Whine and Cheese

Whine and Cheese
Profile photo of David Howden

First it was Canadian dairy producers who were upset with the proposed Canada-EU trade deal. Now it turns out Ontario’s wine producers are also riled up.

The proposed deal will make it cheaper for many goods to trade across the Atlantic. Patrick Gedge, president and CEO of the Winery and Grower Alliance of Ontario notes that “[w]e are highly concerned that this will just put us [Ontario wine producers] at another competitive disadvantage.” Europe is the world’s largest wine producing region and home to some of the best known vintages, as well as very good table varieties.

What Gedge needs to understand is that Canadian wines are already at a competitive disadvantage. The climate, history and knowhow are just not available to the same extent that they are on the old continent. When he speaks of free trade as a source of competitive disadvantage he needs to realize that it is only removing an artificial advantage which has been imposed on the market through Canada’s import laws concerning wine, and the LCBO’s unfair tax policies regarding stocking foreign products.

Writing for the Globe and Mail this morning, Bill Curry notes that Ontario consumers have nothing but upside on this proposed deal. But for winemakers, “the cheaper competition could be bad for business.”

That’s how this game works. Better producers put less efficient producers out of business. With this uprising from the Wine lobby I’m surprised that a banana lobby hasn’t taken root to press ahead for trade sanctions to give their production in Canada a leg up on those imposing Central Americans.

Of course, politicians never see free trade as the positive sum game that it is. It’s not that better and lower cost wine from the EU will flood into Canada and we will lose while they win. It’s that all Canadians who drink wine will have a couple more bucks at the end of the day to spend on other things. Maybe, for example, more investment will be funded to help this country grow along. The cost of not allowing free trade is that alternative that will exist by forcing people to pay more for the imported good. In this case it could be our future at stake!

Of course it gets better yet. Ontario Economic Development Minister Eric Hoskins has said that “[w]e’ve indicated that we would require the federal government to also provide compensation in this regard.”

No we’re dealing with a situation where if the trade deal goes through, Ontario wine producers will demand some type of federal assistance. So let me get this straight, Mr. Hoskins: you want some beer swilling taxpayer in Newfoundland to help support the Ontario wine industry because it can’t hack it on its own? Where does the madness end?

Free trade rests on two simple premises. Some places are comparatively better at doing some things than other places. We can easily see that bananas in Canada don’t make sense, but wine is not so far off. Second, trade makes everyone better off. By allowing customers to buy the best and cheapest options money is freed up for other activities instead of supporting an inefficient industry.

It’s bad enough that there were some concessions on cheese and beef to the trade deal. It’s high time we cut some of this whine out of it, too.

Profile photo of David Howden

David Howden is Chair of the Department of Business and Economics, and professor of economics at St. Louis University, at its Madrid Campus, Academic Vice President of the Ludwig von Mises Institute of Canada, and winner of the Mises Institute's Douglas E. French Prize. Send him mail.

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