RESTRICTED
WORLD TRADE G/STR/N/1/CAN/Add.1
10November 1995
ORGANIZATION(95-3498)
Original: English
STATE TRADING
Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 and
Paragraph 1oftheUnderstanding ontheInterpretation ofArticle XVII
CANADA
Addendum
Thefollowing communication, dated 30October 1995, hasbeenreceived fromthePermanent
Mission ofCanada.
_______________
Pursuant totheprovisions ofArticle XVII:4(a) oftheGATT 1994 andparagraph 1ofthe
Understanding ontheInterpretation ofArticle XVII, andinaccordance withthedecision oftheCouncil
forTrade inGoods of20February 1995, Ihavethehonour tosubmit herewith thebalance ofCanada 's
notification concerning statetrading enterprises inaccordance withthequestionnaire onstatetrading
setoutinBISD 9S/184-185. Thisnotification covers theprovincial liquor boards.
Provincial Liquor Control Authorities
II. Reasons andpurpose forintroducing andmaintaining enterprise
InCanada, theimportation ofandinterprovincial trade inalcoholic beverages isgoverned by
thefederal Importation ofIntoxicating Liquors Act(IILA).Theobjective oftheIILArelates tothecontrol
oftheconsumption ofalcoholic beverages inCanada forthepurpose ofprotecting public health and
morals. Thisstatute provides theprovinces, within theirrespective jurisdiction, withcontrol overthe
saleofintoxicating liquor, andovertheimportation, sending, taking ortransportation ofsuchliquor
intotheprovinces. Theprovinces havedelegated thisactivity totheprovincial liquor control authorities.
Thestatute expressly provides thatnothing intheIILAforbids theimportation, sending, taking or
transportation ofintoxicating liquor forsacramental ormedicinal purposes, orformanufacturing or
commercial purposes notrelated totheuseofliquor asabeverage.
Aswell,under theIILA,anexception exists forpersons licensed bytheGovernment ofCanada
under theExcise Acttocarry onthebusiness ortrade ofadistiller orbrewer where theintoxicating
liquor isimported solely forthepurpose ofbeing usedforblending withorflavouring theproducts
ofthebusiness ortrade ofthatperson.G/STR/N/1/CAN/Add.1
Page2
III. Description ofthefunctioning ofthestatetrading enterprises
Whether theenterprise deals withexports orwithimports orboth.
Theprovincialliquorcontrolauthoritiesdealwiththeimportationandsaleofalcoholicbeverages
withintheirrespectivejurisdictions.Exportationofalcoholicbeveragesisaprivatematterofthebeverage
manufacturer.
Whether private traders areallowed toimport orexport, andifso,onwhat conditions. Whether
there isfreecompetition between private traders andtheenterprise.
TheIILAprovides theprovincial liquor control authorities withthedelegated authority toimport
alcoholic beverages inCanada.
Private traders areallowed toimport iftheyarelicensed bytheGovernment ofCanada under
theExcise Acttocarry onthebusiness ortrade ofadistiller orbrewer where theintoxicating liquor
isimported forthepurpose ofbeing usedforblending withorflavouring theproducts ofthebusiness
ortrade ofthatperson.
Theexportation ofalcoholic beverages isaprivate matter oftheprivate trader.
Alcoholicbeveragesmaybesoldthroughstoresoperatedbytheprovincialliquorcontrolauthority
orthrough provincially authorized private retailers oracombination ofboth.
Thecriteria usedfordetermining thequantities tobeexported andimported.
Provincial liquor control authorities purchase orpermit thepurchase ofalcoholic beverages
inlinewithmarket needs asrelated tosuchcommercial considerations asprice, quality, availability,
marketability, transportation andother conditions ofpurchase orsale. Private traders determine their
owncriteria pertaining toquantities tobeexported.
Howexport prices aredetermined. Howthemarkup onimported products isdetermined. How
export prices andresale prices onimports compare withdomestic prices.
