Ladies and gentlemen, our champagne and charcuterie are in danger. Bubbling to the forefront of the upcoming round of the Transatlantic Trade and Investment Partnership (TTIP) negotiations is the controversial U.S. usage of regional European names for food and drinks manufactured by U.S. companies. Many EU members demand that U.S. wine, spirits and food companies stop marketing their products under names that reference regions in Europe – known as geographical indications, or GIs – including wine names such as Champagne, Burgundy, and Chianti, in addition to names of other products, such as Parma ham, Irish cheddar, Gruyere, and Parmesan cheese.
The ultimate goal of the TTIP talks is to solidify a trade agreement between the U.S. and the EU by removing trade barriers in a wide range of economic sectors which would thus increase the amount of goods flowing back and forth across the Atlantic beyond last year’s $650 billion. However, finding an agreement between these two economies, representing a combined 60 percent of global GDP, has proven to be tricky.
One of the sticking points are these geographical indications, defined in the WTO 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.”
Both sides have previously agreed to a long list of wine GIs prohibited from use by both sides of the table under a 2006 wine agreement. This agreement mandates that while both the EU and the U.S. can legally continue to use GIs from both sides of the Atlantic to market current wines, they cannot market new products under these protected names. The U.S. agreed to seek legislative changes to limit the use of 16 semi-generic names, such as Chablis and Sherry.
Now, however, the EU would like to include a GI component in the TTIP talks, proposing that the US recognize more of the EU’s expansive existing list of GI’s. As of 2012, the EU recognizes around 1065 agricultural and foodstuff GIs, some 1561 wine PDO/PGI and 325 spirit GIs, and more than 80% of total GIs are registered in only 6 of the member states: Greece, Spain, Portugal, Italy, France and Germany. The EU has also made progress in similar efforts in Canada, Singapore and Colombia, and the EU Trade Commissioner Karel De Gucht has stated,“we want to make that with the Americans, too.”
The incentive for increasing protections is pretty clear: a 2012 study for the Commission collected and analyzed economic data on all GIs produced in the EU between 2005 and 2010, and estimated the worldwide sales value of GI products in 2010 at roughly $74.1 billion, constituting around 15% of the output of the EU food and drink industry. The study also found that on average, a GI product sold for a value 2.23 times higher than a comparable non-GI product.
U.S. Senators Pat Toomey (R-Pa.) and Charles E. Schumer (D-N.Y.) have spoken publicly about their disapproval of this proposal: “Can you imagine going into a grocery store and cheddar and provolone are called something else?” said Sen. Toomey. “Generations of dairy farmers and producers have worked hard to cultivate a product and brand that resonates with consumers. Efforts by the EU to establish trade guidelines which would restrict branding are ridiculous and threaten Pennsylvania jobs. I urge the USDA and the USTR to fight back against any attempt by the EU to restrict the use of these familiar brand names.”
Last month, at a briefing with US Secretary of State for Agriculture Tom Vilsack, the European agriculture commissioner, Dacian Cioloş, stated plans to discuss GIs further, before entering into any concrete negotiations. Cioloş said, “We have to explain what the GI is in order to address some worries in the U.S. on this.”
The goal is to conclude the TTIP negotiations by the end of 2014, before a new European Commission is seated. However, this particular issue isn’t likely to be resolved quickly; the U.S. Chamber of Commerce’s vice president for Europe, Peter Chase said, “It will be one of the issues that is closed out toward the end because there is such a difference between the U.S. and the EU systems.”