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Report - CETA Committee on Wine and Spirits

Ottawa (and via videoconference) – 15-16 May 2024

The sixth meeting of the CETA Committee on Wine and Spirits was held on 15-16 May 2024 via videoconference. As in previous meetings, the parties welcomed the attendance of representatives of provincial and territorial authorities as observers to the meeting.

Performance of bilateral trade

The parties exchanged views on bilateral trade in wines and spirits. The parties noted the increasing cost of living and consumer tendency toward more moderate alcohol consumption likely contributed to a decrease in overall bilateral trade in 2023.  In Canada, overall imports of wines and spirits were down 10%, however imports of wine and spirits from the EU only decreased by 7.5%. Canada imported $1.61B CAD of EU wines and $416.6m CAD of EU spirits, for 2023.

For its part, the EU noted that import values from Canada fell overall by 17% while the volume increased in 2023 by 11.7% for wines and spirits. The EU imported 1.66 million EUR of Canadian wines and 17.5 million EUR of Canadian spirits in 2023.

Update of the annex Amendments to the 2003 Agreement on Trade in Wines and Spirit Drinks

After years of discussion, problem solving and creativity, Canada and the EU reported on the Joint Committee to the Agreement between Canada and the European Community on trade in wine and spirit drinks (the “2003 Agreement”), which was held on April 4, 2024.

It was reported that the Joint Committee signed a Decision, outlining technical amendments to Annexes I, III, IV, and VI to the 2003 Agreement. The Decision will see the annexes amended to include new Oenological Practices, 22 EU and 15 Canadian wine geographical indication (GIs), one EU spirit drink GI, as well as an update to the list of Canada’s competent bodies.

Canada explained the ratification process to be completed in the coming months, followed by an exchange of diplomatic notes.

The Parties discussed their willingness to undertake subsequent amendments of the Annexes and discussed pending applications for the protection of GIs. The Parties noted that many GI applications are underway on both sides and agreed to raise awareness with their respective stakeholders without delay to encourage additional applications.  

The Parties agreed to tentatively launch negotiations for the 2^nd Joint Decision amending the Annexes by the end of 2025, while remaining flexible concerning this date.

New varietals

The Parties discussed Annex V of the 2003 Agreement, particularly Appendix 5 listing (optional) grape varieties, which has not been updated since the agreement was negotiated. Canada noted its interest in having new grape varietals allowed on-label for Canadian wines imported into the EU, including on Canadian GI wines. 

Canada also noted two Canadian GI applications included 8 grape varietals that are currently permissible in the EU, even though they are not included in the original Annex V, Appendix 5 to the 2003 Agreement. Canada noted its interest in further exploring the subject, in the hope that a solution could be found outside of further treaty amendments.

Geographical indications

The EU presented new Regulation (EU) 2024/1143 on geographical indications for wine, spirit drinks and agricultural products, as well as traditional specialities guaranteed and optional quality terms for agricultural products that entered into force on May 13, 2024. In response to Canada’s question, the EU clarified that the Commission would remain responsible for the GI policy and GI registrations, amendments and cancellations and that the EU Intellectual Property Office (EUIPO) would maintain and keep up-to-date the Union register. It was also explained that the GI protection and enforcement was enhanced, in particular, as regards online markets and domain names. The possibility of establishing a domain name information and alert system is also envisaged.  

Canada informed the EU that the Canadian Intellectual Property Office (CIPO) continues to review GI applications, and there are currently no backlogs. Canada further noted that since the 2003 Agreement Joint Committee Decision was first drafted in February 2023, Canada has granted protection to 11 new EU wines, of which at least 5 could potentially be new additions to the relevant GI Annex. Canada inquired as to the status of the four Canadian GIs currently being scrutinized by the EU, and expressed its expectation that the process would continue to be collaborative. Canada asked the EU to confirm whether, once finalized, all new Canadian GI applications would have to be published for opposition in the public information notice.

With regards to the terms “méthode champenoise” / “champagne method”, Canada confirmed that while there continued to be no listings of products that make use of these terms in Québec, the province undertook steps in the past year to amend the regulation. The new regulation came into effect on January 25, 2024, and the permissible terms have been amended to “traditional method” / “méthode traditionnelle”.

