CANADA - MEASURES GOVERNING THE SALE OF WINE REQUEST FOR CONSULTATIONS BY AUSTRALIA
Document: REQUEST FOR CONSULTATIONS BY
Date: 16 January 2018
Document codes: WT/DS537/1; G/L/1209
Complainant: Australia
Respondent: Canada
Third parties: Argentina, Chile, China, EU, India, Israel, South Korea, Mexico, New Zealand, Russia, South Africa, Taiwan, Ukraine, U.S., Uruguay
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. III:1, III:2, III:4, XXIV:12  GATT 1994

CANADA - MEASURES GOVERNING THE SALE OF WINE
REQUEST FOR CONSULTATIONS BY AUSTRALIA
The following communication, dated 12 January 2018 , from the delegation of Australia to the
delegation of Canada and to the Chairperson of the Dispute Settlement Body, is circulated in
accordance with Article 4.4 of the DSU.

My authorities have instructed me to request consultations with the Government of Canada
pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU"), and Article XXII:1 of the General Agreement on Tariffs and Trade
1994 ("GATT 1994"), with regard to measures maintained by the Canadian Government and the
Canadian provinces of British Columbia ("BC"), Ontario, Quebec and Nova Scotia governing the
sale of wine.

It appears that a range of distribution, licensing and sales measures such as product mark -ups,
market access and listing policies, as well as duties and taxes on wine applied at the federal and
provincial level may discriminate, either directly or indirectly, against imported wine. In particular:

 The BC wine measures provide advantages to BC wine through the granting of exclusive
access to a retail channel of selling wine on grocery store shelves. The BC measures
appear to discriminate on their face against imported wine by allowing only BC wine to be
sold on regular grocery store shelves while imported wine may be sold in grocery stores
only through a so -called "store within a store." The BC wine measures also provide
advantages to BC wine through a separate distribution system for imported wine and
another system that applies to BC wine. Imported wine is subject to a wide range of
mark-ups, fees and taxes, while BC wineries are permitted to "direct deliver "wine to
consumers. This system provides a substantial benefit to BC wines.

 The Ontario wine measures place conditions on both the sale of wine in grocery stores and
its supply through the Liquor Control Board of Ontario (LCBO), a State Trading Enterprise.
The Ontario measures appear to operate so as to favour products of Canadian origin and
potentially exclude or limit imported products from being displayed and sold. It appears
that the Ontario wine measures advantage Ontario wine by allowing Ontario wineries to
directly deliver wines to licensed establishments in Ontario, on behalf of the LCBO.

 The Quebec wine measures provide Quebec small -scale wine producers with direct access
to grocery and convenience stores. The Quebec measures appear to streamline access in
favour of Canadian wine, while maintaining barriers to access for imported wines.

 The Nova Scotia wine measures provide reduced product mark -up for local producers and
preferences through supplier competitions and price bands.

These measures are reflected in legal and policy instruments and practices that include, but are
not limited to, the following, operating separately or collectively:

1. Federal Importation of Intoxicating Liquors Act 1985;
WT/DS537/1 • G/L/1209

2. Federal Excise Act 2001;

3. Policy Directive No. 15-01, issued by the BC Liquor Control and Licensing Branch, re:
Liquor Policy Review Recommendations #19 and 20: Phased-in Implementation of Liquor
in Grocery Stores, dated February 26, 2015;

4. BC Liquor Control and Licensing Act ([SBC 2015] Chapter 19), succeeding the BC Liquor
Control and Licensing Act ([RSBC 1996] Chapter 267);

5. B.C. Reg. 42/2015, deposited March 17, 2015, amending BC Liquor Control and Licensing
Regulation, B.C. Reg. 244/2002; Order in Council 121/2015, approved and ordered March
16, 2015; British Columbia Gazette, Part II, Volume 58, No. 6 (March 24, 2015);

