The United States Trade Representative filed a renewed complaint with the World Trade Organisation on September 28th, 2017 concerning British Columbia’s BC-only wine on grocery store shelves, setting the stage for a further 60 days of consultation with Canada. While re-filing a trade complaint is not a common step, it is possible to discern a strategy. The move continues to mean uncertainty for BC’s wine retailing landscape, and poses ongoing risks to the business model for the BC wine industry.

I was very pleased to be invited to provide comments today to Business News Network on the implications of the renewed challenge.

A few further thoughts: 

The language of the new filing is very similar to the initial complaint filed by the Obama Administration on January 18, 2017, and is updated mainly to reference new BC documents, including the new regulations under the BC Liquor Control and Licensing Act which came into force after the first WTO filing.  From a US political perspective, the renewed filing now has the “imprimatur” of  the Trump Administration, and reflects the harder line it is taking in its trading relationships and in particular its negotiations with Canada.  The timing may also be intended to align with milestones in the current NAFTA negotiations.

It is not yet clear what the implications of the new US filing are for the positions of the countries who joined the January 2017 filing. The European Union, New Zealand, Australia and Argentina joined the previous request for consultations with Canada about BC’s wine-in-grocery practices.

What is clear is that this renewed WTO challenge points to multiple channels available to the United States and Canada’s other trading partners to pursue international legal remedies, not only to the current BC grocery store model but also expanded to other long-standing BC policies relating to the domestic industry that have come under scrutiny in previous filings (discussed in a June 2017 post by Mark Hicken).

Strategic Considerations

The new British Columbia NDP government will have to decide, under renewed pressure by the United States, which approach it prefers to take to managing the dispute: defend (under Canada) the WTO challenge; work with the industry and the parties to the challenge for a negotiated settlement; or proactively make policy changes to the present wine-in-grocery model.  The last option could be the “cleanest” as it would likely limit WTO scrutiny and a possible adverse ruling on other policies like direct delivery and the domestic producers rebate. It could also be politically difficult, as any adjustment to the present wine-in-grocery model will further shake up wine retail trade channels, and inevitably mean winners and losers in BC’s persistently complicated managed liquor system.

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