Thank you, Mr. Chairman.
I'm Jan Westcott, the president and CEO of Spirits Canada, and I'm here with my colleague, C.J. Helie, who's our executive vice-president. We're pleased to be here today in support of the Canada-European Union comprehensive economic and trade agreement, or CETA.
Spirits Canada is the only national organization representing the interests of Canadian spirits manufacturers, exporters, and consumers. Spirits producers in Canada are primary manufacturers. We source locally grown cereals such as barley, corn, rye, and wheat, and transform them into high value-added consumer products. Our signature products and our international recognition are based on Canadian whiskey and Canadian rye whiskey, but we produce and market a full range of spirits products, including gin, rum, vodka, liqueurs, and ready-to-drink products. Spirits annually represent more than 65% of all Canadian beverage alcohol exports, significantly more than beer, cider, and wine exports combined. In fact, total spirits exports during calendar year 2012 were worth over half a billion dollars, and, happily, were 33% greater in value than they were in 2008, so we're on a good track.
Building on this international success, spirits industry exports in the first nine months of 2013 are running approximately 20% more than last year's. I mention as an aside that spirits are also the only Canadian beverage alcohol sector that is not subsidized by taxpayers. Canadian spirits brands have a great reputation internationally for quality and authenticity, and our members have invested heavily in recent years in new product development and expansion into new markets.
CETA offers another important step in the evolution of bilateral alcohol trade between Canada and Europe. CETA builds on the previous 2004 wine and spirits agreement, and will provide further positive forward momentum.
Today, I'd like to highlight four key sector-specific initiatives within CETA that would be beneficial to Canada.
One, spirits consumers will benefit from the elimination of remaining import tariffs.
Two, most of the growth in the market is in the premium and super-premium end of the business. People are drinking less, but they're drinking better. These premium brands will benefit from the conversion of certain liquor board service fees from an ad valorem or price-based application that penalized higher-value products to a new flat rate, volume-based price structure.
Three, Canadian spirits manufacturers will also now be able to source spirits in bulk from the European Union and bottle them here in Canada, providing first of all greater flexibility, potential cost efficiencies, as well as additional value-added activities here in Canada for certain companies.
Finally, CETA will ensure greater transparency and marketplace discipline in regard to state trading enterprises, otherwise known as liquor boards in Canada, engaged in various aspects of liquor importation, distribution, and retailing.
Last year, spirits represented over 80% of all Canadian beverage alcohol imported by the 27-member-state European Union. Our principle current markets in Europe include France, Germany, Finland, Spain, Sweden, and the United Kingdom, with these six countries representing the majority of our sales. There are great growth opportunities for us across many EU states, including the Czech Republic, Estonia, Hungary, Latvia, Lithuania, and Slovenia, as these eastern European consumers increasingly migrate from vodka to brown spirits such as whiskey.
Some trade critics are concerned that free trade agreements encourage offshore production to lower-cost countries. This concern does not apply to spirits because under Canadian law all Canadian whiskeys must be mashed, fermented, distilled, and matured in Canada; hence, our geographic indication, “Canadian whiskey” and “Canadian rye whiskey”. More importantly, fresh and pure Canadian water and Canadian-grown premium barley, corn, rye, and wheat are essential to creating the unique taste profile of our beloved iconic brands, brands that in a number of cases, such as Canadian Club and Wiser's, have been manufactured and sold continuously for over 150 years in this country. The growth in international exports of Canadian spirits translates directly into more jobs here in Canada on Canadian farms, in Canadian spirits facilities, and in hundreds of small and medium-sized businesses that serve and support our production and maturation facilities.
On behalf of our member companies, we want to extend our appreciation to the Prime Minister and Ministers Fast and Ritz for the leadership they have shown through these negotiations. We also want to commend our Canadian trade officials, particularly chief negotiator Steven Verheul and his team, who were extremely responsive to industry priorities.
I'd also like to recall for the committee members that the Canadian spirits industry has a request before the government for a reduction of $1 per litre of absolute alcohol in spirits excise duty. The impact of the 2006 excise rate changes has dramatically escalated the federal fiscal burden on spirits versus those of our direct competitors. Such a modest decrease in our tax load would be a critical precursor to the industry. It would allow us to take full advantage of the emerging trade opportunities being created through the government's trade agenda, thus enabling Canadian spirits to attain their full potential.
That's the end of my presentation. Thank you very much. At some point we would be pleased to answer questions.