Wineries in West Bank Settlements

In 2017, scientist and wine enthusiast David Kattenburg noticed that his local Liquor Control Board of Ontario (LCBO) store carried wines with the label “Product of Israel.” Kattenburg was sure that the wines in question had been produced in wineries located in settlements in the West Bank.

Kattenburg complained to the CFIA, which is charged with regulating food safety and product labeling. He felt the label misled consumers, and, more significantly, was not in keeping with Canada’s position that settlements were illegal and not part of the state of Israel. Kattenburg’s complaint led to extensive hand-wringing within the CFIA — with input from Global Affairs Canada (GAC) — as to whether the “Product of Israel” label squared with the government’s foreign and trade policy positions toward Israel and the Palestinians.

Federal consumer protection laws such as the Food and Drugs Act and the Consumer Packaging and Labelling Act are clear that products cannot be labeled, packed, sold, or advertised in a false, misleading, or deceptive manner. Food and wine products made outside of Canada require that a country of origin be noted on the label. The CFIA considered both these stipulations and those of the Canada-Israel Free Trade Agreement (CIFTA).

In May 2017, trade and foreign policy officials advised the CFIA that the free trade agreement did not cover product labeling. The agency was advised to instead focus on domestic legislation, including the Food and Drug Act and the Consumer Packaging and Labelling Act, to determine the appropriate course of action.

In July 2017, the CFIA told the LCBO that the “Product of Israel” labels on the wines in question were not in accord with either federal consumer protection laws or the government’s stance on Israeli settlements. The CFIA provided instructions to the LCBO, which issued a directive on July 11, 2017, that wines produced in the Psagot and Shilo settlements would not be imported or sold.

The story should have ended there. But, according to Kattenburg and his lawyer, Dimitri Lascaris, a wave of pressure was brought to bear on the federal government, resulting in a swift reversal of the initial decision. The about-face was announced by the CFIA on July 13, 2017, just two days after the original decision.

The agency claimed, in essence, that it had not read CIFTA’s small print. CIFTA, originally ratified in 1997, deems any territory where Israeli customs apply to be covered by the agreement. The 1994 Paris Protocol on Economic Relations ushered in a de facto trade agreement between Israel and the Palestinians. Israeli import and customs laws are enforced in the West Bank and Gaza Strip. So, the definition of “territory” in the agreement did cover the wines in question after all.

The “Product of Israel” labels were thus determined to be appropriate. In response, Kattenburg filed a freedom of information request. He learned that that trade specialists were clear on the question of what labels should appear on wine bottles — labels are not a trade issue over which CIFTA has any authority.

“False, Misleading and Deceptive”

Kattenburg and Lascaris claim that the CFIA’s about-face was influenced by political pressure. On July 12, 2017, the day before the CFIA made its reversal, B’Nai B’rith issued a statement stating that they had

received a lot of information on this matter from multiple sources and officials during the past twenty-four hours as we were advocating on behalf of the community . . . We can say now that we are expecting this disturbing decision to be corrected in short order.

When asked to comment on whether outside pressure affected the decision, the CFIA claimed that it “maintains its regulatory independence from all external stakeholders. Although there was an allegation of political interference raised by the applicant, no such argument was made during the court proceedings.”

Kattenburg appealed CFIA’s reversal to the agency’s internal Complaints and Appeals Office (CAO), which upheld the decision that CIFTA justified the use of “Product of Israel” labels. Unsatisfied with this response, Kattenburg filed an application for judicial review of the decision in October 2017.

Because Parliament has granted agencies like the CFIA the authority to administer and apply laws governing their work, courts are leery about overturning their decisions. They will only do so in cases that are unreasonable or contain an obvious error of law. But this deference comes with the responsibility to demonstrate a “culture of justification,” meaning that decisions must be transparent and reasonable. Kattenburg argued that the CFIA’s reversal of its original decision was unreasonable and contrary to federal product labeling laws as well as international law.

In July 2019, the Federal Court ruled that the “Product of Israel” labels were “false, misleading and deceptive.” Further, the agency’s reliance on CIFTA to justify its decision was unfounded — CIFTA has no bearing on product labeling. The effect of the decision was to quash the CAO’s recommendation and return the matter to the CFIA for another decision.

The attorney general of Canada appealed this ruling, which led to the Federal Court of Appeal’s decision in May 2021. In the words of the court, the CFIA’s justification was “totally lacking.” The appeals court sent the matter back to the CFIA, yet again.

This decision set the stage for both Kattenburg and one of the wineries in question — Psagot Wineries — to make their cases to the CFIA. While the agency isn’t bound by the federal court’s 2019 ruling, there is likely to be greater scrutiny and interest in the CFIA’s decision this time around.

Trade Agreement Versus Foreign Policy

If the CFIA keeps the “Product of Israel” labels, what does that say about Canada’s position on settlements in the occupied Palestinian territories? For Kattenburg, it means that the federal government is publicly condemning the existence of the settlements while conferring tariff advantages on products produced in those very settlements.

In effect, a trade agreement would trump long-standing foreign policy. This, in turn, would confer a degree of legitimacy on the settlements that is contrary to Canada’s stated commitments under international law. Canada has ratified United Nations Security Council Resolution 2334, which calls on signatories to differentiate “in their relevant dealings” between the territory of the state of Israel and the territories occupied since 1967. These very concerns were raised by the federal New Democratic Party (NDP) during the debate around Bill C-85, which the Liberal government introduced in 2019 to update and amend CIFTA.

According to Kattenburg, broader political speech rights could be in jeopardy if these labels are allowed to stand. The ability to take part in a boycott is contingent on having access to accurate product information. Accurate product labeling is necessary to inform consumers about things such as country of origin, ingredients, and manufacturing details.

If labels are misleading, a consumer’s ability to make conscientious purchasing decisions is compromised. One of the CFIA’s responsibilities is to guard against misinformation, thereby safeguarding the health and well-being of Canadians — and upholding a constitutional right to expression, in its many forms.

The question of what labels will appear on wines produced in West Bank settlements is far from over. It is entirely possible, if either party isn’t satisfied with the CFIA’s second attempt, that the issue will be relitigated yet again. But the recent court decision has served to focus attention on the interplay between Canada’s foreign policy, trade policy, and commitment to international law when it comes to Israeli settlements. It also reveals an urgent need for the federal government to revisit and clarify the scope and application of its commercial trade agreement with Israel. Ottawa must do better in abiding by its own foreign policy pronouncements and obligations under international law.