03.21.19

SCHUMER: NORTH COUNTRY WINERIES ARE MISSING OUT ON BARRELS OF BUSINESS FROM CANADIAN CUSTOMERS DUE TO RESTRICTIVE CANADIAN IMPORT POLICIES RESULTING IN MASSIVE TAXES & FEES ON NY WINES; SCHUMER CALLS ON U.S. TRADE REP TO ELIMINATE UNFAIR BARRIERS IN TRADE TALKS, LEVEL THE PLAYING FIELD FOR NORTH COUNTRY WINERIES

While Americans Are Only Charged Marginal Taxes When Importing Wine Into The US For Personal Use, Canadians Are Forced To Pay Between 60% – 130% Of Wine’s Retail Value When Bringing It Back Into Ontario, Canada, Blocking North Country Producers From A Valuable Revenue Stream & Hindering Industry Growth 

With NAFTA Soon To Be Reviewed By Congress, Schumer Calls On United States Trade Rep To Seek Commitments To Eliminate Ontario Trade Barriers On New York Wine, Boost North Country Producers & Economy 

Schumer To USTR: Level The Playing Field And Uncork Potential For The Thousand Islands Seaway & St. Lawrence Wine Trails

Standing at Thousand Islands Winery in Jefferson County, U.S. Senator Charles E. Schumer today launched a major push to level the playing field for North Country wine producers, who are currently operating at a competitive disadvantage due to restrictive Canadian wine taxation policies. Specifically, as the Congress will soon review the renegotiated North American Free Trade Agreement (NAFTA), Schumer called on United States Trade Representative (USTR) Robert Lighthizer to seek commitments that would eliminate these unfair wine trade barriers with Ontario, Canada, and provide a significant boost to North Country wineries like Thousand Islands Winery. Schumer explained that the North Country is home to a burgeoning wine industry – thanks to top-notch producers on the popular Thousand Islands Seaway Wine Trail – that is significantly constricted by these unfair trade practices that tax Canadians up to 130% on wines purchased in New York for personal use.

“While the North Country wine industry has experienced formidable growth in recent years, wineries across the region are missing out on barrels of business because of burdensome taxes on Canadian visitors bringing New York wine back home. Even though millions of Canadians traverse North Country border crossings to return home each year, these damaging trade practices are making North Country wine unjustifiably expensive and cutting off a valuable stream of revenue for local producers,” said Senator Schumer. “That’s why today I’m calling on our U.S. Trade Rep. to seek an agreement on these onerous taxes with Canada before Congress reviews the renegotiated NAFTA. We need to level the playing field for North Country wineries on the Thousand Islands Seaway and St. Lawrence Wine Trails. Removing these unfair trade barriers would only serve to uncork the North Country wine industry and bring further meaningful economic development to the region.”

Schumer said that while many wineries in Upstate New York depend on sales to foreign tourists, Ontario taxes and fees have limited sales to Canadian customers. Schumer detailed that United States residents returning from short visits to Canada are permitted to bring one bottle of wine per person back into the country duty-free, and are only charged the small tax of $0.21 per bottle by the federal government and $0.06 per bottle by New York State when importing wine into the country beyond this limit.

In comparison, Schumer explained that Canada allows no commensurate duty exemption for visits to the United States under 48 hours. Schumer noted that in fact, wine purchased by Canadian residents returning from day or weekend travel to the United States is subject to a series of onerous federal and provincial taxes and fees. A visitor to a New York winery bringing wine into Ontario, Canada has to pay taxes and fees that amount to 40% of the retail value wine for a day trip and 102% of the value if the wine is shipped, in addition to a $0.62 Canadian federal tax per liter and a 13% Harmonized Sales Tax. Schumer added that these damaging Canadian charges can easily add up to 60-130% of the retail value of the wine, meaning that Canadian visitors, more often than not, come to taste New York wines and not to buy. Schumer explained that with 2,320,926 Canadians taking one or two-day trips using North Country border crossings in 2018, the trade barriers constitute a major impediment to North Country wineries, who could be selling their product to these Canadian visitors.

