For anyone who has ever lived in, or traveled to, Canada, there is one indisputable fact—buying liquor is a challenge. Rules have slowly been relaxed, however, with wine sales in groceries stores leading the way. I remember a trip to Toronto a few years back where a “store within a store” set-up at a grocery store allows you to pick up a bottle of wine (and just about anything else) on your way out. I thought that was pretty clever, and reduced the annoyance of having to make another stop. My home province of British Columbia has been a little late in following suit, but it was great to hear that wine would be sold in grocery stores by 2015. However, I was a little disappointed to find there were only a few stores within the metro-Vancouver area, and only 14 in all of BC, that are currently licensed to sell wine. Inefficient roll-out aside, the legislation, and its application has resulted in a request for consultations at the WTO by the United States. Why?
It’s really about how the licensing system works, and the choices available to grocery stores. There are two basic options: either have a store-within a store that can sell both hard liquor, and wine, imported and domestic; or, to place wine directly on grocery store shelves, but only selling BC wine. The latter option, as explained in the Wine Store Terms and Conditions handbook, is technically a BC VQA (Vintners Quality Alliance) wine store license that permits the sale of “wine that is made from 100% B.C. agricultural products (including cider, mead and sake) off grocery store shelves.” One reason this may be the option of choice is the fact that in BC, liquor stores have to be at least 1-kilometer apart, a rule that does not apply to stores just selling wine. This is potentially a problem because liquor stores tend to be closely situated to grocery stores anyways, and therefore a grocery store could not use this option. Currently, of all the grocery stores selling wine in BC, none have adopted the store within a store model.
Now Simon has already detailed some interesting ways this dispute may play out here, particularly with regard to sub-national measures, which will be fascinating to watch. I just want to focus attention, however, on a very basic point, that I think is sure to help the GATT III:4 claim. With the assistance of my brother who I sent out into the “field” to see what these stores look like, I present the following exhibits:
Now, I think BC wine is great, but an avid free-trader like myself sees red-flags go off (literally in this case). Apparently, so did the U.S. government, which led to the WTO complaint.
So the question that remains is, does Canada have a defense here? Is it possible that we will see something similar to Korea-Beef, where it is argued that a dual-retail system was necessary to counteract fraudulent and deceptive practices? Or will Canada come up with another clever justification for what appears to be a very clear case of discrimination?
