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Business Commentary Interprovincial trade barriers are choking Canada’s burgeoning wine, beer and spirits industry: it’s time for ministers to act

Andrea Stairs is the general manager of eBay Canada & Latin America; Jan De Silva is president and CEO of the Toronto Region Board of Trade and chair of the Canadian Global Cities Council.

Canada is home to world class wine, beer and spirit producers, yet due to antiquated interprovincial trade measures, they are prohibited from selling to the vast majority of Canadian consumers. Ontario vineyards, for example, are free to sell their goods overseas, but are legally prohibited to directly sell to consumers in neighbouring Manitoba.

At a time when Canada is fighting to deal with unprecedented international trade volatility, maintain favourable global trading relationships and protect exports, it’s unfathomable that our own domestic trade policies handcuff our small- and medium-sized businesses from selling across provincial borders. Canada’s global competitiveness hinges on the success of our domestic businesses, and it’s time to start enabling better trading conditions on home soil.

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Eliminating interprovincial trade barriers is a move that’s long overdue and directly affects far more industries than just alcohol in Canada. However, unlocking the economic potential of interprovincial trade of alcohol can act as a first step to freer trade in other industries.

According to the Canadian Vintners Association, small wineries in the United States generate up to four times more revenue than their Canadian counterparts as a result of the allowance of direct-to-consumer selling of alcohol. By cutting small businesses off from accessing lucrative markets – within our own country – policy-makers block channels for growth which impacts consumers, the economy and business competitiveness.

Last month, the federal government introduced legislation that would remove one of the biggest obstacles to alcohol trade within Canada: The 2019 federal budget will eliminate the rule requiring anyone moving beer, wine or spirits from one province to go through a provincial liquor authority.

The hard work now turns to provincial governments who can, and must, go further. At the coming internal trade ministers’ meeting later this month, provinces can keep up the momentum by easing or removing provincial rules so as to relieve the burden on Canada’s small- and medium-sized businesses.

Senate of Canada research suggests internal trade constraints cost the Canadian economy as much as $130-billion a year.

Canadian consumers don’t like this so-called protection either, for alcohol or for any other goods: A recent poll found three out of four Canadians agree we should be allowed to bring any amount of beer or wine across provincial or territorial borders, while 87 per cent think we should be able to order any legal product from anywhere in the country.

Increasing trade is good for both consumers and business. Nova Scotia, British Columbia and Manitoba have already allowed direct-to-consumer delivery of wine within their own provinces, while also seeing significant growth of their local industries. Sales of Canadian wine in Nova Scotia have since grown by 88 per cent, B.C. by 17 per cent and Manitoba by 24 per cent giving producers a new means to meet the demands of their consumers. (And, simultaneously, offering provincial governments a meaningful increase in tax revenues.)

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So, where do we go from here? Eight big city chambers of commerce, working together as the Canadian Global Cities Council, proposed last year that provinces negotiate an “icebreaker” deal on interprovincial alcohol trade. Realistically, this icebreaker doesn’t have to be nationwide at first: initially, it could be negotiated between a few provinces, creating momentum for others to join or risk missing the benefits of modernizing trade.

As they consider how to tear down interprovincial barriers, provinces should also be consistent. The more provinces and territories move together, the more effective and fairer trade within Canada will become.

It’s also important to look at practical ways to remove barriers that go beyond legislation. For example, wine consumers should not always have to work through the patchwork of government distributors such as the Liquor Control Board of Ontario. It should be easier to transact directly with wine producers and licensed merchants.

The infrastructure is already there to facilitate safe and secure online sales of alcohol to consumers of legal consumption age. Provincial policies now need to catch up to reflect and serve Canadian markets and opportunities.

It’s time to uncork opportunities to reduce frictions for sellers within Canada and provide consumers with what they overwhelmingly want. When inclusive trade measures are combined with enabling technologies, there’s no limit to what Canadians and Canadian businesses can achieve – everywhere across the country.

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