Schumer explained that in the renegotiated NAFTA, the United States secured commitments from Canada in a side letter to remove onerous restrictions on the sale of American wine in grocery stores in British Columbia. However, Schumer noted that these commitments will primarily benefit West Coast wineries. According to Schumer, similar restrictions in place in Ontario and Quebec, which are being investigated at the World Trade Organization, would not be removed by the renegotiated NAFTA. Therefore, East Coast wineries, like Thousand Islands Winery and those on the Thousand Islands Seaway and St. Lawrence Wine Trails, will continue facing these restrictions and high taxes in their major Canadian export markets, while their California competitors have fewer restrictions. Schumer argued that the renegotiated NAFTA presents a unique opportunity for the United States and Canada to come to an agreement to terminate provincial wine taxation and regulation schemes that discourage Canadians from buying North Country wines, undermine North Country wineries’ economic growth, and provide Canadian wineries with a major tax advantage, and called on the USTR to do everything possible to secure a level playing field with Canada for producers like Thousand Islands Winery.

The North Country’s Thousand Islands Seaway Wine Trail was established in 2007, and extends across 78 miles of the region. The Thousand Islands Seaway Wine Trail is home to nine member wineries with over a dozen locations in Jefferson County. Wineries on the trail include Thousand Islands Winery, Coyote Moon Winery & Vineyards, White Caps Winery, The Cape Winery, Northern Flow Vineyards, Venditti Vineyards, Otter Creek Winery, Yellow Barn Winery and Busted Grapes Winery. The neighboring St. Lawrence Wine Trail also has three member wineries including River Myst Winery, High Peaks Winery and Bella Brook Vineyard. These wineries have contributed greatly to the Thousands Islands-Seaway tourism industry, in which visitors spent over $540 million and supported over 9,000 jobs in 2017. Schumer said that these wineries’ contributions to this industry could be even higher without restrictive Canadian taxes on New York wine.

Schumer has long fought on behalf of Thousand Islands Winery, which is located on the Thousand Islands Wine Trail and produces roughly 50,000 gallons of wine annually. In 2015, when Thousand Islands Winery was looking to launch their new product, wine slushies, the winery’s plan required several steps of Alcohol and Tobacco Tax and Trade Bureau (TTB) approvals. When staffers at the agency were extremely unresponsive to Thousand Islands Winery, Schumer intervened and provided Thousand Islands winery with a point of contact at TTB, streamlining the process and helping them get through regulatory hurdles. Today, that exact product is sold all across the United States.

A copy of Schumer’s letter to USTR appears below.

Dear Ambassador Lighthizer,

I write today to bring to your attention to restrictive Canadian wine taxation policies that undermine economic growth in upstate New York and put New York wineries at a competitive disadvantage. As Congress will soon review the renegotiated North American Free Trade Agreement (NAFTA), I respectfully request that you seek commitments to eliminate wine trade barriers with Canada that will benefit New York wineries. The U.S. should seek a level playing field between U.S. and Canadian wineries.

Many wineries in upstate New York rely on sales to foreign tourists, but Canadian restrictions have limited U.S. sales to Canadian customers. U.S. residents returning from a short visit to Canada are permitted to bring a bottle of wine per person duty free into the United States and are only charged a small tax when importing to the U.S. after this limit. Canada allows no commensurate duty exemption for visits to the U.S. under 48 hours. In fact, wine purchased by Canadian residents returning from day or weekend travel to the U.S. is subject to a series of onerous federal and provincial taxes and fees. A visitor to a New York winery bringing wine into Ontario Canada has to pay Ontario taxes and fees that amount to 40 percent of the value wine for a day trip and 102 percent of the value if the wine is shipped, on top of a $0.62 federal Canadian tax per liter and a 13% Harmonized Sales Tax. These charges can easily add up to 130 percent of the retail value of the wine if it is shipped and 60 percent if it is brought back on a day trip – which means Canadian visitors, more often than not, come to taste New York wines but not to buy.  

The renegotiated NAFTA secured commitments from Canada in a side letter to remove onerous restrictions on the sale of U.S. wine in grocery stores in British Columbia. These commitments will primarily benefit West Coast wineries. However, similar restrictions in place in Ontario and Quebec, which are being investigated at the World Trade Organization, would not be removed through the renegotiated NAFTA. This means that East Coast wineries, like those in New York, will continue to face restrictions and high taxes in their major Canadian export markets, while their California competitors will have less restrictions.

I appreciate that you have raised these issue with your Canadian counterparts during NAFTA renegotiations. The renegotiated NAFTA presents a unique opportunity for the United States and Canada to come to an agreement to terminate provincial wine taxation and regulation schemes that discourage Canadians from buying N.Y. wines, undermine N.Y. wineries’ economic growth, and provide Canadian wineries with a huge advantage. Again, I request that you seek commitments to eliminate wine trade barriers with Canada and secure a level playing field with Canada for all U.S. wineries.

Thank you for your attention to this issue.

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