International Trade Committee on Oct. 23rd, 2012

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I'd like to understand a little better the other issue concerning the wine industry, because we get representations on both sides of the geographical indicators. We have a number of cheese manufacturers, prosciutto manufacturers, and salami manufacturers in Canada making a product that their ancestors brought out of Europe 300 or 400 years ago. They're still making it the same way. That's a real trade obstacle for us with the European Union, yet here you are in the wine industry promoting this as a good thing for us worldwide for the wine industry.

[Dan Paszkowski]

In wine you have to look at things differently. When we signed the Canada-EU Wine and Spirits Agreement back in 2003, we had to give up the rights to a lot of terms, which the Europeans may call geographical indications, but we call them traditional terms.

For example, we can't use the term “champagne” any longer. At the end of 2013, we will no longer be able to use the terms “port” and “sherry”. To us, those are traditional terms. I'm talking about geographical indications, the Gaspereau Valley, the Okanagan Valley, Niagara-on-the-Lake, St. David's Bench. These are appellation terms. They're geographically based. They define the value and the quality of the wine.

Just last week, after about four or five years of attempts, Napa Valley was finally accepted in China as a geographical indication, so no wines can be sold in China unless the wine originates from Napa Valley in California. That provided them with a huge benefit in terms of fighting counterfeit products.

Another example is that for the past five years, we have attempted to get VQA, the Vintners Quality Alliance, trademarked in Japan. When we put in the application five years ago, we found out that three Chinese nationals had also applied for the VQA trademark in hopes that if they won it, they'd be able to charge us, say, a dollar a bottle for every bottle of wine we sold in China. We fought them all down and five years later, we finally got the trademark approved.

It's those types of terms that people can use to support the sale of a product that isn't truly coming from the appellation region it's attempting to define. That's where we're coming from in terms of geographical indications; it's purely from the site-specific part of Canada.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

That’s very interesting.

Do I have time for another question?

[The Chair, Conservative, Rob Merrifield]

You have time for one quick one.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I will ask Mr. Moore one quick question.

The tradition of building with wood in Japan is very strong, as it is in Canada. The Canadian brand is very strong and welcome in Japan in just about every instance when I've been there. You say your competition is mainly coming out of Russia, Finland and some other Scandinavian countries, and the U.S. How serious is that competition, and is it based on price?

[Aaron Moore]

I would say that we're on equal footing with our Scandinavian counterparts. I know that those governments are more active in subsidizing some of their research and development costs. I'm unfamiliar with that, though. Russia is a problem. Russian manufacturers are ones that we have had problems with in the European market, as well as the Japanese market. Illegal logging is very common in Russia, unfortunately. The European Union is very active right now in trying to address that. I don't know where the Japanese are, but that's a real concern. I think there probably are some Chinese manufacturers exporting to Japan, but I don't know. I don't have any information on that, but Russia is certainly a concern of ours.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. We have two questioners left in the second round. We'll split the time.

Go ahead, Mr. Morin.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Mr. Paszkowski, don't you think we have a challenge only in defining what icewine is? It's never been very scientific. It was invented by monks who were busy testing the previous year's wine and left the grapes to freeze. Then they decided to try to make wine with them. That was the first time icewine ever existed.

We have a complex reality with climate and climate change. In some areas, you have to adapt to climate conditions. We've got to be careful when finding the definition not to write off some producers. I know that between Quebec icewine producers and western producers, there's a little more than a discussion about that. We have to make sure we don't do that, because some producers from Nova Scotia or wherever else could be written off in the definition. That wouldn't help us because in the long run there's a huge potential for icewine in Japan. We have to make sure that we don't paint ourselves into a corner. The market is huge, and the demand will increase tremendously. If we can't produce enough icewine, other countries that are less respectful of international agreements or definitions will take over. You could freeze grapes or apples in China in a freezer and make very good icewine. Then we're in trouble.

Don't you see that as a bigger threat than agreeing on a definition for our country?

[Dan Paszkowski]

I see it as the same threat. If we allow wine practices to be stretched out even so slightly, that's where we open up the door to the measures that you just mentioned, taking grapes, apples, what have you, and freezing them in a freezer. We just faced that in Spain. Spain is a hot country, and they were freezing grapes in a freezer, trying to sell the product as icewine. Not only that, they were trying to get their government to develop an appellation region for that freezer wine.

