Joint report: CETA Committee on Wine and Spirits

March 15, 2023 (Brussels)

The fifth meeting of the CETA Committee on Wine and Spirits was held on 15 March 2023 in Brussels and via videoconference. As in previous meetings, the EU welcomed the attendance of representatives of provincial authorities as observers to the meeting.

Performance of bilateral trade

The Parties reviewed statistics and exchanged views on bilateral trade in wines and spirits. Canada noted that, for the period of 2020-2022, imports of wines, spirits and beer from the EU were up 17.7% to $2.2B (CAD). For its part, the EU noted that import values from Canada increased by 26.4% over the same period, up to € 25 million in 2022.

Noting the progress undertaken to date by Canada and the Canadian provinces, Canada noted its disappointment with the EU’s lack of positive messaging following the Joint Progress Report - Outcome of the review process in Annex 30-C of CETA, particularly as discussed during the Joint Commission in December, 2022.

Geographical indications

The EU presented the Commission proposal for a regulation on geographical indications (GI) for wine, spirit drinks and agricultural products, and other quality schemes for agricultural products (notified to the WTO under G/TBT/N/EU/895). The EU clarified that the reform relates to GIs registered under EU Regulations based on direct application for protection. First reading examination was ongoing in the European Parliament and in the Council.

Canada informed the EU that the Canadian Intellectual Property Office has seen a significant increase in applications since the previous meeting of the Committee in 2022.  Following two years of receiving no applications from EU wine and spirit right holders, Canada received 11 applications for protection of EU wine GIs and 5 applications for spirit GIs in 2022.

The EU called upon Canada to amend two measures regulating the terms “méthode champenoise”/“champagne method” and “cidre champagne”/“champagne cider” to align rules with practice with respect to the protected GI “Champagne”. Canada confirmed once again that Québec does not allow the marketing of products whose labels use the term “Champagne Method”/“méthode champenoise” in the province and that technical work was ongoing within the Québec government to amend the relevant province’s regulation accordingly, at the opportune moment. Canada indicated that the term “cidre champagne” was not used in the market anymore and provided an update on the ongoing review of the Canada Food and Drug Regulations: Canada plans to publish a draft regulation for comments in autumn 2023, with a view to authorising the Canadian Food Inspection Agency (CFIA) to adopt standards through incorporation by reference. The adoption of the new regulation would be followed by another consultation on future standards that would be incorporated by reference.

The EU informed Canada about attempts by Irish GI right holders to assert their rights in Canada by means of cease-and-desist letters for the use of “Irish Cream”. In addition the EU pointed out that it had been informed that Irish right holders had lodged a formal complaint via the CFIA complaints web-portal. The EU was now seeking advice as to possible next steps under Canada’s system of GI protection. Canada assured the EU that CFIA would respond to the right holders’ complaint in due course. Furthermore, Canada noted once again that the GI applied for and protected in Canada since 2005 is “Irish Cream Liqueur”, not “Irish Cream” and confirmed that GI right holders may apply for protection under Canada’s open GI system. The EU also inquired about possible costs for GI right holders requesting assistance under the Canada Border Services Agency (CBSA) programme to combat counterfeit products.

Oenological practices

The Parties reviewed notifications of oenological practices submitted in recent years. Canada noted that 6 of the practices notified by the EU are currently authorised in Canada. In regards to authorisation process, Canada informed the EU that while relevant International Organization of Vine and Wine (OIV) documents can be submitted as part of the technical dossier, Canada cannot authorize oenological practices based solely on OIV documents. Canada agreed to provide information on the submission of technical dossiers for food additives, food processing aids, and novel food determination (which can include certain new processes).

Amendment to annexes to the 2003 agreement on trade in wines and spirit drinks

The Parties confirmed their willingness to seek approval to amend the annexes of the 2003 Agreement in line with the Joint Progress Report published on 2 December 2022. The EU confirmed that it was ready to start working on the draft amendment.

Canada’s national low-risk drinking guidelines

Canada updated the EU on Canada’s Guidance on Alcohol and Health as developed by the Canadian Centre on Substance Use and Addiction. Canada noted that the report provides updated and evidence-based information about the risks and harms associated with consuming alcohol, and includes policy recommendations on alcohol.  Health Canada is reviewing the report, together with other research, input and evidence.

