WTO name ruling: who really won?

Wines & Vines, July, 2005 by Jordan Mackay

The headline of an Associated Press article that ran in March read, "Both Sides Claim Victory in WTO Fight over Food Names." Now, if you've been following this battle between the European Union and the United States over what they call GIs (geographical indicators), or if you simply care about wine, you'll know that the wine industry has a lot invested in the issue of place. Given the issue's importance, the headline was perplexing: A ruling in which both sides claim victory is clearly different from a compromise, which leaves no one claiming victory and everyone feeling a little bit burned. No, when both sides claim victory you know that something is messed up. And when the World Trade Organization (WTO) is involved, you know it's going to be an untidy melange of international trade legalese and confusing acronyms (CAs).

The ultimate question is: What did this ruling mean for wine? "The answer is going to be very short," says David Thual from his home in Belgium. Thual is general secretary of the Geneva-based ORIGIN, the Organization for an International Geographical Indications Network, comprised of, according to its Web site, "more than 100 producers from 24 countries (that) have decided to create an international network to protect and promote geographical indications."

Thual says, "The answer is going to be very short, because this case doesn't relate to the wine sector. This case was launched by the U.S. and Australia against the EU regulations, but outside the wine and spirits sector. There is a big problem with Budweiser. That's what this was about."

The Budweiser case, the most high profile of a host of naming issues, is instructive. Here's how it works: From the European perspective, geography protection bests trademark rights. Europe wants to reclaim names that relate to specific places, everything from Parmesan cheese to Bologna to Budweiser. But in the U.S., these names have become what trade wonks call "semi-generic." Being forced to change such names here could mean billions of dollars in repackaging and rebranding costs for American companies.

In the case of the "king of beers," Anheuser-Busch could be stripped of Budweiser, the brand name of the world's top-selling beer. But Budweis happens to be the name of a Czech town that has been brewing beer for more than 700 years. Naturally a Czech brewer, Budweiser Budvar, claims it is the rightful owner of the name. Anheuser-Busch, however, sees the name as having value only through the massive work it has done to build the brand, and believes it's the Czechs who ought to stop making Bud. A USA Today article quoted an Anheuser-Busch lawyer as saying, "The situation is intolerable. It allows the Czech company to free ride on the reputation of our brand." Not to mention anyone from the Czech town who might call themselves a Budweiser.

The WTO ruled for Bud, saying that Europe could not deny U.S. trademark owners their rights. It also ruled that Europe's regulation for protecting GIs discriminates against U.S. products (like Florida oranges and Vidalia onions, which haven't been protected in Europe) that are named for their place of origin. Although there are more than 600 registered GIs in Europe, none are from non-EU countries. But the WTO did rule--and this is the part that Europe likes--that protections must be given equally to all products, essentially validating the concept that names should be protected. So while Florida orange producers might be happy, so are Parmesan cheese producers in Parma. What it all means is that it's nowhere close to over.

So, while wine matters were not affected by this recent WTO ruling, controversy continues to roil over GIs. For instance, while everyone agrees (and the EU and WTO have ruled) that wine and spirit place names should be protected, U.S. regulations still allow some EU GIs to be used by American wine producers to designate products of U.S. origin. The most significant examples are Burgundy, Champagne, Chablis, Chianti, Malaga, Madeira, Moselle, Port and Sherry. In 1997, the D'Amato amendment codified the use of semi-generic wine names in the U.S. into federal law.

So you have two legal systems with different protections going head to head--Old World versus New World. This has created an impasse that will take years, if not generations, to properly sort out, not to mention mountains of paper and lots more CAs. But even though the issue of naming rights has spiraled off into the humdrum morass of international trade regulation, passions still remain high.

"I think it's a consumer truth and labeling issue," says Sam Heitner of the U.S. Office of Champagne, a primary player in this battle. "Wonderful wine can be made all over the world, but it's important that the consumers--particularly Americans, as more and more of them consume wine--understand where their wines come from. The words on the label are very important in this regard."

Champagne has mounted an education program through a series of advertisements that feature a big yellow question mark and the words, "Champagne not from Champagne? No way!" and explain that "some sparkling wines may look and even taste the part, but if it's not from Champagne it's simply not true Champagne. That's because Champagne isn't merely a type of wine, it's a specific region 90 miles east of Paris with a long history of winemaking expertise."