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 used Canada’s opposition process by submitting a letter to CIPO which resulted in an applicant withdrawing their application. Canada indicated that some EU GI right holders have experienced success in the Canadian marketplace by contacting producers who were using EU GIs without authorization through cease-and-desist letters. However, there have been a few other reported occasions where GI right holders had to take a further step of pursuing litigation in order to defend their rights. The EU also inquired about warehousing costs for GI right holders requesting assistance under the Canada Border Services Agency programme to combat counterfeit products.

EU and Member States health warning labels

Canada continues to express concerns with the multiplicity of health labelling schemes arising in the EU market. Canada further noted the lack of harmonization within the EU on health warnings, and the potential impact this could have on trade and the single market. Canada asked the EU to work with Ireland and other Member States on the upcoming legislative requirement in the Food  Information to Consumers. The EU clarified that until it has regulated this issue, national measures may apply.

Ingredient and nutritional labelling

Commission Delegated Regulation (EU) 2023/1606, adopted on 30 May 2023, outlined the mandatory addition of an ingredient list for wines, as well as matching information requirements contained in the VI-1 form (import certificate).  

Canada thanked the EU for confirming, in December 2023, that despite the changes made to the VI-1 forms to include a list of ingredients, Canadian labelled and packaged wines are exempt from this requirement. In seeking additional clarification on the parameters by which Canadian wines must have ingredients on-label, or embedded within a QR code, Canada will be submitting questions to the EU in writing.

EU legislative proposal on packaging and packaging waste

Canada continues to follow developments related to the EU sustainable packaging and packaging waste policies. Understanding that the EU Parliament and Council reached a provisional agreement on the new regulation in March 2024, Canada sought clarification on the impact to trademarked packaging and will look to submit technical questions in writing. The EU informed that while the packaging and packaging waste regulatory package is not yet complete, concerns raised by Canada are being considered in the ongoing consultations.

Revision of Canadian Food Regulations

The EU called upon Canada to delete the term “cidre champagne”/ “champagne cider” to align rules with practice with respect to the protected GI “Champagne”. Canada indicated that the term “cidre champagne” was not used in the market and provided an update on the ongoing review of Canada’s Food and Drug Regulations. Canada published a draft regulation for public comments in November 2023, with a view of using incorporation by reference to administer food standards that are currently in the Food and Drug Regulations. As per the Canadian Food Inspection Agency incorporation by reference policy, the adoption of the new regulation would still require that the CFIA undergo a consultation to amend or adopt new standards that would be incorporated by reference. The example of “cidre champagne” and food standards for liqueurs were also discussed in the context of this new regulatory architecture.

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 initially granted over two fiscal years. Canada informed the EU that the programme was extended in 2024 for a further three years, with a budget of CAD $177 million. The EU also enquired about support granted to the sector by Canadian Provinces.

Amendments to the Charter of the French language introduced by Bill 96 in Québec

Canada provided an update to amendments proposed to the Charter of the French language introduced by Bill 96 in Québec. Canada noted that many comments were received during the consultation period on the draft regulation and are currently being reviewed by Québec officials. Canada clarified that several terms that are often used in the alcoholic beverages industry and are recognized in Québec don’t need to be translated into French at this time, and no changes are foreseen with the new regulation, e.g. India Pale Ale (IPA), single malt whisky. The law will equally not require GI names to be translated into French.

Mark-ups and taxes in Canadian Provinces

Canada provided an update regarding the implementation of policy changes previously announced regarding several provincial measures in Québec and Nova Scotia. 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.

More specifically, the EU reiterated its concerns with origin-based differential mark-ups and taxes maintained by Ontario, Québec, Nova Scotia, British Columbia and New Brunswick, that it considers discriminatory and having an adverse economic impact on EU producers, and called upon Canada to eliminate those differentials. The EU recalled the letters sent in 2023 by the Commissioners to the selected Canadian Provinces on this matter and announced its intention to follow up on these communications with the provincial authorities.

As regard the differential mark-up applied to certain specific EU products by the Société des Alcools du Québec (SAQ), Canada noted that while the measure, effecting cognac and champagne, was the result of historical categories, the SAQ notified suppliers and agents that the measure has been amended, and the differential mark-up eliminated with the  changes coming into effect on May 26, 2024 for products available in the branch network and June 9, 2024 for products available through private orders.

