CELEX: 51989PC0015
Language: en
Date: 1989-01-17
Title: PROPOSAL FOR A COUNCIL DECISION on the conclusion of an Agreement between Canada and the European Community concerning trade and commerce in alcoholic beverages. (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (89) 15
Vol. 1989/0004
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   COM(89 )  15     final
                                                   Brussels , 17 January 1989
                       PROPOSAL FOR A COUNCIL DECISION
  on the conclusion of an Agreement between Canada and the European
  Community concerning trade and commerce in alcoholic beverages .
                   ( presented by the Commission )
 ---pagebreak---                            EXPLANATORY MEMORANDUM
1. The importation , distribution and sale of alcoholic drinks in Canada
   is controlled exclusively by provincial marketing agencies , or
   "Liquor Boards ".    They apply a variety of discriminatory measures
   depending on the province , including surcharges , point of sale
   restrictions , listing policies or mark-up differentials .              The
   mark-ups on imported drinks vary from 1% to 15% on spirits , up to
   65% on wines , and even higher in some provinces on beer .
2. After many efforts at finding a bilateral solution the Community
   finally requested a GATT Panel to evaluate the liquor board
   measures .    In October    1987  the Panel reported that the measures
   regarding
   - discriminatory wine mark-ups and
   - restrictive practices concerning access to Liquor Board lists and
     points of sale
   were    not   in  accordance     with  the   Federal   Government 's   GATT
   commitments .
   On 22 March 1988 Canada accepted the GATT panel 's findings and
   conclusions , while stating firmly that for internal reasons Canada
   could not commit itself to progress in the beer sector in the
    " foreseeable future "..
    In September 1988 the Canadian authorities suggested negotiations to
   achieve a bilateral settlement .      The Community judged it worthwhile
   to pursue these negotiations .
3.  The negotiations started on 24-25 November and concluded after a
    further week of meetings on 17 December 1988 . The resulting draft
    agreement provides for :
    - immediate elimination of all discrimination in the spirits sector ;
    - elimination of almost all listing and distribution discrimination
       in the wine sector ;
    - elimination    of   discriminatory    mark-ups   in  the   wine   sector
       immediately in five provinces , and over seven years for all other
       provinces except for the + 1% of Canadian wine which is made
       wholly from Canadian grapes , where the phase-out will take ten
       years ;
    - national treatment ( which means sprovincial treatment ) regarding
       access to beer listings ;
                                                                               %
 ---pagebreak---                                        2
   - a  letter    specifying  a  Canadian   commitment  to eliminate  beer
     mark-ups    when   the  provinces   have   eliminated their  internal
     barriers to beer trade .
   The Agreement also provides for monitoring and consultation on its
   implementation and , of course , the Community has retained all its
   GATT rights .
4. The Commission therefore proposes that the Council adopt under
   Article 113 of the Treaty the attached decision concerning the
   conclusion of an Agreement between Canada and the European Community
   concerning trade and commerce on alcoholic beverages .
 ---pagebreak---                      PROPOSAL FOR A COUNCIL DECISION
                                    OF
on the conclusion of an Agreement between Canada and the European
Community concerning trade and commerce in alcoholic beverages .
The Council of the European Communities
Having regard to the Treaty establishing the European Economic
Community , and in particular Article 113 thereof ,
Having regard to the proposal from the Commission,
Whereas Canada and the Community , in the light of the findings and
conclusions of the GATT Panel on Import , Distribution and Sale of
alcoholic drinks by Canadian Provincial Agencies have reached a
settlement , on 17 December 1988, in the form of an Agreement ,
Whereas this Agreement should be approved ,
HAS DECIDED AS FOLLOWS :
                                Article 1
The Agreement between Canada and the European Economic Community
concerning trade and commerce in alcoholic beverages with the
two exchanges of letters annexed thereto , is hereby approved on
behalf of the Community .
The text of the Agreement is attached to this Decision .
                                Article 2
The President of the Council is hereby authorized to designate
the person empowered to sign the agreement in order to bind the
Community .
