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Friday, November 19, 2004

Goodbye to "Sparkling Wine?" 

That " California sparkling wine" you're tippling? It may be plonk, but soon enough it may also be labeled "champagne."

According to the Washington Post:
The United States and Australia prevailed in an interim ruling by the World Trade Organization in a dispute over protection given by the European Union to its regional goods such as Champagne wine and Feta cheese, trade officials said Thursday.

The ruling is not binding, but it indicates that the final report -- due in about a year -- will likely also go against the E.U., said the officials, who spoke on condition of anonymity.

If the final ruling goes in favor of the United States and Australia, producers around the world will be able to continue using specialist regional names for their own products -- such as calling a product champagne, even though it is not produced in the Champagne region of France.

Speaking in Brussels, trade spokeswoman Arancha Gonzalez confirmed that the E.U. received the confidential report Wednesday, but she declined to go into details.

Gonzalez said it was "a little bit too early" for the United States and Australia to claim victory and stressed that the E.U. was still "very certain" its arguments were sufficient to allow the WTO to find its system in compliance with global trade rules.

The WTO said it was unable to comment, as the findings of a preliminary ruling are distributed only to the parties involved.

Brussels last year published a list of 41 wines, cheeses and other regional products that it wants to protect under WTO rules. The United States and Australia then complained to the WTO -- the body that sets the rules on international trade -- that the E.U. isn't giving enough protection to their products.

The two countries claim the E.U. is breaching WTO rules by not protecting imported goods that have so-called geographical indications -- high-quality products known by the region or city where they are produced.

They say the E.U. gives better protection to its member states than to other countries on the issue, breaching WTO rules that say all trading partners must be treated equally.
"National treatment" is indeed one of the central norms underlying the WTO, and while I've read very little about this case (here are all the documents made public by the WTO, and here is the most comprehensive document on the subject from the US Trade Representative), my understanding is that the EU's case actually rests on one of the other pillars of the WTO: reciprocity. Basically, the EU says that countries such as the US which don't accept the EU's full list of protected place-name designations can't ask the EU to protect their own geographic "brands." If I recall correctly, the US, while accepting the sacredness of the "Champagne" designation, ignores certain other similar products like Parma ham (check this). To Europeans, then, "reciprocity" is taken to mean "If you accede to all my demands, I'll accept a similar list that you draw up."

The US points out that the EU actually signed treaties guaranteeing "national treatment" before presenting other countries with this list. [National treatment simply means that if you allow regions within your sovereign domain to get protection for their "brands," then refusing identical protection to foreign geographical "brands" like "Idaho potatoes," "Florida oranges" or "New York minutes" entails giving your national products a leg up in contravention of your treaty obligations.] If the US's case is accepted, it would appear to mean that the sequence of events dictated which WTO norm determined proper action here.

It's an interesting case. I'm looking forward to seeing the WTO's decision. In the meantime, I think I'll enjoy some good ol' American Champagne.

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