industry has been active in engaging as many as make sense, and will continue to do so in order to ensure a strong presence of 100% Canadian wines for Canadian consumers.

A third avenue for premium VQA wines is direct sales to the trade. When given the opportunity to sell directly to the customer, Ontario's VQA wineries have made a strong success in sales to trade in this province. From our perspective, the lesson around direct delivery is that our wineries are prepared to invest and hustle in driving sales in these channels, which are extremely competitive, and that with this personal service we can grow our business even in the face of imported wines and consignment pricing.

Fourth is our export of wines. This continues to be a significant opportunity for Canadian wines, particularly icewines. Working together under the auspices of a national export strategy, VQA wineries continue to grow the profile of icewines and premium table wines abroad.

Last but not least, our sales at the cellar door. For the vast majority of wineries in Ontario, transactions at the winery itself are the primary vehicle for sales. Currently in Ontario, there are approximately 130 wineries commercially active in producing and selling VQA wines. Cellar door sales are primarily driven through the significant tourism numbers that the wine country experience attracts into our market. It is at the cellar door that our customers make an important emotional connection to both the wine country experience and to the wines. This is what customers want to be able to subscribe to and bring back home. Whether this be an on-site transaction of any volume or a desire to reorder product, the inability to service this request directly for any Canadian out-of-province customers is embarrassing for the winery and exceptionally frustrating for the consumer.

These customers are very wine involved and have an expectation that they'll be able to continue this very personal relationship with their favourite winery at any time. Being able to service this customer directly will allow wineries to have a commercial relationship with their customer that parallels the one that they can have with virtually any other store or supplier currently.

I look forward to the discussions here today. Please know that the Wine Council of Ontario supports the proposed amendments as articulated by the Canadian Vintners Association. This will ensure that the bill's intended impacts are realized, and the opportunities it affords Canadian wine customers are clear.

Direct-to-consumer sales will give Ontario's VQA wineries an opportunity to continue relationships with their most interested and discerning customers. The passage of this bill will be an important and critical first step in being able to carry on these relationships in a modern commercial environment. This will complement the ongoing efforts of Ontario's wineries to grow their shelf presence and sales at both the LCBO and other Canadian liquor boards.

Thank you.

[Debbie Zimmerman, Chief Executive Officer, Grape Growers of Ontario]

Thank you very much.

The Grape Growers of Ontario support Bill C-311. We welcome the all-party support for expanding the cultivation and use of Canadian wine grapes. The legislation is well-intentioned, and if properly implemented, could be very helpful to our members. The excellent reputation of Canadian wines is spreading around the world. All Canadians should be able, legally, to enjoy our wonderful Ontario wines. It should not be easier to ship from a winery in Ontario to Memphis than to Montreal.

While we certainly do not want to stand in the way of this exciting initiative, we must ensure that the modifications proposed in Bill C-311 are the best or the safest way to achieve the goal. We believe that the initiative should apply—and we join with our partners in Nova Scotia—only to wines containing 100% Canadian grapes. However, we understand that the WTO rules require that equivalent competitive opportunity must be provided to all wines from all WTO members. Would Canadian wine blenders and bottlers of imported wine be far behind? Could Costco, offer their Juila Cellier—bottled in Quebec, foreign-origin—wines across the country? Our members are concerned that Bill C-311 could be much more beneficial to imported wine than to 100% Canadian. Could we lose more than we gain?

The Importation of Intoxicating Liquors Act is the basis for the liquor boards' right of first receipt. Amending this law could attract attention from NAFTA and the WTO. Should Canada be challenged about the way, or any way, or all provinces, or prominent provinces implement Bill C-311? Other, indeed, all liquor board practices based on the IILA could be challenged.

There were two challenges of liquor board practices under GATT in the late 1980s and the early 1990s, and Canada lost both. There was another EU challenge under the WTO a few years ago, and this was settled by more concessions than were made. These decisions were not only about markup. They also condemned Canadian practices on point-of-sale and direct delivery, which are at issue here.

Last week you asked whether U.S. practices had been challenged. In fact, Canada did challenge the U.S. on a wide range of their practices related to wine and beer. Canada won. That report was adopted by GATT in June 1992. Several practices linked to use of local grapes or local fruit wine were condemned. Earlier GATT and WTO challenges were settled on a negotiated and/or compromised basis. The WTO is more logistical than the GATT. Relitigating could result in great cost to Canadian wineries and grape growers.

I would say that hoping the changes pursuant to Bill C-311 will not be noticed or challenged is not sound business practice. Indeed, we know Mr. Dunning's testimony at the EU is closely being monitored.

We agree with Bill C-311. It is no doubt more politically attractive and would be popular—we realize that—but there are potential risks and downsides that need to be carefully examined to ensure that we're not opening a Pandora's box.

Thank you.