WTO Panel Rules on Geographical Indications

Eliza Patterson
April 19, 2005
In mid-March 2005, a World Trade Organization (WTO) panel ruled on a case of interest to many WTO members.[1] The case, brought by Australia and the United States, challenged the WTO consistency of a European Union (EU) regulation[2] related to the protection of geographical indications (GIs) for agricultural products and foodstuffs. The widespread interest stems from concern that at a time when WTO negotiations are focusing on liberalizing trade in agricultural products, the EU regulation effectively limits import competition for much of its farm and food sector.
Geographical indications are defined in the WTO TRIPS Agreement Article 22 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." Only goods originating in the specified territory may bear the GI, which -- it is assumed -- gives them a competitive advantage.
The EU regulation at issue sets forth the requirements and procedures for registering GIs and the extent of intellectual property protection available to such registered GIs.
The concern of opponents of the regulation is that it effectively limits the use of GIs to products originating in the EU, thereby placing imports at a competitive disadvantage.
While the WTO Panel found several aspects of the regulation to be WTO-inconsistent, it did not condemn the regulation as a whole but simply recommended that it be amended to correct the violations. Both sides to the dispute welcomed the ruling. The US and other opponents of the regulation say that such amendments will substantially address their concerns by making use of GIs available to products originating outside the EU as they are to those originating in the EU. For its part, the EU claimed victory because it will be allowed to maintain a system that limits the use, within the EU, of EU-origin indications to products that actually come from the named location. Many EU-origin indications currently are used outside the EU for non-EU-origin products having the same basic characteristics as EU-origin products, such as beaujolais wine, champagne and parmesan cheese. Under the EU regulation, only products actually originating in the indicated region may bear the region's name when sold on the EU market.
The case is noteworthy not only for resolving an economically important controversy, but also as an illustration of the much-vaunted pragmatic nature of the WTO. The Panel refused to tie itself in knots trying to compare the famously vague, imprecise language of the WTO rules with the narrow technical language of the EU regulation. Rather, it evaluated the actual effect[3] of the regulation on the parties and the market in light of the purpose and intent of the WTO rules at issue.
The Panel found that the provisions of the regulation relating to the availability of GI protection and those relating to the procedures for obtaining GI protection discriminate against products originating outside the EU. As such, they violate the national treatment obligation of both TRIPS Agreement and the GATT 1994.[4]
Regarding the availability of protection, the EU regulation provides that GIs for products originating in territory outside the EU may only be registered, and thus protected, if the government in whose territory the GI is located meets two conditions: it must adopt a system for GI protection that is equivalent to that in the EC and it must provide reciprocal protection to products from the EC. In the Panel's view meeting these two conditions was a burden and constituted "less favorable treatment" of non-EU products in violation of WTO rules.
As to the application procedures, the EU regulation provides that non-EU nationals seeking to register a GI located in the territory of non-EU state must obtain pre approval from their own government before applying to the European Commission. In contrast EU nationals seeking protection for EU-based GIs may go directly to the European Commission.
In a finding most WTO member nations, including the complainants in this case, presumably would applaud, the Panel found that the absence of representatives from non-EU states on the EU committee deciding on GI applications was not a violation of WTO rules. A contrary finding would have had implications for states' autonomy, a fact the Panel could not ignore.
The Panel also found no violation of WTO rules in the EU requirement that products bearing GIs from non-EU member states must be labeled as to country of origin whenever the protected name was identical to a community protected name. Once again the Panel focused on reality: in such a case the clear possibility of consumer confusion justified the different treatment.
Continuing to focus on the actual operation of the regulation, the Panel concluded that the regulation's provision allowing the co-existence of GIs and previously registered trademarks for the same region did not violate the TRIPS Agreement. The Panel agreed with Australia and the United States that TRIPS[5] requires that trademark owners be given the right to prevent use of subsequent GIs where confusion is likely to result. The Panel noted however that TRIPS[6] also provides that such right may be limited if the legitimate interests of the trademark owner and third parties are protected. Turning to the facts before it, the Panel pointed out that the relevant right of trademark owners and third parties was to prevent consumer confusion and there was no evidence that the co-existence of trademarks and subsequent GIs resulted in the likelihood of confusion. More than 600 GIs had been registered over an eight year period, but the complainants in this case had been able to identify only four instances in which the GI registration would result in a likelihood of confusion with a prior trademark.
Supporters of the WTO dispute resolution system presumably will applaud this case as illustrating the ability of WTO Panels to resolve politically charged, legally and technically complex, cases to the satisfaction of both disputants.
About the author
Eliza Patterson is a graduate of Harvard Law School. She teaches international trade law at Washington and Lee School of Law. She can be contacted at erpatterson@msn.com.
[1] Twelve WTO members filed third party arguments.
[2] Council Regulation (EEC) No.2081/92 of 14 July 1992.
[3] "Thrust and effect" in the panel's words.
[4] The National Treatment obligation under TRIPS requires that each WTO Member accord to the "nationals" of other WTO Members treatment no less favorable than it accords its own nationals. The National Treatment obligation of Article III of GATT 1994 requires equal treatment of products produced in another Member's territory. The Panel acknowledged that the differences in treatment accorded by the EU Regulation were not based on the nationality of the person seeking the protection, but rather on the location of the GI. Nevertheless the Panel found a violation of National Treatment obligations based on the effect of the Regulation. It noted that, while in theory non-EU nations might seek protection for GIs in the EU and EU nationals might seek protection for GIs outside the EU, in fact this was rarely the case. The Panel also acknowledged that although the regulations related to regions, not products, the benefit of a GI registration was to products and any hurdles to obtaining GI registration effectively constituted unfavorable treatment of products from that region.
[5] TRIPS Article 16.1.
[6] TRIPS Article 17.