The following was published on POLITICO and POLITICO Pro on 13 June 2016.
European winemakers have gained useful allies in the push to protect regional names, such as chianti and champagne, in trade talks with the United States: vintners from California’s most-prized wine country.
But that doesn’t mean the U.S. will change its stance in the slow-going transatlantic negotiations.
In Napa Valley and a smattering of other U.S. wine-making regions, vintners say they want Washington to give in to the European Union’s demands on “geographic indications,” which are like trademarks on brand names except that they apply to geographic regions — identifying a wine as chablis or burgundy if it’s from those places, for example.
But the rest of U.S. wine industry is holding firm to a deal Washington struck with Brussels in 2006 that allows American vintners to keep labeling their products with such regional designations so long as they were doing so before the agreement was struck. The deal — which safeguards nearly 1,000 European wine names — strikes the right balance in allowing established U.S. producers to keep the labels they’ve been using for decades, they say. The divide sets up a major showdown as U.S. and EU negotiators work furiously to wrap up the trade talks before President Barack Obama leaves office.
"They've already agreed to our system, [and] now they're trying to undo an agreement which everyone in an arms-length transaction entered into in good faith …," said Tom LaFaille, vice president and international trade counsel for the Wine Institute, a California wine industry advocacy group that opposes changes to the 2006 wine deal. “It's of extreme importance to us."
In March, the European Commission published a new proposal under the TTIP that would “update and improve” the 10-year-old wine agreement, ending American use of 17 semi-generic wine names and extending the 2006 agreement to distilled spirits, according to the Commission. It also would create a committee on trade in wine and spirits to manage changes to the list of protected names.
The move has the backing of French Trade Minister Matthias Fekl, a staunch opponent of the U.S. position on geographic indications, who met with Napa winemakers last week. Like French President François Hollande, he has warned negotiators they can kiss the TTIP goodbye if the EU’s agricultural demands aren’t met.
“What we think is that it’s possible to have protection of both geographical indications and wine trademarks” under the U.S. system, Fekl said at a European Institute discussion on multilateral trade in Washington last week. “It was very interesting to have discussions with the Napa Valley, because it showed that there is not only opposition, but that there can be common ground.”
But EU officials point out that the two sides still haven’t formed a working group for negotiations on geographical indications for wine and other food products named after their regions, such as parmesan or gorgonzola cheese, which also could be affected by the place-names debate.
“Today there is no group because the U.S. does not want a group,” a French official told POLITICO. “Of course, they are aware of the European position.”
A spokesman for the Office of the U.S. Trade Representative said the U.S. will not consider renegotiating the 2006 agreement through TTIP, arguing the current deal already favors European producers. But he said the U.S. is engaging with the EU on how to handle distilled spirits.
Trade numbers show that Europe dominates two-way wine trade with the U.S. Although America is the fourth-largest exporter of wine in the world, the U.S. ran a $3 billion trade deficit in the product with the EU in 2013, the Congressional Research Service reports. In addition, Europe is far and away the leader in production worldwide, making 60 percent of the global supply in 2011, most of that from France, Italy and Spain, the report says. The U.S. comes in a distant second at about 10 percent of global supply.
While the majority of the U.S. wine industry supports the Obama administration’s position in TTIP, the Wine Institute’s LaFaille hinted as well that Congress wouldn’t be pleased if negotiators make any changes to the 2006 agreement through the trade pact.
“We’re confident that the U.S. government — both the administration and Congress — will continue to support the U.S. wine industry in TTIP and other trade negotiations,” he said.
But Rex Stults, government relations director for the trade group Napa Valley Vintners, said the U.S. should drop the semi-generic names. If vintners can’t protect their labels, imitation products can sour their product’s image, he said.
Winemakers in Napa Valley, which became the first region in the U.S. to gain a geographic indication in Europe, are already seeing their regional name appear on bottles of cheap wine in foreign markets, he said, sharing an image of a Chinese wine with a Napa Valley mark.
"We've had our name ripped off all over the world," Stults said. "How we can we go fight for our integrity around the world when the United States doesn't offer that same reciprocation?”
Other sectors that could be affected by geographic indications are also paying close attention to developments in the wine talks.
"We do aim to track what's happening in other sectors, particularly because it seems to be a useful indication of where GI policies may be headed in the years to come for our industry as well," said Shawna Morris, vice president for trade policy at the National Milk Producers Federation and a spokeswoman for the Consortium for Common Food Names, a group that fights GIs for food names that it thinks are generic.
"Years ago, when the GI issue was frankly just a wine issue, I think our industry was relieved it wasn't our problem, for the most part,” she said. “Unfortunately, that situation didn't last long."
But Sam Heitner, director of the U.S. wing of the Comité Champagne, a French trade association, said it’s time to make the leap and embrace protected names. That way, regional authenticity and quality assurance can be better safeguarded in a global market, he said.
“This is not an intellectual stretch,” Heitner said. “This is simply closing a loophole to treat all wines equally, not creating a separate set of rules for a small set of names.”