WRITTEN QUESTION P-0740/00

by Karla Peijs (PPE-DE) to the Commission

(6 March 2000)

Subject: De Zaak Havana Club/WTO, Bacardi-Martini versus Pernod Ricard

1. Can the Commission explain why it is pushing so much for a WTO Panel procedure in the Article 133 Committee concerning the legitimacy of Section 211(b) of the Omnibus Appropriations Act of 1998 under the TRIPS Agreement, when several Member States have raised their doubts as to the need for such a Panel procedure?

2. Is the willingness of the Commission to support a private conflict of a commercial company not contrary to the new policy of the Commission to avoid blurring of interests in its decision-making process?

3. Can the Commission explain why the dispute between two commercial companies justifies the heavy judicial procedure of the WTO panel procedure?

4. Does the Commission think that asking for a WTO Panel in this particular matter is a sign of appropriate timing, bearing in mind the delicate trade relationships with the USA at the moment?

5. Can the Commission confirm that all means for an amicable solution have been exploited in this particular matter?

Answer given by Mr Lamy on behalf of the Commission

(24 March 2000)

1. Section 211 of the United States Omnibus Appropriations Act 1998 was adopted in October 1998. After detailed analysis, the Commission came to the conclusion that Section 211 violates certain provisions of the World Trade Organisation trade related aspects of intellectual property rights (WTO TRIPs) agreement, notably its national treatment provisions, trademark provisions and enforcement provisions. This analysis was shared by all Member States.

The Community and its Member States raised the incompatibility of Section 211 with the WTO TRIPs agreement with the United States on various occasions, including at the past three Community-United States summits and within the WTO TRIPs Council in order to find an amicable solution to the matter. However, the American administration constantly refused to engage in any substantive discussion. The Community and its Member States requested consultations under the WTO dispute settlement understanding in July 1999. Two rounds of consultations were held in September and December 1999, but the United States maintained the view that Section 211 is compatible with the United States international obligations. Having evaluated the outcome of the WTO consultations and the economic and political interests involved, the Commission came to the conclusion that it was appropriate to request the establishment of a WTO panel on this issue in order to ensure the proper application of the WTO TRIPs agreement by the United States. To this end, the Commission sought, in conformity with the established rules, the opinion of the Member States.

2. and 3. The WTO dispute concerns an American law which, in view of the Community and its Member States, violates the WTO TRIPs agreement. This law can potentially affect all European companies dealing with Cuba. It should be in the interest of the Community and its Member States to ensure that the provisions of the WTO TRIPs agreement are respected by all WTO members. It is normal practice to examine the incompatibilities of the legislation of a WTO member with WTO rules not only from a legal point of view, but also from the angle of its economic importance.

On the basis of the information available, Section 211 was, so far, applied once. A European company challenged its American competitor before American courts about the use of a trademark and trade-name. Following the recent judgement of the American courts, the European company is now prevented from defending its rights in the United States. The judgement is mainly based on Section 211. On the other hand, the American courts did not examine the compatibility of Section 211 with the American international obligations.

4. and 5. As explained before, the Commission raised this matter on numerous occasions with the United States in order to find an amicable solution to the dispute. Each dispute settlement case should be examined and dealt with on its own merits. It should not affect the overall Community-United States relationship. This case relates to a trade dispute about a particular American law. It appears from the foregoing that the only means available to the Community and its Member States to ensure the proper application of the WTO TRIPs agreement by the United States is the request for a WTO panel.