Summary of understanding between Australia and Canada regarding certain measures related to the sale of wine maintained by Ontario

Backgrounder

This confirms the understanding reached between Canada and Australia regarding certain measures maintained by the province of Ontario, as outlined in Australia’s request for panel establishment in the World Trade Organization (WTO) dispute Canada - Measures Governing the Sale of Wine (DS537). This understanding comprises the following terms:

  1. The Government of Ontario will ensure that no additional restricted beer and wine authorizations are authorized under Ontario Regulation 232/16 and that any existing restricted beer and wine authorizations are converted to unrestricted beer and wine authorizations by August 31, 2020.
  2. The Government of Ontario commits to eliminate the tax difference between Ontario wine and non-Ontario wine sold in off-site winery retail stores, including wine boutiques. The existing tax differential on wines sold in off-site winery retail stores will be phased out within three years from the date this understanding takes effect. In furtherance of this commitment, the government will introduce legislation in Ontario’s Legislative Assembly to eliminate the tax difference, and fully support its passage.
  3. The Government of Ontario commits to make the following amendments to Ontario Regulation 232/16:
    • a)     By the end of Year one from the date this understanding takes effect, amend the definition of “small winery” in subsection 43(2) to increase the annual worldwide sales threshold from 200,000 litres to no less than 375,000 litres.
    • b)    By the end of Year two from the date this understanding takes effect, amend subsection (2) in section 25 to reduce the amount of dedicated shelf space from 50% to no more than 45%.
    • c)     By the end of Year three from the date this understanding takes effect, amend subsection (2) in section 25 to reduce the amount of dedicated shelf space to no more than 40%.
  4. The Government of Canada will provide progress reports every six months in regard to items 1-3 above, beginning six months from the date this understanding takes effect, until the commitments therein have been fulfilled.
  5. Canada and Australia will promptly and jointly notify the Panel that they have reached a mutually agreed solution with respect to all Ontario measures identified in Australia’s panel request and request that the Panel refrain from making any findings or recommendations in its report in respect of those measures.
  6. Australia agrees not to institute WTO dispute settlement proceedings against any Ontario measure identified in the panel request for DS537 so long as: i) Canada carries out the undertakings set out in items 1-3 above within the time periods specified therein; and ii) any other changes made to the Ontario measures do not adversely affect the competitive opportunities afforded to Australian wine.

This understanding is without prejudice to Australia’s views on the WTO-consistency of Ontario’s measures identified in the panel request for DS537. Furthermore, this understanding does not alter Australia’s claims with respect to the non-Ontario measures covered by DS537 and is also without prejudice to Australia’s right to launch WTO dispute settlement proceedings regarding measures not covered by DS537. 

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