CETA — the Canadian-European Union Comprehensive Economic and Trade Agreement— came into force on Sept. 21, 2017.
Now that we're well into 2018, what does that mean? A look at it from a wine lover's perspective, the English translation of a 2017 story I wrote for the Spanish wine magazine, Vivir el Vino...
If you love wine, CETA sounds good on paper. There will be more freedom to import and export wines. It will also cost less to import wines from European wine-producing countries.
“When CETA enters into force, tariffs will be eliminated on virtually all of Spain’s exports to Canada,” says Natasha Nystrom, a spokesperson for Global Affairs Canada, part of Canada’s federal government.
As a quick glance through the average Canadian wine shop will tell you, “Canada and the EU have enjoyed a long and strong trading relationship in the alcoholic beverage sector,” she adds.
And that will likely continue, say Canadian wine industry experts.
The Canadian Vintners Association — a lobby group for Canadian winemakers and winery owners — has long supported free trade deals with other countries, and CETA is no exception.
“The majority of wine trade issues with the EU were addressed under the Canada-EU Wine and Spirits Agreement, which was signed in 2004,” says Asha Hingorani, the Canadian Vintners Association director in charge of government and public affairs.
Since that agreement was ratified, EU wine imports to Canada have increased by 40 million litres or $482 million,” she says.
Today, Canada imports about 70 million Euros of Spanish wine each year. And every year, the EU as a whole imports roughly 180 million litres of wine into Canada.
Compare that to Canadian wine exports to the EU — roughly 123,000 litres a year. That is, Hingorani says, “a significant wine trade imbalance.”
But the Canadian wine industry is tiny compared to a typical European wine-producing nation, especially one the size of Spain. Canada has about 700 wineries, which generate roughly $7 billion Canadian for the Canadian economy, a number that includes wine tourism such as hotels, tours and restaurants.
Most Canadian wineries are small, however, and make only a few thousand cases of wine or less each year. They typically sell all or most of their wines domestically, so they won’t be directly affected by CETA or dealing with CETA legislation.
Eventually that may change, Hingorani notes. “CETA will provide access to one of the largest markets in the world (500 million consumers) which should provide new benefits as Canadian wine exports continue to grow.”
And for larger Canadian wineries, which make enough wine to export to Europe, CETA will mean positive changes. Currently, EU tariffs for bottled wine range from 13.1 Euros/hectolitre (for some wines including icewine) up to 32 Euros/hectolitre for some sparkling wines, notes Nystrom. Those tariffs, of course, will be eliminated under CETA.
But what about the average person? Few Canadians will actually notice much of a difference at their local wine and liquor stores.That’s because import duties on wine coming into Canada are already very low (1.87 to 4.68 cents per litre), Nystrom says.
Still, overall, that number adds up to roughly $4.5 million per year, notes Hingorani, who says “ it is anticipated that these savings will be used to further promote EU wines in Canada to capture greater market wine sales market share.”
Her major concern is that all levels of Canadian government must then show support for the Canadian wine industry, including the elimination of inter-provincial trade barriers — long a contentious issue for Canadian winemakers and supporters of the Canadian wine industry, who cannot yet legally ship wine to every province in Canada — as well as support to grow the domestic and international markets.
“This will best position our sector to take full and immediate advantage of CETA, as we strive to increase sales and grow the contribution of the Canadian wine industry,” Hingorani says.
The Liquor Control Board of Ontario (LCBO) is one of the world’s largest buyers and retailers of wine and spirits, retails and distributes alcohol throughout the province of Ontario, Canada’s largest province. As a government agency, the LCBO doesn’t have an official position on trade agreements, but LCBO spokesperson Christine Bujold says she doesn’t think the average Canadian consumer will notice any difference.
“The new CETA agreement will eliminate duties on EU wines and spirits, but as these duties are very small they are unlikely to make an impact on consumer prices,” Bujold says.
“It’s worth noting these changes will apply equally to Spanish wines and competing wines from France, Italy and other EU countries.”