Thank you very much, Mr. Chairman.
I'm the president and CEO of Spirits Canada. Joining me today to answer any questions you may have is my colleague, C.J. Helie, our executive vice-president.
The Canadian spirits industry produces amongst the highest value-added processed agrifood products made in Canada. Canadian distillers source locally grown cereal grains—barley, corn, wheat, and rye—and transform these into premium-branded consumer goods.
We often talk about the value that the international export of Canadian spirits, and of Canadian whisky specifically, brings to Canadians in terms of jobs and wealth creation. Open and free markets are not a zero-sum game. Canadian spirits manufacturers can compete with the best the rest of the world can produce.
Certainly, Canadian consumers have benefited from the elimination of import customs tariffs on spirits, the elimination of higher liquor board markups on imports, and the introduction of a very wide range of new products, including single-barrel American bourbons or reposado and añejo tequilas, product categories unknown to most Canadians before NAFTA.
While Canadian whisky has been a dominant player in the U.S. market since the American Civil War, we've actually enjoyed a 100-fold increase in the value of our exports to Mexico since the coming into force of NAFTA in 1994. That's a pretty dramatic improvement in our business.
With fully 70% of Canadian spirits production exported, international trade is essential to the health of domestic manufacturers and to thousands of Canadian companies, many of whom are classified as either micro-, small- or medium-sized businesses that provide essential goods and support services to us as manufacturers.
However, Canada actually exports very little Canadian whisky, the commodity. What we do export are brands of Canadian whisky, iconic brands such as Canadian Club, Crown Royal, Canadian Mist, Black Velvet, Alberta Premium, Forty Creek, and Wiser's, as well as a whole series of innovative new brands, such as Alberta Dark Batch, Lot 40, and, Crown Royal's best whisky in the world, Northern Harvest Rye, amongst many others. It's actually this branding and the Canadian value-add that distinguishes spirits from many other agricultural exports and even many processed agrifoods.
As I mentioned earlier, 70% of Canadian spirit product is exported. Relevant to today's discussion, our NAFTA partners, the U.S. and Mexico, account for 85% of that total, so saying that retaining open access to the NAFTA market is critical to the future of the Canadian spirits industry is actually a gross understatement.
NAFTA is critical to spirits, and spirits are critical to NAFTA's beverage alcohol trade. In fact, spirits account for over 65% of the value of beverage alcohol imports sourced from Canada by the U.S. and Mexico. NAFTA, in fact, has helped distilleries in Canada, the United States, and Mexico compete with products made outside of North America. People often miss that. That's a very important point.
After 20 plus years of NAFTA, our supply chains are very closely interwoven. We benefit from the mutual recognition of our respective signature products such as Canadian whisky, American bourbon, and Tennessee whiskies, as well as tequila and mezcal. We also recognize that after 20 years the agreement could use some improvements and modernization.
The priorities of the Canadian spirits industry for the renegotiation of NAFTA include the retention of duty-free access for all Canadian spirits to the American and Mexican markets, including maintenance of the current rule of origin, and the extension of the formal recognition of “Canadian whisky” as a distinctive product of Canada, which is to include Canadian rye whisky as well.
We've also tabled a joint proposal, along with our colleagues at the Distilled Spirits Council of the United States and Mexico's National Chamber of the Tequila Industry, for an annex to the “Technical Barriers to Trade” chapter, modelled after a similar annex under the TPP negotiations, to deal with various labelling, packaging, certification, and similar regulatory issues. We're working hard to get alignment between our industries across the North American footprint.
We've also requested the inclusion of additional disciplines for beverage alcohol state monopolies to ensure that things like product markups and fees are fully transparent, standardized, and applied equally on all spirits, regardless of country of origin.
In closing, I would simply add that despite the accelerated pace of negotiations we are experiencing in the NAFTA context versus more traditional negotiations, we are extremely pleased and satisfied with the outreach and the consultations being undertaken by both Global Affairs and Agriculture and Agri-Food Canada. We remain extremely confident in Canada's negotiating teams, and underline both their professionalism and expertise as best in class.
We would be happy to answer any questions you may have.