Reign of Terroir

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By K. William Watson,

from CATO Institute,

How to Resist Europe’s Efforts to Control Common Food Names as Geographical Indications.

The European Union’s agenda in international trade negotiations includes an effort to secure the protection of their “geographical indications” (GIs) in foreign markets. If European officials have their way, a great number of common food and drink names will disappear from American grocery store shelves. American companies would have to make up new names for wines such as champagne, port, and sherry, and also for common cheeses such as parmesan, gorgonzola, and feta. Even such identifiers as “California champagne” and “parmesan-style cheese” would not be allowed.

At the heart of Europe’s approach to GI protection is the idea of terroir—that there is an essential nexus between a product’s characteristics and the place it was made. When others use place names in a generic way, they are, in the European view, unfairly usurping the value created in that name by generations of local producers. Supporters claim that strong GI protection is needed to prevent fraud, ensure fairness, and promote economic development.

In truth, Europe’s approach to GI protection mainly serves to privilege traditional producers at the expense of consumer welfare and economic growth. The connection between quality and origin is often exaggerated by European policymakers, and the level of protection that GIs enjoy prevents the flow of accurate information to consumers. Moreover, by incentivizing traditional production patterns through communal rights, Europe’s GI system directly reduces both innovation and competition in their own market.

For its part, the U.S. government views Europe’s position as a protectionist attempt to control the use of generic terms that correspond to European cities or regions where those products were first made. The United States has its own way of protecting GIs, but it does so, with some exceptions, through trademark law rather than a dedicated regulatory scheme. The consequence is that many European GIs are not protected.

The United States should fight against Europe’s attempt to spread its GI protections around the globe. This means, first, resisting efforts to expand the mandate for GI protection at the World Trade Organization. Second, the United States should, like it did in the Trans-Pacific Partnership, secure open markets for generically branded products within regional and bilateral agreements. Finally and most importantly, U.S. negotiators should make it clear that GIs will not be a subject for negotiation in the Transatlantic Trade and Investment Partnership (TTIP).

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