Background
3.1
It is proposed that Australia enter into the Agreement between
Australia and the European Community on Trade in Wine (the Agreement).
3.2
The Agreement’s purpose is to facilitate and promote trade in wine
originating in the European Community (EC) and Australia.
3.3
Australia and the EC concluded a similar Agreement in 1994 to facilitate
and promote trade in wine. The 1994 Agreement authorised a number of winemaking
practices and provided for the protection of the names of wines originating
from particular regions in Australia and the EC. However, the 1994 Agreement
left unresolved a number of issues relating to the protection of certain EC
Geographical Indications[1] and Traditional
Expressions[2]. The proposed Agreement
aims to resolve these issues and will replace the 1994 Agreement.[3]
3.4
The Agreement will enter into force after the Parties have notified each
other in writing that their respective requirements for the entry into force of
the Agreement have been complied with. The EC has already completed its
requirements to bring the Agreement in to force. For Australia to bring the
Agreement into force, amendments will have to be made to the Australian Wine
and Brandy Corporation Act 1980, the Australian Wine and Brandy
Corporation Regulations 1981 and the Trade Marks Act 1995.[4]
Obligations
3.5
Article five requires both Parties to authorise the importation and
marketing of wine produced using the processes or practices outlined in the
Agreement. In particular the EC is required to authorise the importation and
marketing of Australian wines produced using 16 additional winemaking
techniques which previously lacked authorisation, or were only provisionally authorised,
under the 1994 Agreement.[5]
3.6
Article 10 sets out that where a dispute arises between the two Parties
over recognition of a new production procedure or practice, a process of
arbitration shall take place. The determination of this arbitration is binding
on both Parties.[6]
3.7
Article 12 requires both Parties to prevent the use of certain protected
names in the labelling of wines produced in their territories. Australia is required to prevent the use of names listed in Annex II, Part A and Annex III of the Agreement. The EC is required to prevent the use of names listed in Annex III of the Agreement. Both Parties are required to prevent the use of names that refer to the
territories of the other Party.[7]
3.8
Articles 13 and 16 distinguish between how Geographical Indications and
Traditional Expressions are regulated for wine imported from countries outside
the Agreement. Article 13 requires that Parties prevent the misuse of
Geographical Indications in the labelling of wine produced within their
territories and imported from third countries. Article 16 requires that
Australia prevent the misuse of EC Traditional Expressions only in the
labelling of wine produced within Australia.[8]
3.9
The Australian Wine and Brandy Corporation (AWBC) provided the Committee
with an example of how these provisions would function:
Were a Californian burgundy—a third country product—using a
European Geographical Indication presented on the Australian market, AWBC would
be required to prevent the sale of such a wine. But were a Californian
spatlese—that is a traditional European expression meaning late
harvest—presented on the Australian market, that would be perfectly legitimate
because even though, under the agreement, Australian winemakers have agreed not
to use those Traditional Expressions, we do not need to prevent third countries
from using them.[9]
3.10
Articles 15 and 17 permit Australia to use a range of sensitive names in
the labelling of its wine for a limited period following entry into force of
the Agreement. Australia may use the names Burgundy, Chablis, Champagne,
Graves, Manzanilla, Marsala, Moselle, Port, Sauterne, Sherry, White Burgundy,
Amontillado, Auslese, Claret, Fino, Oloroso and Spatlese for 12 months, and may
use the term Tokay for 10 years, following entry into force of the Agreement.[10]
3.11
Article 23 permits Australia to continue to use a range of names listed
in Annex V. These include commercially important terms for the Australian
fortified wine industry including ‘cream’, ‘ruby’, ‘tawny’ and ‘vintage’.[11]
3.12
Article 27 prohibits Parties to the Agreement from introducing more
onerous labelling requirements than those that exist when the Agreement enters
into force.[12]
Reasons for Australia to take treaty action
3.13
Under the 1994 Agreement, Australia and the EC resolved to agree on dates
for the phasing out the use of EC-claimed Geographical Indications and
Traditional Expressions in the labelling of Australian wine. The proposed
Agreement resolves this issue and makes these dates clear.[13]
