LexSage

The CFIA Reverses Its Decision:
Wine Produced In The West Bank
CAN Be Labelled “Product of Israel”

July 13, 2017
Authored by Cyndee Todgham Cherniak

On July 13, 2017, early in the morning, we posted an article entitled “The Canadian Food Inspection Agency Asks For Israeli Wines To Be Removed From Ontario Shelves".  We are pleased to confirm that the CFIA has reversed its decision that wines produced from grapes grown in the West Bank and fermented and produced in the West Bank should not be labelled “Produced in Israel”.  I am not saying that Canada-US Blog made the difference – but, I hope that we did.

Yesterday, we raised questions about whether the Government of Canada was “planning to deny Canada-Israel Free Trade Agreement preferential tariff treatment to goods manufactured in the Golan Heights, the West Bank, East Jerusalem and the Gaza Strip”.  On July 13, 2017 (after our blog post was public), the CFIA put the following statement on their web-site reversing their earlier decision:

“Product of Israel” Wine Labelling
The Canadian Food Inspection Agency (CFIA) regrets the outcome of the wine labelling assessment which led to the Liquor Control Board of Ontario’s (LCBO) response regarding products from two wineries labelled as “Product of Israel”.

In our assessment, we did not fully consider the Canada-Israel Free Trade Agreement (CIFTA).

Further clarification of the CIFTA (Article 1.4.1b) indicates that these wines adhere to the Agreement and therefore we can confirm that the products in question can be sold as currently labelled.

The CFIA will be following up with the LCBO to correct our original response.”

The Canada-Israel Free Trade Agreement does provide the answer and the CFIA position was not consistent with the free trade agreement.  The Preamble states:

“Preamble
The Government of the State of Israel and the Government of Canada:

• Desiring to strengthen their economic relations and to promote economic development;
• Wishing to create a framework for promoting investment and cooperation;
• Resolving to foster the development of their trade with due regard to fair conditions of competition;
• Recalling the mutual interest of the Government of the State of Israel and the Government of Canada in reinforcement of the multilateral trading system as reflected in the WTO;
• Recalling that the Government of Canada and the Government of the State of Israel entered into a Memorandum of Understanding on September 27, 1976 which established a Joint Economic Commission, which was continued under a Memorandum of Understanding on Economic Cooperation entered into on August 5, 1993;
• Wishing to establish a free trade area between the two countries through the removal of trade barriers;
• Declaring their readiness to explore other possibilities for extending their economic relations to other fields not covered by this Agreement;
• Have agreed as follows:” (Emphasis Added)

Article 1.4 of the Canada Israel Free Trade Agreement (referred to by the CFIA in their reversal) states:

“Article 1.4: Definitions of General Application
1. For the purposes of this Agreement, unless otherwise specified:

• enterprise means any entity constituted or organized under applicable law, whether or not for profit, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association;
• good of a Party means a domestic good as this is understood in the GATT 1994 or such a good as the Parties may agree, and includes an originating good of that Party;
• Harmonized System means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes, as adopted and implemented by the Parties in their respective tariff laws;
• originating good or material means a good or material that qualifies as originating under Chapter Three;
• person means a natural person or an enterprise; and
• territory means:

(a) with respect to Canada the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources;

(b) with respect to Israel the territory where its customs laws are applied;” (Emphasis Added)

The State of Israel includes the Golan Heights, the West Bank, East Jerusalem and the Gaza Strip.  Israel’s customs laws are applied to the Golan Heights, the West Bank, East Jerusalem and the Gaza Strip.  This means that wine wholly produced in the West Bank from grapes grown in the West Bank would satisfy the Canada-Israel Free Trade Agreement rules of origin.  The wine may be labelled “Produced in Israel” for customs purposes.

This is an unfortunate situation where one government body (the CFIA) made a decision that did not consider all the relevant facts.  The CFIA made a decision that goods were mislabeled without reviewing the Canada-Israel Free Trade Agreement or asking the Canada Border Services Agency, Global Affairs Canada, the Competition Bureau or other federal government bodies responsible for imports, trade or labeling, for their input.  Canadian importers of products from Israel will need to speak up when similar errors are made at the bureaucratic level (whether intentional or unintentional).

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or by email at cyndee@lexsage.com.