US embassy cable - 05GENEVA2797

UNCLAS SECTION 01 OF 04 GENEVA 002797 
 
SIPDIS 
 
PASS:  USTR:  ESPINEL, MULLANEY, HAUDA, WINTER, WELLER, 
STRATFORD 
STATE:  WILSON, FELT, EB/TPP/IPC, EAP/CM 
USDA:  FAS/ITP/SCHWARTZ, TTB/TOBIASSE 
USPTO:  LASHLEY, SALMON 
USDOC:  ITA/SCHLEGELMILCH 
USDOJ:  PARSKY, CHEMTOB, GAMMS, SHARRIN 
 
E.O. 12958: N/A 
TAGS: EAGR, ETRD, WTRO, Trade 
SUBJECT:  WTO TRIPS COUNCIL SPECIAL SESSION October 27 2005 
 
 
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 
 
SIPDIS 
(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. 
 
AGENDA 
 
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. 
 
NEGOTIATION OF THE ESTABLISHMENT OF A MULTILATERAL SYSTEM OF 
NOTIFICATION AND REGISTRATION OF GEOGRAPHICAL INDICATIONS 
FOR WINES AND SPIRITS 
 
 
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. 
 
CONTRIBUTION TO THE PREPARATIONS FOR THE HK MINISTERIAL 
CONFERENCE 
 
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 
 
SIPDIS 
tentatively as March 16-17, June 12-13, and October 26-27.