Export prices aredetermined bytheprivate trader. Theretailsalespriceoftheimported product
isafunction ofitslanded cost(invoice price, dutyandfreight), towhich areadded theapplicable mark-
upandfederal andprovincial sales taxes. Thefederal andprovincial sales taxes donotdistinguish
between domestic andimported product. Themark-up varies byproduct typeandbyprovincial
jurisdiction.AsaresultoftwoGATTPanels1,provincialliquorcontrolauthoritieshavemodifiedmark-up
practices onalcoholic beverages tobring them intoconformity withtheGATT2.
1Canada -Import, Distribution andSaleofAlcoholic Drinks byProvincial Marketing Authorities (1988)
andCanada-Import,DistributionandSaleofCertainAlcoholicDrinksbyProvincialMarketingAgencies(1992).
2TheCanada-U.S FreeTrade Agreement immediately eliminated discriminatory markups ondistilled spirits
andallowed foracomplete phase outofdifferential price markups onwine by1January 1995. Annexes B&
Cofthe"Agreement between theEuropean Economic Community andCanada concerning trade andcommerce
inalcoholic beverages" which areapplied onanMFN basis allow forthecomplete phase outofmark-up
differentials onblended and100percentCanadian wine by1January 1995 and1January 1998, respectively.
Mark-up differentials ondistilled spirits were eliminated asof1January 1993.G/STR/N/1/CAN/Add.1
Page3
Whether long-term contracts arenegotiated bytheenterprise. Whether theenterprise isused
tofulfil contractual obligations entered intobytheGovernment.
Notapplicable.
IV. Statistical Information
Therelevant statistical information isattached.
V. Reason whynoforeign trade hastaken place (ifthisisthecase) intheproducts affected
Notapplicable.
VI. Additional information
Summaries ofprovincial liquor marketing practices areattached.G/STR/N/1/CAN/Add.1
Page4
ALBERTA
ACTS AND REGULATIONS
- Liquor Control Act(consolidated January 13,1995)
- Liquor Administration Regulation (Alta. Reg.215\91)
- Liquor Administration Amendment Regulations
SUMMARY OFLIQUOR MARKETING PRACTICES
Allretail salesofalcoholic beverages inAlberta have beenprivatized. Thelastgovernment-
operated Alberta Liquor Control Board (ALCB) stores closed inMarch 1994. Aneworganization,
theAlberta Gaming andLiquor Commission (AGLC) wasformed inJune1995toregulate liquor and
gaming activities intheProvince.
Theproducts forlisting arechosen byliquor agencies andlicensees whodetermine whether
aproduct isbrought intotheprovince. Suppliers havetheoption ofmaking theirowntransportation
arrangements oremploying theservices ofagents toexpedite theprocess ofconsolidating andshipping
orders.
TheAGLC istheimporter andwholesaler ofrecord. Allneworders areplaced onconsignment,
withtheagent/supplier named asconsignee.
Amendments totheLiquor Control Actpassed onNovember 10,1993 openthewayforbeer
suppliers toestablish theirownwarehousing arrangements. Final approval forsucharrangements is
required from theAGLC.
Effective 8August 1993, provincial mark-up ratesunder awholesale pricing structure were
established. Retailers maysetretail prices according tomarket forces.
Thewarehousing anddistribution ofbeverage alcohol products from theAGLC warehouse
anddistribution facility inSt.Albert, operated bytheALCB upto19June1994, hassincebeenmanaged
byaprivate company, Connect Logistics Services Inc.,adivision ofTibbett andBitten Group Canada
Inc.Charges reflect thecostofreceiving, storing andshipping products bythepallet orbythecase.
Asaresult, products selling highvolumes willenjoy lower handling costs, while those selling smaller
quantities mayexperience higher handling costs.
Under thenewAlberta system, imported products aregiven national treatment.G/STR/N/1/CAN/Add.1
Page5
BRITISH COLUMBIA
ACTS AND REGULATIONS
- Liquor Distribution Act,R.S.B.C. 1979, c.238 andtheregulations thereto, andtheir
amendments, including:
- Revenue Statutes Amendment Act,S.B.C. 1992, c.1-3.
- Miscellaneous Statutes Amendment Act,S.B.C. 1993, c.13.
SUMMARY OFLIQUOR MARKETING PRACTICES
TheLiquor Distribution Branch (LDB) istheimporter ofrecord forallalcoholic beverages
imported intoBritish Columbia.
