RESEARCH PAPER SERIES, 2021–22   2 July 2021

Geographical indications and the Australia-EU Free Trade Agreement

Ian Zhou and Rob Dossor

Economic Policy Section

1 Executive summary

‘A rose by any other name would smell as sweet’, or would it?

In current negotiations over an Australia-European Union Free Trade Agreement (Australia-EU FTA), the European Union wants Australia to extend geographical indication protection to 400 product names. If Australia agrees, Australian locally produced goods will be prohibited from using those protected names, with potentially significant costs to many Australian businesses. Prominent examples of EU protected names are ‘feta’ cheese and ‘kalamata’ olives.

Contents

Executive summary

What are geographical indications?

International and domestic laws on GIs

The Australia-European Union Free Trade Agreement

Why is the EU advocating for greater GI protection?

How does greater GI protection affect Australian businesses?

Australian stakeholders’ views

The Australian Government’s response

Conclusion

2 What are geographical indications?

A geographical indication (GI) is a way to identify a product that originates from a specific region and has a particular quality that is unique to its geographic origin.

Functioning like a trademark, a GI can be viewed as an intellectual property right that enables some producers to name their products according to the products’ geographic origin.

Probably the most famous example of a GI is the right to use the name ‘champagne’. In the EU, only French winemakers from the Champagne region, who follow an enforceable set of winemaking rules, have the exclusive rights to name and market their sparkling wine as ‘champagne’.

The EU argues that one of the main advantages of GIs is that they inform consumers about the true geographic origin of a product that has certain qualities or characteristics specific to that region. For example, when a consumer buys a bottle of champagne, the consumer knows the wine is made in France and that it has unique qualities.

3 International and domestic laws on GIs

International agreements, including a number of free trade agreements, have recognised GIs as intellectual property that must be protected. The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (commonly known as TRIPS) requires members to adopt legal measures that protect certain GIs, but does not specify the means by which GIs are to be protected. This is left for WTO members to decide.

Consequently, the types and levels of GI protection vary from one country to another. The EU has consistently pushed for greater GI protection in non-European countries through regional or bilateral trade agreements. Janusz Wojciechowski, the EU Commissioner for Agriculture said:

European Geographical Indications reflect the wealth and diversity of products that our agricultural sector has to offer. Producers’ benefits are clear. They can sell products at a higher value, to consumers looking for authentic regional products. GIs are a key aspect of our trade agreements. By protecting products across the globe, we prevent fraudulent use of product names and we preserve the good reputation of European agri-food and drink products. Geographical Indications protect local value at global level. [emphasis added]

In 1994 Australia and the European Community (now the EU) signed an agreement (later replaced with a new agreement signed in 2008) to regulate the trade in wine between Australia and the EU. The wine agreement regulates and protects the use of European GIs such as ‘champagne’, ‘sherry’, ‘burgundy’ and ‘port’ in the Australian wine market, while also extending a form of GI protection to Australian wine regions, such as the Barossa Valley and Margaret River.

GI protection is enforced in Australia via the Trade Marks Act 1995, the Wine Australia Act 2013 and the Wine Australia Regulations 2018, which make it illegal, for example, for Australian producers to label their products as ‘champagne’, ‘scotch whisky’, or ‘burgundy’:

Champagne—sparkling wine can be labelled as ‘champagne’ only if it is produced in the Champagne region of France using specific production methods.

Scotch whisky—malt or grain whisky can be called ‘scotch whisky’ only if it is produced in Scotland using specific methods.

Burgundy—wines labelled ‘burgundy’ can only be sourced from the Burgundy region in eastern France.

The Australia-European Union Free Trade Agreement

One of the EU’s objectives in the Australia-EU FTA is for Australia to extend GI protection through domestic legislation to a list of product names (currently 400 names that comprises 166 foods and 234 spirits), in addition to the wine GIs that are already protected in Australia.

Prior to the Australia-EU FTA, the EU attempted to register ‘prosecco’ as a GI in Australia in 2013 arguing that only those white wines produced in the Prosecco region of Italy should be called ‘prosecco’ wines. The Winemakers’ Federation of Australia successfully opposed this move on the basis that the term ‘prosecco’ is, first and foremost, the name of a grape variety.

4 Why is the EU advocating for greater GI protection?

The EU has a substantial commercial interest in advocating for greater GI protection. A study commissioned by the European Commission found that the total sales value of European GI protected products amounts to €74.8 billion annually. Protecting product names as GIs protects European exports by limiting competition and preventing new entrants into the industry.

In addition to commercial interests, the EU advocates that ‘GIs are key to European Union and developing countries’ cultural heritage, traditional methods of production and natural resources’.

Due to the size of the EU market, the EU has the bargaining power to push for greater GI protection when it comes to free trade agreement negotiations. For example, the EU is Australia’s third largest trading partner (behind China and Japan) with merchandise trade worth over $58.7 billion in 2019–20. On the other hand, Australia was ranked as the EU’s 19th largest trading partner in 2020.

