Statements and Speeches by Ministry Representatives 2004

International Trade Developments In Wines and Spirits New Perspectives Of The WTO

Delivered to the International Federation of Wines and Spirits by HE Wade Armstrong, New Zealand Ambassador to the European Union, Brussels, 29 October 2004

Thank you to the International federation of Wines and Spirits for the invitation to join you today.

I have been asked to speak today about developments in the World Trade Organisation.

New Zealand has a strong interest in the Doha Round negotiations and is an active WTO Member, particularly on agricultural trade issues. This reflects our position as the world’s largest exporter of dairy products – and an economy with minimal protection and virtually no agricultural subsidies an economy seen as open and moderate in its policy approach.

The negotiations are also important for our wine sector. One of the side effects of the withdrawal of agricultural subsidies in New Zealand in the mid-1980s has been the diversification of farming, including the development of an internationally competitive wine sector. On a global scale, New Zealand remains only a minor producer of wine, ranked a lowly 33rd in the world in terms of production. But production in recent years has grown significantly and New Zealand is increasingly reliant on competitive access to international markets. So the aspects of the WTO negotiations that directly affect the wine sector are very important to us.

Today in 15 minutes I want to

1. outline our view of the current WTO negotiations; and
2. describe the particular aspects of the negotiation that are of direct relevance to the wine and spirits sector ;

Doha Development Agenda

A key debate about the Doha WTO Round, including at the ill-fated 2000 Seattle and 2003 Cancun meetings, and right up until recently, concerned the scope of the agenda. It was a question of broad or narrow. A resumption of agriculture negotiations had been agreed in the Uruguay Round; clearly that would be balanced by negotiations on manufactured goods – Non-Agricultural Market Access, or NAMA, as it is called. Beyond that, some WTO Members, such as the EU, wanted a broad agenda, including negotiations to establish WTO rules for new issues such as Investment and Competition policy; and Trade Facilitation. These became known as the Singapore Issues after the location of the first WTO Ministerial meeting in 1996.

Developing countries generally were opposed to an overloaded agenda – claiming they had enough problems dealing with the Uruguay Round agreements which had extended WTO rules into major new areas like trade in services or intellectual property.

This debate was eventually resolved in favour of a narrower agenda in which agriculture, Non-Agricultural Market Access and trade in services are the main pillars, with some additional areas like Trade Facilitation and review of the Dispute Settlement Agreement.

At the launch of negotiations in Doha in 2001 the conclusion of the Round was foreseen as December 2004 and the objective was to agree the so-called modalities of the Cancun meeting in December 2003.

The modalities are the crux of the negotiations, they are the methods by which trade liberalisation – be it tariff cutting, or subsidy reduction – is to be implemented – and the parameters to be applied to such cuts.

Unfortunately there was no agreement on modalities at Cancun. Instead there was a major difference of view. However, thanks to the efforts of all WTO Members, including the positive influence of agriculture reform in the EU, momentum was restored to the negotiation in July. A key part of the July outcome was agreement on a framework in which to pursue the agriculture negotiations which are seen as the key to a successful Doha Round. The Doha Round now stands at a point where

1. First, over the next 4 or 5 months negotiations on modalities in agriculture and NAMA will be pursued, intensively one hopes, at a technical level. At that point a new EU Trade Commissioner and the next United States Trade Representative will be able to re-engage at the political level necessary to secure the accommodations that any agreement on modalities will require.
2. it is not clear when the modalities phase will be completed. Some delegations see a natural target as the next WTO Ministerial in Hong Kong in December 2005. There is, however, concern not to overload expectations for that meeting, which suggests a need to maintain momentum throughout 2005.

the deadline to conclude the negotiations has been extended to December 2005 – although one must realise that the actual conclusion cannot be predicted at this stage; There has yet to be an unsuccessful GATT or WTO Round but recent experience indicates that to achieve a final result may require a couple more years.

Substance of the negotiations

As to the substance of the negotiations, there are particular aspects of direct interest to this conference. These include the broad issue of market access - where tariffs for wine and other products will need to be reduced - as well as domestic support, where the definition of the Green Box will come under scrutiny.

But international trade negotiations in wines and spirits go well beyond tariffs. Intellectual property issues are addressed as part of the negotiations in the WTO Council for Trade-Related Intellectual Property Rights. There are two main IP issues stemming from agreements at Doha. The first issue of access to medicines for developing countries is perhaps not of direct interest to this group. Secondly there is the set of issues relating to Geographical Indications.

In summarising the negotiations taking place in the TRIPS Council, I offer a personal view – one that draws on my experience as a former Chair of that Council several years ago – and one that does not necessarily represent the views of my Government.

I think few people would disagree with me that the set of issues around GI’s is the subject of strong debate, a debate that broadly sees Europe sitting on one side and the New World producers on the other.