3.14
The Government stated that negative impacts on the Australian wine
industry would be limited, as much of the industry has already shifted away
from using European wine styles as a descriptor of Australian wines.[14]
3.15
However, the Government noted that the requirement that Australia phase
out the use of ‘Port’ and ‘Tokay’ in the labelling of wine will have a significant
impact on Australia’s fortified wine industry.[15] Nonetheless, the
Agreement permits Australia to continue to use a range of sensitive EC-claimed
terms which are of high value to Australia’s fortified wine industry including ‘ruby’,
‘tawny’, ‘vintage’ and ‘cream’.[16] Australia would not be
permitted to use these terms if it did not become a Party to the Agreement.[17]
3.16
Furthermore, a representative from the Department of Agriculture,
Fisheries and Forestry informed the Committee that assistance was provided to
the fortified wine industry:
… a grant of $500,000 was provided towards a fortified wine
rebadging project which looked at developing alternative names and using this
opportunity to reposition the fortified sector. This project is nearing
completion and the renaming will see ‘sherry’ being referred to as ‘apera’
within a year of the agreement coming into force and ‘tokay’ will be known as
‘topaque’ within 10 years of that date.[18]
3.17
The Government noted that, whilst the Australian wine industry has great
potential for further growth, there is only limited growth potential in the
Australian domestic market. Thus any future increase in Australian wine
production will need to be exported.[19] The Government
considered that the Agreement will help to consolidate Australian access to
European wine markets and will in turn facilitate growth in the Australian wine
industry.[20]
3.18
By requiring that the EC not impose more restrictive labelling
requirements in the future, the Agreement will reduce the risk to the
Australian wine industry of any difficulties or costs that might arise if the
EC was permitted to implement more onerous wine labelling requirements in the
future.[21] The AWBC informed the
Committee of an additional benefit of this provision:
… [this provision] will provide certainty to Australian
winemakers going forward … it will give Australian winemakers confidence to
continue to produce wines in the manner in which we do in this country and to
present them in the way that we typically do and not be denied access to
European markets.[22]
3.19
Under the 1994 Agreement a range of new winemaking techniques important
to Australia were not recognised. Thus these techniques have had to be
provisionally authorised every 12 months. The proposed Agreement permanently
authorises these new techniques and provides that any new winemaking practices
will automatically receive provisional approval. This aspect of the Agreement
secures Australia’s access to European wine markets.[23]
3.20
The AWBC argued that the requirements under the 1994 Agreement, and
under the proposed Agreement, for Australian winemakers to move away from using
EC-claimed names has encouraged Australian winemakers to be innovative in the
naming of their product. In turn, the Australian wine industry has benefited
through differentiating their product from other wines, and in some cases,
establishing these new products as household names.[24]
3.21
The AWBC claimed that small wine producers in particular will benefit
from this Agreement. The Agreement requires the EC to protect a range of
Australian wine names, which will in turn promote the regional differences of
wine and the unique characteristics of wines associated with those regions.
Thus, small producers may have a greater capacity to differentiate their wines
through labelling and the characteristics associated with that label.[25]
Opposition to the Agreement
3.22
The Committee received a submission from Dr Matthew Rimmer, Associate
Director of the Australian Centre for Intellectual Property in Agriculture
which operates as a partnership between the University of Queensland, Griffith
University and the Australian National University. Dr Rimmer’s submission urges
the Committee to take into account a range issues including:
- the potential for
Geographical Indication regulations to be used beyond their initial intent;
- the history of
Geographical Indications in Australia;
- the potential costs
of the proposed Agreement; and
- the Agreement’s
interaction with current laws.
Dr Rimmer’s submission argues that a
range of issues pertaining to the Agreement have not been properly considered
by the Government.[26]
3.23
The submission argues that previous Agreements that regulate the naming
of wines are at risk of being expanded beyond their initial geographical scope.
