The USMCA trade agreement officially entered into force this week. You would be forgiven for missing the message. The new trade agreement will be called the U.S.-Mexico-Canada Agreement (USMCA) and will become the world`s second-largest economic bloc behind the European Union, as the Guardian reports. On Sunday evening, U.S. and Canadian negotiators announced an interim review of NAFTA as part of the new U.S.-Mexico agreement. There will be a lot of discussion on the most serious issues, from milk to steel to Chapter 19. But the USMCA also contained a page letter between Canada and the United States that was the end of a long saga parallel to the negotiations – and almost as hectic as the broader negotiations themselves – on wine. The United States and Canada are currently in a trade dispute over how the Canadian province of British Columbia (BC) regulates the sale of wine in BC grocery stores. A provincial policy adopted by BC in 2015 limits the sale of wine in grocery stores to B.C. products. The only way for BC supermarkets to sell imported wine is in a physically separate area with its own cash registers.
The Obama administration has filed two complaints with the World Trade Organization (WTO) claiming that BC`s discriminatory measures restrict the sales chances of U.S. wine producers and provide a significant competitive advantage for bc wine. (OMC WT/DS520 and WT/DS531). While the USMCA`s wine supply will primarily benefit California vineyards, it could also indirectly benefit Idaho vineyards, as increased domestic wine exports benefit the entire U.S. wine industry, said Moya Shatz-Dolsby, executive director of the Idaho Wine Commission. Earlier this summer, U.S. Trade Representative Robert Lighthizer even escalated the U.S. complaint against B.C rules at the World Trade Organization. In 2017, the United States requested consultations with Canada on this issue, and when it was unable to reconcile, the WTO established a body in July 2018 to listen to the dispute.
The united States` dominant – and persuasive – argument before the WTO was that this policy violated Canada`s “national treatment” obligations under the General Agreement on Tariffs and Trade (GATT). Under the GATT, Canada is not allowed to treat a Canadian product cheaper than a U.S. product if both products are “like” or similar, and with respect to WTO jurisprudence, there was little doubt that a red wine from California`s Napa Valley is considered “like” a red wine from the Okanagan region of B.C.