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AGREEMENT

between the European Economic Community and Canada concerning trade and commerce in alcoholic beverages

THE EUROPEAN ECONOMIC COMMUNITY AND

THE GOVERNMENT OF CANADA (hereinafter referred to as 'the parties'),

TAKING INTO ACCOUNT their respective rights and obligations under the General Agreement on Tariffs and Trade with respect to the treatment of goods, and particularly alcoholic beverages, originating in the territory of the other party;

RECALLING the findings and conclusions of the GATT Panel on Import, Distribution and Sale of Alcoholic Drinks by Canadian Provincial Marketing Agencies;

DESIRING to resolve their differences over trade in the alcoholic beverage sector and to ensure respect for international legal obligations while acknowledging the temporary need for structural adjustment;

ENDEAVOURING to ensure that measures that are currently benefiting the sale of alcoholic beverages originating in the European Economic Community are not made more restrictive,

HAVE AGREED AS FOLLOWS:

Article 1

Definitions

In this Agreement:

'basic price' means the landed cost of alcoholic beverages, which may include the cost of service, incurred by Canadian competent authorities;

'blended wine' means wine made in Ontario and British Columbia that contains less than 100 % but no less than 30 % Canadian grapes or grape product;

'100 % Canadian wine' means wine that is made entirely from Canadian grapes or grape product in British Columbia, Nova Scotia or Ontario and that is sold in the province of origin;

'Canadian competent authority' means any government or commission, board or other governmental agency that is authorized by law to control the sale of distilled spirits, wine and beer;

'cost of service' means the audited expenses incident to the purchase, storage, delivery to sales points, handling and sale of alcoholic beverages;

'the Community' means 'the European Economic Community';

'delisting' means a revocation of a listing;

'distilled spirits' means spirits, liqueurs and other spirituous beverages;

'distribution' means access to the points of sale for alcoholic beverages other than outlets of the Canadian competent authorities;

'listing' means a decision by a Canadian competent authority whether brands or varieties of distilled spirits, wines and beer may be sold in its outlets;

'mark-up' means the amount added to a base price and to applicable duties and taxes which results in the establishment of a retail price;

'mark-up differential' means the difference between the mark-up on a product of the Community and the mark-up on the like product of Canada other than additional costs of service necessarily associated with imported products of the Community;

'measure' includes any law, regulation, procedure, requirement or practice; 'national treatment' means treatment by a Canadian competent authority of a product of the Community that is no less favourable than the most favourable treatment accorded by such competent authority to any like product of Canada;

'Ontario brandy' means brandy that is produced in Ontario from Ontario grapes or grape product;

'product of Canada' means distilled spirits, wine or beer respectively that is produced, bottled or packaged in Canada;

'product of the Community' means distilled spirits, wine or beer respectively that is produced in the customs territory of the Community.

Article 2

Distilled spirits

1. Canadian competent authorities shall accord national treatment to distilled spirits that are the product of the Community in respect of measures affecting the listing, delisting, distribution and mark-up of such products.

2. Notwithstanding subparagraph 1:

(a) the competent authority in Ontario may accord a preference to Ontario brandy in respect of the mark-up of such brandy, for the time and in the measure provided for in Annex D;

(b) Canadian competent authorities may limit sales by a distillery on its premises to distilled spirits produced there.

Article 3

Beer

Canadian competent authorities:

(a) shall accord national treatment to beer that is the product of the Community in respect of measures affecting the listing or delisting of such beer;

(b) shall not increase any mark-up differential that exists on 1 December 1988 between beer that is the product of the Community and beer that is the product of Canada.

Article 4

Wine

1. Canadian competent authorities shall accord national treatment to wine that is the product of the Community in respect of measures affecting the listing, delisting and distribution of such wine.

2. Notwithstanding subparagraph 1, the appropriate Canadian competent authority may:

(a) limit sales by a winery on its premises to wines produced there;

(b) require private wine store outlets in Ontario to sell only wines produced by Canadian wineries;

(c) require that wine sold in grocery stores in Quebec under applicable regulations be bottled in Quebec, provided that alternative outlets are provided in Quebec for the sale of wine that is the product of the Community, whether or not such wine is bottled in Quebec.

3. Canadian competent authorities shall eliminate the mark-up differential between wine that is the product of the Community and wine that is the product of Canada in accordance with the schedules in Annexes A, B and C. Any increase in the mark-up differential after 22 March 1988 shall be eliminated before the scheduled reductions take place. Article 5

Listing and delisting measures

1. Any measure of Canadian competent authorities relating to the listing or delisting of products of the Community shall be:

(a) non-discriminatory;

(b) based on normal commercial considerations;

(c) transparent; and not create disguised barriers to trade; and be

(d) published and made available to persons with an interest in the trade and listing or decisions to delist such products.

2. Canadian competent authorities shall, in respect of applications for listing of or decisions to delist products of the Community, provide:

(a) prompt, written notification of decisions to applicants;

(b) written reasons for those decisions;

(c) administrative appeal procedures to ensure prompt, objective reviews of a decision to refuse to list or a decision to delist.

Article 6

Consultations

The parties shall monitor the implementation of the Agreement and shall consult, promptly at either's request, concerning any matter relating to its interpretation and implementation. This will include consultations on measures that are currently benefiting the sale of the product of the Community.

Article 7

Relation to GATT

The parties retain their rights and obligations under the General Agreement on Tariffs and Trade.

Article 8

Duration

This Agreement shall enter into force on signature.

