A professor of mine once distilled all of corporate law into four simple words: Don’t be a pig. Europeans negotiating a free trade deal with the U.S. aren’t heeding that sound advice.
The European Union wants to expand rules that identify products by where they originate — so-called Geographical Indications or GIs — as a way to increase its sales of cheese. This means that U.S. companies would no longer be able to sell cheese labeled with common names such as parmesan, feta and asiago in the U.S. market. Right now, the U.S. has agreed to abide by GIs for cheeses that come from very specific regions, such as Parmigiano Reggiano and Grana Padano. But U.S. cheese makers are still permitted to use generic cheese names as they have been doing for decades.
As recent emails between U.S. and EU representatives show, though, European countries aren’t willing to accept this arrangement. In March, the EU released a list of more than 200 food products it believes should be covered by GI protections, including some of the most popular U.S cheeses. This represents approximately 14 percent of U.S. cheese production valued at approximately $4.2 billion per year. As U.S. negotiators race to complete the giant U.S.-EU trade deal, the Transatlantic Trade and Investment Partnership (T-TIP), they must resist Europe’s provocations and ensure that American dairy products are on a level playing field with their European counterparts.
The EU already ships $972 million of cheese to the U.S. annually while the U.S. ships just $6 million of cheese to the EU. The United States actually sells more cheese (just under $8 million) to the tiny nation of Trinidad & Tobago, population 1.3 million, than to the EU, population 508 million.
Despite this advantage, the EU is trying to win even more market share by attempting to claim sole rights to use generic names. U.S. trademark law already rightfully recognizes legitimate GIs that correspond to specific regions in Europe. Such rules are necessary to ensure that American consumers are not misled about the origin of their products. But the EU seeks to go much further by clawing back common cheese names that have been produced in the United States for decades and are clearly generic. This would deny U.S. cheese producers the ability to use those common monikers not just in Europe but in the United States as well. The EU even wants to force the U.S. government to enforce this scheme.
That’s just wrong. GIs, which are a type of intellectual property regulation, are used in Europe to restrict product names to certain places and production methods. With cheeses, for example, Parmigiano Reggiano must come from the Parma region of Italy and other cheeses can’t use that name or even “parmesan.” As a result of not being able to use “parmesan,” U.S. cheese companies had to discontinue selling parmesan in the EU market — a whole market was lost costing millions.
The U.S. cheese industry, on the other hand, has no problem with labeling cheeses. A fundamental precept is that a label must be truthful and not misleading. No one thinks a cheese produced in the U.S. can be called Parmigiano Reggiano. That would be misleading. But there’s no reason a cheese made in the U.S. can’t be called “parmesan.” In fact, the U.S Patent and Trademark Office agreed and deemed “parmesan” alone to be generic, a view also shared by many other countries.
Many U.S. cheeses at issue here are made by family-owned companies that have been in the U.S. for decades. They built the U.S. market for these cheeses. The U.S. government also has invested millions of dollars maintaining an open and transparent intellectual property system, a system that Europeans benefit from in their U.S. sales.
For example, U.S. cheese makers have been producing asiago cheese in the United States for decades and built the market here. U.S. marketing efforts, especially restaurateurs’ asiago bagels, have had a huge and positive impact on the market. As a result, Italian exports of asiago cheese have benefited significantly when previously little of that cheese had been imported to the United States. While the original cheese came to the U.S. with Italian immigrants, asiago long ago lost its original connotations and became generic. It simply would be inappropriate for the EU to attempt to claw back this name at this time.
Furthermore, the EU has been inconsistent in its application of GIs. For example, there is no town or region in Greece called “feta,” yet this type of cheese also enjoys a GI in the EU.
The EU’s insistence that the U.S. government hamstring cheese producers in the U.S. market for the benefit of GI holders in Europe who already hold a 150-to-1 sales advantage is not just unreasonable. It’s being piggy.
Yet the fate of an entire T-TIP trade agreement might rest on this issue. The dairy industry is ready to fight the EU on this matter while opponents of free trade are eager to exploit the dispute to kill the entire pact. This would be a terrible outcome because T-TIP could have huge benefits to all countries involved — but not at the expense of U.S. cheese producers who are simply asking for a fair market.
The EU announced in New York recently that better access to the European market for U.S. meat and poultry will be directly tied to concessions on cheese GIs. This sort of big talk isn’t new. But it is rash and dangerous. A unified U.S. agricultural sector is vital to the eventual passage of T-TIP. Trying to start a knife fight between dairy and meat producers hardly furthers that goal. What’s more, framing the issue as a zero-sum game virtually guarantees strong opposition from the loser. U.S. policymakers are right to reject the EU ultimatum for the sake of fairness and the future of free trade.
The U.S. dairy industry does not oppose accurate labeling for cheeses. But the EU’s push in T-TIP for onerous restrictions in both the United States and the European Union goes too far.
Source: Politico