I want to acknowledge from the outset that the subject is a sensitive one, leading to discussions about heritage, about language, about ancestry, about free-riding and also about freedom of expression.

GIs in the Doha Declaration

There are in fact three GI issues with varying status which have been raised in this Round.

1. First, WTO Members agreed in the Uruguay Round TRIPS Agreement, and then again at Doha, to negotiate the establishment of a multilateral register for the protection of wines and spirits GIs.
2. Second is the proposed extension to all products of the current higher level of protection given to wines and spirits by Article 23 of the TRIPS Agreement.
3. The third, and final, issue is the so-called claw-back list which has been introduced into the WTO agriculture negotiations.

I will spend most of my time on the first issue, partly because it is of most interest to you, but also because it is the only one of the three where there is actually a clear mandate to negotiate. On the other two issues, I will simply say that their existence is evidence of the breadth and depth of the GI debate.

Wine and Spirits Register

But back to the register. My first point is that WTO Members have agreed to negotiate the establishment of this register and there is understanding that we must reach agreement.

In fact little progress has been made in these negotiations for some time. As some of you will know, one side is arguing for a register that would be mandatory for all WTO Members to participate in, and that would create clear legal obligations in relation to geographical indications. They say that anything less is meaningless and doesn’t actually facilitate the protection of GIs.

The other side argues in favour of a database of GIs that could be accessed by national IP officers but would have no binding legal effect at the national level. They say that anything more goes too far and conflicts with important IP principles of territoriality and enforcement by right-holders.

I see a number of reasons for the slow progress to date

• First, whenever this issue is discussed very quickly points of principle on IP rights emerge. IP rights are private property rights and can be very valuable. Moreover, unlike other forms of IP rights, GIs can last in perpetuity. So, the stakes are potentially high. If, these rights can be so valuable, we need to be careful in how we grant them and how they are enforced and by whom. Traditionally intellectual property rights are granted on a territorial basis and are enforced by right holders, not by governments. This is the price you pay for having such a valuable right. Those arguing against the EU-style model consistently argue that GIs are no exception and that the kind of model the EU is looking for runs rough-shod over these principles.
• Second, the kind of approach favoured by the EU is modelled on an EU regulatory system very foreign to many WTO members, including New Zealand. It appears to be unnecessary, complex and costly. The idea of having such a system is difficult to accept. It would also mean that it was for governments to enforce and protect these private property rights and to pay the price of doing so. This is a responsibility and cost that many governments are reluctant to accept.
• Third, some WTO Members are concerned about what might this might lead to in the future. WTO Members agreed to provide a higher level of protection to GIs for wines and spirits at the end of the Uruguay Round. This higher level of protection was meant to be the exception, with the normal level being that provided for all other goods. Now, some Members are pushing for extension of this exceptional level to all goods.

So where do we go to next in this debate? The discussion has been deadlocked for some time. In order to make progress the discussion will need to move beyond a polarised debate between a small number of largely developed country members. Many WTO members have not been involved –and see little interest in investing in a discussion in which they have no commercial interest; have no experience of GIs or of becoming embroiled in a polarised north-north issue.

We are, however, beginning to see a wider range of countries, particularly developing countries, showing an interest in this particular negotiation. More discussion will therefore be needed on the specific development benefits and costs of the various options.

It is clear that some sort of resolution must eventually be reached. For that is required by the mandate and for some countries, including many here in Europe, it is a very important interest in the overall WTO negotiations. But to achieve an outcome, there will need to be flexibility on both sides whose positions have become dangerously entrenched.

Claw-back list

Just a quick word on the discussion on GIs taking place in the agriculture negotiations. Paragraph 13 of the Doha Declaration only states that

• we take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture

With this reference, the EU has introduced into the Agriculture negotiations a proposal to claim back a list of EU geographical indications - including 28 wine and spirits names - that are regarded by many Members to be generic names. This has become known as the EU “claw-back list”. That issue is controversial. It is one that is being pressed by the EU but not with notable success or support.

Differing approaches to regulation Old World versus New World

Finally, I am quite prepared to accept that the topic I’ve discussed so far is probably far drier than any good Chablis! But I hope you will see that the negotiations I’ve described do depend on important details.

Ms Fischer Boel, the EU Commissioner-designate for agriculture, indicated at the European Parliament examination of her nomination, that the issue of GIs is one to which she attaches importance but it is also an area in which the EU faces an uphill battle to secure its objectives. I agree.

The debate over negotiations on GIs really does give rise to sensitivities on both sides. I have only touched on the different positions in the WTO negotiations. But I also note that the IP issues are a reflection of much broader underlying differences on regulatory approaches, which may affect the wine sector, among others. Countries like New Zealand do not deny the need for regulation for health or safety reasons. and our courts will ensure that our winemakers do not use names that meet the terms of protection under the WTO TRIPs Agreement. But we will continue to test carefully the justification for ambitious claims for new or extended property rights.

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