Sunday 18th Nov, 2018

INDUSTRY OPINION: Australia initiates WTO action against Canadian restrictions on wine exports

Photo: Shutterstock
Photo: Shutterstock

ON 17 January 2018 a series of media stories announced that Australia had initiated the WTO “disputes” process against Canada in relation to measures maintained by the Canadian Government and a number of Canadian provinces governing the retail sale of wine.

The announcement appeared to be something of a surprise as Australia had not initiated a dispute in the WTO since action against the EU in 2003. This is not to say that Australia has not been active in disputes in other contexts. Australia is the respondent in a number of actions brought at the WTO, most prominently relating to our plain packaging legislation. Australia has also joined as a “third party” in 104 actions brought by other countries.  Australia has also been active in many other aspects of the WTO with prominent involvement including action at the latest Ministerial meetings (MC 11) such as leadership on the development of the e – commerce initiative.

However, in context, there may have been hints that such an action may have been forthcoming. The US has recently brought two similar actions against the Canadian Government and two Provinces to which Australia has been allowed to join as a third party. While being joined as a third party does allow some degree of involvement in the dispute, it does not afford full engagement or visibility in the action and would not allow involvement in any appeal.  The action also involves Australian wine exports which have benefitted significantly from our FTA agenda which would have encouraged our Government to take further direct action.

Accordingly, more recently, Australia raised its own concerns on the wine measures directly with Canada and after bilateral negotiations were unsuccessful and following discussions with industry the Government finally resolved to initiate its own action. The action takes place at a time where there have been suggestions of other tensions between Australia and Canada after it appeared that Canada refused to endorse the signing of a revised TPP at the last APEC leaders meeting. Reports suggest that there is no link between the two matters but there did seem a high degree of disappointment with Canada on TPP11 especially when the earlier signs from Canadian authorities was that it would signed the revised deal and it appeared that only a last minute opposition from the Canadian PM may have caused the change in position. Even so there now appears to be more optimism that the Canadians may agree to the revised “TPP 11” now known as the Comprehensive and Progressive Agreement for Trans – Pacific Partnership (CPTPP)

The action initiated by the Australian Government alleges breaches of the General Agreement on Tariffs and Trade 1994 through measures maintained by the Canadian Government and the Provinces of British Columbia (BC), Ontario, Quebec and Nova Scotia. The claim is that a range of distribution measures, licensing and sales measures such as product mark – ups, market access and listing policies as well as duties and taxes on wine applied at the federal and provincial level may discriminate, either directly or indirectly against imported wine.  One example is that wine from BC gains exclusive access to a retail channel of selling wine in regular grocery stores while imported wines can only be sold through “stores within a store” which are not practical as they are expensive and cannot be established within a one kilometre area where alcohol is otherwise being sold.

The process set by the Dispute Settlement Understanding (DSU) includes compulsory discussions between Australia and Canada for 60 days and if there is no successful resolution then Australia may proceed to requesting a Panel be established to adjudicate from which an appeal can be lodged to the Appellate Body. The implementation of outcomes is then monitored with countermeasures available against parties who do not implement measures.  Of course there is significant pressure on the whole WTO DSU at the moment where the US claims it does not fairly represent its interests and the US has not facilitated the appointment of members to the Appellate Body.

The wider question is whether this constitutes evidence of a more active engagement by the Australian Government in bringing actions at the WTO in other areas of dispute. Certainly, industry has for many years been keen to see more direct actions being brought but ultimately any action requires political will by the prevailing government of the day and neither side of politics had demonstrated any appetite for direct action. Accordingly whether this action represents a change in this position is yet to be seen.

Of course none of this happens quickly so we will keep you informed of progress and any practical outcomes. As always, if pain persists, please consult your trade lawyer!

* Andrew Hudson is a trade lawyer at Rigby Cooke Lawyers

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