Cablegate: Wto Trips Council Special Session October 27 2005

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A

1. SUMMARY: The TRIPS Council Special Session met on
Thursday, October 27, 2005. The Special Session is charged
with negotiating a system of notification and registration
of geographical indications (GIs) for wines and spirits
eligible for protection in those WTO Members participating
in the system, in order to facilitate the protection of
GI's. Ambassador Manzoor Ahmad of Pakistan chaired the
meeting. Discussion centered on remaining issues under the
Secretariat's comparison document of the proposals tabled

(the Joint Proposal, Hong Kong and the EC). The issues
discussed were duration/renewal of the system; modification
of notifications; termination of participation; withdrawals
of GIs; administering body and fees/costs. Many
delegations, including Brazil, voiced serious concern over
the EC proposal's over-reaching nature that is beyond the
mandate. The EC and Switzerland provided interventions
supporting the EC proposal. In addition, the Chair held an
informal consultation regarding the Council's contribution
to the Ministerial. The Chair suspended the meeting to hold
further consultations. END SUMMARY.


2. As the Special Session is solely concerned with the
negotiations of a system of notification and registration of
GI's for wines and spirits, the Agenda was short, including:
negotiation of the establishment of a multilateral system of
notification and registration of geographical indications
for wines and spirits; and other business.


3. Discussion began on the issue of modification and
withdrawal of notification and registration under the three
proposals tabled. Argentina noted that the Joint Proposal
offers simple and clear methodology so that all
modifications are notified to the administering body.
Argentina noted reservations regarding the EC proposal with
the respect to the withdrawal of notification under
paragraph 8.1 of the proposal. It states that "if the GI no
longer fulfills the conditions.the notifying member shall
withdraw the relevant notification." Argentina opined that
there is no guidance for when a notifying Member fails to
make a notification that the GI has fallen into disuse in
the country of origin. It was noted that this lack of
notification could be damaging to producers in third
countries. Argentina added that the direct legal effect in
the proposal creates great uncertainty for producers that
would have to stop using a term but then not be aware that
the term no longer meets the requirements for registration
under the system. Argentina stated that the Joint Proposal
allows each country's legislation to apply and that there is
more certainty for producers in third countries.

4. The EC first commented that the Hong Kong proposal has
the duration of GI protection limited to 10 years. The EC
noted that TRIPS is silent regarding duration of protection,
stated that it has doubts whether 10 years would be in
conformity with TRIPs, and asked about the rationale this
provision. With respect to the Joint Proposal, the EC
stated that there could be termination of participation, but
maintained that there should be no such thing as terminating
participation in the system, as it is not consistent with a
multilateral system. On withdrawals of GIs, the EC stated
if a notifying Member fails to notify a withdrawal of a GI
that is no longer protected in the country of origin, the
Member would be in violation of the text. For the third
country market aspect, the EC stated that it is up to a
country to decide whether it protects a GIs that has fallen
into disuse in the country of origin, pursuant to Article
24.9. In response to Argentina's question concerning
withdrawal of participation, the EC stated that it has not
provided any language on that point and would be ready to
think about language but noted that withdrawal from the
system could only mean changing from a participating to a
non-participating member, unless a Member becomes an LDC or
leaves WTO.

5. Hong Kong responded to the EC's question concerning
duration of protection under its system. Hong Kong noted it
is not proposing any legal limit on duration of protection.
The provision is meant more as administrative mechanism to
keep the system up to date. If circumstances remain the
same for that particular GI, it will be automatic renewal,
subject to an administrative fee. If there are changes, the
durational limit provides a mechanism for the administering
body to keep the system up to date.

6. The USDEL stated that for those Members who are neither
wine nor spirits producers, the EC comments demonstrate
which proposal to avoid. The U.S. noted that it still
cannot understand the benefit of being a non-participating
Member under EC system. There would be no corresponding
benefits for non-participating Members, but these Members
are subject to costs of a mandatory system. The U.S. stated
that the Council should focus on the Joint Proposal because
it does not impose any new obligations or increase levels of
protection, but helps facilitate protection that had already
been negotiated during the Uruguay round.

