Finance Committee on March 27th, 2012

[Mark Adler, Conservative, York Centre, ON]

Let's not forget that back in 1988, the NDP and the Liberal Party were both against the Canada-U.S. Free Trade Agreement, mainly because it was supposed to lead to the destruction of the Canadian wine industry. In fact, free trade between Canada and the United States has created the most competitive and finest wine industry on the face of the earth. I say Mr. Albas is to be congratulated for his great foresight in all of this.

Mr. Dunning, do your members compete directly with the wine industry?

[Rowland Dunning]

That depends on what province you're talking about. In Ontario, there's a competitive relationship, because the wine industry has something like 350 off-site stores to compete with the LCBO. In Quebec, the SAQ competes with the depanneurs. In British Columbia, the British Columbia distribution brands compete with the winery sales, so yes, in some provinces there is some competition.

[Mark Adler, Conservative, York Centre, ON]

Have you done any analysis to determine whether or not your members would lose any revenue if this bill becomes law?

[Rowland Dunning]

We figure that if the bill becomes law and provinces institute direct shipping, those kinds of sales could represent up to 5%, so we're figuring on about a $300-million loss.

[Mark Adler, Conservative, York Centre, ON]

Is that why you're not in agreement with the others—because it would mean a loss to your business?

[Rowland Dunning]

I'm not in agreement with what?

[Mark Adler, Conservative, York Centre, ON]

You're not in agreement with the others on the panel who are in the wine industry and support this bill.

[Rowland Dunning]

I'm not necessarily against any of the comments that have been made. The only thing we're saying is that our consumers should have full access to Canadian wines right across the country.

We sell $1 billion of Canadian wines in liquor stores in Canada. Last year we had 240 private orders in Ontario to B.C. wineries, totalling 800,300 cases. A billion dollars worth of Canadian wines sold in Canadian liquor stores is not too shabby.

[Mark Adler, Conservative, York Centre, ON]

You're in favour of this bill, then.

[Rowland Dunning]

We don't think the bill is necessary, because we're already doing what the bill implies.

[Mark Adler, Conservative, York Centre, ON]

You are, but they're not.

[Rowland Dunning]

Who? The wineries? I'm not sure what you mean. Any liquor board in Canada can order a wine for a customer from any winery in this country right now, and we do it all the time.

[Mark Adler, Conservative, York Centre, ON]

However, if I were to go across the provincial border and buy a case of wine and bring it back, I'm technically breaking the law.

[Rowland Dunning]

Not in our perspective. Let me clarify—

[Mark Adler, Conservative, York Centre, ON]

In your perspective I wouldn't be, but you're not the government.

[Rowland Dunning]

Federal lawyers say that's against the law. Provincial lawyers say it isn't.

[Mark Adler, Conservative, York Centre, ON]

If I were to walk into one of your members' outlets and order something, how long would it take to get a case?

[Rowland Dunning]

It depends on the jurisdiction. In Ontario, if you wanted to pay an expedited fee, you would get it in three days, but most likely it would take a couple of weeks.

[Mark Adler, Conservative, York Centre, ON]

The cheese would get a little mouldy in that time, wouldn't it?

[Rowland Dunning]

No, you can go to the liquor store and pick up a bottle. Nine times out of ten, if you're ordering from outside the province, it's not for consumption that evening.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Adler.

We now go to Mr. Mai, please.

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

I'll try to be less political than my colleague over there, but I'll just let you know that before our leader got elected, we approved the Jordan free trade agreement. Out of respect for our witnesses, I think we'll focus on the subject that is here.

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

You need to get that Jordanian wine in.

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

I have a question to anyone who can answer it. The issue of trade has been raised a couple of times. Who can say there is not a problem with the trade issues if this bill were to pass? Can you say there are no consequences?

[Dan Paszkowski]

We have had significant consultations with government departments and with trade lawyers. In fact, our trade lawyers were the ones who participated in the two challenges that were mentioned by my colleagues to my right, both the EU and the U.S. GATT challenges.

If the wine enters Canada and national treatment obligations are provided, there is no case for any legal trade action. Now, wine has to enter into each province through first receipt. That is part of the IILA, and that does not change. This means that the wine has to enter in through a liquor board, go through the distribution system, and the charges are incurred on that particular case of wine.

In the case of imports, if a consumer in another province was interested in getting that unique case of Chianti that is available at the LCBO but not at the Manitoba liquor corporation, with national treatment obligations they would be allowed to access that case of Chianti, pick it up in Ontario, and carry it back to Manitoba, or to contact the LCBO in Ontario, procure that case of wine, and have it delivered back to the province of Manitoba.

As long as you meet those national treatment obligations, there is no trade violation. It does not mean that a consumer in Ontario can order directly from a vineyard in France; it has to go through first receipt to meet the federal obligations.