Thank you very much, Mr. Chair, and good afternoon.
As the president of the Canadian Vintners Association, better known as the CVA, I'd like to thank all members for this opportunity to provide our industry's perspectives on the proposed Canada-Japan free trade agreement.
The CVA is the national voice of the Canadian wine industry, representing wine companies accounting for more than 90% of the wine produced and sold across Canada. Wine is increasingly becoming the beverage of choice in Canada and presently accounts for 30% of the beverage alcohol market, up from 18% only 20 years ago. Today the Canadian wine industry represents 11,500 direct jobs, 1,000 independent grape growers, 450 wineries, $2 billion in domestic liquor board sales, and $28 million in export wine sales.
Japan is the most developed and competitive wine market in Asia. In 2011, Japan imported 145 million litres of wine valued at $878 million, a growth rate of 14% over the previous year. Japanese wine imports have increased by roughly 16% in the five-year period 2006 to 2010, and are predicted to grow by a further 18% between 2011 and 2015.
Japan is Canada's eighth largest export market for wine. A free trade agreement with Japan would benefit the Canadian wine industry if tariffs are eliminated, internationally accepted wine-making practices are recognized, and genuine Canadian icewine and geographical indications are protected from the growth in counterfeit products.
Canadian wine exports to Japan by sales value are as follows: icewine, 59%; table wine, 24%; and sparkling wine, 17%. By export region, Ontario represents 75%, British Columbia represents 18%, and Quebec represents roughly 7%.
Removal of Japan's tariff and non-tariff barriers would benefit Canadian wineries and the growth of wine exports. The import tariff on wine is a 15% ad valorem with a maximum of $1.57 Canadian per litre, whichever is less, and a minimum customs duty of 84¢ per litre. Sparkling wines are subject to a tariff of $2.28 Canadian per litre.
Given the differential tariffs in place, Canadian wines can face higher tariffs than wine imported from other countries. For example, Chile is a principal competitor for Canada on the world wine market, but has successfully negotiated the elimination of its wine tariff under its free trade agreement with Japan. With a lower, phasing-out tariff rate, Chilean wine imports into Japan have increased significantly since 2007, capturing a greater market share. There has been a 23% compound annual growth rate since the signing of the free trade agreement with the Chileans. A free trade agreement with Japan must include the phasing out of wine import tariffs.
Japan's regulatory system for oenological practices, including additives and processes, can be difficult to navigate and can represent a costly barrier to trade. To address this concern, Canada is an active participant in the APEC Wine Regulatory Forum to help promote regulatory alignment in the Asia-Pacific region, to help remove costly, unnecessary, and burdensome regulatory obstacles with respect to oenological practices, definition and/or description of products, labelling requirements, and methods for analyzing, assessing or certifying wine products. Mutual recognition of oenological practices and processes and product specifications, as well as a process to address new practices or modifications to winemaking practices, should be part of the Canada-Japan FTA.
Icewine is Canada's flagship wine product. It has garnered global recognition and prestigious international awards. It has helped build Canada's reputation as a wine-producing country, supported the growth of our world-class table and sparkling wines, and helped develop our burgeoning wine country tourism industry.
As with many successful products, genuine Canadian icewine and our legitimate wine businesses have been harmed by the proliferation of counterfeiting on a global scale. Adequate protection and enforcement is a key condition for nurturing the success of Canada's icewine industry. To protect Canadian interests and to assist Japanese authorities in protecting their consumers from counterfeit products, it is essential that icewine be defined in the free trade agreement with Japan as “wine made from grapes naturally frozen on the vine”. This would parallel Canada's commitments under the Canada-European Community Wine and Spirits Agreement and the World Wine Trade Group labelling agreement. It would also be in line with the commitment of both Canada and Japan to the Anti-Counterfeiting Trade Agreement to enhance international cooperation and support effective international standards.
Finally, all wine-producing countries strive to protect names that identify wine as originating in a territory where a quality reputation or other characteristic is attributable to its geographical indication, for example, appellation regions such as Prince Edward County, Niagara, the Okanagan Valley, or sub-appellation regions such as Niagara-on-the-Lake, or the Gaspereau Valley in Nova Scotia.
These geographical indications for wine should be protected in the Canada-Japan agreement. Further, these geographical indications should not be allowed to describe or present a wine not originating in Canada, whether or not it is accompanied by expressions such as “kind”, “style”, “type”, “imitation”, or the like, to safeguard the distinctiveness and reputation of our wines.
Thank you. I'd be more than happy to answer any questions.