New NAFTA includes a win for U.S. wine industry

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – The U.S. wine industry scored a win in the new NAFTA agreement reached between Canada, Mexico and the U.S.

The agreement, announced Sept. 30, is intended to replace the 24-year-old North American Free Trade Agreement with the United States-Mexico-Canada Agreement (USMCA). 

The wine industry’s USMCA win was overshadowed in many news reports by the wins garnered by this nation’s dairy, wheat and poultry industries. But the lesser known wine provision included in the new agreement could have a notable impact on U.S. wine exports to Canada. 

Under terms of the USMCA, British Columbia has agreed to ends its practice of not allowing imported wines to be stocked on grocery shelves in the Canadian province, which has a population of 4.8 million people.

According to the Wine Institute, which represents 1,000 California wineries, Canada has agreed to end that policy by Nov. 1, 2019. 

“This agreement represents real progress towards improved market access for U.S. wines in Canada,” Wine Institute CEO Robert “Bobby” Koch stated in a press release. “We still have much work to do in other areas of market access [in Canada], but this is a significant accomplishment.”

U.S. wine exports totaled $1.53 billion in 2017 and 97 percent of those were from California. Canada was by far the top foreign market for U.S. wines in 2017, accounting for $444 million worth of U.S. wine exports.

While the USMCA wine provision will mainly directly benefit California wineries, it could also indirectly benefit Idaho wineries because increased domestic wine exports benefit the entire U.S. wine industry, said Idaho Wine Commission Executive Director Moya Shatz-Dolsby.

According to the IWC, Idaho’s 52 wineries produced 372,601 gallons of wine in 2016, enough to fill 156,686 12-bottle cases. Idaho farmers harvest about 3,000 tons of wine grapes each year off of 1,300 acres.

According to a 2013 study, Idaho’s wine industry had a $169 million impact on the state’s economy that year. The study by Stonebridge Research Group also found the industry was responsible for 1,226 Idaho jobs. 

While the vast majority of U.S. wine exported to Canada is from California, “there is some wine from the Pacific Northwest that is sent there,” said Michael Kaiser, vice president of WineAmerica,  which represents wineries in all 50 states.

“We’re happy that the British Columbia grocery store issue will be resolved next year,” he said. “This will allow Northwest wineries to have more opportunities to get their wine to the market in British Columbia.” 

British Columbia regulations exclude all imported wine from grocery store shelves. 

Imported wine can be sold within a grocery store but only in a special “store within a store” that is physically separated from the grocery store and has controlled access and separate cash registers.

The U.S. Trade Representative last year filed a complaint with the World Trade Organization against British Columbia’s wine policy.

Under the terms of USMCA, British Columbia agrees to end the practice and the U.S. agrees to drop its WTO complaint. 

According to the U.S. Department of Agriculture, U.S. wine exports to British Columbia totaled $56 million last year and U.S. wine had a 10 percent share of that market.

In a May 25 news release, U.S. Secretary of Agriculture Sonny Perdue said, “We want customers in British Columbia to have the opportunity to buy our great American wine. The practice of discriminating against U.S. wine is unfair and cannot be tolerated any longer. Our wine producers rely on export markets and they deserve fair treatment, especially by our northern neighbors in British Columbia.”