This Agreement shall be of indefinite duration. It may be terminated by either party on 30 days' notice.

Hecho en doble ejemplar en Bruselas, el veintiocho de febrero de mil novecientos ochenta y nueve.

Udfaerdiget i to eksemplarer i Bruxelles den otteogtyvende februar nitten hundrede og niofirs.

Geschehen zu Bruessel am achtundzwanzigsten Februar neunzehnhundertneunundachtzig in zwei Urschriften.

Égine se dýo antítypa stis Vryxélles, tin eikostí ogdói Fevroyaríoy chília enniakósia ogdónta ennéa.

Done in duplicate at Brussels this twenty-eighth day of February in the year one thousand nine hundred and eighty-nine.

Fait en double exemplaire à Bruxelles, le vingt-huit février mille neuf cent quatre-vingt neuf.

Fatto in duplice esemplare a Bruxelles, il ventotto febbraio millenovecentottantanove.

Gedaan in tweevoud, te Brussel, op achtentwintig februari negentienhonderd negenenachtig.

Feito em duplo exemplar em Bruxelas, aos vinte e oito de Fevereiro de mil novecentos e oitenta e nove.

Por el Consejo de las Comunidades Europeas

For Raadet for De Europaeiske Faellesskaber

Fuer den Rat der Europaeischen Gemeinschaften

Gia to Symvoýlio ton Evropaïkón Koinotíton

For the Council of the European Communities

Pour le Conseil des Communautés européennes

Per il Consiglio delle Comunità europee

Pelo Conselho das Comunidades Europeias

Por el Gobierno de Canadá

For Canadas regering

Fuer die Regierung Canadas

Gia tin kyvérnisi toy Kanadá

For the Government of Canada

Pour le gouvernement du Canada

Per il governo del Canada

Voor de Regering van Canada

Pelo Governo do Canadá

ANNEX A

1. Except as otherwise provided in Annexes B and C, Canadian competent authorities shall eliminate, in accordance with Article 4 (3), the mark-up differential that exists between wine that is the product of the Community and wine that is the product of Canada in accordance with the following schedule:

(a) on a date no later than 1 April 1989, 25 % of the differential;

(b) on 1 January 1990, 25 % of the differential;

(c) on the first day of January of each year from 1991 until 1995 inclusive, 10 % of the differential.

2. Nothing in this Agreement shall prevent Canadian competent authorities from eliminating the differential more expeditiously than provided for in the schedule in paragraph 1.

ANNEX B

The Canadian competent authorities in Ontario and British Colombia shall reduce the mark-up differential between blended wine and wine that is the product of the Community in accordance with the following schedule:

(a) on a date that is no later than 1 April 1989, 19 % of the differential;

(b) on 1 January 1990, 19 % of the differential;

(c) on the first day of January of each year from 1991 until 1995 inclusive, 12,4 % of the differential.

ANNEX C

Canadian competent authorities in British Colombia, Nova Scotia and Ontario shall reduce the mark-up differential that exists between 100 % Canadian wine and wine that is the product of the Community in accordance with the following schedule:

(a) on a date that is no later than 1 April 1989, 10 % of the differential;

(b) on the first day of January of each year from 1990 until 1998, 10 % of the differential.

ANNEX D

The Canadian competent authority in Ontario shall eliminate the mark-up differential between Ontario brandy and the like product of the Community in accordance with the following schedule:

(a) on a date no later than 1 April 1989, 20 % of the differential;

(b) on the first day of January of each year from 1990 until 1993 inclusive, 20 % of the differential.

EXCHANGES OF LETTERS

Letter No 1

Brussels, 28 February 1989

Sir,

I refer to the Agreement between Canada and the European Economic Community concerning Trade and Commerce in Alcoholic Beverages that was signed today.

I wish to confirm that the Prime Minister of Canada and the Premiers of the Provinces of Canada have agreed to initiate negotiations, involving the federal and provincial governments, concerning the reduction or elimination of interprovincial barriers to trade in alcoholic beverages, including beer.

Canada will bring measures on pricing of beer into conformity with its GATT obligations following a successful conclusion of this process.

Please accept, Sir, the assurance of my highest consideration.

For the Government of Canada

Letter No 2

Brussels, 28 February 1989

Sir,

I acknowledge receipt of your letter of today's date with regard to mark-up differentials on beer.

I note it is the intention of the Government of Canada to bring measures on pricing of beer into confirmity with its GATT obligations.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the Council

of the European Communities

Letter No 1

Brussels, 28 February 1989

Sir,

In the context of the bilateral settlement of the disputes between Canada and the Community regarding the practices of provincial liquor boards in Canada which we have signed today, I hereby confirm the Community's willingness to enter into negotiations with Canada on the reciprocal supervision and protection of spirituous beverages appellations. I note that the Government of Canada is also willing to enter into parallel negotiations on reciprocal recognition of origin appelations for wine and that we agree to start those negotiations in the first quarter of 1989.

I would appreciate your confirmation of the Government of Canada's agreement with the terms of this letter.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the

Council of the European Communities

Letter No 2

Brussels, 28 February 1989

Sir,

Thank you for your letter of today's date concerning the Community's willingness to enter into negotiations on the reciprocal supervision and protection of spirituous beverages appellations and on reciprocal recognition of original appellations for wine. I hereby confirm the Government of Canada's willingness to enter into the proposed negotiations.

Please accept, Sir, the assurance of my highest consideration.

For the Government of Canada