Before products canbesoldintheprovince theymustbelisted withtheLDB. Thelisting process
isdescribed inthedocument "British Columbia Liquor Distribution Branch Purchasing andMarketing
Manual".
Suppliers ortheiragents determine thepriceatwhich theysellproducts totheLDB. TheLDB
applies apricing formula tothesupplier price todetermine thefinalprice toconsumers. Thepricing
formula isdescribed inthedocument "British Columbia Liquor Distribution Branch Markup Schedule".
TheLDBoperates approximately 220stores. Inaddition, thereisalargeprivate retail system
consisting of275beerandwinestores, 25winestores and140rural agency stores.G/STR/N/1/CAN/Add.1
Page6
MANITOBA
ACTS AND REGULATIONS
- TheLiquor Control Act,R.S.M. 1988, c.L160 andtheregulations thereto, andtheir
amendments, including:
- TheLiquor Control Amendment andConsequential Amendments Act,S.M.
1993.
SUMMARY OFLIQUOR MARKETING PRACTICES
TheManitoba Liquor Control Commission (MLCC) istheimporter ofrecord forallliquor
imported intoManitoba. Allspirits andwinesoldintheprovince mustmeettheMLCC 'slisting criteria
andgross profit quotas. Thecriteria andquotas apply toallbeverage alcohol inauniform andnon-
discriminatory manner, irrespective ofcountry oforigin.
Allspirits andwinearewarehoused bytheMLCC anddistributed toits50owned stores, 175
privately owned agency stores andsome 1,467 licensed premises.
Beverage alcohol 'sretail priceisdetermined byapplying acategory markup tothelanded cost.
Minimum markups apply toallproducts butthere arenominimum prices. Thesame category and
minimum markups areapplicable tolikeproducts regardless ofcountry oforigin.
Audited costofservice differentials (commercial considerations) areapplied ataflatperlitre
charge percategory.G/STR/N/1/CAN/Add.1
Page7
NEW BRUNSWICK
ACTS AND REGULATIONS
- NewBrunswick Liquor Corporation Act,R.S.N.B. 1973, c.N-6 andtheregulations
thereto, andtheiramendments.
- Liquor Control Act,R.S.N.B. 1973, c.L-10, andtheregulations thereto, andtheir
amendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
Importation ofalcoholic beverages intoNewBrunswick isdonethrough theNewBrunswick
Liquor Corporation (NBLC). Allsuppliers havefullandequal access totheNBLC 'slisting process.
Listed products receive distribution totheentire retail system, including agents andlicensed
establishments. Marketing programs areavailable toallsuppliers onanequal access basis.
TheNBLC maintains aretail system of63stores and43agency outlets. Thissystem isthe
exclusive retailer ofallalcoholic beverages intheprovince. Inaddition, approximately 1,200
establishments arelicensed foron-premise consumption. These licensees buyexclusively through the
NBLC retail system described above.
Suppliers havetheoption ofestablishing theirownin-province warehouse anddistribution or
going through NBLC 'scentral warehouse anddistribution system. Aservice charge isapplied toall
alcoholic beverages going through theNBLC warehouse anddistribution system.
Retail price isdetermined byapplying anadvalorem markup totheproduct 'slanded cost(at
point ofsale). Rates arelisted inthe"Markup Structure" document andareapplied uniformly toall
products regardless oforigin.G/STR/N/1/CAN/Add.1
Page8
NEWFOUNDLAND
ACTS AND REGULATIONS
- TheLiquor Corporation Act,R.S.N. 1990, c.L-19, andtheregulations thereto and
theiramendments.
- TheLiquor Control Act,R.S.N. 1990, c.L-18, andtheregulations thereto, andtheir
amendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
Importation ofalcoholic beverages totheNewfoundland market canonlybedone bythe
Newfoundland Liquor Corporation (NLC). Inorder fortheNLC toimport alcoholic beverages for
saleinitsstores, theproducer mustcomplete alisting application, andtheListing Committee ofthe
NLCmustapprove theapplication. Details ofthelisting procedures maybefound intheNLC'sListing
Policy andProcedures.
