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Prosecco and Gorgonzola wars: how Europe’s GIs are complicating FTA talks with Australia and New Zealand

Bottle of Prosecco on a beach © James West
Will ‘Australian Prosecco’ go the way of ‘Australian Champagne’?

The Geographical Indications issue will not prevent the European Union concluding Free Trade Agreements with Australia and New Zealand – but it is nevertheless likely to be a major complicating factor.

This is the view shared by officials and stakeholders on both sides as the talks, which were launched last summer, begin to pick up momentum.

It is generally agreed that there is goodwill in each negotiation, and a desire to make solid progress towards establishment of an FTA with each country. But, as with other FTAs negotiated by the EU in recent years, protection for GIs will be a high priority on the European side — and a probable irritant for Canberra and Wellington.

“The debate that is under way on GIs really reflects philosophical differences on the subject,” said one Antipodean insider. “Are those differences bridgeable? We’ll see….”

EU seeking GI protection ‘matrix’ in third countries

The European Union has a strong attachment to its GI system, under which the names of more than 3,300 food products, wines and spirits are protected against imitation or appropriation.

The system has applied within the EU since 1991, but the Commission’s strategy is to globalise this protection via a matrix of agreements with third countries. GIs have featured prominently in all of the EU’s most recent FTA agreements, with the result that terms like ‘gorgonzola’ and ‘Scotch whisky’ are now reserved exclusively for European exporters in Canada, Mexico and Japan.

Moreover, many of these protected names represent high-value exports, with GIs estimated to account for around €16billion ($18billion) out of total EU agri-food exports of around €60 billion annually. “Virtually all of Italy’s cheese exports are GIs,” noted Jukka Likitalo, Secretary General of European dairy trade association Eucolait.

However, while the majority of products on the EU’s GI register are relatively uncontroversial, there are some, like ‘feta’ cheese, which are viewed by non-European countries as being generic food types rather than regional denominations, and over which the EU should therefore have no claim to exclusive use.

Feta cheese in a salad
‘Feta’ cheese is viewed by non-European countries as a generic food

The GI issue dominated public discussions during a visit to Australia and New Zealand by EU Agriculture Commissioner Phil Hogan in February. On that occasion, the Commissioner went on a charm offensive, predicting that the final deal would to boil down to just half a dozen or so contentious names, and that ad hoc agreements would ultimately be found in these cases.

“We will find solutions. It could be co-existence [agreement to allow Australia and New Zealand to use a term protected in Europe within their own territory], or grandfathering [allowing companies with a historic track record of using a protected term to continue to do so]. Or we might accept the evidence that a product is produced by Australia and that they have a good case,” Hogan said in an interview in the Australian parliament.

With three negotiating rounds having now been held with both Australia and New Zealand, the time for serious engagement in these tricky discussions is rapidly approaching.

Public consultation on GIs in New Zealand

The process is most advanced in the case of New Zealand, which recently held a three-month public consultation on a list of 172 European food GIs – plus a vast number of wine and spirit names – which the EU had submitted to Wellington. The consultation closed on March 19 and the Wellington is currently studying the responses received.

New Zealand currently has no legal provision for GI protection for products other than wines and spirits, so it will need to create a brand new legal framework in order to accommodate the EU request – a significant investment of legislative capital to accommodate a programme requested by a trade partner.

The all-powerful New Zealand dairy industry will undoubtedly push back against the EU’s request to claim exclusivity on cheese names which are produced in New Zealand, such as feta, asiago, gorgonzola, fontina and munster.

Both New Zealand and Australia will ultimately make concessions in these areas, knowing how politically important it is for the EU for secure a deal to safeguard what Brussels likes to think of as Europe’s ‘agri-food heritage’.

But the two countries will seek to exact a price for that agreement, and that will come in the shape of improved access to Europe’s well-protected markets for dairy products, meat and fruit (and, in Australia’s case, also cereals and sugar).

“Hogan himself has drawn the link between GIs and market access,” noted one close observer of the negotiations. “Australia’s and New Zealand’s agricultural market access into the EU is limited – and the EU’s move to split its tariff rate quotas with Britain after Brexit has further reduced some of those market access opportunities. This will have an effect on public opinion in these countries.”

Unlike Australia, New Zealand does have a pre-existing bilateral agreement in place covering wine standards and terminology, so this too will have to be painstakingly negotiated.

But Ignacio Sanchez, Secretary General of European wine producers organisation CEEV, is not anticipating that the wine chapter will create a roadblock in the EU-New Zealand talks.

“With New Zealand we have not uncovered any major problems so far, so it should go smoothly,” he told Borderlex.

Role of Australian ‘certification trade marks’

Australia does have a system of protection for regional food products — but it takes the form of ‘certification trade marks’.

These are, in effect, a ‘halfway house’ between brand-based trade marks and open GIs in the European sense. The certification trade mark has a specific ‘owner’ – but use of such trade marks is generally open to other businesses if they comply with relevant standards, which can include production processes and geographical origin.

A significant challenge in the EU-Australia talks will therefore be how to reconcile these legal, procedural and philosophical differences. For this reason, the EU has yet to send Australia the list of GIs for which it will be seeking protection.

In the area of wine names, the existing EU-Australia wine agreement will help to smooth the path towards an overall accord, as will acceptance on both sides of the principle of so-called ‘higher-level’ GI protection for wines and spirits under relevant WTO rules. The latter enshrines the principle that protected terms cannot be used with geographical qualifiers — for example, the concept of “Australian Champagne” is a non-starter.

Rows of vines in a vineyard
Australia cannot produce a ‘Champagne’ – but will it be allowed to call its fizz ‘Prosecco’?

But difficulties nevertheless lie ahead over the term ‘prosecco’ – which in Europe is an Italian-registered GI, but which is registered simply as a grape variety in Australia. Italy changed the name of the grape variety from ‘prosecco’ to ‘glera’ in 2009. The Prosecco region, near Trieste, was then registered as a GI region. Already, however, terms like ‘Australian prosecco’ have been floated as a possible compromise.

Many months of difficult negotiations lie ahead in both countries. Most observers expect the talks with New Zealand to be completed first, as it is a smaller economy than Australia and it presents a narrower range of critical topics to be resolved — mostly relating to agriculture.

But for both agreements, a deal on GIs will be part of the mix. Despite the difficulties, none of the parties involved will ultimately be prepared to allow product names to get in the way of a much-coveted, GDP-enhancing deal.

The next (fourth) round of negotiations with New Zealand is scheduled to take place in Wellington in May, while the fourth round of talks with Australia – which now faces a general election on May 18 – is pencilled in for July.

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