American wine makers want to overturn the province's decision to let select grocery stores exclusively sell B.C. VQA wine, arguing shoppers should be able to buy international wines as well in those outlets.
If successful, the challenge under international trade agreements could transform or even put a cork in the centrepiece of the B.C. government's liquor policy reforms.
The California Wine Institute submitted its complaints to the Office of the United States Trade Representative in an Oct. 27 letter stating that the regulations were “blatantly discriminatory.”
The B.C. government announced in 2014 that as of April 1, 2015, grocery stores would be able to apply for a permit to sell B.C. wine on their shelves under one of two different models.
A VQA-only licence allows stores to bypass the rule they be at least one kilometre from liquor stores, as well as avoiding the ‘store within a store’ model set out for non-B.C. wine.
California Wine Institute vice-president and international trade counsel Tom Lafaille said the organization has opposed the regulations since their implementation.
"We were assured by the B.C. government and industry that imported wines would still be able to be sold in B.C. grocery stores," Lafaille said, adding that this two-part model doesn’t satisfy that promise.
"We’re working with industry and governments… this is an international effort to free up grocery store shelves for non-B.C. wine."
The VQA-only permit goes against Canada’s international trade commitments, said Lafaille. The submission to the Office of the U.S. Trade Representative noted that the U.S. and Argentina, Australia, Chile, Mexico, New Zealand and the United Nations filed formal objections with the B.C. government challenging the new system on April 29, 2016.
While the future of the North American Free Trade Agreement has been called into question by U.S. President-elect Donald Trump's promise to renegotiate or rip it up, U.S. wine lobbyists aren't relying solely on NAFTA.
The letter stated that as new regulations appear to favour B.C. wine over imported wine, the nations question "whether they are consistent with Canada’s commitments as a member of the World Trade Organization – specifically the national treatment obligations under Article III:4 of the General Agreement on Tariffs and Trade 1994."
But the province disagrees.
"To our knowledge, no regulatory tariff action has taken place and no trade injunctions has been filed," said Ministry of Small Business and Red Tape Reduction communications director Bill Anderson.
"The B.C. wine on shelves mode will never see more than 60 partners and the liquor licences that are in these grocery stores are the same VQA licences that have existed in B.C. for years."
Currently, Anderson added that only 12 grocery stores – six per cent of the total amount in B.C. – will have VQA-only licences, including one in South Surrey.