Ireland public health (alcohol) (labelling) regulations 2022

The EU explained that Ireland introduced the public health (alcohol) (labelling) regulations in 2022 (notified to the WTO under G/TBT/N/IRL/4) to address a domestic health issue. The EU carefully assessed the necessity of the proposed health warnings and considered that they are justified by the public health objectives in the Irish national context.

Canada expressed a concern with the multiplicity of labelling schemes arising in the EU market. Canada further noted the lack of harmonization within the EU on health warnings, and the potential impacts this could have on trade, and the single market. 

Ingredients labelling

The EU informed Canada about the outcome of the public consultation on food labelling which was carried out from 13 December 2021 until 7 March 2022, which covered several topics including the initiative on the labelling of alcoholic beverages announced in Europe’s Beating Cancer Plan. The EU added that preparatory work on this initiative was ongoing.

The EU presented a draft proposal for a regulation amending Commission Delegated Regulation 2019/33 (notified to the WTO under G/TBT/N/EU/952). Following the EU legislator’s decision to require the provision of nutrition information and the list of ingredients for wine and aromatised wine products as of 8 December 2023, the draft Delegated Regulation notified to the WTO specifies certain details regarding the provision of the list of ingredients for wine. Canada expressed concerns that the new mandatory ingredient particulars, including the need to add ingredients to the VI-1 certificates could pose difficulty for its exporters.

EU judgement C-86/20

Canada enquired about the possible implications of the Court’s ruling in C-86/20 on third party Competent Bodies and VI-1 requirements. The Commission explained its view that the Court ruling confirms that the VI-1 certificate is intended to be given to the import authorities of the EU Member State, and that the burden of proof of continued compliance with EU standards lies with the importer. The Court followed the Commission’s opinion on the validity and purpose of the VI-1 certificate. While Canada had questions in regards to how the ruling may impact the post-import verification process, the Commission considers that the ruling does not affect the validity of the VI-1 certificates issued by Canadian competent bodies.

EU legislative proposal on packaging and packaging waste

The EU presented the Commission proposal for a Regulation on Packaging and Packaging Waste of 30 November 2022 and noted that the co-legislators had started examining the proposal (notified to the WTO under G/TBT/N/EU/953). Canada noted its concerns relating to the implementation of the proposed measure, due to the existence of competing Member States proposals.

Nordic alcohol monopolies – Common environmental roadmap

The EU presented the Common environmental roadmap adopted in 2022 by the alcohol monopolies of 5 European countries including two EU member States (Sweden, Finland). In that roadmap, those companies set out broad objectives to halve their CO2 footprint by 2030 and minimise their negative environmental impact. The roadmap is expected to contribute to the EU’s ambitious climate goals.

Support programmes for the Canadian wine sector

Canada updated the EU on the implementation of the federal support programme for wine producers introduced in 2022, with a budget of CAD $166.2 million of support to be granted over two fiscal years. The EU enquired also about support granted to the sector by Canadian Provinces.

Differential mark ups and taxes in Canadian provinces: implementation of changes previously announced by Canada

Canada provided an update regarding the implementation of policy changes previously announced regarding several provincial measures in Québec, Ontario, and Nova Scotia.^{Footnote 1} Canada informed the EU that the provinces remain on track to meet their commitments in this regard. The EU stressed the importance of the expected changes in relation to Canada’s commitments under CETA and to the economic impact of the current measures on EU wines. The EU reiterated its request to remove the discriminatory measures.

Other differential mark ups and taxes in Canadian provinces

The EU reiterated its concerns with origin-based differential mark ups and taxes maintained by Ontario, Québec, Nova Scotia and New Brunswick^{Footnote 2}, stressing the economic impact the measures have on EU products, and called upon Canada to eliminate those differentials.

As regards the differential mark up applied to certain specific EU products by the Société des Alcools du Québec (SAQ), Canada indicated that the EU’s concerns were being considered.