In particular, the submission points to the Champagne region in France which
was enlarged in 2008 to facilitate greater production. The submission urges the
Committee to be wary of the possibility that the terms of the Agreement could
be expanded to assist European winemakers.[27]
3.24
The AWBC noted that whilst some regions have been expanded beyond their
initial geographical scope (such as the Champagne region) this issue has little
impact on Australian winemakers. It was suggested that, under the terms of the Agreement,
Australian winemakers are not permitted to use certain names regardless of the
size of the EC region that can use those names. Thus the AWBC considered that
Australian winemakers would be unaffected by this issue.[28]
3.25
Dr Rimmer questions whether the benefits to Australia of increased
access to European markets truly outweigh the cost of more restrictive labelling
requirements and claims that the Government has downplayed the costs of the
Agreement to the Australian wine industry. Dr
Rimmer argues that the Agreement may have significant economic, legal, social
and political impacts on Australia. Dr Rimmer urges the Government to conduct a
clear and detailed cost and benefit assessment of the Agreement.[29]
3.26
The Government’s Regulatory Impact Statement (RIS) contains a cost and
benefit impact analysis. This analysis concludes that, whilst Australia will be
required to prevent the use of a range of wine names, the EC will be required
to accept a range of new wine making techniques which are of high value to
Australia. Also, due to the standstill provision, Australia will be protected
from more onerous labelling requirements in the future. The analysis argues
that due to these provisions Australia will gain greater, and more secure,
access to foreign wine markets. Thus, based on this analysis, the RIS
determines that it is in Australia’s national economic interest to enter in to
the Agreement.[30]
Implementation
3.27
The AWBC informed the Committee that they are responsible for enforcing
Australia’s wine labelling requirements under the Agreement.[31]
3.28
Articles 29 to 32 establish, and outline the functions of, a Joint
Committee consisting of members of the EC and Australia. Parties shall maintain
contact through this Joint Committee on issues relating to the implementation
of the Agreement.[32]
3.29
The Australian Wine and Brandy Corporation Act 1980 will need to
be amended in order to accept new winemaking techniques and labelling
requirements, resolve issues around exceptions to the false and misleading
description and presentation of wine and also to introduce or amend key
definitions.[33]
3.30
The Australian Wine and Brandy Corporation Regulations 1981 will
need to be amended to reflect the use of Australian quality wine terms, provide
phase-out dates and transitional periods for the use of certain labelling names
and to change wine labelling rules.[34]
3.31
The Trade Marks Act 1995 will need to be amended to ensure key
definitions are consistent with the Australian Wine and Brandy Act 1980,
and to give power to the Registrar of Trade Marks to amend the Register
consistently with the Agreement.[35]
Costs
3.32
There will be administrative costs associated with updating the Register
of Protected Names by the Australian Wine and Brandy Corporation and amending
the Australian Wine and Brandy Corporation Act 1980 and Australian
Wine and Brandy Corporation Regulations 1981 to enable Australia to comply
with its obligations under the proposed Agreement. These will be absorbed
within existing budgets.[36]
3.33
The Government is assisting the fortified wine industry to meet the
costs of phasing out some terms with a contribution of $500,000 to assist with
determining suitable replacement terms. At the time of the Committee’s hearing,
$450,000 of this funding had been used to facilitate the transition including
through the development and testing of alternative wine names. A further
$50,000 will be provided to facilitate the launching of these new names in the
market place.[37]
Future treaty action
3.34
Article 39 provides that Parties may amend the Agreement by consensus.
This consensus may occur through the Joint Committee mentioned above.[38]
3.35
The Government anticipates that technical amendments to the Agreement
are likely in order to authorise new or modified wine-making techniques.[39]
3.36
Article 44 provides that Parties may terminate the Agreement one year
after a written notice of termination is provided to the other Party.[40]
Consultation
3.37
Negotiations for the proposed Agreement have been carried out over the
last 13 years in consultation with the Winemakers’ Federation of Australia
(WFA) which represents more than 90 per cent of Australia’s wine production.
Wine industry leaders have also been consulted through the AWBC International
Trade Advisory Committee. These consultations provided input into the
negotiation of the Agreement and supported Australia entering into the
Agreement.[41]
3.38
Relevant Commonwealth Ministers and agencies and State/Territory
Governments were consulted about the Agreement and raised no issues with
Australia becoming a Party to the Agreement. [42]
Conclusions and recommendation
3.39
The Committee is of the view that the Agreement will provide Australian
winemakers with greater, and more secure, access to European markets. The
Committee considers that accession to the Agreement will strengthen trade
between Australia and the EC, and will provide an additional forum through
which future issues relating to trade in wine can be considered and agreed upon.
Recommendation 2 |
|
The Committee supports the Agreement between Australia
and the European Community on Trade in Wine and recommends that binding
treaty action be taken. |
