The US Agriculture Secretary, Tom Vilsack, was in Brussels this week, among other things to have lunch with EU Agriculture Ministers during their monthly Council meeting. He also took the opportunity to have a discussion with Commissioner Ciolos on some of the agricultural issues that are proving difficult to resolve in the ongoing negotiations on the US-EU Transatlantic Trade and Investment Partnership (TTIP) free trade agreement.
One of these issues is the EU demand that the US should recognise and protect the EU’s list of geographical indications (GIs). Geographical Indications are defined in the WTO as “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin”. The EU recognises two types of GIs for foodstuffs – Protected Designation of Origin and Protected Geographical Indication – and similar categories for wines and spirits.
As of 2012, around 1065 agricultural and foodstuff GIs, some 1561 wine PDO/PGI and 325 spirit GIs have been registered in the EU (the great majority of these are EU names although the register is also open to third countries). Registered foodstuff names are mostly names of fruit, vegetables and cereals (almost 30%) and of cheeses (almost 20%). The other main categories of products concerned are meat and meat products (around 12.5% each) and oils, mostly olive oils (about 10%). More than 80% of GIs are registered in 6 member states: Italy, France, Spain, Greece, Portugal and Germany.
The importance of this issue in trade negotiations is that the EU recognises it is unlikely to be competitive in the production of basic agricultural commodities but that its long culinary heritage has created a number of premium products which are valued by consumers in the marketplace. Although these product names are protected on the EU market, the EU also wants to have protection for these GIs on international markets.
A 2012 study for the Commission estimated the value of GI products in 2010 at €54.3 billion, of which over half was due to wines. This corresponds to around 6% of the output of the EU food and drink industry. The value of agricultural and foodstuff GIs was €15.8 billion in that year.
The study estimated that exports of GI products in 2010 were €11.5 billion, representing 15% of all extra-EU exports of food and beverages. Again, half of this represents wine and another 40% spirits, and exports of agricultural and food GIs accounted for the remaining 9%. The US was the single largest market for the EU’s GI products, and GIs accounted for 30% of all US imports of food and beverages from the EU. However, export values are concentrated in a small number of products: champagne and cognac from France; Scotch whisky from the United Kingdom; and Grana Padano and Parmigiano Reggiano from Italy.
The EU’s negotiating objectives on GIs
GIs are protected under the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) but at a lower level than in the EU. It is necessary to show evidence of consumer confusion to prevent the use of a GI term. The Commission notes that this may be very difficult when the true origin is indicated (for instance “Australian Feta”), when the GI term is accompanied by expressions such as “like”, “kind”, “style”, etc. (for instance ” Prosciutto Parma style”), or when the GI is used in translation.
Wine and spirit GIs are given a higher level of protection under TRIPS. Subject to a number of exceptions, they have to be protected even if misuse would not cause the public to be misled for example if the true origin is indicated. Protection against use in translation is also automatic and objective, and use of expressions such as “like”, “kind”, etc. is also prevented.
The EU has raised the possibility of extending the higher level of protection beyond wines and spirits during the Doha Round of multilateral trade negotiations, but has been strongly rebuffed by other WTO members including the US who reject this approach. As long as TRIPS does not provide a satisfactory level of protection for the EU’s GIs, it sees bilateral FTAs as a way to achieve progress on its goals. DG Trade has a useful summary of the EU’s position on GI’s in international trade negotiations on its website.
US-EU differences in protecting GIs
It is important to underline that the US does recognise and protect geographical indications, Examples of geographical indications from the United States include: “Florida” for oranges; “Idaho” for potatoes; and “Washington State” for apples.
However, the US protects GIs through its trademark regime which means there are a number of differences with the EU approach. GIs can be protected as trademarks, collective marks or certification marks within this regime.
For example, the use of the name Roquefort is protected as a certification mark to indicate that the cheese has been manufactured from sheep’s milk and cured in the caves of the Community of Roquefort (France) in accordance with their long established methods and processes. Similarly, Cognac is recognised as a certification mark since purchasers in the US primarily understand the Cognac designation to refer to brandy originating in the Cognac region of France, and not to brandy produced elsewhere, and since the owners of the mark control and limit use of the designation which meets certain standards of regional origin.
