Trade in Wine Bilateral Bartering between Tradition and Innovation

The debate over the protection of GIs accordingly spans the same conceptual gap between fair appropriation or emulation and misappropriation or usurpation, and is also influenced by a mix of cultural and value differences, and divergent trade interests. GIs are defined in TRIPS as a form of IP, but are not defined and need not be protected as distinct property rights. Therefore, the array of laws used to protect them ranges from specific laws on appellations or designations, over trademark law and the general law of unfair competition and unfair trade practices, to direct government regulation of labelling and production standards. The very toponymic, economic and cultural resonance of some claimed GIs gives them the quality of a 'national champion' in the knowledge economy (European Commission, 2003a,b,c). Hence, GIs occupy an ambiguous position between conventional IPRs and the 'form of national property' that is represented by other knowledge resources such as GR (Lamy, 2004). Different perceptions of GIs are often claimed to be rooted in distinct, seemingly contradictory, value systems. This is neatly captured in the two schools of thought on protection that shape the international debate: one closer to a conception of a national or communal asset (typified by an appellation system); and the other closer to private IPRs more on the model of trade marks (Vivas-Egui, 2001). The fact that the same GI may be protected by both legal mechanisms, and that the two mechanisms often exist in parallel within the one legal system, highlights the value component of a complex multilateral debate, a debate conventionally construed in terms of legal doctrine and trade interests, but perhaps more clearly understood as a debate over the legitimacy of imitative innovation.

Despite the established quality of international law in this area, which took place in the 19 th century, the legitimacy of various approaches to GI protection is under scrutiny in continuing multilateral and bilateral negotiations that seek to define the legitimate scope of commercial use of the denotation and connotation of geographically significant terms. Multilateral negotiations have considered both the fix-rule approach (debating the extension of 'absolute protection' under TRIPS to a wider scope of products than wine and spirits) and the result-oriented or managed-trade approach of a multilateral register that, in some proposals, may have the effect of constituting entitlement to protection, not merely notifying GIs as potential candidates for protection. Proposals in the context of agricultural trade negotiations, for 'clawback' - seeking, 'for a selected group of GIs of significant economic and trade value, to remove prior trademarks and, if necessary, grant protection for EU GIs that were previously used or have become generic' (European Commission, 2003a,b,c) - is a result-oriented approach that would barter between traditional areas of trade negotiations and the knowledge resource represented by exercising exclusivity over the denotation and connotation of individual terms.

The bilateral context provides a more precise setting to analyse these negotiating dynamics. Bilateral negotiations over trade in wine have sought to barter between preservation of the value of traditional reputation as against the legitimacy of innovative imitations, and market access for innovative products in general. Existing plurilateral standards for appellations of origin provide a high level of exclusivity, protecting against usurpation or imitation as such (not merely the deceptive or confusing use of names),11 and have long-standing provisions uniquely deferring to the traditional origin of established products despite the evolution of apparent linguistic usage,12 particularly concerning wine.13 The bilateral negotiations have gone beyond the scope of GIs to consider traditional expressions as an object of protection. This broadening scope of tradition-based claims in wine negotiations helps clarify the value systems and associated knowledge resource trade interests that are at stake. A GI denotes both a particular product and its geographical origin and connotes distinctive qualities associated with the origin it denotes. Claims for the protection of 'traditional expressions' relating to wine would entail the suppression of the use of terms by relative newcomers that are seen as distinctively invoking or referring to traditional processes, even in the absence of a denotation of origin or source (although traditional expressions are often assumed to have an implicit geographical connotation, despite the diffusion of traditional production methods through migration and other means).

In order to protect a traditional form of production against illegitimate imitation, this form of protection traverses the policy space between the regulatory ceiling imposed by the obligation for consumer protection and other public policy interests to be 'least trade-restrictive' or not 'a disguised restriction on trade', and the regulatory minimum established by the positive obligation to protect recognized GIs and to suppress unfair competition - in short, the conceptual gap between TRIPS as a set of minimum regulatory standards and general trade law as a limit to regulation. At some point - the regulatory ceiling - a regulation to govern such traditional references shifts from being a mandatory constraint on illegitimate trade or unfair competition, required as a minimum under TRIPS, to an excessive regulation that exceeds the maximum under conventional trade law; conceptually, the tipping point is situated in GATT (art. XX), which establishes IPP as an exception to the necessity test for regulatory measures. Bilateral negotiations on trade in wine (typically undertaken between the European Union (EU) and new-world producers such as Australia, Canada and the USA, and also among new-world traders14) therefore serve to construct an ad hoc and pragmatic form of legitimate trade or fair competition within the policy space set by the TRIPS minimum and the trade law maximum.