Spirits andwinewhich arelisted bytheNLC maybedistributed bytheNLC fromtheNLC
warehouse forsaleintheNLC's30stores and64agency outlets. Theretail price ofaproduct is
determined asfollows:
(a) Wines -landed costplus61percentoflanded costplus$2.25 per750mlbottle plus
GST(federal Goods &Services Tax)plusRST(provincial Retail Sales Tax)
(b) Spirits -landed costplus62.5percentoflanded costplus$6.20 per750mlbottle
plusGSTplusRST
(c) Liqueurs -landed costplus56.2percentoflanded costplus$5.90 per750mlbottle
plusGSTplusRST
Current GSTandRSTratesare7percentand12percent, respectively.G/STR/N/1/CAN/Add.1
Page9
NOVA SCOTIA
ACTS AND REGULATIONS
- TheLiquor Control Act,R.S.N.S. 1989, c.260 andtheregulations thereto, andtheir
amendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
ImportationofliquorisdonethroughtheNovaScotiaLiquorCommission(NSLC).TheNSLC's
listing policies provide equal access toallproducts. Suppliers, bothdomestic andimported, areall
requiredtooperatethroughtheNSLCwarehouseandrelateddistributionsystem.Allproducts,regardless
oforigin, maybesoldinallpoints ofsaleintheprovince.
Markups areestablished bypackage sizewithin product categories andarethesameregardless
ofproduct origin.
Themarkup isthesame forallproducts bycategory andsizeregardless oforigin.
Inaccordance withthetradeagreement definitions, allproducts which gothrough thewarehouse
arecharged thesame cost-of-service.G/STR/N/1/CAN/Add.1
Page10
ONTARIO
ACTS AND REGULATIONS
- Liquor Control Act,R.S.O. 1980, c.243 andtheregulations thereto, andtheir
amendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
Ontario 'sbeverage alcohol distribution andretail system ischaracterized byamixofprivate
andpublic operations. TheLiquor Control Board ofOntario (LCBO), agovernment agency, distributes
andsellsalldomestic andimported spirits, wineandbeer.TheLCBO isresponsible fortheimportation,
quality assurance, distribution andsaleofalcohol ingovernment-run stores across Ontario.
Under theLiquor Control Act(anditsregulations), theLCBO: approves allbeverage alcohol
products soldinOntario; testsproducts forquality control andsafety; and,approves beverage alcohol
prices.
TheLCBO applies specific warehousing andretailing feestobeerproducts, butdoesnothave
specific service feesforwineorspirit products. Inthecaseofthose products, Board costsarerecouped
from LCBO markups.
TheLCBO isthemajor retail channel forspirits. In1994, on-site manufacturers 'stores were
allowed. TheLCBO istheprimary outlet forimported wine(including out-of-province wine) butit
isalsosoldbylicensed agents forprivate andconsignment sales. Allimported products mustfirstbe
delivered toanLCBO warehouse, asdelegated byaregulation under theImportation ofIntoxicating
Liquors Act.
Brewers Retail Inc.(BRI) isaprivately-owned company operating under theauthority ofthe
Liquor Control Act.Itoperates stores which sellimported anddomestic beertothepublic. Theprimary
distribution channel forbeerisBRI;theLCBO isasecondary channel forbeer.BRIhasanopenlistings
policy (willsellanybrand) andnodelisting policy orvolume maximums, butitrestricts lower volume
brands toonepackage size.
Allimported beverage alcohol products which aresoldinOntario mustfirstbereceived by
theLCBO,pursuanttoauthoritydelegatedtoitundertheImportationofIntoxicatingLiquorsAct.Ontario
hasmaintainedphysicalimportreceivershiptoensurequalitycontrolandadequatemonitoringforrevenue
collection purposes.
TheLCBO purchases imported products atwholesale andarranges andpaysforfreight costs
toOntario. TheLCBO warehouses allimported beer,wineandspirits, andvirtually alldomestic spirits
andwinesoldbytheLCBO. Foreign beermanufacturers, liketheirdomestic counterparts, havethe
option ofdistributing from LCBO warehouses toretail outlets. TheLCBO applies thesame volume
andadvalorem charges toalldomestic andimported beer.G/STR/N/1/CAN/Add.1
Page11
PRINCE EDWARD ISLAND
ACTS AND REGULATIONS
- Liquor Control ActandRegulations ,R.S.P.E.I. 1988, c.L-14 andtheregulations thereto, and
theiramendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
Wine andspirits, whether imported ordomestic, aremarked upat120percentoflanded cost.
