A trade panel has ordered the province to amend or repeal its Alberta Small Brewers Development (ASBD) Program after determining the program violates internal free trade agreements.
The May 11 ruling from an Agreement on Internal Trade (AIT) panel said the program provided Albertan brewers with a competitive advantage over brewers in other provinces in a way that violated the AIT. The province has six months as of May 29 to repeal or amend the ASBD Program — which provides Albertan breweries with a grant to offset the cost of a $1.25 per litre beer markup — to bring it into AIT compliance.
"The ASBD Program is based on market factors that have a direct effect on the provincial market for beer and internal trade in beer. The ASBD Program provides a direct incentive to produce beer in Alberta, thereby putting producers of beer from other provinces at a competitive disadvantage in the market for beer in Alberta," the ruling said.
Alberta treasury board president and Minister of Finance Joe Ceci said the government is considering its options to respond to the ruling.
"We have the backs of Alberta brewers and this decision will not change that," Ceci said in an emailed statement. "We're currently reviewing the decision in greater detail considering options that will continue to support our economic diversification efforts while respecting our trade commitments. Alberta maintains the most open liquor market in the country with over 4,000 beer products available for sale and that will not change.”
The ruling is in regards to an appeal launched by the provincial government after another AIT panel determined July 28, 2017 that the ASBD Program was not in compliance with the agreement and caused injury to Artisan Ales, the main complainant for the case.
Artisan Ales is a Calgary-based seller of imported beers. Its president Mike Tessier said the $1.25 per litre beer markup had a negative impact on his business, causing some of his six-pack beer products to cost over $20.
"When a person gets to a till with a $20 bill and they can't buy a six pack, they're taking that six pack back. My sales, as expected, slowed right down," Tessier said in an interview. "I thought it was wrong, I knew it was wrong, two tribunals have told me it was wrong."
Tessier said he wants fairness for beer sellers in Alberta.
"I just want fairness across the board. Basic rules of every trade agreement is you can't tax on origin and that's what they've done," Tessier said.
The Alberta government also faces Constitutional legal challenges on its ASBD Program from Ontario-based Steam Whistle Brewing and Saskatchewan-based Great Western Brewing.
Steam Whistle Brewing director of marketing Tim McLaughlin said he expects a judge's ruling on the case within the next six weeks.
Alberta Small Brewers Association (ASBA) president Neil Herbst said he was disappointed with AIT trade panel ruling, adding the ASBD Program has helped the association grow from 11 members in 2013 to 65 members in 2018.
"It kickstarted the industry, I think to a large degree," Herbst said in an interview.
A January 2018 provincial press release about the ASBD Program said over the past year, it had created 780 new jobs in the small brewing industry and the addition of 513 new beer products made in Alberta.
Herbst said Alberta brewers exporting product out of province run up against all kinds of non-tariff hurdles, which the ASBD Program helped balance out.
"Come up with any barrier that would be a non-tariff barrier and it's probably in use somewhere," he said.
The ASBA is optimistic the province will find a way to continue to support Albertan brewers, Herbst added.
"We're pretty optimistic that the province will come up with a new program that continues to support Alberta brewers," Herbst said. " The exposure of Alberta brewers has been very beneficial to the province."