7. The EC stated that Article 23.4 states "multilateral"
and that the Joint Proposal is plurilateral in nature and
therefore does not meet the mandate.

8. Australia stated that it is concerned with respect to
GI's that have fallen into disuse but that remain registered
under the system and impact third country markets.
Australia also responded to the EC's "multilateral" comment,
noting that the Code of Good Practice in the Technical
Barriers to Trade Agreement is a multilateral agreement in
which all Members do not have to participate.

9. In response to Chinese Taipei's question for Hong Kong
on whether a member can terminate its participation in the
system at any time, Hong Kong responded yes.

10. With respect to fees and costs under the three
proposals, the EC stated that its system is inspired by the
Madrid Protocol. The EC noted that the cost of system
should be borne proportionally by those who benefit the most
from the system. The fees would be paid by notifying WTO
members. A basic fee would be paid to cover administrative
costs, and individual fee to monitor for past and future
trademarks. The WTO Secretariat will establish fees and
redistribute fees like the Madrid Protocol system.

11. Australia stated that there are no fees or costs
related to the Joint Proposal. In contrast, the EC proposal
would result in each PTO charging an individual fee to cover
examination cost, in addition to basic cost mentioned in EC
proposal. Australia noted that it is unclear what cost
savings will be under the EC proposal, as opposed to
applying for certification mark under current systems.
Australia also noted that there would be many costs
associated with EC proposal that would not be recoverable by
fee mechanism proposed. Members would have to implement new
system of protection, (those who protect under unfair
competition law, for example), and costs associated with
mandatory challenge procedures.

12. New Zealand stated it sees the Joint Proposal as the
lowest cost proposal. It has minimal costs for those
choosing to participate, and no cost for those who are non-
participating Members. In contrast, the real costs of EC
system are higher than just carrying out a trademark system,
and there would be significant cost to consumers, producers
and governments. New Zealand noted that the costs even for
a developed country would be difficult under the EC's
system. Countries would have to monitor all notified GIs,
monitor national trademarks and lose flexibilities under
national law; engage in bilateral negotiations and lose
flexibilities in that forum as well. It was noted that for
some developing countries they may not have the
infrastructure to implement these new obligations.

13. Argentina stated that Members should be concerned with
hidden costs that would have to be borne by national PTOs.
It was noted that the EC's proposal is very complex with
respect to costs and fees, there are some initial elements
in Articles 9.2 and 9.3 that give rise to uncertainty.
There is no estimate as to how much it will cost or what the
budget is for the administering body. Argentina noted that
Article 9.7(b) mentions "monitoring" and questioned whether
each WTO member would have to continually monitor the
applications for trademarks and be reimbursed by another
member. Also noted that the Secretariat is charged with the
role of having to calculate the individual and basic fee to
be paid by the applicant.
14. Canada stated that the fees that are believed to be
involved under the EC's system are: lodging a reservation;
examination costs; costs to governments entering into
bilateral negotiations; trademark searches (searches
normally done by lawyers or trademark practitioners);
governmental costs for setting up system to deal with a
flood of applications (hiring people, new computers, etc);
costs with respect to opposing potential notifications;
costs of enforcement; costs to producers/retailers regarding
rebranding; and costs to trademark holders who have
trademarks that consist of or contain GIs. Canada added
that it is now dealing with 490 applications for GIs that
came in all at once after the conclusion of the Canada -EC
wine agreement. They are overwhelmed, and unsure how a
smaller country will be able to handle this situation in a
multilateral context. Canada concluded by noting that the
Joint Proposal is a voluntary system that would be low in
costs to run.

15. Japan stated that a proposed system should not impose
costs on Members nor the Secretariat. Chinese Taipei agreed
with the statements of New Zealand, Australia, Canada, and
Japan. Colombia also agreed with these statements.