Anapplication feeofCan$100.00 ischarged forthereview ofanywineorspirit product.
Allbeermust beimported through thePrince Edward Island Liquor Commission (PEILC).
DomesticandimportedbeeraretreatedidenticallybythePEILCwithrespecttoimportation,distribution,
pricing andsale. There arenobreweries inPrince Edward Island.G/STR/N/1/CAN/Add.1
Page12
QUEBEC
ACTS AND REGULATIONS
- Actrespecting theSociété desalcools duQuébec, R.S.Q. 1977, c.S-13 andthe
regulations thereto, andtheiramendments including:
- AnActtoamend theActrespecting theSociété desalcools duQuébec and
other legislation, S.Q.1992.
- Actrespecting beerandsoftdrink distributors 'permits, R.S.Q. 1977, c.P-9.2 and
theregulations thereto, andtheiramendments.
SUMMARY OFLIQUOR MARKETING PRACTICES
BylawtheSAQ[QuebecLiquorBoard]istheonlybodyauthorizedtoimportalcoholicbeverages
intoQuebec. Inregard tospirits, theSAQalsohasamonopoly ondistribution throughout theprovince.
Spirits aresoldtothose withlicences forin-house consumption andtoconsumers through itsnetwork
of341branches and154agencies.
Thedistribution network forthesaleofalcoholic beverages isdetermined bytheMarketing
Policy andtheRules forregistration ofproducts inthegeneral index oftheSAQ. Wines aredistributed
through twonetworks, namely SAQ branches andgrocery stores.
Itisthepolicy oftheSAQtosellthealcoholic beverages available initsbranches atuniform
prices across theprovince. Depending onthecategory inwhich theybelong, allthealcoholic beverages
soldbytheSAQaremarked upusing thesamemark-up structure, regardless oftheircountry oforigin.
Thismark-up structure isavailable toallsuppliers from theSAQ.
Suppliersareresponsibleforpromotingtheirproducts.Theymayuseadvertisingrepresentatives
todoso,iftheywish.
TheSAQistheonlyimporter andfirstwholesaler ofbeer. Onalabelbylabelbasis, aforeign
brewer, likeaCanadian brewer, maychoose toeither deliver hisownproducts tolicensed establishments
(private retail stores, bars, restaurants, etc.)orhavetheSAQ distribute theproducts through SAQ
stores andestablishments foron-premise consumption.
Canadian brewers thatdonothaveaQuebec brewer 'spermit andforeign brewers thatwish
todistribute theirownproducts orhavethemdistributed through localagents tolicensed establishments,
must obtain adistributor 'spermit from theRégie desalcools, descourses etdesjeux(RACJ).G/STR/N/1/CAN/Add.1
Page13
SASKATCHEWAN
ACTS AND REGULATIONS
- TheAlcohol andGaming Regulation Act,being S.S.1988-89, c.A-18.01 asamended byS.S.
1989-90, c.15andS.S.1993, c.17andc.45, andtheregulations thereto.
SUMMARY OFLIQUOR MARKETING PRACTICES
TheSaskatchewan Liquor andGaming Authority (SLGA) hasauthority overthemanufacture,
possession, saleanddelivery ofbeverage alcohol inSaskatchewan, andistheimporter ofrecord for
allwine, spirits andbeerimported intoSaskatchewan. TheSLGA maintains abroad listing policy
thatapplies equally tobothimported anddomestic products. Further details arecontained intheSLGA
Listing Policy.
Itisthepolicy oftheSLGA todealdirectly withthesupplier inthecountry oforigin. Listing
application forms, andproduct andsupplier profiles mustbesubmitted orapproved bythesupplier.
TheSLGAisundernoobligationtoapprovelistingrequestsorpurchasestockfromanysupplier.
