Lately, I have been spending a large amount of my time on an issue that will directly affect our local wineries, and most wineries across Canada.
In 2018, following the government’s introduction of an excise escalator tax (basically meaning an automatic increase every year on the alcohol excise tax) for import beer, wine and spirits, Australia requested a review at the World Trade Organization for Canada’s exemption for 100 per cent Canadian wines.
The WTO draft report is anticipated in April, with the final legally binding report this summer.
If the review agrees with Australia, this could have a catastrophic effect on some 400 Canadian wineries, including 32 wineries here in Kelowna-Lake Country. It would force them to bear the burden of tens of millions of dollars in new taxes each year as an industry – a new cost that they have not paid before, putting this important industry at risk.
Local winery owners I’ve spoken to, as well as representatives from the British Columbia Wine Institute, and the Canadian Wine Growers Association all say that if we lose the trade dispute it will set the wine industry back 15 years.
On Jan. 16, official Opposition MPs who have wineries in our communities across the country jointly signed a letter to the federal small business, export promotion, and international trade minister, urging the government to immediately engage with Australia to settle this dispute prior to the WTO ruling.
We received a response from the minister on Jan. 31 where the minister stated, “Australia’s position on the excise duty exemption has been unwavering and clear…”.
Basically, the response was that there isn’t much the government of Canada can do. It is not engaging with Australia as far as we know to negotiate any resolution, or coming up with a plan on how to address this if Canada loses the trade challenge.
I have also spoken several times in the House of Commons about this issue asking government to come up with a plan, as have many of my colleagues.
We have to remember that wineries are farms and most are small businesses employing thousands of Canadians across the country.
Our cost of production here is considerably higher, and farm land prices are high compared to other parts of the world, including Australia. To put things into perspective, our entire industry here in B.C. grows less acreage of grapes than some of the individual large wineries themselves in Australia.
We live in a special place here that will be affected proportionally higher than in most parts of the country, as everyone in Kelowna-Lake Country lives just 15 minutes from a winery.
Connect with me if you have any thoughts on this topic.
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