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B.C. government will no longer be allowed to block U.S. wines from grocery store shelves

Click to play video 'B.C.’s wine industry expressing concern that the new trilateral free trade agreement may hurt it' B.C.’s wine industry expressing concern that the new trilateral free trade agreement may hurt it

Grocery store shelves lined only with B.C.-made wines are soon going to look different. As part of the revised North American Free Trade Agreement, Canada agreed to end a policy that allows grocery stores to stock only B.C. wines.

“Specifically, B.C. shall eliminate the measures which allow only B.C. wine to be sold on regular grocery store shelves while imported wine may be sold in grocery stores only through a so-called ‘store within a store,’ and such contested measures shall not be replicated,” reads the letter from United States Trade Representative Robert Lighthizer.

According to the letter, the practice must come to an end by Nov. 1, 2019.

In a response letter, Canadian Global Affairs Minister Chrystia Freeland said the Canadian government agrees with the change.

The B.C. government still needs to negotiate with the federal government on how the change will work.

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WATCH: What does the new trade deal mean for B.C.?

Click to play video 'What does the new U.S./Canada/Mexico trade deal mean for B.C.?' What does the new U.S./Canada/Mexico trade deal mean for B.C.?
What does the new U.S./Canada/Mexico trade deal mean for B.C.?

The previous provincial government announced in 2015 special licences that allowed only B.C. wines on grocery store shelves as part of the modernization of the liquor laws.

Currently there are 29 grocery stores in the province that only sell B.C. wines.

“It will move likely in the direction of it will no longer be possible to exclusively have B.C.-only wines on grocery store shelves,” B.C. Trade Minister Bruce Ralston said. “The details of that will be worked out between the parties. There is time to negotiate and implement the policy.

“We have done everything we can to support the industry but even the industry recognized that this measure, as nice as it was for the B.C. industry, was being challenged and a day of reckoning may come.”

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WATCH: BC Wine Institute says California group misunderstood wine sale changes

The issue of B.C.-only wines in grocery stores has long been a matter of contention for the U.S. government. In May, the Trump administration requested that the World Trade Organization set up a dispute settlement panel to rule on its claim of Canada’s “discriminatory” trade practices involving U.S. wine.

BC Wine Institute CEO Miles Prodan says he is disappointed, but not surprised, about the side deal.

“B.C. wineries have a challenge to grow and make wine and the access to consumers is really important and these licences were really important for that and we hope to continue that as best we can,” Prodan said.

READ MORE: B.C. wine now available in Tsawwassen Save-On-Foods

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Part of the negotiations that will have to take place between the Canadian government and B.C. is whether the province will require grocery stores that hold the special licences to sell non-B.C. wines or whether the power to decide will be in the hands of the retailer.

“It might be a term and condition of a grocery store licence that they sell a variety of international products,” said Dentons lawyer and wine law expert Shea Coulson. “I would suspect that that would be a demand of necessity by U.S. industry groups.

“Practically speaking if B.C. only permits U.S. wines in grocery stores then the court challenge will just be taken up by Australia, etc. and the EU. The practical solution to me is that it will have to open up to international wine.”

The new trade deal has also had a huge impact on the loonie. The Canadian dollar soared to a four-month high after news that the U.S. and Canada reached a deal to replace NAFTA. The loonie hit 78 cents U.S.

What analysts are trying to figure out is whether it was just a short-term rally for the dollar.

WATCH: Impact of the new trade deal on the Canadian dollar

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Impact of the new trade deal on the Canadian dollar

“There is some support for the loonie but the factors still remain we are a long way from freer trade. It’s sort of NAFTA 2.0 with no major changes so maybe this rally is short-lived for the Canadian dollar” said Robert Levy, Corus business analyst.

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If you shop online the new trade deal will save you money. Currently, if you ship an item from the U.S. to Canada worth more than $20 it can be subject to tax and duties. That amount hasn’t changed since 1985.

Under the new deal, items worth at least $150 would be subject to duties. This does depend on the type of item and where it was made.

For example, if you shipped a pair of shoes to yourself and they came out to C$100. according to a CBSA calculator taxes and duty come out to an extra $34.40. Under the new deal you would pay just $12 in taxes.

— With files from Grace Ke