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In Alberta’s wine war with B.C., I’m siding with Australia

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In Alberta’s wine war with B.C., I’m siding with Australia

B.C. premier John Horgan threatens to delay the Kinder Morgan pipeline expansion yet again so Alberta premier Rachel Notley cancels Alberta’s purchases of B.C. wine, at least those that take place through the Alberta Gaming and Liquor Commission, which still handles wholesale wine purchases in Alberta.

It’s the classic problem with trade wars: If you hurt my petroleum industry workers, I’ll hurt my wine consumers, too! You have to stop me before I hurt even more of my citizens! Short of military invasion, the only recourse most jurisdictions have when other jurisdictions do things they don’t like is to hurt their own citizens by depriving them of imports.

It’s true, my stopping my imports may also hurt your producers, so my actions aren’t purely self-hurting. It’s more like murder-suicide than just plain self-harm, if you think that makes it more rational. On the other hand, as Albertan Colby Cosh points out in the National Post, the hurt to Albertans from being deprived of B.C. wine may not actually be that great, given all the other wines, many of them possibly better, that either are available on the market or could be if the AGLC allowed it.

By the same token, the harm to B.C.’s vintners from Alberta’s withdrawal of its purchase won’t be great so long as B.C. is still able to sell on the world market. But is it? The fact that Alberta is B.C.’s second biggest wine customer, after B.C. itself, may be evidence that, however much the world may need more Canada, it doesn’t believe it needs more Canadian wine. And if you can’t grow world-competitive wine in B.C., it’s not clear where else in Canada you could do it, given the winter weather everywhere east of the Rockies. Niagara is nice but it’s not Tuscany.

On this interprovincial dispute I find myself on the side of Australia. Australia recently filed a formal request at the WTO for consultations with Ottawa concerning “measures governing the sale of wine.” You can read the three-page request here. Australia’s beef is that four provinces, including B.C. but not Alberta, discriminate against its wines by tilting presentation and marketing toward wines produced in-province. The complaint cites 25 different laws and practices favouring local wines. (One thing it proves without a doubt is that we have far too many laws governing the sale of alcohol. It’s 2018 now. We’re about to legalize marijuana. Can’t we loosen the rules on alcohol, too?)

B.C. gets the most attention in the complaint. Australia considers it discriminatory “on the face of it” that B.C. wines can be sold directly from grocery store shelves while other wines can be sold only through “a so-called ‘store within a store.’” Also: “Imported wine is subject to a wide range of mark-ups, fees and taxes, while B.C. wineries are permitted to ‘direct deliver’ wine to consumers.” There are similar problems with government marketing of wines in Ontario, Quebec and Nova Scotia. (As a lifelong Quebecer who has lived through some terribly severe winters, I find it astonishing, and discouraging, that there is a nascent Quebec wine industry. It seems an almost certain misallocation of resources.)

I have no idea whether Australia’s charges are true or whether, if true, they do in fact constitute discrimination according to the rules of the WTO. We shall see as the WTO process unfolds. But they are certainly the kinds of things provinces do to help local producers and whether they’re discriminatory or not in law, they seem pretty obviously discriminatory in fact.

In announcing her ban on B.C. wine, Premier Notley made clear she had chosen wine for retaliation because her government could order its crown corporation not to buy any more. She had the power to do that. With other goods and services, she did not have the constitutional right to intervene.

There’s a lesson in that. If we privatized the wine industry, and the liquor industry, too, then private sellers could devise their own marketing strategies and favour or not the wines consumers wanted. If Australia didn’t like it, tough. The market, not the government would have spoken.

In the meantime, Advance Australia Fair! Here’s hoping your complaint gets results.

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