A press release from the Office of the U.S. Trade Representative in early October heralded the key achievements of the recently concluded U.S.-Mexico-Canada trade agreement, intended to replace the vilified NAFTA agreement that dated from the early 1990s. Let’s take a look at what the release said about Geographical Indications:
“The Parties agreed to provide important procedural safeguards for recognition of new geographical indications (GIs), including strong standards for protection against issuances of GIs that would prevent United States producers from using common names, as well as establish a mechanism for consultation between the Parties on future GIs pursuant to international agreements.”
Readers of this blog will recall that U.S. dairy producers in particular were fired up after the European Union concluded a free trade agreement with Canada (CETA) and announced a trade agreement with Mexico, both of which gave protection within Canada and Mexico to a list of European sourced cheese names that included FETA, FONTINA and ASIAGO, among others. That indignity came after U.S. industry had watched as the EU earlier wrapped up trade agreements with China and Japan, each of which contained extensive lists of protected cheese names as GIs. (Certain meats, wines and other goods are also listed as protected GIs. GIs for wine implicate some complicate rules under the TRIPS agreement, so we’ll stick with cheese in this discussion.)
Faced with the difficulty of being an outsider to those EU bilateral trade agreement, U.S. industry, represented by the Consortium for Common Food Names (CCFN), the U.S. Dairy Export Council and others, mounted a full court press with the Trump administration to push for clawbacks through the trilateral USMCA negotiations. (Even more infelicitous in sound than its predecessor NAFTA, in some legal quarters, this new agreement is being called “USumCA”. A good name for a stinky cheese?)
What does USMCA achieve for US cheese producers?
In the area of procedural safeguards, Mexico and Canada agreed that where Parties (meaning the nations that are each a party to the new USMCA agreement) allow registration of GIs in their jurisdictions, there must be greater transparency in the examination process, including opposition and cancellation procedures akin to those in effect for trademarks, with published decisions that are available and searchable by electronic means. Two grounds for opposition or cancellation reflect trademark-like approaches, namely, that a GI that is likely to cause confusion with a mark that is the subject of a pre-existing trademark application or registration; or the proposed GI is likely to cause confusion with a trademark that has acquired rights (such as though use) under law. The third (and more interesting) ground for opposition/cancellation speaks to the concerns of the US cheese industry: that the GI is a term “customary in common language as the common name” for the relevant good in the territory of the Party.
Several footnotes accompany this notion. A refusal to register based on “common name” objections may be addressed by the applicant agreeing to disclaim any exclusive rights in the GI term that is considered a common name. A clarifying footnote explains: “a term customary in common language as the common name may refer to single component terms or individual components of multi-component terms.” Practical translation? “Asiago” standing alone as a GI may be challenged and be required to be disclaimed; or if used in combination with “Uncle Sam’s Wisconsin Asiago,” may also be challenged as a common name in a proceeding and then disclaimed.
How to Determine whether a term is “customary in the common language”?
CCFN had been advocating that common food names should not qualify for GI protection, but in its published materials, had rarely done more than assert that some cheese names had become “common names” for types of cheese that consumers outside the U.S. recognized, but did not associate with a particular place of origin. But CCFN rarely offered any evidentiary guidance for how to determine whether this was, in fact, the case with respect to any given cheese name. And certainly no mention was made of how to determine if a cheese name that is common in a producer country (like the USA) carries over that same status—or not– when newly introduced on products to first-time consumers in another country.
Article 20, E 4 of USMCA tackles this issue. The examining authority in the country where a GI seeks registration, say Mexico or Canada, “shall have the authority to take into account how consumers understand the term” inside their countries. How will they do so? Certain factors are set out as relevant to the inquiry:
• Whether the term is used to refer to the type of good in question, as indicated by “competent sources” like dictionaries, newspapers and relevant websites.
• How the term is marketed and used in trade in the territory of that Party;
• Whether the term is used, as appropriate, in relevant international standards recognized by the Parties to refer to a type or class of good in the territory of the Party, such as pursuant to a standard promulgated by the Codex Alimentarius; and
• Whether the product in question is imported into the Party’s territory, in significant quantities, from a place other than the territory of the GI identified in the petition, and whether those imported products are named by the term.