Done at Brussels
                                       For the Council
                                       The President
 ---pagebreak---                             AGREEMENT BETWEEN CANADA
                                        AND
                              THE EUROPEAN COmUNITY
            CONCERNING TRADE AND COMMERCE IN ALCOHOLIC BEVERAGES
                         THE EUROPEAN ECONOMIC COMMUNITY
                                        AND
                             THE GOVERNMENT OF CANADA
                  ( hereinafter referred to as the "Parties ")
TAKING into account their respective rights and obligations under the
General Agreement on Tariffs and Trade with respect to the treatment of
goods , and particularly alcoholic beverages , originating in the terri¬
tory of the other PARTY ;
RECALLING the findings and conclusions of the GATT Panel on Import ,
Distribution and Sale of Alcoholic Drinks by Canadian Provincial Market¬
ing Agencies ;
DESIRING    to  resolve    their  differences  over   trade in the alcoholic
beverage sector and to ensure respect for international legal obliga¬
tions while acknowledging the temporary need for structural adjustment ;
ENDEAVOURING to ensure that measures that are currently benefitting the
sale of alcoholic beverages originating in the European Economic Commun¬
ity are not made more restrictive ,
HAVE AGREED AS FOLLOWS :
                                     ARTICLE I
DEFINITIONS
In this agreement :
" base price" means the landed cost of alcoholic beverages , v/hich may
include the cost of service , incurred by Canadian competent authorities ;
" blended wine "    means wine made in Ontario and British Columbia that
contains less than 100 percent but no less than 30 percent Canadian
grapes or grape product ;
"100 percent Canadian wine" means wine that is made entirely from
Canadian grapes or grape product in British Columbia , Nova Scotia or
Ontario and that is sold in the province of origin ;
" Canadian competent authority " means any government or commission , board
or other governmental agency that is authorized by law to control the
sale of distilled spirits , wine and beer ;
" cost of service" means the audited expenses incident to the purchase ,
storage , delivery to sales points , handling and sale of alcoholic
beverages ;
" the Community " means " the European Economic Community "
" delisting" means a revocation of a listing ;
 ---pagebreak---                                       £
" distilled spirits " means spirits ,      liqueurs and other spirituouo
beverages ;
" distribution" means access to the points of sale for alcoholic
beverages other than outlets of the Canadian competent authorities ;
" listing" means a decision by a Canadian competent authority whether
brands or varieties of distilled spirits , wines and beer may be sold in
its outlets ;
"mark-up" means the amount aikled to a base price and to applicable
duties and taxes which results in the establishment of a retail price ;
"mark-up differential " means the difference between the mark-up on a
product of the Community and the mark-up on the like product of Canada
other than additional costs of service necessarily associated with
imported products of the Community ;
" measure"   includes any   law ,  régulation ,  procedure , requirement or
practice ;
" national treatment " means treatment by a Canadian competent authority
of a product of the Community that is no less favourable than the most
favourable treatment accorded by such competent authority to any like
product of Canada ;
" Ontario brandy" means brandy that is produced in Ontario from Ontario
grapes or grape product ;
" product of Canada" means distilled spirits , wine or beer respectively
that is produced , bottled or packaged in Canada ;
" product of the Community " means distilled spirits , wine or beer
respectively that is produced in the customs territory of the Community ;
DISTILLED SPIRITS
                                  ARTICLE II
1 . Canadian competent authorities shall accord national treatment to
     distilled spirits that are the product of the Community in respect
     of measures affecting the listing , delisting , distribution and
     mark-up of such products .
2.   Notwithstanding sub-paragraph 1 ,
     ( a ) the competent authority in Ontario may accord a preference to
           Ontario brandy in respect of the mark-up of such brandy , for
           the time and in the measure provided for in Annex D ;
                                                                            t
 ---pagebreak---                                 - 3 -
       ( b ) Canadian competent authorities may limit sales by a distillery
             on its premises to distilled spirits produced there .
  BEER
                                     ARTICLE III
  Canadian competent authorities
       ( a)  shall accord national treatment to beer that is the product of
             the Community in respect of measures affecting the listing or
             delisting of such beer ;
       (b)   shall not increase any mark-up differential that exists on
             1 December 1988 between beer that is the product of the
             Community and beer that is the product of Canada .
  WINE
                                    ARTICLE IV
  1.   Canadian competent authorities shall accord national treatment to
       wine that is the product of the Community in respect of measures
       affecting the listing , delisting and distribution of such wine .
  2.   Notwithstanding sub-paragrnph 1 , the appropriate Canadian competent
       authority may :
       (a)   limit sales by a winery on its premises to wines produced
             there ;
       ( b ) require private wine store outlets in Ontario to sell only
             wines produced by Canadian wineries ;
       ( c ) require that wine sold in grocery stores in Quebec under
             applicable regulations be bottled in Quebec , provided that
             alternative outlets are provided in Quebec for the sale of wire
             that is the product of the Community , whether or not such wine
             is bottled in QuuDec .
  3.   Canadian competent authorities shall eliminate the mark-up
       differential between wine that is the product of the Community and
       wine that is the product of Canada in accordance with the schedules
       in Annexes A , B and C. Any increase in the mark-up differential
       after   22    March 1988  shall   be eliminated before   the scheduled
       reductions take place .
