Bill C-311 is the law of the land – now what?

Since we last checked in on the progress of federal Bill C-311 (which received Royal Assent on June 28, 2012) amending the interprovincial shipment of wines across the country, a couple of interesting issues have surfaced in British Columbia.

First, it is remarkable that the BC government was caught so flat-footed in its initial response to the legislation.  The federal Bill had received unanimous support in the House of Commons in all three readings dating back to October 2011, signalling a rapid route through the remainder of the legislative process. The ultimate passage of the Bill should not have been a surprise to the BC government. However, the Ministry in charge, under whose Minister (Rich Coleman) this file has remained a constant regardless of his main portfolio, failed to adequately respond to the spirit or intent of the federal legal change, instead announcing that a limited quantity of “in-person” imports from another province was allowed. 

Direct online purchases – and by implication, BC “export” sales – were expressly excluded, prompting strong criticism (“howls of outrage”) from the BC wineries who have begun to factor direct interprovincial direct sales into their business plans. To make matters worse, the Minister’s verbal comments on the matter were contradicted by the wording of his Ministry’s press release of the same day announcing the policy change. Confusion reigned. Further, provincial liquor boards were seen to be at odds not only with C-311 – the federal law of the land – but in some cases also with their own provinces’ legal regimes which permit the direct purchase of wines from other provinces (principally Alberta and Manitoba – neither province has a pre-existing legal prohibition).

Some degree of clarity, and relief for BC consumers, was achieved on July 12th, as Minister Coleman announced a regime which puts BC in a leading position in Canada with respect to interprovincial wine shipments.  BC wine fans may now order an unlimited quantity of wines from other provinces (grapes must be grown and wines must be made in Canada) for personal consumption, without the BCLDB markup or other penalties (such as jail – as applied under the previous federal legislation).  

The move made by the BC government is welcome for consumers, and helps establish terms on which other provinces could interpret the federal law.  However, for the time being BC wineries remain beholden to the decisions made by other provincial governments – influenced by their liquor boards – as to whether they will permit BC wines to be sold directly to consumers in their provinces.  The advocacy of such organisations as the Canadian Vintners Association will continue to be crucial.  In a recent press release, the CVA released its “scorecard” of those provinces that now permit unlimited direct sales: BC, Alberta, Saskatchewan and Manitoba. The key holdouts of course are Ontario and Quebec.  The CVA affirms its commitment to work with consumer groups and wineries to “remove provincial restrictions that prohibit consumers from purchasing wines directly from Canadian wineries”.  One hopes that the CVA and Free My Grapes (www.freemygrapes.ca), supported by the freshly-announced BC policy change, will continue to keep up the pressure for open trade in Canadian wines across the country.

A second and potentially more serious consideration surrounding the passage of C-311 and the provincial responses so far are the recurring concerns around whether provincial moves are compliant with Canada’s international trade obligations.  During third reading debate in the House of Commons the Opposition NDP promoted exclusive CanCon (Canadian Content) amendments to the private member’s bill brought forward by Conservative Okanagan-Coquihalla MP Dan Albas. As noted by Vancouver wine lawyer Mark Hicken, the federal bill was carefully crafted NOT to trigger a trade complaint under World Trade Organisation rules, which would most likely be launched by the US or Europe (Canada is currently negotiating a free trade agreement with the European Union).

While the final version of C-311 appears not to discriminate against import wines, BC’s current policy (now confirmed in regulation) expressly permits only the direct purchase from other provinces of wines made from Canadian-grown grapes. At first glance, it makes eminent sense that Canadian wines should be freely traded within the country.  However, to permit this trade while excluding the option to directly order imported wines from a retailer in another province may yet prove to put British Columbia (and therefore Canada) offside of its WTO, and possibly NAFTA, obligations with its trading partners.  (See Mark’s excellent analysis of the BC developments and the risks to Canada’s international trade obligations at www.winelaw.ca).  BC’s position differs from Alberta and Manitoba in that neither of those provinces prohibits its residents from ordering any wine available at any retailer across the country.

Two concluding thoughts on these emerging issues:  first, as any British Columbian who has followed the trials and tribulations of the forest industry knows, it is generally not worth attracting the attention of the United States Trade Representative concerning a trade dispute that offers even the perception of unfairly disadvantaging American commercial interests in a given commodity or product. 

And second, could it be that BC’s wording is actually very astute, and rather than depriving BC consumers of directly ordering import wines from another province, it is actually taking aim at the seldom-discussed Cellared in Canada category?  Whether intended or inadvertent – and provided it stands up to scrutiny – BC’s move could well go some way to clarifying for the Canadian consumer what really is Canadian wine.  That CanCon distinction is one worth making.