The last two factors are clearly derived from the CCFN playbook. It had argued that cheese names listed in the guidelines set out in the Codex Alimentarius, the food safety standard of the UN’s Food and Agriculture Organization (FAO), should automatically equate to “common names” and therefore be considered incapable of designating a particular place of origin or linking the quality or reputation of a product to a specific geographic place. In this view, a cheese name listed in the Codex would be ineligible as a GI in any jurisdiction covered by USMCA. For example, if the Codex has production and safety guidelines for CHEDDAR, then CHEDDAR could not act as a GI. This new USMCA “factor” does not address the fact that the Codex, by its own explanation, was developed for a different purpose altogether nor does it provide a means to evaluate the weight accorded one trade-incentivizing international guideline (food safety) over another one (protection of GIs).
The principal achievement of the U.S. dairy industry was to include the last factor for consideration by the relevant authorities. Since Canada has its own robust dairy industry and does not import a great deal of cheese from the U.S., the provision must have been squarely directed to the uncomfortable case of Mexico. Mexico imports a large amount of cheese from U.S. producers, but had agreed in principle in its FTA with the EU to protect a list of European GIs for cheese, some of which cheese names are used more “generically” by US cheese makers. Applying this factor, the volume of sales in Mexico of Wisconsin-made FONTINA cheese would be considered in deciding whether Mexico could agree to respect FONTINA as a GI under an EU FTA framework, which would otherwise give exclusive use and protection of that term to a cheese made only in a certain region of Italy.
But what does it mean to say that a product is imported in “significant quantities”? A footnote clarifies: a Party may consider the amount of importation of that product at the time of an application or petition is made for protection of a GI. But this explanation still begs the question of what is meant by significant quantity. For a premium artisanal cheese sold in upscale markets, a significant level of import may look quite different from a significant level of importation of an industrially produced cheese sold in discount or big box markets. And for large countries, such as Mexico or Canada, which markets are at issue? Urban niche markets? Home deliveries? Internet sales? Traditional grocery stores?
When is the Cheese Course?
Time will tell how these factors play out in analysis by relevant authorities in Mexico and Canada. What is clear, however, is that Canada and Mexico also had highly motivated and excellent negotiators. For the immediate present, USMCA does not rectify the concerns of CCFN or other cheese producers regarding the list of GIs previously agreed between the EU and Canada (2016) or between the EU and Mexico (2018). That’s due to a timing issue. Article 20, E.7 (6) states that no Party is required to apply Article 20 to GIs that have been specified, identified in, and that are recognized and protected pursuant to, an international agreement involving a Party, or a non-Party, provided that the agreement was concluded, or even agreed in principle, prior to the date of conclusion or agreement in principle of USMCA; or was ratified by a Party prior to the date of ratification of UCMCA; or entered into force for a Party prior to the date of entry into force for UCMCA for that Party. Assuming USMCA was agreed in principle on September 30, 2018, that allows Canada and Mexico to continue to respect and protect the GIs that each respectively agreed with the EU. If new GIs are nominated under either bilateral trade agreement later in time, Canada or Mexico, as the case may be, will need to abide by the new requirements set out in USMCA.
Business Insider reported in early October that President Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Peña Nieto are expected to sign the agreement shortly before Peña Nieto leaves office on November 30. Given the notification requirements under USTR’s trade promotion authority, the U.S. Congress would not vote on USMCA until 2019. Even if the U.S. Senate approves the deal, the new leadership in the U.S. House of Representatives is bound to ask questions. Notwithstanding that USMCA was negotiated by USTR on a “fast track” authority basis that does not allow for changes to negotiated language after the fact (remember the fast-tracked Uruguay Round Agreement Act and its unintended consequences for copyright?), newly installed members of Congress will likely want to know what they are being asked to sign off on. And because the agreement broadly addresses issues about labor, the environment, dairy production, wheat quotas and other areas of intellectual property, the questions are bound to be plentiful. GIs may turn out to be a cheese dessert, rather than a main course of discussion..
In December, in time for the holidays, we’ll take up the status after BREXIT of Scotch Whisky, Cognac and other premium drinkable GIs