*
I                                                                             P'-
                                                                               7
 ---pagebreak---                                      - 4 -
LISTING AND DELISTING MEASURES
                                   ARTICLE V
 1. Any measure of Canadian competent authorities relating to            Lhe
     listing or delisting of products of the Community shall be :
     ( a ) non-discriminatory ;
     ( b ) based on normal commercial considérations ;
     ( c ) transparent ; and not create disguised barriers to trade ; and be
                                                                                 (
                                                                                 I
     ( d ) published and made available to persons with an interest in the
           trade and listing or decisions to delist such products .
                                                                                 »
2.  Canadian competent authorities shall , in respect of applications for
     listing of or decisions to delist products of the Community ,                1
     provide :
     ( a ) prompt , written notification of decisions to applicants ;
                                                                                  i
     ( b ) written reasons for those decisions ;
     ( c ) administrative appeal procedures to ensure prompt , objective
           reviews   of  a decision  to  refuse  to list or  a  decision  to
           delist .
CONSULTATIONS
                                  ARTICLE VI
THE PARTIES shall monitor the implementation of the Agreement and shall
consult , promptly at either' s request , concerning any matter relating to
its interpretation and implementation . This will include consultations
on measures that are currently benefitting the sale of the product of
the Community .
RELATION TO GATT
                                  ARTICLE VII
The parties retain their rights and obligations under the General
Agreement on Tariffs and Trade .
                                                                             Ù
                                                                               *
 ---pagebreak--- DURATION
                              ARTICLE VIII
This Agreement shall enter into force on signature .
This Agreement shall be of indefinite duration .     It may be terminated
by either party on thirty days' notice .
Brussels , 17 December 1988
                                                 1
                                             01
H. Wilson    -ÏT) ) 1                    J.-P . Leng
 ---pagebreak---                                   ANNEX A
1. Except as otherwise provided in Annexes B and C , Canadian competent
   authorities shall eliminate , in accordance with Article IV , para¬
   graph 3 , the mark-up differential that exists between wine that is
   the product of the Community and wine that is the product of Canada
   in accordance with the following schedule :
   ( a)  on a date no later than 1 April 1989 , 25 percent of the differ¬
         ential ;
   (b)   on 1 January 1990 , 25 percent of the differential ;
   ( c ) on the first day of January of each year from 1991 until 1995
         inclusive , 10 percent of the differential .
2. Nothing in this Agreement shall prevent Canadian competent
   authorities from eliminating the differential more expeditiously
   than provided for in the schedule in paragraph 1 .
 ---pagebreak---                                    ANNEX B
The Canadian competent authorities in Ontario and British Columbia shall
reduce the mark-up differential between blended wine and wine that is
the product of the Community in accordance with the following schedule :
    ( a)  on a date that is no later than 1 April 1989 , 19 percent of the
          differential ;
    ( b ) on 1 January 1990 , 19 percent of the differential ;
    (c)   on the first day of January of each year from 1991 until 1995
          inclusive , 12.4 percent of the differential .
                                                                        ". αν
 ---pagebreak---                                  ANNEX C
Canadian competent authorities in British Columbia , Nova Scotia and
Ontario shall reduce the mark-up differential that exists between 100
percent Canadian wine and wine that is the product of the Community in
accordance with the following schedule :
( a)  on a date that is no later than 1 April 1989 , 10 percent of the
      differential ;
(b)   on the first day of January of each year from 1990 until 1998 , 10
      percent of the differential .
 ---pagebreak---                                    ANNEX D
The Canadian competent authority in Ontario shall eliminate the mark-up
differential between Ontario brandy and the like product of the
Community in accordance with the following schedule :
    ( a) on  a  date  no  later  than 1 April 1989 ,    20 percent of  the
         differential ;
    ( b) on the first day of January of each year     from 1990 until 1993
         inclusive , 20 percent of the differential .
                                                                      //3
 ---pagebreak---                                     Brussels
                                    , 1989
Mr . J.P. Leng
Commission of the European Communities
Brussels
Dear    Mr , Leng ,
             I refer to the Agreement between Canada
and the European Economic Community concerning Trade
and Commerce in Alcoholic Beverages that was signed
today .
             I wish to confirm that the Prime Minister
of Canada and the Premiers of the Provinces of Canada
have agreed to initiate negotiations , involving
the federal and provincial governments , concerning
the reduction or elimination of interprovincial
barriers to trade in alcoholic beverages , including
beer .
             Canada will bring measures on pricing
of beer into conformity with its GATT obligations
following a successful conclusion of this process .
                                    Yours sincerely .
                                    D. Molgat v , ' > i ,
                                    Ambassador   K
 ---pagebreak---                                                                                    Brussels
                     COMMISSION
                     OF THE EUROPEAN
                     COMMUNITIES
          D»r#cl©ra»e-G«neral
          Eiternai Relations
               Deer Mr Molgat ,
                I acknowledge receipt of your letter of                                                       with regard to
               mark-up differentials on beer .