The major difficulty is around the use of EU GIs that the US considers generic and used so widely that consumers view them as representing a category of all of the goods and services of the same type. This may have arisen because European immigrants brought the names with them to the US and used them to promote their own products in their new home. For example, the use of the name Fontina as a certification mark indicating regional origin was refused as it was held to be a generic name of a type of cheese, in view of the fact that non-certified producers outside that region use the term to identify non-certified cheeses.
This suggests that the differences between the US and the EU on this issue are not differences in principle, but rather revolve around a number of specific names which are protected in the EU as GIs but which the US sees as generic (though two competing systems add costs, of course, for those attempting to have global protection for their GIs). It is worth looking at how similar issues were addressed in some recent FTAs concluded by the EU. We take as examples the recent FTA concluded by the EU with South Korea and the FTA still being negotiated with Canada to provide an indication of what the EU might like, or hope, to achieve with respect to GIs in TTIP.
EU-South Korea FTA
The EU-South Korea FTA, which entered into force in July 2011, is the first completed agreement in a new generation of FTAs launched by the EU in 2007 and which go further than previous agreements in lifting trade barriers. It also includes provisions on issues ranging from services and investments, competition, government procurement, transparency in regulation, sustainable development to intellectual property rights, also including GIs,.
The provisions on GIs in the EU-South Korea FTA can be summarised as follows (see Annexes 10-A and 10-B for the GIs protected):
• The Parties recognise that each has legislation in place for the registration and control of geographical indications that meet a set of criteria set out in the agreement.
• The Parties agree to lists of each other’s geographical indications annexed to the agreement that will be protected according to this legislation. Separate lists of geographical indications are annexed for wines and spirits.
• A ‘grandfather’ clause is included which allows continued use of trademarks already in existence before the date of the application for protection or registration of a GI which, for the GI names contained in the annexes, is the date when the Agreement enters into force.
• Enforcement of protection will be undertaken at the initiative of the respective authorities in each Party or at the request of an interested party, which presumably could be either the producers concerned or a member state or the EU Commission.
• A Working Group on Geographical Indications is established which can add additional GIs to the annexes as they are approved by either Party as well as to ensure the smooth operation of this aspect of the FTA agreement.
The first thing to observe is that the agreement does not provide for the automatic protection of all GIs on the EU GI register. Indeed, there are 63 Korean foodstuff GIs given protection compared to just 60 GI names from the EU member states. These 60 EU GIs are a small sub-set of the total number of GI agriculture and foodstuff names registered in the EU, although they are presumably chosen for their importance to trade.
The second point to note about the 60 EU GIs included in the foodstuff annex is that the great majority are compound names. That is, parmigiano is not a protected name, but Parmigiana Reggiano is; speck is not protected but Tiroler Speck is; camembert is not protected but Camembert de Normandie is. The single names that are protected are mostly cheeses (Comté, Roquefort, Reblochon, Taleggio, Asiago, Fontina, Gorgonzola and, notably, feta). The wines and spirits list includes many of the well-known wine regions of Europe, including champagne, port, ouzo, cognac as well as names such as Irish whiskey and Scotch whiskey.
The EU-Canada CETA and GIs
A political agreement on the EU-Canada Comprehensive Economic and Trade Agreement (CETA) was reached in October 2013. The final text remains to be fully negotiated and then must be approved by both parties, a process which could take up to two years. As a result, the legal text has not been released (although leaked versions of draft chapters as of December 2013, though not the intellectual property chapter, are available on the internet).
However, the Canadian government has presented a summary of the final negotiated outcomes to the Canadian Parliament, including a section on GIs. Canada is also a member of the North American Free Trade Agreement (NAFTA), so Canada’s commitments in CETA are of particular interest because of the potential for conflicts between the two preferential trade agreements. The relevant section on GIs reads as follows:
• Canada currently recognizes a number of EU wines and spirit geographical indications (GIs), such as Cognac and Bordeaux.
• Agreed to varying ways of addressing EU requests regarding 179 terms covering foods and beer.
