Alberta challenges ruling that says its beer tax violates trade rules

EDMONTON — Alberta’s beer war is opening on a new front.

The government says it will appeal a trade panel ruling that found the province’s incentive for Alberta brewers violates interprovincial free-trade obligations.

“We stand firmly with Alberta small brewers. We will not abandon them now,” Finance Minister Joe Ceci said Tuesday at the legislature.

“There have been 18 small breweries opened up in the year since the program started. It’s doing what it’s intended to do. Jobs are happening.”

Three weeks ago, a three-member dispute resolution panel of the Agreement on Internal Trade determined that the incentive violates trade rules agreed upon by all provinces and the federal government.

The challenge was filed by Artisan Ales, a Calgary-based importer of beer from places such as Quebec and Europe.

Artisan Ales co-owner Mike Tessier said he was not surprised Ceci has chosen to appeal. He said the province can’t give ground when it is also facing court challenges from two out-of province brewers over the program.

“They more or less have to do this,” Tessier said in an interview.

The price changes have damaged his business and hurt other distributors, he said.

“They’ve had the rug ripped out from them overnight.”

Ceci should have pursued options to help small brewers in a trade-compliant way without inflicting collateral damage on others in the industry, Tessier suggested.

Ric McIver, finance critic for the United Conservative Party, said Ceci needs to accept the trade ruling and fix the incentive program.

McIver said the party wants businesses, including small brewers, to thrive but “we do not, however, agree that violating trade agreements with protectionist measures does anything to help these businesses thrive.”

The dispute began almost two years ago when Ceci announced changes to government markups on beer sales. Until then, beer producers had been charged a markup on a sliding scale. Large producers paid the maximum of $1.25 a litre.

In October 2015, Alberta kept the sliding scale for provinces in the New West Partnership at that time — Saskatchewan, Alberta and British Columbia — but made all other brewers pay the maximum $1.25 regardless of how much or how little they sold.

Opponents argued this was a violation of free trade and Alberta ultimately acquiesced. A year ago, it changed the beer rules again.

This time, it made all beer producers in Alberta and elsewhere pay the same $1.25 a litre. But it also introduced grants to help Alberta producers expand their businesses.

Artisan Ales filed a complaint with the internal trade panel. The brewer argued the incentive program and the one-price markup were effectively retaining the previous approach through the back door.

Alberta argued that the $1.25 across-the-board markup and the grants are two different things and are both allowed under interprovincial free-trade rules.

In a 2-1 decision, the panel agreed with Artisan.

Ceci declined to elaborate on the legal arguments the government will use to try to overturn the decision when the appeal goes before another panel.

Alberta has the most open liquor market in Canada — vendors simply have to fill out a form to sell. Access to shelves in other provinces is controlled by liquor boards.

Ceci said he is watching ongoing talks among provinces on revising liquor trade rules under the new Canadian Free Trade Agreement.

“I’m certainly hopeful that will bring some better co-operation amongst all provinces.”

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