Policy & Positions Manual

National Issues - Service Canada

Removing Inter-Provincial Trade Barriers For Canadian Wine Delivery (2011)

Issue
As international competition increases for Canadians, the issue of inter-provincial regulations, which prohibit many national businesses and industries from increasing their domestic market share, becomes a pertinent one.  Macro discussions relating to inter-provincial trade have been held in recent years by provincial and territorial governments:  These discussions have explored areas of common interest for national businesses and industries and looked at where the removal of barriers have the potential to provide and strengthen competitive advantages.  This approach is a good first step in fostering a more competitive national marketplace, however the more immediate action of directing energies towards targeted regulations would provide a powerful means of demonstrating the positive impacts that removing trade barriers can have on industry and economies.

A prime example of where this immediate action would prove useful is the Canadian wine industry.  As it stands, Canada’s domestic wine industry produces world-class, 100 percent made-in-Canada wines, yet because of current regulations that prohibit the direct delivery of wines to consumers across provincial boundaries, wineries are faced with an unfortunate handicap.  By removing these prohibitive wine-related regulations, a perfect case study into the benefits of further reducing inter-provincial barriers as a means to strengthen domestic industries would be born.

Background
In Canada the direct delivery of alcohol across provincial borders in illegal, whether to an individual or to a business which is not affiliated with or representing that province’s liquor board or approved seller:  The regulation has been in effect since 1928, when the Importation of Intoxicating Liquors Act began preventing the direct sale of liquor across provincial boundaries.  Currently there are wineries that ignore the rule, or even attempt to outsmart it by using Canada Post transport their products, yet others will not direct deliver beyond their provincial borders in accordance with the regulations in place.  Additionally, the current regulations actually prohibit an individual from taking even one bottle of wine across a provincial boundary.

The current regulations were designed long before Internet sales became a viable option for wine distribution.  As the Canadian wine industry expands, it is crucial that every domestic opportunity to market its products is explored.  Direct inter-provincial sales, for personal use, would afford small to mid-sized wineries an important and competitive way to sell their wines, and in turn would create more national choices for Canadian wine drinkers.  Furthermore, it would allow Canadians who visit Canada’s wine regions the opportunity to be able to enjoy wines from those regions in their homes – a mutual benefit for both domestic wine sales and domestic tourism.

The growth of both the B.C. and Ontario wine industries is extremely beneficial to Canada.  Aside from creating jobs, preserving valuable agricultural land, and creating vibrant tourism destinations, the wine industry also adds value to the economy in many other ways:  A 2002 study conducted by the KPMG and commissioned by the Wine Council of Ontario, found that the sale of one litre of Ontario wine added $4.29 in value to the Ontario economy compared to $0.56 in added value from the sale of an imported wine.

Until recently similar prohibitive regulations hindered the domestic wine industry in the United States from delivering directly to consumers over state borders.  In 2005, the U.S. Supreme Court ordered regulations to be adjusted to allow for domestic wines to be direct delivered across state jurisdictions, deeming the current regulations of the day to be unconstitutional.  Consequently, in 2006-2007 U.S. wineries reported a 31 percent increase n direct sales to consumers:  By affording consumers more domestic choice, in all markets, the entire domestic industry has benefited.

It is safe to say that any changes to Canada’s inter-provincial trade regulations could have the same positive impact as has been demonstrated in the U.S.  By removing federal and inter-provincial barriers to domestic wine delivery, for personal consumption, an important agricultural commodity will gain access to a larger domestic market that will in turn improve the financial stability of the industry and thus have an overall positive impact on the economy.


THE CHAMBER RECOMMENDS

 That the federal government:

  1. Demonstrate commitment to reducing inter-provincial trade barriers by working with all provinces and territories to remove prohibitive regulations related to the direct sale and deliver of 100 percent Canadian made wines for personal consumption.

  2. Immediately amend the Importation of Intoxicating Liquors Act to make it legal for 100 percent Canadian made wines to be transported across provincial borders by consumers, and remove barriers for the direct sale and delivery of 100 percent Canadian made wines across provincial borders to consumers for their personal use.