2
July 2021
PDF version [312KB]
Ian Zhou
and Rob Dossor
Economic Policy Section
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
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.
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.
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.
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.
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)
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.
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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