European Union senior trade official Ignacio Garcia Bercero, right, shakes hands with his South Korean counterpart Kim Han-soo prior to a meeting at EU headquarters in Brussels July 16. EU and Korean negotiators held their second round of Free Trade Agreement negotiations in Brussels last week. / AP-Yonhap |
By Kim Deuk-kab
Research fellow, Samsung Economic Research Institute
 With the ink barely dry on the Korea-U.S. Free Trade Agreement, Korea began negotiations for another free trade pact, this time with the European Union. During the first round of talks, the EU introduced the concept of ``Geographical Indications'' (GIs), a product designation largely unfamiliar to Koreans but of vital importance to European businesses and governments.
GIs provide protection for products that denote their place of origin as an intrinsic part of their intellectual property rights, if names of these products are linked to specific geographical areas, connoting qualities inherent to a place or region. Some examples are Champagne, Bordeaux wine, Roquefort cheese and Parma ham.
Currently, approximately 5,000 products in Europe are afforded GI protection. Some 80 percent of them are wines and liquors. The rest are agricultural products and foodstuffs such as cheese, meat, fruit, olive oil and mineral water.
For Korea, the issue at hand is how it should respond when the EU demands GI protection not only to wines and liquors but also to a broad array of agricultural products. The EU is paying close attention to the handling of this issue. The Korea-EU FTA is likely to be the first FTA that applies GI protection to agricultural products. To be sure, European producers already have lobbied to ensure that GI protection be included in any FTA between the EU and Korea. GI products make up a substantial portion of the EU's agricultural exports. In this respect, GIs will be a major intellectual property rights issue during the negotiations (along with regulations on counterfeit goods).
GIs have been an integral part of multilateral and bilateral trade agreements by European nations since then they were first accorded international protection in the late 19th century. Today, GIs are at the heart of the EU's Common Agricultural Policy reforms, which aim at promoting production and exports of high-end agricultural products while simultaneously reducing agricultural subsidies. GIs thus serve as a marketing tool that provide value-added to agricultural products. With formation of the World Trade Organization in 1995, GIs became an important issue in the Agreement on Trade Related Aspects of Intellectual Property Rights. GIs ultimately were incorporated into the multilateral framework of the General Agreement on Tariffs and Trade. In the Doha trade talks, the EU has attempted to further expand the scale and scope of GIs throughout the world.
For agricultural products, Southern European countries have applied for the most GIs, accounting for 80 percent of the total. Italy leads the pack, with a 21.2 percent share, with France a close second at 20.5 percent, followed by Spain and Portugal at 14 percent each. Thereafter, Greece maintains an 11.5 percent share and Germany a 9.2 percent share, with the U.K. and other members accounting for 10 percent. Annual sales of products protected under GIs amount to 19 billion euro in France, 12 billion euro in Italy, and 3.5 billion euro in Spain.
The EU seeks to extend GI protection to agricultural products and foodstuffs like cheese, rice and tea. France and Italy strongly insist on the international protection of GIs on agricultural products in addition to wines and liquors. Switzerland, Turkey, India, Pakistan, Sri Lanka, Thailand and many Asian countries are also in favor of the protection provided by GIs as defined by the EU. However, the U.S., Canada and Australia oppose the introduction of the multilateral GI registration system and the extension of additional GI protections as promoted by the EU.
The EU is currently protecting GIs on wines & liquors by bilateral trade agreements with major countries, while striving to establish a multilateral register for GIs through the Doha round yet to be concluded. In 1994, in a wine agreement made with the EU, Australia agreed to phase out the use of widely known European names on wines made in its territory. In 2003, Canada agreed to end the use of 21 names of European wines and liquors on Canadian products in three phases. In March 2006, the EU succeeded in limiting the use of 16 GIs on U.S. products in a wine agreement with the U.S.
In addition, the EU has reached an agreement on the protection of GIs for wines and liquors in free trade talks with Chile, South Africa, and Mexico. In the FTA with Chile, the EU secured high-level protection of names of registered wines and liquors. In July 2001, the EU and
South Africa agreed to phase out the use of 'Port' and 'Sherry' on products made in South Africa within 12 years, and on products exported from South Africa within five years.
In 1997, the EU and Mexico agreed on the mutual recognition and protection of GIs for liquors. Mexico agreed to protect the GIs of more than 250 European liquors and, in exchange, gained the ability to enjoin the use of place names like 'Tequila' and
'Mezcal,' on products made in Europe.
At the second round of talks, the EU will ask Korea to limit the use of names registered through GIs and ultimately phase them out. If this demand is accepted, appellations like Champagne, Cognac, Scotch, and Bordeaux can no longer be used on domestic Korean products. Accordingly, the Korean government must identify any wine and liquor that use names registered as GIs, and come up with the appropriate countermeasures. At the same time, Korea will likely press for the longest transitional period possible.
Unlike in previous free trade talks, the EU is expected to request that GIs be applied to agricultural products in negotiations with Korea. In this regard, the government must decide on the scope of GI protection in consideration of its potential impact on Korea's agricultural sector. Many believe that GIs will not greatly affect Korea's agricultural industry, as Europe's food culture is markedly different from that of Korea. However,
the bakery and food/beverage industries are expected to be affected by GIs.
Then, a question naturally arises. Can the EU extend its GI protection, on legal ground, to agricultural products beyond wines and liquors? The answer is yes. By successfully revising GI-related regulations through legal settlements and disputes with the U.S. and Australia, the EU has gained the legal ground to expand items protected under GIs.
EU Trade Commissioner Peter Mandelson welcomed a WTO ruling in March 2005 that allowed the extension of GI protection to more products. According to EC Regulation 510/2006, most agricultural products including meat and dairy products, fish, fruit, vegetables, beer, beverages made from plant extracts, pasta, bread, pastry, cakes, confectionery and other baker's wares are now under the protection of GIs.
Some say that Korea should leverage GIs to protect Korean agricultural products in the European market. Currently, 38 agricultural products are registered as GIs in Korea. Since Bosung Green Tea was registered as Korea's first GI in 2002, 27 agricultural products and 11 forestry products have been registered as of April 2007.
Products registered for GI protection can attain better recognition in the market and can enjoin use of their names by other regions or companies. However, Korea's GI system has had little influence on the international community due to their internationally unknown names, and hence, Korean GI products cannot expect exclusive rights for themselves in overseas markets.
In order for Korea's GIs to be recognized by the EU, they must be registered with the European Commission according to procedures set by the EU. If Korea and the EU agree to protect GIs on agricultural products via a free trade agreement, domestic Korean products can be guaranteed exclusive rights in the EU market without having to go through the EU's GI registration process. Thus, the Korean government must carefully determine which products should be protected as GIs as more Korean agricultural products and foodstuffs can flow into the EU market if a Korea-EU FTA is concluded.
The recent successful exports of Korean rice to Switzerland are a good example that demonstrates the potential of the European market for Korean goods and services. Provincial governments and agricultural communities in Korea must focus on developing export items that will attract European consumers. The 38 products registered under GI protection can be viable candidates for exports to the EU, with GIs helping to enhance the quality and reputation of those products.
This article was carried on the Web site of the Samsung Economic Research Institute.
Any inquiries about this article should be addressed to europe.kim@samsung.com.
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