Canada's minister of argiculture and agri-food warns that his country may impose retaliatory tariffs on US wines if the country does not revise or revoke controversial country of origin (COOL) labeling laws.
Gerry Ritz was speaking at the American Meat Association Forum in Chicago yesterday, where (not surprisingly) he directly addressed the issue of meat, but also reportedly referenced wine. Possible tariffs on everything from 'wine of fresh grapes, including fortified wines, certain grape must, ethyl alcohol and other spirits were all referenced on a possible target list released by Ottawa in June 2013 .
Any tariff on wine would be a body blow for the $1.43bn US wine export industry - which exports 90% of its product from California - since Canada (exports $434m in 2012, according to US Wine Institute figures released in February) is second only to the EU ($485m) in terms of export value. The Wine Institute represents 1,000 Californian wineries and wine-related businesses.
A spokesperson for the trade body - which wrote to US senators on October 29 urging them to develop a WTO-compliant solution to the COOL law via ongoing discussions around the nation's Farm Bill - told BeverageDailly.com last night that it "strongly opposes Canada’s consideration of a tariff increase on US wines over a dispute that does not involve wine".
"Trade wars benefit no one. Wine producers in The World Wine Trade Group representing Argentina, Australia, Canada, Chile, New Zealand, The Republic of Georgia, South Africa and the US have urged their respective governments to follow the principle that wine should not be used for retaliation in trade disputes between its members regarding products other than wine," they added.
Red blends win over younger Canadians
According to the Wine Institute, Canadian consumers continue to embrace California wines, making it the fastest growing wine region in the US by volume and value, with much of the growth coming from red blends that appeal to younger consumers.
"At the same time, Canadian consumers continue to show interest in California wines at higher price points with sales of premium wines reaching higher levels than ever before. This momentum is expected to continue in 2013 with major retail promotions this spring in the three largest provincial markets of Quebec, Ontario and British Columbia," the Wine Institute said.
But COOL represents a potential hurdle, with Ritz insisting Monday: “COOL continues to hurt industries on both sides of the border, adding unnecessary red tape, delays, and costs to our integrated North American meat industry. US legislators have an opportunity now through the Farm Bill to end the economic harm that COOL is having throughout North America."
“Our government remains committed to pursuing all options available to resolve this dispute, including retaliation," he added.
Canada considers US COOL labeling regulations a protectionist policy that violates World Trade Organization (WTO) rules, and opponents of mandatory COOL attack it as a disguised trade barrier that increases meat importers' costs and implies that imports may be less inherently safe or lower quality than US equivalents.
COOL became US law under the 2002 Farm Bill that requires retailers to provide COOL labeling for beef, pork and lamp; Congress later extended the legislation to include fresh fruits, nuts and vegetables, and only this May, the USDA issued a revised rule demanding more specific information on meat labels to assist consumers, and (it claims) bring US legislation in line with WTO rules.
Canada delivers 'unified message' to US
Canada disagrees, and its Chicago delegation also included other federal and provincial government members: Alberta agriculture and rural development minister Verlyn Olson, Saskatchewan agriculture minister Lyle Stewart, Manitoba agriculture, food and rural initiatives minister Ron Kostyshyn.
The Canadians said they stood alongside Canadian and US industry "to deliver a unified message of the negative impacts COOL is having on both sides of the border".
On September 25 a World Trade Organization (WTO) compliance panel on COOL was established in Geneva to determine whether the US has imposed measures that violate WTO obligations.
If the WTO rules in favor of Canada then the country could seek its authorization from to impose retaliatory tariffs on US exports to Canada, including wine.
*Article Updated 6/11/13 to include Wine Institute comment.