With any wine in history, there's a certain practice to use. If you move away from that practice, you hurt the product internationally. Quebec is producing a fantastic product, absolutely fantastic. However, the process that they're using is different from the process used for icewine, so there's no problem calling that product winter wine, vin d'hiver. Call it anything else, but you can't call it icewine because it does not meet the international standard for icewine production. If we do open that up, we will be kicked out of the Canada-EU Wine and Spirits Agreement. We'll be kicked out of the World Wine Trade Group agreement where all these definitions appear. The International Organisation of Vine and Wine has defined it as naturally frozen on the vine and said that it has to be harvested at minus eight degrees. Harvested means picked from the vines, not cut and then left in the vineyards to be produced into a wine product later.

It's a fine line but it's one for which we've spent years and years developing a product where we've become the superpower in the world. There's no interest to move away from what that international definition is without hurting the entire icewine industry around the world.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Spain would have a hard time getting to minus eight degrees on a natural vine, I would think.

Go ahead, Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Unfortunately, my freezer's not big enough to make icewine.

I'd like to thank all of our guests for coming today.

I have one question for you, Mr. Moore. I want to extend the discussion that Mr. Keddy had.

You indicated that in terms of regulations as they relate to wood products and Japan you're concerned about declarations regarding illegally harvested trees. I thought I heard you say you like the regulations pretty much the way they are. Then you said that Russia is involved in illegal logging and that it was prevalent.

Wouldn't the adherence to a rules-based system, where you declare that only legally harvested trees are acceptable, shut out the illegal logging and give you a clearer path to marketing without those predatory practices?

[Aaron Moore]

Yes, that's true. British Columbia in particular, more so even than eastern Canada, is in a really good position to comply with any regulations having to do with illegal logging or harvesting. There certainly isn't—

[Ed Holder, Conservative, London West, ON]

Mr. Moore, what you're saying is that you actually support a declaration and regulations regarding legally harvested trees. I just want to be clear on that. It wasn't clear before to me.

[Aaron Moore]

Okay.

I would prefer to have fewer regulations. If there are regulations, we certainly have a competitive advantage there in comparison to builders outside of Russia. Right now, though, I don't know what restrictions there are on Russian manufacturers selling into Japan.

[Ed Holder, Conservative, London West, ON]

I'm always mindful of the extension of the rule of unintended consequences. As my Cape Breton mom used to say, “Be careful what you wish for.” You might want to reflect, and your association might want to reflect more, if what you're trying to do is get rid of the illegal competitors. Anyway, that's a thought.

Perhaps I could just ask our friends from Posiflex a couple of very quick questions. Thank you for coming.

Do you export outside of Canada now?

[Sébastien Tardif]

Yes.

[Ed Holder, Conservative, London West, ON]

To where, please?

[Sébastien Tardif]

We do export. We have a partner in Bay Minette, Alabama. We have actually designed product for them. We have a modest distributor in France, in Brittany. I've sold products in Taiwan—

[Lyne Noiseux, President, Posiflex Design Inc.]

By Internet.

[Ed Holder, Conservative, London West, ON]

Good. Have you used Canada's trade commissioner service to assist you in exporting to Japan, or have you been looking at that?

[Sébastien Tardif]

No, not in this particular aspect for Japan. I've worked with the trade commissioner service in the past. We have tried different things with them. We did go to Boston a couple of times to meet some people. We had some work with them, but not specifically for Japan.

[Ed Holder, Conservative, London West, ON]

I would encourage you to consider that. If you need some contacts, I'm sure we could provide them.

Mr. Paszkowski, thank you for coming back.

I'm very concerned about your definition of drinking regularly means one time per month, because I'm not sure how I would define it certainly for myself.

It's a quick question that I have for you, if I could, please.

You talked about geographical indications and you talked about the Niagara region, you talked about the Okanagan Valley, or at least Mr. Cannan did. How far does that go? Where, from your perspective, would you define a geographical indication as being a territory? For example, in southwestern Ontario, near the 10th largest city in Canada, which is London, there is Point Pelee and Pelee Island Winery. Just outside my area, in the Sparta area, there are some fruit wineries. How far does that go in terms of how you anticipate a trade deal should look in terms of trying to protect regional interests? How small does that go?

[Dan Paszkowski]

Well, if you mean in Canada, Canada would be a geographical indication, a large one. Provinces, for example, Nova Scotia, would be a geographical indication today, but there are opportunities to break it down into smaller lots. Ontario has already done that. Ontario has the province, and the appellations, and sub-appellations within the appellations.

[The Chair, Conservative, Rob Merrifield]

Okay, thank you very much. Your time has about gone.

How large is London, did you say?

[Ed Holder, Conservative, London West, ON]

It is the 10th largest city in Canada, Chair.