Why Australia is challenging Canada over local favouritism

Australian wine exports (Photo: iStock/Shane White)

Why are Australia and New Zealand challenging Canada through the World Trade Organisation (WTO)?

Canada is a British-settled former colony, much like Australia, but its wine market differs markedly from ours.

For a start, liquor distribution is totally government controlled. In each state or province, a single liquor monopoly imports, distributes and retails the wine. There is no free enterprise as we know it. This makes it extremely difficult to have wine imported and distributed effectively, if at all.

The local wine industry has in the past been small and restricted by the climate, but as global warming is softening this handicap, the local wine industry is expanding and thriving. It no doubt lobbies hard to have its products given preferential treatment in its own markets. Now, Canada stands accused of protectionism.

In recent times, the most populous states, British Columbia and Ontario – which are also the main wine producing states – have legislated that only Canadian wines can be sold through lucrative grocery retail outlets. This is the main bone of contention behind Australia’s WTO challenge.

Canada is Australia’s number four wine export market and is worth about AUD $190 million to us.

Australia is the fifth-biggest country of origin for Canadian wine sales, after the US, Canada itself, Italy and France. We have 10% of the market by volume.

The US mounted a similar WTO dispute against Canada 12 months ago, which Australia joined as an observer.

There is hardly any Canadian wine sold in Australia. Duty-free stores have historically sold super-expensive ice-wines, but little else. But if the Six Nations Wine Challenge, which I help judge every year, is any guide, the Canadian wine industry is improving rapidly. In 2017, Canada topped two classes, sweet wines and rieslings. In riesling, Canada clinched both the trophy and the runner-up awards, as well as two other gold medals. But the big surprise was shiraz. It came third after New Zealand and Australia, with four awards: runner-up, a double-gold and two gold medals.

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