U.S. President Donald Trump’s decision to impose 25-per-cent tariffs on most Canadian imports has prompted Canadian premiers to underscore the need to eliminate interprovincial trade barriers.
The challenge will be to convert talk into action.
A March 5 joint statement from the premiers promised to create credentialing rules that would allow trained professionals to work anywhere in Canada, and to review exemptions to interprovincial free trade, both by June 1.
A MacDonald Laurier Institute study in 2022 found that if premiers eliminated interprovincial trade barriers, allowed free trade and mutually recognized other provinces’ policies, Canada’s economy could grow between 4.4 per cent and 7.9 per cent. That is equivalent to between $110 billion and $200 billion per year, or between $2,900 and $5,100 per capita, the report found.
“What we need to do is start acting like a country,” B.C. Premier David Eby said at a media scrum Feb. 26, two days before the first-ever meeting between Canada’s Internal Trade Minister Anita Anand and all provincial trade ministers.
“B.C. continues to push … for a mutual recognition approach. This is where if it’s good enough for your province, it’s good enough for our province, and with a limited list of exceptions, where necessary, but ideally none,” Eby said.
The impetus to chop red tape between provinces, however, is good news for those in B.C.’s wine industry because it is illegal for B.C. wineries to sell wine directly to consumers in most of Canada’s other nine provinces.
That includes Ontario, Quebec, Prince Edward Island, Newfoundland and New Brunswick.
All provinces, except P.E.I. and Newfoundland, on March 5 announced that they had agreed to remove obstacles preventing their alcohol from being sold in other jurisdictions.
Time will tell what changes get enacted.
“If the scope is as broad as suggested, this has the potential to completely restructure Canada’s liquor market nationally and provide many new opportunities for Canadian businesses,” said Vancouver-based Harris and Co. partner Shea Coulson.
“The devil will be in the details.”
Current penalties can be steep, said Coulson, who in 2017 argued in front of the Supreme Court of Canada on behalf of B.C. wineries and others who challenged the constitutionality of specific interprovincial trade barriers.
He pointed to Ontario’s Liquor Licence and Control Act, which lists penalties up to $250,000 for corporations and $100,000 for individuals for offences such as bypassing the Liquor Control Board of Ontario when buying or selling alcohol.
Image: Harris and Co. partner Shea Coulson has experience arguing in front of the Supreme Court of Canada in favour of reducing interprovincial trade barriers.
“I’m not aware of action being taken against a B.C. winery,” Coulson said. “I would be surprised if a prosecutor thought it was in the public interest to do that, but cease and desist letters have been sent.”
Some winery owners told BIV that Ontario has levied fines on them for selling wine directly to Ontarians but they did not want to go on the record.
Country Vines Winery principal Lucas Hogler told BIV that he has heard rumours that the Ontario liquor board secretly places small orders with B.C. wineries just to see if the wineries will try to deliver the product direct-to-consumer.
In contrast, there are a few provinces where direct-to-consumer wine sales have been legal for a while, retired wine-sector lawyer Mark Hicken told BIV.
“In Manitoba, direct-to-consumer sales are completely legal and have been since 2012,” he said.
“Nova Scotia changed their rules so B.C. wineries could theoretically ship to Nova Scotia, though it is not a big market. Saskatchewan also has a system.”
Saskatchewan’s process is that residents are required to get government permits to directly buy wine from other provinces’ wineries. They would then have to pay provincial tax on those direct-to-consumer purchases from wineries, Hicken said.
“I think it’s very unlikely that people have actually done that because customers are not usually going to go and get a permit to buy a case of wine,” he said.
Alberta is the most recent province to allow direct-to-consumer sales between residents and B.C. wineries.
This followed Alberta government threats that wineries caught selling directly to Albertans would face being delisted from the province’s official sales channels.
B.C. and Alberta then last summer hammered out a deal to allow B.C. wineries to register and get approved by the Alberta government to sell wine directly to Albertans.
The agreement held that wineries would calculate the Alberta tax on wine shipments and send that money directly to the Alberta government.
The two governments’ agreement was that this system be in effect for one year.
“I would think that it would be extended,” said Unsworth Vineyards sales and marketing director Chris Turyk, who told BIV his company sells about nine per cent of its 11,000 cases of wine to Albertans either through direct-to-consumer sales or through the province’s liquor board.
He said the process to get registered was simple and that he would like other provinces, such as Ontario, adopt a similar system.
The government of Alberta recently announced that it planned to hike its mark-ups on wine.
It confirmed to BIV in an email that the new rates will apply to Canadian wine as well as foreign wines.
