As we leave the holiday season behind us, let’s “wine” down and discuss the latest saga in Australia’s wine industry.

In 2019 Australia’s free trade negotiations reached a fizzing point when the EU asked Australia to honour Prosecco as a geographic indication (“GI”) of Northern Italy. Honouring Prosecco as a GI would prohibit local wine producers in Australia from marketing wine as ‘Prosecco’.

In what appears to be a response to ‘wining’ from stakeholders, the Australian government recently announced that it would allocate a $100k research grant to Monash University for them to build a case against the geographic claim for Prosecco.

So, first things first – what exactly is a geographic indication?

In Australia, the Trademarks Act defines a GI as ‘a sign that identifies the goods as originating in a country, or in a region or locality in that country, where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographic origin.’[1] Registered GIs may only be used for goods that are produced in the specified region and according to the rules protecting the GI.

For example, although certain sparkling wines produced in Australia go through a similar wine-making process to Champagne, they cannot be labelled as ‘Champagne’ because they do not originate from the Champagne region in France. The EU wants Prosecco to suffer a similar fate to its sparkling sibling.

Implications (not just a hangover)

At this stage you may be asking – why is it so important for Australia to keep the name ‘Prosecco’ for its producers? Reports suggest that Prosecco contributes about $60 million to Australia’s wine exports and this figure is expected to rise to $500 million over the next decade.[2] This means the Australian wine industry will be significantly affected if the EU is successful in its push for GI recognition.

The legal framework for the debate

Interestingly, the Prosecco debate has been a long-standing and thorny issue. The name ‘Prosecco’ was universally recognised as a grape variety until 2009 when the EU granted the name to Italy as a GI. The grape was renamed to “Glera” in the EU as a result. In 2013 the European Commission applied to have the name registered as a GI in Australia. The application was denied by the Australian Trade Marks Office after finding substantial evidence that Prosecco was a grape variety rather than a geographic region.

However, the issue did not end there. Adding to the cocktail of debate, the EU now wants to include ‘Prosecco’ in its list of more than 1500 product names it wants exclusive rights to under its $100 billion bilateral trade agreement with Australia.

The argument of grape variety versus geographic location is an important one. If Prosecco is the name of a grape variety and not a geographical indication, the prohibition of its use in trade marks on Australian Prosecco would be likely to contravene Article 20 of the Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”) and Article 2.1 of the Technical Barriers to Trade (“TBT Agreement”).

Article 20 of the TRIPS Agreement states that ‘the use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements.’[3] If Prosecco is a grape variety, then it would be ‘unjustifiable’ within the meaning of Art 20 to encumber the use of the term within trademarks for products made from the grape.

The GI ban may also be prohibited under the TBT agreement. The purpose of the TBT agreement is to ensure that standards and regulations are non-discriminatory and do not create unnecessary obstacles to trade. Article 2.1 of the agreement prohibits WTO members from imposing technical regulations that result in unjustifiable discrimination between domestic products and products originating in any other country.[4] As such, if Prosecco is a grape variety then prohibiting Australian wines to be labelled as Prosecco would likely contravene Art 2.1 of the TBT Agreement.

Overall, if these claims are successful then the prohibition under an EU-Australia Free Trade Agreement is invalid because a government cannot contract out of its obligations under the TRIPS and TBT Agreement.

Where to from here?

Whether Prosecco will fizz or fall flat will ultimately depend on developments from the research team and Australia’s negotiations with the EU.