Allsuppliers arerequired toprovide thefollowing information when completing anapplication form:
- anex-cellar quotation andthelocation ofsame
- anFOBportquotation, aswellasaspecified loading port
- anestimated retail price
- anyspecial conditions ofsale(thiswould reflect anaddition tothestated quotation
forless-than-full container/truck loads and/or pallet charges, andminimum order
quantities orprice concessions forquantity orders).
Applications fornewlistings arereceived throughout theyearandareconsidered atsemi-annual
reviews. Newproduct listings areevaluated onthebasis ofquality, marketing andpromotion plans,
anticipated customer acceptance, fitwithSLGA 'sproduct portfolio, unique characteristics, container
andpackaging, supplier order andshipment arrangements, deferred payment proposals, andshelflife.
Minimum annual salesvolumes areexpected foreachproduct listing ortheproduct maybedelisted.
General listings depict products withgeneral appeal andareavailable throughout theretail
outlet system. Specialty listings depict products withlimited orseasonal appeal.
TheSLGA mayissue aClass "C"license toabrewer, distiller, orwine manufacturer and
authorize it,subject toapplicable Canadian laws, toexport Saskatchewan manufactured beverage alcohol
ofaspecified class, brand orkind. Holders ofaClass "C"license maybegiven approval toimport
beverage alcohol intoSaskatchewan ifitispurchased from aperson authorized tosellitandthe
requirements ofSection 3oftheImportation ofIntoxicating Liquors Actaremet.
TheSLGA operates 81retail outlets inSaskatchewan, threeofwhich offerafulllineselection
ofspecialtyproductsinadditiontotheirassortmentofgenerallistings.Inaddition,theSLGAhasgranted
authority toapproximately 200operators ofprivate business establishments insmall ruralcommunities
tosellbeverage alcohol products.G/STR/N/1/CAN/Add.1
Page14
Anybeersupplier thatchooses todistribute itsownproducts willberequired, asare
Saskatchewan suppliers, toadhere toprovincial regulations governing, among other things, container
specifications/returns, SLGA policies related todistribution onaprovince widebasis, uniform pricing,
andtwo24-bottle packlistings, duetospace limitations attheretail level.
Therulesgoverning access topoints ofsaleapply equally todomestic (including in-province)
andforeign brewers.
TheSLGA 'spricing system isapplied equally todomestic (including in-province) andimported
beer. Audited cost-of-service charges areapplied inanon-discriminatory manner toallbeerdistributed
through theSLGA system.G/STR/N/1/CAN/Add.1
Page15NOTIFICATION PURSUANT TOARTICLE XVII
Canada
Statistics
Commodity Units YearImports Exports
Canadian product1
Total ByArt.XVII Enterprise* Total ByArt.XVII Enterprise
Quantity $'000 Quantity $'000 Quantity $'000 Quantity $'000 Quantity $'000
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Total
distilleriesKLP 1994
1993
1992
199121,679
19,646
20,085
19,284235,257
208,767
206,491
187,104n.a.
n.a.
n.a.
n.a.n.a.
n.a.
n.a.
n.a.75,521
77,770
80,425
72,392525,431
525,928
493,571
423,3760.00
0.00
0.00
0.000.00
0.00
0.00
0.00n.a.
n.a.
n.a.
n.a.n.a.
n.a.
n.a.
n.a.
Total
alcoholic
beverages1994
1993
1992
1991739,574
645,325
633,824
578,458n.a.
n.a.
n.a.
n.a.n.a.
n.a.
n.a.
n.a.803,161
744,385
674,464
597,9740.00
0.00
0.00
0.000.00
0.00
0.00
0.00n.a.
n.a.
n.a.
n.a.n.a.
n.a.
n.a.
n.a.
* Forcolumns 5and6:inmost cases imports byArticle XVII enterprises account forvirtually allimports asspecified incolumns 3and4.
However, forcertain products, importation byprivate traders isundertaken chiefly forblending purposes.
Statistics Canada doesnotprovide suchabreakout.
1 Shipment datawasusedasproduction dataisnotavailable.
Datasources: Trade datafrom Statistics Canada TIERS database.
Shipments from Statistics Canada, Annual Survey ofManufacturers, Catalogue #32-250.