The interests engaged are analogous to those in the GR debate, and as diverse, but are managed in a strikingly different manner. At core, these negotiations concern a trade-off between conventional market access for more diverse production standards (including innovative production methods and other departures from traditional methods) and the protection of distinctive names denoting wines. A key demand of new-world wine producers in their trade relations with the EU has been the right to use innovative oenological practices such as cation exchange resins for wine stabilization, and oak chips in steel casks (a form of imitative innovation in contrast to the use of traditional oak casks). Concerns to gain consistent and assured market access for wine produced by such practices have been a significant impetus towards bilateral agreements: 'The potential threat of dispute on the basis of oenological practices . . . in the case of the European Union, for example, is always on the cards' (JSCOT, 2004). For instance, using a 'positive list' approach (identifying approved practices, rather than listing prohibited ones), the Canada-EU wine agreement permits cation exchange resins and oak chips for Canadian, but not Community, producers. These practices have also been the subject of successive short-term derogations under the Australia-EU wine agreement, but permanent approval has not been granted owing to the specific dynamics of negotiations on a number of unresolved issues. There has been an explicit role for such access as a bargaining chip for gaining other concessions, in particular retrospective exclusivity over the denotation and connotation of traditionally based terms. One official acknowledged that 'the delay in obtaining permanent approval for [cation resin exchange] has been political. . . . It is not so much a matter of health, safety or other issues; they do not like the practice' (JSCOT, 2003). Similarly, EU documents advise that '[i]n order to ensure the smooth progress of the negotiations . . . the Commission has proposed a derogation to permit the importation of wines from Australia which have undergone flavouring with oak chips to give the wine an "oak flavour". This practice does not have any adverse health implications but is not permitted in the EU' (European Commission, 2003a,b,c). The trade-off between issues has been directly acknowledged. A senior US trade negotiator commented that if Europe would (inter alia) agree to mutual acceptance of oenological practices, 'the US industry has concluded that, yes, they'd be willing to relinquish the use of European names' (Carter, 2002), and an Australian industry figure remarked that '[i]f the industry wants to sign this agreement, then it has to be prepared to trade away some of these terms' (Gettler, 2004).

The way in which the use of names is 'relinquished' is instructive. A number of bilateral agreements now directly specify the terms to be protected as GIs for wines and spirits.15 There may be substantive definitions of key concepts, which ostensibly set rules, but certain terms are listed directly that are deemed to comply with the definitions, with an agreed date of application. Consequently, negotiators agree that a term will cease to have generic effect as of a certain date, from which it will resume having an exclusive reference to its historic geographical origin. For example, the Canada-EU agreement stipulates that, from a specified date, 'Canada shall no longer deem' that certain wine names are 'customary in the common language of Canada as a common name' for the wines in question; these include contested terms such as 'port' and 'sherry', which had been viewed by different communities as either distinctive geographical references or generic descriptions. This is to negotiate over the direct application of rules at the national level, and to predetermine outcomes, rather than have eligibility determined by a domestic tribunal, so the agreement stipulates directly that certain names 'are eligible for registration as protected geographical indications' (art. 10) rather than allowing for a distinct domestic process. In the international IP domain, agreed lists of protected GIs are the chief instance of the outcome-oriented or managed-trade approach, as opposed to a fix-rule approach, which would simply agree on a definition of eligible GI and allow terms to be assessed for eligibility through domestic processes (the normal approach for IP agreements).

This form of pragmatic settlement over the legitimacy of trade entails negotiated outcomes on the acceptability of certain innovative wine production practices and retrospective recalibration of the connotations of traditional terms (of varying geographical rootedness). This directly settles the question of how to interpret and apply general rules against unfair competition and illegitimate use of descriptive terms in international trade, not through the case-by-case determination by domestic tribunals, but through pragmatic agreement. These outcomes can be argued to be legitimate and equitable because they provide an agreed functional resolution that allows for a workable allocation of knowledge resources; however, this may be at the expense of consistency and balance in the application of underlying principles.

These negotiations reconcile trade interests centred on traditional or artisanal production rooted in terroir, and those based on the products of innovative production methods and imitative innovation that compete with traditional products and seek to use terms that connote qualities first associated with the original product. The negotiations settle the forms of imitative innovation and the connotative use of these terms that are deemed 'legitimate'. This notion of legitimacy must also comport with overarching multilateral rules: with the notion of legitimate trade in TRIPS terms and with the attainment of legitimate policy objectives such as those recognized under the TBT and the GATT. This recalls an underlying policy challenge: such bilaterally negotiated, fix-outcome settlements should also serve the goals of protecting the public against the misleading or deceptive denotation and connotation of terms used to identify and describe competing products, and against unsafe or unhealthy products.

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