January 8, 2015 12:30PM

TTIP Opponents Fret Over Phantom Liberalization of GIs

Some of the most vocal criticism of the Transatlantic Trade and Investment Partnership, a proposed trade agreement between the European Union and the United States, is coming from Europeans worried that the agreement will liberalize parts of their economy that it actually won’t.  This is a very frustrating situation, because supporters of the agreement are then forced to assure critics that the TTIP will not, in fact, do this particular good thing they don’t want it to do.

For example, people have claimed angrily that the TTIP will require the UK to privatize its National Health Service and then prevent the government from “renationalizing” it—that would be great, but it’s not true.  At most, the UK would be required to allow U.S. companies to participate if the government chose to privatize parts of the NHS and then compensate them in any future taking, as it would surely do anyway.  If the UK ever reforms its health system, it won’t be because of TTIP.

Now a new boogieman has emerged, with European news media fretting this week that the TTIP could require Europe to relax protections for geographical indications on cheese and meat products.

As reported in the Financial Times:

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: “If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.”

Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.

. . .

[But] Daniel Rosario, spokesman for the EU, insisted that TTIP would not undermine European food brands or weaken intellectual property safeguards.

“On the EU side, we have made clear to our American counterparts that geographical indications are one of our main priorities and we have not agreed and will not agree to reduce the protection of our geographical indications in Europe,” he said.

Despite what a German official may have said, the EU is not only committed to maintaining its GI protection scheme but is intent on spreading it internationally.  If the TTIP does impact the use of geographical indications it will likely be to require the United States to recognize and protect European GIs in the U.S. market.

That’s a real shame, because Europe’s method for protecting GIs is bad for European consumers.  U.S. policymakers should avoid imitating it.

Sometimes when a product uses the name of a place, it’s to indicate origin.  For example, any consumer that purchased  Napa Valley wine, Wisconsin cheese, or Florida orange juice expects that some or all of the product was produced in those locations.  On the other hand, lots of place names are generic indicators of a product’s characteristics.  For example, no one thinks Philly cheesesteak, Boston cream pie, or Texas toast have to be made only in those places.

The proper way to distinguish between these different uses of place names is to gauge consumer expectation.  However, many countries in Europe, and the EU itself, protect GIs not to prevent consumer confusion but to secure advantages for traditional producers.  They use restrictions on language in order to prevent names from becoming generic, and are trying to claw back names that have already become generic in foreign markets.

Americans would be surprised to learn how many of the foods they eat have names that Europe thinks are GIs in need of protection.  The most well-known example of a term that is generic to Americans but not Europeans is champagne, which to most Americans simply means wine with bubbles.  But cheeses like asiago, parmesan, and gorgonzola are also regulated geographically in Europe as well as countless other descriptive terms like Cornish pasty and Greek yogurt.

The result for Europe is a market where quality and geography are legally tied together.  This system pleases local producers and politicians, but it also kills innovation and prevents the development of efficient supply chains.  Consumers may know just where their cheese came from, but without competition, they will have to pay more for it and it probably won’t taste as good.