6. BC Liquor Control and Licensing Regulation, B.C. Reg. 241/2016, deposited October 20,
2016, effective January 23, 2017, succeeding BC Liquor Control and Licensing Regulation,
B.C. Reg. 244/2002;

7. "Wine Store Terms and Conditions," BC Liquor Control and Licensing Branch publication,
updated August 2017;

8. Special Wine Store Licence Auction Act and regulations of 2015 [SBC 2015] Chapter 20
(British Columbia);

9. British Columbia Wine Store Handbook, January 2017;

10. "Manufacturer Terms and Conditions,"BC Liquor Control and Licensing Branch publication,
December 2017;

11. British Columbia Vinters Quality Alliance system, including British Columbia Wines of
Marked Quality Regulation and creating the "BC VQA"appellation of origin;

12. British Columbia Liquor Distribution Act [RSBC 1996] Chapter 268;

13. Mark ups, fees and taxes through the British Columbia Liquor Distribution Branch;

14. Ontario Liquor Licence Act [R.S.O. 1990, Chapter L.19] and Regulations;

15. Ontario Liquor Control Act [R.S.O. 1990, Chapter L.18] and Regulations;

16. Ontario Regulation 232/16 regarding the sale of liquor in government stores under the
Liquor Control Act;

17. Ontario Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996,
Chapter 26;

18. Mark ups, fees and taxes through the Liquor Control Board of Ontario and the Alcohol and
Gaming Commission of Ontario, including those listed in the 2016 Ontario Budget;

19. Chapter P-9.1 An Act respecting liquor permits (Quebec) and Regulations, including:
 chapter P-9.1, r. 6 Regulation respecting promotion, advertising and educational
programs relating to alcoholic beverages;

20. Act respecting the Société des alcools du Québec and Regulations, including:
 chapter S-13, r. 5 Regulation respecting the duties and costs payable under the
 chapter S-13, r. 7 Regulation respecting wine and other alcoholic beverages made
or bottled by holders of a wine maker's permit; Act respecting the Société des
alcools du Québec (chapter S-13, ss. 30 and 37); and
 chapter S-13, r.6 Regulation respecting the terms of sale of alcoholic beverages by
holders of a grocery permit in the Act respecting the Société des alcools du
Québec;
WT/DS537/1 • G/L/1209

21. Legislation and regulations enacted as a result of Bill 88: An Act respecting development of
the small-scale alcoholic beverage industry (Quebec);

22. Act respecting the Quebec sales tax and Regulation respecting the Quebec sales tax;

23. Mark ups, fees and taxes through the Société des alcools du Québec;

24. Liquor Control Act of Nova Scotia and Regulations; and

25. Mark ups, fees and taxes through the Nova Scotia Liquor Corporation

as well as any amendments or successor, replacement, or implementing measures.

These measures appear to be inconsistent with Canada 's obligations pursuant to Articles III, XVII
and XXIV:12 of the GATT 1994.

 Article III:1 and III:2 of the GATT 1994 because they are internal taxes or other internal
charges of any kind applied to products imported into Canada in excess of those applied to
products of Canadian origin, so as to afford protection to products of Canadian origin.

 Article III:4 of the GATT 1994 because they are laws, regulations, or requirements
affecting the internal sale, offering for sale, purchase, or distribution of wine and fail to
accord products imported into Canada treatment no less favorable than that accorded to
like products of Canadian origin.

 Article XVII:1 of the GATT 1994 because the provincial liquor control boards/commissions
of British Columbia, Ontario, Nova Scotia and Quebec, as State Trading Enterprises, are
not acting in a manner consistent with the general principles of non-discriminatory
treatment prescribed in the GATT 1994 for governmental measures affecting imports by
private traders.

 Article XXIV:12 of the GATT 1994 because Canada has not taken reasonable measures as
may be available to it to ensure observance of the provisions of the GATT 1994 by the
regional and local governments and authorities within its territories.

We look forward to receiving your reply to the present request and to fixing a mutually convenient
date for consultations.