16. The EC stated that the Joint Proposal contains costs
and is a system that implies some obligations through which
tribunals will have to examine registration, and that this
will incur costs. The EC noted that there must also be
costs, for example, associated with setting up computers for
all PTOs to hold the database to look at during examination.
The EC also stated that it will exercise self-restraint in
notifying GI terms, adding that imposing a fee on the
registration will automatically restrain the number of
notifications. The EC continued by noting that its proposal
is pro-developing countries and noted that Colombia is
applying for GI protection in the EU.

17. Hong Kong noted that its proposal does not have direct
costs on non-participating Members, but noted that there are
indirect costs regarding monitoring third country markets
(legal presumption approach).

18. Australia noted that it opposed the EC's
characterization that the Joint Proposal is as costly as the
EC's proposed system, stating all of the new obligations
that are included in the EC system.

19. The USDEL supported Australia's comments, and also
noted that EC's GI regime for some time did not provide
protection for third country GI's unless the relevant
country had a reciprocal system. The U.S. stated that, in
contrast, the certification mark system in the United States
protects a large number of third country GIs. The USDEL
stated that the Joint Proposal meets the mandate and that
the database proposed is unprecedented in its transparency.
The USDEL concluded by stating that the EC's proposal is
justifying compulsory bilateral negotiations when a
reservation has been lodged against a notification by
misinterpreting Article 24.1. It was noted that in order
for Article 24.1 to apply, the term at issue would have to a
GI in the objecting territory and that the EC is essential
stating that even where a Member objects to the registration
because it is not a GI in its territory that Member cannot
object to bilateral negotiations. The USDEL stated that the
EC is shifting the rights and obligations in this area.

20. Chile stated that the fact that Members have to engage
in bilateral negotiations is a feature that does not exist
with in the Madrid Protocol and does not exist with in
TRIPS. Chile noted that this feature alone would involve
lots of costs, and moreover territoriality is not addressed
in the EC's proposal.

21. In response to the EC's question concerning the costs
of the Joint Proposal, Australia reiterated that there would
absolutely no costs to non-participating members. Noting
that this is significantly different than EC proposal, where
non-participating members would still have to set up a
system of administration, even when they are not notifying
any GIs themselves. Australia noted that under the Joint
Proposal Members are free to implement the Joint Proposal
the way they see fit and that there would be no need to
employ new staff or revise existing law.

22. With respect to the role of the administering body, the
EC noted that it envisions either the WTO Secretariat or
WIPO having the role. Switzerland stated that the
administering body should undertake administrative tasks
such as receiving notifications and reservations, sending
such information to Members and publishing the information
on-line. Switzerland also added that the administering body
should carry-out formal examination of notifications to
ensure requirements are met.

23. Hong Kong stated that with respect to the review of the
system, participation is a feature that would have the
opportunity for review. The U.S. noted concern with respect
to a review that would change the nature of participation
into a mandatory one. The USDEL noted with respect to the
administering body that the first question is to know the
type of system that will be administered. The U.S. indicated
that the Joint Proposal will be very easy to administer,
with limited overhead and similar to the implementation done
by the Secretariat of the Central Registry of Notifications.

24. The Chair noted Members remain divided on the issues of
legal effect, participation and costs and fees.


25. The Chair held informal consultations regarding what
should happen in the run-up to Hong Kong.

26. The EC noted that a new language on the mandate should
be considered, including "a multilateral register that has
binding force and should be multilateral in the sense that
all Members should be bound by it." The EC added that it
expects progress on GIs consistent with progress on other
areas, including Agriculture.

27. Australia noted that in terms of Chair's report to the
TNC/GC, it should be short, factual and reflects the nature
of the discussion, including recent meetings that show there
has been good engagement, but that work continues, including
with the legal texts that are on the table.

28. The USDEL indicated support for Australia's statement
and noted that no clarification of the mandate is warranted.
Chile, Canada, Argentina, New Zealand and Chinese Taipei
endorsed these comments.

29. Switzerland noted that to overcome the gridlock on the
issue, the Chair's report should indicate that guidance is
necessary from a higher level.

30. The Chair indicated that he was suspending the meeting
and would continue with consultations on this issue. The
Secretariat announced dates for next year's Special Session

tentatively as March 16-17, June 12-13, and October 26-27.

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