New USMCA trade deal means end to B.C.-only wine on grocery store shelves

New trade agreement replaces NAFTA, upsetting Canadian dairy industry. Meanwhile, steel tariffs remain

As the impact of a renegotiated trade pact between Canada, the U.S. and Mexico begins to sink in, Kamloops politicians and business representatives say they are relieved to see a deal in place — while wine shoppers in grocery stores will soon see an expanded selection from outside of B.C.

Replacing the 25-year-old North American Free Trade Agreement, the United States Mexico Canada Agreement (USMCA) was reached late Sunday night amid 11th-hour negotiations ahead of the American-imposed Oct. 1 deadline.

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While admitting there is still much information to review, both Kamloops-Thompson-Cariboo (Conservative) MP Cathy McLeod and Kamloops Chamber of Commerce president Joshua Knaak said it’s important an agreement is in place.

“We needed a deal with our biggest trading partner,” McLeod said.

The negotiations, however, were all about making concessions to U.S. President Donald Trump, with essentially no gains for Canada, McLeod told KTW.

Knaak echoed that sentiment.

“I think the prospect of a trade war, the uncertainty, is pretty frightening in the business sense,” Knaak said. “Do we have something that was better than what we had before? It doesn’t sound like it. It doesn’t sound like we had to give up much, but we didn’t gain anything out of it.”

Under the USMCA, Canada has preserved holdovers from NAFTA such as the dispute-resolution provision Chapter 19, which allows for independent panels to resolve disputes involving companies and governments, and Chapter 20, the government-to-government dispute-settlement mechanism. Also unchanged from the original NAFTA is Canada’s cultural-exemptions clause that excludes cultural institutions from being treated like other products and services, a rule that protects Canadian media outlets from being purchased by U.S. interests.

For Canada, Chapter 19 was important because, as Prime Minister Justin Trudeau argued, there needs to be some rules for settling disputes when dealing with the current U.S. president.

In exchange, however, Canada made concessions that include increasing the quota on foreign imports into its dairy market and other supply-managed sectors, giving American farmers more access to the Canadian market.

The concessions also trickle down to B.C. specifically as the province will be required to eliminate its rule allowing only B.C. wines on grocery store shelves by Nov. 1, 2019, which means shoppers visiting the Sahali Save-On-Foods store in Kamloops will soon see wine from the U.S. and other countries sitting next to vino from local wineries.

McLeod believes the B.C. wine industry can withstand the competition.

“Canada and B.C. wines can compete with the best,” McLeod said. “As a consumer, it doesn’t trouble me. It will be interesting to see what the industry thinks.”

KTW is awaiting a call back from the Kamloops Wineries Association.

In a press release, Premier John Horgan and Minister of Jobs, Trade and Technology Bruce Ralston said the province agreed to amend the measure, describing the policy as “a problem that we were going to have to fix.”

The province said it plans to work with the Canadian government to resolve it in a manner that best protects the B.C. wine industry. When the previous B.C. Liberal government introduced the B.C.-only wine provision in grocery stores, international trade challenges sprung up in the U.S. and Australia. Imported wine was previously required to be sold through a “store within a store” model in grocery stores.

Knaak said what will impact Kamloops businesses most from the new deal is what’s missing from it, noting United States steel tariffs have not been addressed. Steel tariffs and the expired softwood lumber agreement remain untouched after the USMCA announcement. On Monday, Trump said America’s 25 per cent tariffs on steel and aluminum imposed on Canada and Mexico will remain in place until a solution can be worked out.

“As far as items that impact our industry locally, that’s a big one,” Knaak said, noting he has heard rebar costs are up 50 per cent, which impacts consumers and anyone building housing.

Both the province and the BC Lumber Trade Council issued statements applauding the fact the renewed trade agreement maintains the dispute-resolution mechanism from NAFTA, describing it as an essential mechanism for challenging U.S. tariffs on Canadian softwood. BC Lumber Trade Council president Susan Yurkovich said the duties that remain imposed by the U.S. Department of Commerce on Canadian softwood lumber punish consumers and workers on both sides of the border and finding a resolution to the softwood lumber dispute must remain a key priority.

Preservation of Chapter 19 is a plus, Knaak said, adding he hopes Canadian concessions on the auto and dairy sectors will lead to an end to the U.S. “playing hardball” on the softwood lumber agreement.

Canadian dairy farmers panned the renegotiated deal, saying it will undercut the industry by limiting exports and opening up the market to more American products. Dairy Farmers of Canada issued a statement saying the deal would grant U.S. dairy producers an expanded 3.6 per cent market access to the domestic dairy market and eliminate competitive dairy classes, which the group says will shrink the Canadian industry.

“This has happened, despite assurances that our government would not sign a bad deal for Canadians,'' said Pierre Lampron, the organization's president. “We fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.''

KTW has placed calls to Blackwell Dairy Farm in Barnhartvale and is awaiting a response.

The provincial government said it is concerned about the possible impacts on the nearly 8,000 people working in the province’s dairy industry and urged an end to the steel and aluminium tariffs now that the USMCA is in place.

The BC Chamber of Commerce described the USMCA as a step forward, but also re-affirmed its stance for Canada to continue to diversify its trade with other countries.

“These negotiations have thrown into stark relief how dependent Canada is on U.S. trade,” a statement from the chamber reads, noting B.C. is the most diversified province, with a little more than 50 per cent of its trade being with America.

The USMCA comes after more than a year of trade negotiations between Canada and the U.S.

“Hopefully, it just means that our countries can get back to — instead of posturing — doing trade the way the two closest neighbours should be doing trade,” Knaak said.

— with files from the Canadian Press

© Kamloops This Week


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