Spirit Drinks Trade Act - Questions and Answers

1. What is the Spirit Drinks Trade Act?
The Spirit Drinks Trade Act (SDTA) implements Canada's international trade commitments related to the use of spirit drink names from foreign countries. The SDTA makes it an offence to use the names of certain spirit drinks from other countries. For example, for a spirit drink to be sold as Grappa it must be exclusively produced in Italy.

The SDTA does provide exceptions for spirit drinks that have been blended or modified in accordance with Canadian laws and, for any registered trademark that was applied for before January 1, 1996. For example, a product may be blended or modified with an imported spirit drink as listed in the SDTA. In addition, the distilled product Ice Grappa is an example of an exception to the SDTA as this particular Canadian trade-mark was applied for in September 1995.

2. Why did Canada enact the Spirit Drinks Trade Act legislation?
The Spirit Drinks Trade Act was established to fulfill Canada's international trade commitment to recognize that certain spirit drink names are exclusive to their country of origin pursuant to the coming into force of the Canada-European Community wine and spirits agreement.

The benefit to Canada from the European Community Wine and Spirits Agreement is that Canada now receives protection and recognition for geographical indications of spirit drinks originating in Canada for Canadian Rye Whisky and Canadian Whisky in the legislation of importing countries. Such recognition protects these spirits products from being blended with other products, protects its prestige and enhances marketing efforts.

3. When did Canada make these international commitments regarding spirit drinks of foreign countries, and what was the overall process?
The Spirit Drinks Trade Act (SDTA) was established to implement Canada's bilateral agreement with the European Community on trade in wines and spirit drinks which was signed in September 2003. The Canadian government consulted stakeholders representing wineries, distilleries, organizations of producers and research groups, provincial and territorial governments, and liquor boards as part of the overall process prior to the creation of the SDTA. The consultations indicated that the Canadian wine and spirit industries did not oppose the phase out of generic names from the Trade-marks Act, and the stakeholders communicated their support of the mutually beneficial Canada-European Community wine and spirits agreement.

The SDTA legislation also includes measures relating to Canada's existing commitments under the North American Free Trade Agreement to protect such spirit drink names as Tequila from Mexico and Bourbon from the United States. Measures also include protection for Caribbean rum, which Canada committed to in the context of the CARIBCAN agreement with the Commonwealth Caribbean countries.

In addition, the SDTA also reflects Canada's Uruguay Round obligations related to the protection of spirit drink names such as Irish whisky, Scotch whisky, Cognac and Armagnac.

4. What foreign spirit drink names are protected under the Spirit Drinks Trade Act?
The following spirit drink names are protected under the Spirit Drinks Trade Act:
  • Grappa (Italy)
  • Grappa di Ticino (Ticino region of Switzerland)
  • Jägertee, Jagertee or Jagatee (Austria)
  • Korn or Kornbrand (Germany or Austria)
  • Ouzo (Greece)
  • Pacharán (Spain)
  • Scotch whisky (Scotland)
  • Irish whisky (Northern Ireland or the Republic of Ireland)
  • Armagnac brandy (Armagnac district of France)
  • Cognac brandy (Cognac district of France)
  • Tennessee whiskey (United States)
  • Bourbon whiskey (United States)
  • Tequila (Mexico)
  • Mezcal (Mexico)
  • Caribbean rum (Commonwealth Caribbean countries)
5. What Canadian spirit drink names are protected under the Canada-European Community Wine and Spirits Agreement?
The following Canadian spirit drink names are protected under the Canada-European Wine and Spirits Agreement:
  • Canadian Rye Whisky
  • Canadian Whisky
6. What do businesses need to do to comply with the Spirit Drinks Trade Act?
In order to comply with the Spirit Drinks Trade Act (SDTA), businesses must ensure they do not sell a product as a spirit drink using a spirit drink name that is protected under the SDTA except where it has been produced, distilled, or manufactured exclusively in the country that it originates from.

7. What are the roles of Agriculture and Agri-Food Canada, the Canada Revenue Agency and the Canada Border Services Agency?
The Minister of Agriculture and Agri-Food Canada is responsible for the Spirit Drinks Trade Act (SDTA). Under the SDTA, the Minister has designated certain officials of the Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA) as inspectors and analysts respectively for the purpose of administering and enforcing the SDTA. Excise duty officers with the CRA who presently conduct audits under the Excise Act, 2001 will carry out inspections under the SDTA, while CBSA analysts will carry out the analysis of samples as may be required in enforcing the SDTA. Officials of both organizations are well-positioned to undertake these responsibilities.

8. What is the penalty for violating the Spirit Drinks Trade Act?
The penalty upon summary conviction under the Spirit Drinks Trade Act is a fine not exceeding $50,000 or imprisonment for a term not exceeding six months, or both. A conviction upon indictment may result in a fine not exceeding $250,000 or imprisonment for a term not exceeding three years, or both.

As with other legislation, compliance is the aim and officials from Agriculture and Agri-Food Canada, Canada Revenue Agency and Canada Border Services Agency will work with the Canadian industry to achieve this goal.

9. Where can I get more information?
The full text of the Spirit Drinks Trade Act (SDTA) is available online at the Canada Justice Web site. You may wish to view the Spirit Drinks Trade Act compliance and enforcement policy. A list of regional excise duty offices is available in Excise Duty Memorandum 1.1.2, on the Canada Revenue Agency Web site. Personnel located at the CRA Regional Duty Offices would be able to provide information on compliance with the SDTA.
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