• Preserved space for Canadian trademark holders and for users of commonly used English and French names for food products
• Offer protection for GIs without prejudicing the validity of existing Canadian trademarks
• Enforcement of GIs in the Canadian market remains a private matter to be argued before the courts.
• Some EU GIs were protected but with the caveat that they not impact the ability of producers to use specified English- and French-language terms that are commonly employed in Canada.
The following terms continue to be free for use in the Canadian market, in both official languages, regardless of product origin: Valencia orange, Black Forest ham, Tiroler bacon, Parmesan, Bavarian beer, Munich beer.
For example, Canadian producers would be able to use English and French but not the German language for Black Forest ham (Schwarzwaelder Schinken).
• Limited GI rights provided to EU on: Asiago, feta, fontina, Gorgonzola and Munster
won’t affect ability of current users of these names in Canada to continue use
future users will be able to use the names only when accompanied by expressions such as “kind,” “type,” “style,” “imitation” or the like.
• Canada preserves the ability to use the customary name of a plant variety or an animal breed.
Producers can, for example, sell the kalamata variety of olive and use the variety name in their packaging.
• Canada maintains ability to use components of multi-part terms, for example:
“Brie de Meaux“ will be protected, but the term “brie” can be used on its own
“Gouda Holland“ will be protected, but the term “Gouda” can be used on its own
“Edam Holland” will be protected, but the term “Edam” can be used on its own
“Mortadella Bologna“ will be protected, but either “Mortadella” or “bologna” can be used separately.
• Canada did not agree to protect the French term “noix de Grenoble” (walnut, in English), meaning this term remains free for use in Canada.
• Budweiser beer: Canada will not protect the GI “Budejovicke,” which prevents any potential conflict with the Budweiser trademark.
Are GIs really a stumbling block to a TTIP agreement?
GIs are a valuable form of intellectual property. It is easy to understand why passions are aroused if EU producers feel that the value inherent in a GI is appropriated by a competitor making use of the same designation. However, most EU GIs are unknown outside their region of origin. There are just a handful of economically important names that are likely to be important to both sides.
Finding a balanced outcome should not be beyond the ingenuity of the negotiators. The US side is less likely to oppose the protection of compound names, for example. The CETA shows that the EU side is willing to accept significant exceptions from the level of protection that it seeks in order to make progress overall.
However, there are political as well as economic interests at stake. Politically, EU agriculture has relatively few offensive interests in the TTIP negotiations so gaining greater protection for GIs is seen as a way to sell a deal to EU farmers as a compensating factor for likely losses for EU livestock producers.
Another political factor is that the TTIP agreement, like the EU-Canada CETA deal, must be approved not only by the Council and the EU Parliament but also by the parliaments of the 28 individual member states. Here, regional interests can play a role. For example, CETA may run into difficulty in the Greek Parliament because of what is viewed as inadequate protection for the feta GI in the proposed deal (recall that current users of the name can continue to use it, and new Canadian producers can also use it provided they qualify it by expressions such as “kind” or “like”).
However, voting down a prospective TTIP agreement would maintain the status quo and would not improve the position of EU GIs on the US market. At the end of the day, this is a negotiation where the EU can make some progress on protecting its GIs in the US market even if it will end up accepting less than what it hoped to achieve. If the overall outcome is seen as unbalanced, it will be rejected. It remains to be seen if the negotiators will succeed in identifying the ‘sweet spot’ which will be broadly acceptable to both sides.
Photo credit: ekathimerini.com
This post was written by Alan Matthews
Latest posts by Alan Matthews
- State aid rules and the CAP 2020 legislation - October 28th, 2018
- Market and trade effects of the next CAP reform - October 21st, 2018
- Member State CAP allocations and progress on the MFF - October 16th, 2018
- Evaluating the legislative basis for the new CAP Strategic Plans - October 11th, 2018
- Recent trends in EU WTO domestic support notifications - October 5th, 2018
- CAP spending in the next MFF - September 23rd, 2018
- The redistributive payment is more effective at redistribution - September 4th, 2018
- More on capping direct payments - August 28th, 2018