Hypocritical Canada’s Trade War Over Australia Wine Brings WTO Action

Canadian Prime Minister Trudeau loves to complain about Trade Wars as NAFTA negotiations drag on and America launched steel and aluminum tariffs, all be it exempting Canada. Well it turns out Canada’s biggest ally, Australia has been the victim of Canadian hypocrital trade barriers on it’s wine.

Canadian Prime Minister Trudeau’s loves to complain about Trade Wars as NAFTA negotiations drag on and America launched steel and aluminum tariffs, all be it exempting Canada. Well it turns out Canada’s biggest ally, Australia has been the victim of Canadian hypocrital trade barriers on it’s wine.

Trudeau Red Wine

Trudeau doesn’t mind a drop of red, we assume this isn’t Australian wine, that would be hypocritical! Source: Toronto Sun

Trudeau has become a bit of a laughing stock since his unfortunate photo opportunties on his recent trip to India. The majority of Canadians, polls show,  have become increasingly angry at his government’s economic and foreign policy mismanagement. You have to give to the Prime Minister though, he has managed to insult both his biggest allies in the same week, America and Australia.

This one is over Australian wine exports. as I was flicking through today’s Sydney Morning Herald enjoying a lovely Hunter Valley Chardonay I read that Australian trade officials recently met with Canadian trade officials over two days in Geneva. The meeting though wasn’t to dicuss hockey or curling but about extra taxes and mark-ups on imported wine sold in Canada. The Australian wine industry is not happy given the of breach international trade rules and the threat to Australian wine sales. Heck more than that the Australians asked, “aren’t we meant to be mates”?

Australian trade minister Steve Ciobo criticised Canada for “discriminating against Australian wine imports” with extra fees on imported wines (that’s Canadian for tax) and separate distribution channels reserved for Canadian wine only (did you even know there was such a thing?). 

So given that Canada itself reacted with anger to the Trump tariff move, with its foreign affairs minister Chrystia Freeland saying: “As the number one customer for American steel, Canada would view any trade restrictions on Canadian steel and aluminium as absolutely unacceptable.”

This is not an idle matter, it is actually the first time Australia has initiated formal WTO action since 2003. In January Australia launched formal World Trade Organisation dispute settlement action against Canada over the various wine measures,

In fact the formal consultations between representatives of the two countries was just the first stage in World Trade Organisation dispute settlement action over the issue.

Wine Australia released a report showing Australian wine exports to Canada were valued at $187 million in 2017, equal to seven per cent of Australia’s total wine exports for the year of $2.6 billion and our fourth biggest wine export market.

Tony Battaglene, chief executive of Winemakers Federation of Australia, said Canada was a significant market for Australia. “It’s an important market at a higher value price point as well…They do like premium wine,” he said. “It’s our fourth biggest market, so it’s significant, so we take it very seriously. The issue is that the Canadian liquor boards are trying to give preferential treatment to domestically produced product. “

One of the reasons we’re involved in this dispute is a fear that the US will seek the same rights as the Canadian industry, and then they would get equal access and that would leave us in a very adverse position.”

The WTO decision can’t come soon enough as the Australian wine industry is also about to start spending a significant amount of money on promoting Australian wine in both America and Canada on the belief exports to both countries could be increased.

Most Canadian provinces have liquor control boards, which Mr Battaglene likened to government-owned liquor monopolies that raised substantial revenue for provincial governments.

When they start giving preferential treatment to domestic product it means that you don’t have any other way to sell your product but through those outlets, and that means that you suffer a significant disadvantage,” Mr Battaglene said. “This issue has been around for some time, a number of years, but it’s become we think, almost a systemic problem. So each province is introducing new measures all favouring their domestic producers, and they differ between provinces.”

Mr Ciobo said he had initiated World Trade Organisation dispute settlement proceedings as a result of ongoing concerns held by the Australian wine industry. “The Australian wine industry is a big export earner for Australia, and helps create many jobs for Australians. I want to make sure we stand up for our producers and not allow other countries to discriminate against us, costing us export income and potentially jobs,” he said. “Australia requested formal WTO Consultations on measures discriminating against Australian wine imports that we consider to be clearly inconsistent with Canada’s WTO commitments.”

There has been ill feeling between the two countries on a trade level since canada blocked BHP from overtaking Canada’s largest Potash companies at the the height of the commodities boom in 2008. The reality is that move did BHP and Australia a facvor as the Potash company share price collapsed and the losses would have been around $100 billion. In essence Australia dodged a bullet there. There is also speculation that Australia’s decision to export medical marijuana upset Canada, but in reality if anything that would have been a reverse response. At least from what we read pot is cheap in Canada with the massive over production and Trudeau is full tilt on legalisation.

So maybe a bong hit of Canadian weed will be the competitor for the Canadian liquor board that they never saw coming and Australian wine won’t be the evil drop from the Commonwealth.

Another chapter in ‘How to wine friends and influence people’ by Justin Trudeau and crew. 

Source: SMH, WTO, Reuters

From a sunburnt country.

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