                I note it is the intention of the Government of Canada to bring measures
                on pricing of beer into conformity with its GATT obligations .
                                                                                             Yours sincerely ,
                                                                                             Oean-Pierre Leng
-o
                                                                                                                               t
                                                                                                                                 Y
                                                                                                                                  \
 Provisionai address Rue de ta lO' 200 • 0*iQJ9 Brusseis - Beigium - Téléphoné direct hne 23      téléphoné e*chanoe 235 11 tt
 Tete * COM6U B 2t877 • Télégraphe address COMEUR Brusseis
 ---pagebreak---                                                                                                                         V
                                                                                                        / fN
                        COMMISSION                                                   Brussels         T..                      ' ft'' C
                        OF THE EUROPEAN
                        COMMUNITIES
           Directorate-General
           External Relations
                Dear Mr Wilson ,
                In the context of the bilateral settlement of the disputes between
                Canada and the Community regarding the practices of provincial liquor
                boards in Canada which we have initialled today , I hereby confirm the
                Community 's willingness to enter into negotiations with Canada on the
                reciprocal supervision and protection of spirituous beverages
                appellations . I note that the Government of Canada is also willing to
                enter into parallel negotiations on reciprocal recognition of origin
                appellations for wine and that we agree to start those negotiations in
                the first quarter of 1989 .
                I would appreciate your confirmation of the Government of Canada 's
                agreement with the terms of this letter .
                                                                                           Yours sincerely
                                                                                           Jean-Pierre Leng
V                                                                                                                                         ; i'
 Provisional address : Rue de la Loi 200 • B-1W9 Brussels - Belgium - Téléphoné direct line 23    téléphoné exchange 235 11 11
 Teiex COMEU B 21877 - Télégraphie address COMEUR Brussels
                                                                                                                                        46
 ---pagebreak---                                   Brussels
                                  17 December 1988
Mr. J.P. Leng
Commission of the European Communities
Brussels
Dear Mr. Leng ,
           Thank you for your letter of today 's date
concerning the Community 's willingness to enter
into negotiations on the reciprocal supervision
and protection of spirituous beverages appellations
and on reciprocal recognition of original appellations
for wine . I hereby confirm the Government of Canada 's
willingness to enter into the proposed negotiations .
                                  Yours sincerely ,
                                             c
                                  H. Wilson    K > *7
 ---pagebreak---                                                                                       Brussels
                                                                                      Brussels • ;
                                                                                                     V i'                ■. . ..;V
                                                                                                               L- - f- u" "
                       COMMISSION
                       OF THF. EUROPEAN
                       COMMUNITIF.S
         Directorate-General
         External Relations
               Dear Mr Wilson ,
               I wish to record that , in the course of our negotiation , I asked you
              whether the implementation of the elimination of the mark-up differen¬
               tials on blends would result in an increase in the mark-up on wines that
               are the product of the Community . You replied that this would not be the
               case as it was your understanding , on the basis of a response from the
               Chairman of the Ontario Liquor Control Board , that the elimination would
               be achieved by increasing the mark-up on wines that are the product of
               Canada .
                                                                                                Yours sincerely ,
                                                                                                Oean-Pierre Leng
Provisions! address : Rue de la Loi 200 • B- 1049 Brussets - Belgium - Téléphoné direct line 23  téléphoné excharge 235 11 11
Telex COM EU B 21877 - Télégraphie address COMEUR Brussels
 ---pagebreak---                                  Brussels
                                 17 December 1988
Mr. J.P. Leng
Commission of the European Communities
Brussels
Dear Mr. Leng ,
          I acknowledge receipt of your letter of
December 17 and confirm that it accurately represents
our conversation .
                                 Yours sincerely ,
                                 H. Wilson
 ---pagebreak---                                               Bruxelles , 17.12.1988
Dear Mr. Leng ,
I hereby confirm that the following provinces will eliminate tha mark-up
differential on wine immediately on entry into force of this agreements
    - Alberta ,
    - Saskatchewan ,
    - Manitoba ,
    - Prince Edward Island ,
    - Newfoundland .
                                            Yours sincerely ,
                                             H. WILSON
 ---pagebreak---                                                                          α/-7
                                                  Bruxelles , 17.12.1930
Dear Mr. V/ ilson ,
I acknowledge receipt of your letter of 17 December the text of which
reads as follows :
"I hereby confirm that the following provinces will eliminate tha
mark-up differential on wine immediately on entry into force of this
agreement :
    - Alberta ,
    - Saskatchewan ,
    - Manitobu ,
    - Prince Edward Island ,
    - Newfoundland . "
I confirm that I am in agreement v/ ith it .
                                             Yours sincerely ,
                                                 3.P. LENG
                                                                              2-1