European Affairs

U.S. Hopes for a Deal on Wines - And What to Call Them     Print Email
James M. Murphy, Jr.

The United States and the European Union are seeking to negotiate an agreement in which American wine producers would restrict their use of certain names of European origin, such as Burgundy, in exchange for greater access to the European market. The United States considers that such names have become "semi-generic," in that they are widely used to describe some types of wines not necessarily produced in the place where the name originated.

The United States does not accept the European Union's proposal that additional negotiations on "geographical indications" should be held in the wider discussions on agriculture that are also taking place in the WTO as part of the latest round of multilateral trade talks initiated in Doha in 2001.

While we are hopeful that agreement can soon be reached in the wine sector, there are still a number of important issues that need to be resolved, particularly those involving what we call asymmetries between the U.S. and EU wine markets. EU producers have better access to the U.S. wine market than we do to the European market.

Tariffs are roughly twice as high on American wine exported to Europe as on European wines sold in the United States. Unlike the United States, the European Union subsidizes its wine exports and provides large amounts of domestic support to the industry.

The European Union requires burdensome certification forms for U.S. wines, which we do not require for EU wines. Probably the most important non-tariff barrier, however, is the result of differences in oenological practices.

At first we proposed that this problem be resolved through the concept of mutual acceptance, which means that we accept each other's oenological practices. Both the United States and the European Union would accept wines made in accordance with the rules and regulations of the exporting country.

This solution has been adopted by the World Wine Trade Group, formerly known as New World Wine Producers, which includes Argentina, Australia, Chile, Canada, New Zealand, South Africa and the United States.

The European Union does not accept this concept. EU negotiators have said that they are willing to accept all current wine-making practices approved by the Bureau of Alcohol, Tobacco and Firearms of the U.S. Treasury, but that they cannot give the United States a blank check for any future practices that the ATF might approve.

Instead, the European Union has proposed arbitration, which we have agreed to explore, and we are trying to determine whether we can find a mutually acceptable method. I am optimistic that this can be agreed.

We should not forget that the protection of names is also an issue for the United States. We gave the European Union a choice between treating the problem as an intellectual property issue or relying on the ATF's prior approval system for wine labels. The European Union chose to work with the ATF system.

In the United States, the ATF provides excellent protection for all names, including those originating in the European Union. No wine can be sold in the United States until the ATF approves the label, and the ATF has devoted a large amount of resources to the approval process.

In the European Union, on the other hand, the Commission does not really have a system, and the protection of names is enforced at the member state level. The irony is that the European Union, which is much more concerned with protecting names, seems to have a weaker protection system than the United States.

Another difficulty is that the European Union wants us to relinquish not just semi-generic names like "port," but also related terms that are not currently protected by either U.S. or WTO intellectual property regulations. In the case of port, for example, related terms would be "tawny" or "ruby."

In our view, this is an attempt to create an entirely new category of intellectual property, which does not exist today. It would significantly complicate the challenge of re-naming a product. If you can no longer call it "port," what can you call it?

Producers in Australia and elsewhere obviously face the same problem, and had assumed that they could use "tawny" and "ruby" to describe their wines. We still have to resolve this problem.

A more serious problem, however, is the European Union's attempt to introduce geographical indications for a far broader category of products, including food, into the WTO negotiations on agriculture.

This proposal has not received much support, other than from Japan and some of the Central and Eastern European countries that are soon to join the European Union. It is opposed by the United States, the Cairns Group of agricultural exporting countries and many others.

Part of the reason for this opposition is that the European Union is trying to introduce the issue under the heading of "non-trade concerns." While the Doha Declaration says non-trade concerns may be taken into account in the agricultural negotiations, they do not have the same status as the three core issues - export competition, domestic supports and market access - and the European Union has not yet specified how it wants to address the issue.

There are two other reasons that many countries have been distinctly hostile to the introduction of geographical indications into the agricultural negotiations. The first is that the issue is being addressed in the negotiations on intellectual property (TRIPS) and should remain there.

That is where expertise on geographical indications, and on intellectual property in general, is concentrated, and the TRIPS negotiators have a mandate to deal with these issues.

The second reason is the strong suspicion that non-trade concerns in general, and geographical indications in particular, are being raised largely for protectionist reasons. The European Union denies this. We shall not, however, be able to judge how far these suspicions are justified until the European Union reveals further details of how it wants to conduct the negotiations.

James M. Murphy, Jr. is Assistant U.S. Trade Representative for Agricultural Affairs. He is responsible for the coordination of agricultural trade policy within the Administration and the negotiation of trade agreements with foreign governments. In his twenty-three years at USTR, he has served successively as Assistant USTR for Japan, for Europe and the Mediterranean, and for Latin America and the Caribbean.

 

This article was published in European Affairs: Volume number IV, Issue number I in the Winter of 2003.