The EU sought clarifications regarding mark-up rates in Alberta, British Columbia, Manitoba, Saskatchewan and Newfoundland and Labrador and announced its intention to reach out directly to the authorities of Alberta to express its concerns. Regarding Alberta, Canada stressed that foreign small beer producers are eligible for reduced rates, noting that since 2019, a total of 43 small brewers from 13 separate EU nations have at one point qualified for a reduced small beer manufacturer’s mark-up. Canada also explained that reduced mark-up rates for small spirit manufacturers are available only for those that self-distribute.

In regard to British Columbia (BC), Canada clarified that there are no reduced mark-ups for BC based distillers that sell their products through the BC Liquor Distribution Branch system and asked the EU if they could provide more information on the industry’s concerns.

Finally, regarding Manitoba, Saskatchewan and Newfoundland and Labrador, Canada noted that EU producers meeting the respective eligibility criteria would be eligible. Regarding Manitoba, the EU expressed concerns that other specific requirements of the scheme may de facto limit participation to local producers. Canada confirmed that the eligibility requirements are not meant to exclude foreign producers but they do include a requirement for on-site fermentation with finishing and bottling at the same facility.

Access to certain market outlets in Canadian Provinces and Territories

The EU reiterated its concerns with the measures regarding direct deliveries of local products to restaurants, bars, and private retailers. The EU noted that direct deliveries are at times exempt from the mark-up that applies to the products distributed via the Liquor Boards.

Canada provided an update on Ontario’s alcohol Modernization, noting that the Liquor Control Board of Ontario (LCBO) will continue to operate as a retailer across the province. The LCBO will also be the exclusive wholesaler for all retail, bars and restaurants selling alcohol.  While beginning no later than January 1, 2026, Ontario consumers will be able to buy beer, wine, cider, and ready-to-drink alcohol beverages at all participating convenience, grocery, and big box grocery stores across the province, spirits will continue to be sold exclusively at the LCBO. The EU expressed hope that this important reform does not result in unequal treatment of economic operators.

Canada provided an update on the work of the Alcoholic Beverages Working Group created pursuant to the Canadian Free Trade Agreement. 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.

Other distribution and retail practices in Canadian Provinces

The EU expressed strong concerns with the LCBO enforcing clause 14 of its payment terms and conditions and outlined the severe economic impact it had on EU exporters. In addition, the EU argued that the measure encroaches upon confidentiality of business transactions and results from the LCBO taking advantage of its market position. Canada confirmed that Canadian suppliers/producers have also been subject to this enforcement and noted that this is simply a matter of the LCBO enforcing its contractual rights. The EU invited the Government of Ontario to consider removing clause 14 from its payment terms and condition altogether.

The EU raised questions regarding the LCBO shipping from source policy. Canada noted this is a long-standing operational policy that applies to all products to support the LCBO’s supply chain management policy, while reducing both freight costs and greenhouse gas emissions. The EU expressed concerns from the perspective of enhancing efficiency of deliveries in the context of interconnected global supply chains.

The EU expressed concerns with origin-based differential payment terms introduced by the LCBO in the course of 2022. Canada informed the EU that the LCBO is undertaking a multi-year transformative technology and business system update, and that it intends to harmonise all of its payment terms as part of this modernisation exercise.

The EU reiterated its concerns with the SAQ ban on overpackaging and enquired whether it is meant to apply to all operators regardless of their origin.  Canada noted many similarities with the EU packaging and package waste policy. Canada further indicated that the SAQ has made itself available to producers and agents with questions regarding the policy and that the full application of the measures comes into effect in 2030.  

For this measure as well as for the lightweight glass bottle policies in Ontario and Québec, Canada noted the policies apply to all wines sold by and through the SAQ and the LCBO. 

Any other business

Canada noted that it intends to provide new additions to the list of authorised Canadian laboratories and authorised wine producers for drawing up VI-1 documents for wine imports into the EU.

The EU proposed the inclusion of low and de-alcoholised wines into the Committee discussions. The Parties agreed to consider the addition to the committee’s scope for information-sharing purposes only.

The parties agreed to organise the next meeting in 2025, with the EU hosting.

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, DG Grow

Delegation of the European Union to Canada

Canada

Co-chair: Deputy Director, Technical Barriers and Regulations Division, ¶¶ÒùÊÓƵ

¶¶ÒùÊÓƵ: Technical Barriers and Regulations, Intellectual Property Trade Policy, Mission of Canada to the EU

Agriculture and Agri-Food Canada: Technical Trade Policy

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