The EU’s free trade agreements with Canada, Japan, Singapore, and South Korea all included a list of GIs that each party has agreed to protect. The EU and China have also signed a GI protection agreement. The EU is negotiating a free trade agreement with New Zealand. According to an NZ Government Discussion Paper from December 2019:

The EU has proposed that New Zealand adopts a regulatory protection framework for GIs that is similar to the existing EU framework but that is significantly different to New Zealand’s existing framework…

The EU has made it clear that an outcome on the protection of GIs is necessary for a successful conclusion on the FTA. (p. 7)

The United States government does not protect geographic terms that are generic names for goods/services, considering a geographic term to be generic when it is so widely used that consumers view it as designating a category of all of the goods/services of the same type, rather than as a geographic origin (p. 1). The US Patent and Trademark Office states:

Some EU GIs–when encountered outside the EU–are the names of types of products rather than a specialty product from a specific area. For example, ASIAGO is a GI in the EU but it is the common name for a type of cheese in the United States and in other countries.

In 2016, the US and the EU halted their free trade agreement negotiations.

5 How does greater GI protection affect Australian businesses?

If Australia fully accepts the EU’s GI protection proposal and implements it in Australian law, many Australian businesses will be required to rebrand their locally produced goods. Besides the direct cost of relabelling, Australian businesses will potentially lose sales due to damage to brand recognition.

The EU has not proposed any compensation to Australian businesses for the potential costs involved in changing product labelling.

The example of feta

The 400 GIs proposed by the EU include several product names that are commonly used in Australia. One of the most prominent examples is ‘feta’ cheese. There are many Australian cheesemakers that produce and advertise their cheese as ‘feta’ or ‘fetta’ because in Australia it is arguably a generic term that describes salty white cheese, rather than an indicator of geographic origin. However, according to current EU GI rules, only those white cheeses produced in a traditional way in mainland Greece can be called ‘feta’ cheese.

The ABC has published an infographic that illustrates how GI protection could potentially affect the advertising and labelling of Australian produced ‘feta’ cheese.

Figure 1: a ‘before-and-after’ comparison of the potential impact of GI protection on the labelling of Australian-produced ‘feta’ cheese.

Source: the ABC, ‘Popping prosecco’s bubble’, 31 October 2019.

While several of the GIs the EU seeks to protect are likely to have a significant impact on Australian businesses, other GIs are not. For example, they might relate to products that are not currently, or likely to be, made in Australia (e.g. Bayerisches Bier) or products that are made in Australia but not well known by their GIs.

6 Australian stakeholders’ views

Many Australian businesses view the EU proposal for greater GI protection as a trade protectionist measure that could hurt Australian exports. The DFAT website contains a list of stakeholder submissions regarding the Australia-EU FTA.

For example, the Export Council of Australia (ECA) said:

The ECA is concerned with the ongoing efforts by the EU to increase protection for GIs that would, in effect, privilege one set of food producers – predominantly those in the EU – over others. GIs can have broad implications for food and non-food products alike, should an EU style system ever be implemented here. There is significant anecdotal evidence that GIs are becoming a significant NTB (non-tariff barrier). (p. 7)

The Law Council of Australia said:

If the EU’s demands are accepted, Australia would be conferring a scope of protection well beyond that required by TRIPS and which other countries have refused to confer in corresponding negotiations. (p. 3)

The Law Council believes the EU is seeking a broad scope of GI protection that will prevent use of the GIs accompanied by an expression such as ‘style’, ‘type’ or ‘like’. The EU has requested that the 400 GI names be protected against:

… any misuse, imitation or evocation, even if the true origin of the product is indicated or if the protected name is translated, transcribed, transliterated or accompanied by an expression such as "style", "type", "method", "as produced in", "imitation", "flavour", "like" or similar, including when those products are used as an ingredient.

If the Australia-EU FTA is enforced, potentially it means that Australian cheesemakers will be unable to sell their cheese as ‘feta’, or even ‘feta-style’ or ‘feta-like’.

The Law Council of Australia said:

The EU's proposal would require Australia to do more than apply the Article 23 standard to GIs for goods other than wines and spirits. It would require Australia to exceed the TRIPS Article 23 standard in all applicable sectors. (p.3)

7 The Australian Government’s response

The former Australian Trade Minister, Simon Birmingham, told the ABC:

Australia doesn’t like the idea of geographical indications but this is a not-negotiable element from the European Union…

We will put up a strong fight in terms of areas of Australian interests and ultimately what we’re trying to do is get the best possible deal that ensures Australian businesses and farmers can get better access to a market engaging 500 million potential consumers.

According to the Department of Foreign Affairs and Trade, the Australian Government has made no commitment to protect EU GIs. The Government has, however, committed to engaging with the EU on its GI interests and any commitments on GIs in the FTA will depend on the overall outcomes the EU is prepared to offer Australia, including with regard to market access.

8 Conclusion

GIs, like any other intellectual property right, can be a positive force in protecting consumers and generating new knowledge. At the same time, they can also impose costs on Australian businesses and may be viewed as protectionist.

When negotiating the terms of the free trade agreement with the EU, the Australian Government will be balancing competing goals and considerations, which would likely include:

the rebranding cost for Australian businesses if the EU’s proposal for greater GI protection is accepted

the administrative cost of protecting European GIs in Australia (e.g. informing the public about European GIs, enforcing compliance with GI laws) and

the benefits for Australian businesses if the EU allows greater access into its market.

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