John Ivison: Liberals can do better than abandon promised free trade in Canadian booze

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Ontario wines one display at an LCBO. Photo by Postmedia

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An alternative solution for small producers looking to expand is to sell directly to consumers across the country.

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That has been impractical, with shippers such as Canada Post or FedEx reluctant to ship to provinces that don’t permit direct-to-consumer sales.

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But Kubek said the federal government should not be throwing up its hands. It should simply adopt a private members’ bill, Bill C-262, put forward by Conservative MP Dan Albas, which would amend the Canada Post Corporation Act to allow Canada Post and other “trusted carriers” to collect, transmit and deliver beers, wines and spirits directly to consumers. As Albas pointed out, Ottawa has the exclusive jurisdiction over interprovincial trade.

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The teetotaller MP for Okanagan Lake West–South Kelowna said that he is happy for the government to steal his bill and fast-track it through the House. Passage of the bill would “operationalize” the direct-to-consumer industry, helping small businesses to grow.

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Albas said it would take a brave provincial premier to lobby against those efforts, given all the talk about free internal trade in Canada.

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Kubek said governments should stop treating Canadian wine as if it were foreign wine.

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“No major wine-producing country treats wines from another region the way that Canada treats wines from another province.”

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He said provinces are more interested in the tax revenue generated by the economic activity than in growing that activity.

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Kubek’s vision is to have a Canada-wide “vintners’ quality assurance” scheme that would allow wines from any province to be on the shelves without being subject to massive markups.

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“When I talk to government officials, they go: ‘Well, we have to worry about a trade challenge,” he said. “I think (President Donald) Trump threw the whole argument of trade challenges right out of the window.”

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A recent report by Deloitte for the Wine Growers of Canada estimated that the 600 or so wineries contribute around $10 billion to the country’s GDP.

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Vignoble de l’Orpailleur in Quebec’s Eastern Townships. Photo by J-F Bergeron / ENVIRO FOTO

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The report said the federal and provincial taxes on a $20 bottle in Ontario accounted for 14.2 per cent (compared to 8.8 per cent in California), while the retailer’s mark-up was 41 per cent, leaving 44 per cent for the producer.

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Wines produced domestically (or blended here using foreign grapes) accounted for 29 per cent of sales in 2023/24. That compares to around 80 per cent of domestically produced sales in France, Australia and California.

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The removal of U.S. wine from the shelves of many provincial liquor stores has created a unique Canadian cultural moment that should allow producers to increase domestic market share.

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Instead, Kubek said provincial monopolies in B.C. and other provinces used the removal of American wines as an opportunity to bring in more French, Italian, Argentinian, Chilean and Australian wines, rather than boost Canadian exposure, because the government makes an 89 per cent markup on foreign wine.

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The federal government has provided funding to a Wine Sector Support Program that helps refund excise payments and it has acted to lower federal barriers to trade.

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But that hasn’t had the desired effect. Kubek said the passage of Albas’s bill would give Prime Minister Mark Carney and LeBlanc an off-ramp.

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“They could say: ‘Well we did what we could and now (producers) can ship this way.’ Suddenly the provinces might get a little bit more (flexible) and come to the table,” he said.

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Given the centrality of interprovincial trade liberalization to Carney’s “One Canadian Economy” vision, it would be strange for the government to simply throw its hands up and say there is nothing more it can do.

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To admit defeat so early would be to confirm that Canada has been blessed by nature but beggared by policy, and that the standard view of this country as a nation of over-protected underachievers is, in fact, legitimate.

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National Post

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