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Canada bows out of trade dispute with Australia - N.S. wineries the losers

A murmuration of starlings flies over the Goose Landing Vineyard in North River on Monday September 24, 2018. The vineyard lost most of its grapes to starlings and frost.
(RYAN TAPLIN / The Chronicle Herald)
Starlings fly over the Goose Landing Vineyard in North River. N.S. wineries could be hurt by a federal decision to concede in a trade dispute with Australia. (RYAN TAPLIN / The Chronicle Herald)

After two and a half years of legal wrangling, Canada and Australia have reached an agreement that will impact wineries in Nova Scotia.

In 2009, the Nova Scotia Liquor Corporation implemented a policy that saw the price of local wines marked up less than wines from abroad.

Local products are marked up 43 per cent, while imported wines are marked up 140 per cent before going on store shelves.

“The intent was to support emerging wine regions,” said NSLC spokeswoman Bev Ware.  “It’s not specific to Nova Scotia, or even the Atlantic Region, it’s any emerging wine region in the world. In addition to the Nova Scotia wineries, we also carry some product from a couple of British wineries that qualify.”

Ware said the intent of the Emerging Wine Regions Policy was to help wineries get established in the market.

But in January of 2018, Australia filed a complaint about the policy with the World Trade Organization, related to Canada's commitments under the 1994 General Agreement on Tariffs and Trade.

On Monday, the province announced the emerging wine regions policy will be phased out over the next four years.

“Notwithstanding its confidence in the defence of the policy, the province has decided to end years of litigation with an important trading partner through the NSLC's transition away from the policy,” says a release.

The province also says it will collaborate with the local wine industry in this transition.

"Government is working with industry to build on its success, and to find ways that balance the interests of our local industry while being compatible with Canada's trade obligations," said Agriculture Minister Keith Colwell.

The Winery Association of Nova Scotia is not pleased by the decision.

“We would say that this is not an outcome we wanted, but it is the outcome achieved. Now more than ever we need to support Canadian product and product from Nova Scotia and this includes our wine industry,” WANS board chair Gerard Adams said via email. “Nova Scotia in particular is an emerging wine region, we are a job creator in both urban and rural Nova Scotia and we contribute to the diversification of the economy. However, if Nova Scotia wants a future for the wine industry, measures need to be taken to support it. Wine regions in Europe and Australia have programs in place to support the industry, and this is an opportunity for us to modernize our programming to support the future success of our wine industry in Nova Scotia.”

Ware said the NSLC is in the process of implementing a new strategic plan, and reviewing all policies and regulations that pertain to support for local products, including markup rates.

“So, we do anticipate that there will be some changes to the way we support local industry, but it’s too early to say what those additional supports will be,” she said.

The province says that last year, more than 500 people worked in the Nova Scotia wine industry, which generated domestic sales revenue of $21-million.

The federal minister for trade said the decision to stop battling Australia over wine prices at the WTO was made as part of taking trade obligations seriously.

“We stand by our position that the Emerging Wine Regions Policy is origin neutral and, to date, no international body has ruled against the NSLC,” Geoff MacLellan said in a release. “That said, Australia is an important trading partner for Canada and prolonged litigation means uncertainty for our industry."


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