The EU sought clarifications regarding mark up rates in Alberta, Manitoba and British Columbia. As regards Alberta, the EU noted that the mark up schedule for spirits was modified in December 2022 and asked whether EU spirits would now be eligible for the reduced rates; on beer the EU invited Canada to provide the applicable rules and procedures for eligible EU producers to claim the reduced mark up rates; on refreshment beverages the EU expressed strong concerns regarding the maintenance of origin-based differentials in the new mark up schedule. Regarding Manitoba, Canada indicated that EU wine and mead manufactured by small producers meeting the eligibility criteria may access the reduced mark up and surcharge rates; the EU invited Canada to provide the applicable rules and procedures. Finally, Canada clarified that there are no reduced mark ups for BC based distillers that sell their products through the BC Liquor Distribution Branch system.

Differential access to certain market outlets in Canadian provinces and territories

The EU reiterated its concerns with the British Columbia measures regarding direct deliveries of local products to restaurants, bars, and private retailers. The EU noted that direct deliveries are exempt from the mark up that applies to the products distributed via the BC Liquor Distribution Branch but EU products cannot enjoy the same treatment since EU exporters are not allowed to develop their own direct distribution networks in the Province. The EU stressed the economic impact of the measure on EU products and called upon Canada to eliminate the differential treatment.

Canada provided an update on the work of the Alcoholic Beverages Working Group created pursuant to the Canadian Free Trade Agreement. Canada confirmed that several Canadian jurisdictions have been collaborating on a working group to explore feasible models for interprovincial direct-to-consumer (DTC) sales of alcoholic beverages for personal consumption. The EU reiterated its request that the Provinces and Territories take this opportunity to align their approaches with CETA commitments including the National Treatment principle.

As regards to direct deliveries of local beer and coolers to bars and restaurants in Manitoba, Canada indicated that products delivered under that scheme are subject to same rates as those distributed via the Manitoba Liquor & Lotteries.

Other distribution and retail practices in Canadian provinces

The EU expressed concerns with origin-based differential payment terms introduced by the Liquor Control Board of Ontario (LCBO) in the course of 2022. Canada informed that the LCBO would harmonise the payment terms in stages beginning April 1, 2023.

The EU expressed concerns with the SAQ ban on overpackaging, with possible disproportionate effects on trade due to the design of the measure, tight compliance deadlines and the fact that the same requirements would not apply to all like domestic goods available on the Québec market. Canada indicated that the measure is not mandatory, nor does it provide for penalties.  Canada further indicated that the SAQ has made itself available to producers and agents with questions regarding the policy and that the measure does not aim at cutting suppliers out of business but rather at working with them to reduce environmental impacts. For this measure as well as for the lightweight glass bottle policies in Ontario and Québec, Canada noted that while the measures are not regulatory requirements, in practice domestic producers tend to comply with those requirements for all of their production, to avoid the cost of maintaining separate production inventories and processes.

Canada confirmed that the LCBO expanded its assortment of imported bag-in-box wines: following the product call issued in December 2021, LCBO listed 6 new imported wines, including 3 EU products. Canada indicated that the LCBO manages this product type as per usual commercial methodology.

Canada confirmed that since 2017, wine bottled in Quebec bearing varietal names may be sold in groceries and convenience stores in Québec. While this deviates from the letter of the derogation set out in Article 2.2(c) of the 1989 EU-Canada Agreement on trade and commerce in alcoholic beverages, Canada noted that the change was meant to be in alignment with the EU definition of table wine, and that imports of bulk EU wines had increased significantly since Québec had introduced the change.

Any other business

Canada informed the EU that on 14 March 2023, Québec approved the Conseil des appellations réservées et des termes valorisants (CARTV) as competent body for issuing VI-1 documents and will seek to have the new competent body added to the EU wine list 6 (third countries competent bodies).

Participants

European Union

Co-chair: European Commission, DG Agriculture and Rural Development, Head of unit The Americas

European Commission services: DG Agriculture and Rural Development, DG Trade, DG Environment

Delegation of the European Union to Canada

Canada

Co-chair: Deputy Director, Technical Barriers and Regulations Division, Global Affairs Canada

Global Affairs Canada: Technical Barriers to Trade, Intellectual Property Trade Policy, Trade Agreements Secretariat, Mission of Canada to the EU

Agriculture and Agri-Food Canada: Technical Trade Policy

Privy Council Office: Intergovernmental Affairs

Provincial authorities: Alberta, British Columbia, Manitoba, Ontario, Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, Yukon, Québec, Saskatchewan