Canadian province to defend wine industry against U.S. trade action

VANCOUVER (Reuters) - The Canadian province of British Columbia said on Wednesday it would defend its wine industry against a trade challenge from the United States, saying it was confident it was not breaking any international trade rules.

Earlier Wednesday, the United States said it started action against Canada at the World Trade Organization, accusing British Columbia of discriminating against U.S. and other imported wine by allowing only local wine to be sold in grocery stores.

"Trade agreements such as NAFTA allow for a number of private wine outlets that sell only B.C. wine," Shirley Bond, British Columbia's minister for jobs, tourism and skills training said in a statement.

"We are confident in the approach we have taken," she said.

Grocery stores have become a growing retail channel for wine sales in British Columbia since the province changed its rules in April 2015 to expand wine distribution. Only retailers who won licenses in a provincial auction are allowed to sell wine.

The spat coincides with growing uncertainty in trade relations between Canada and the United States, its biggest trading partner.

U.S. President-elect Donald Trump has promised to either renegotiate or scrap the North American Free Trade Agreement and overhaul trade policy after he takes office on Jan. 20.

"The discriminatory regulations implemented by British Columbia intentionally undermine free and fair competition, and appear to breach Canada’s commitments as a WTO member," United States Trade Representative Michael Froman said in a statement.

"Canada and all Canadian provinces... must play by the rules, he said.

(Reporting by Nicole Mordant in Vancouver)