WRITTEN QUESTION E-0820/00

by Roberta Angelilli (UEN) to the Commission

(21 March 2000)

Subject: Article 211 of the US Omnibus Appropriation Act

With regard to the dispute between the EU and the USA over Article 211 of the US Omnibus Appropriation Act of 1998, can the Commission say:

- whether the TRIPS agreements, with which the Commission claims Article 211 is incompatible, should be interpreted as authorising the Member States concerned to recognise the extraterritorial validity of intellectual property rights confiscated without payment of adequate compensation to the rightful holders;

- whether, before deciding to refer the case to the WTO Panel, it carried out the appropriate investigations to ascertain whether Article 211, in the context of other US laws regulating the expropriation of goods without compensation, in effect discriminates against Cuban citizens rather than those of the rest of the world;

- whether it does not consider that in order not to give the impression that referral to the panel was rather a tactical move for the benefit of a private individual and a third country, it should reopen consultations with the United States with a view to formulating Article 211 in such a way as to comply with the Commission's interpretation of the agreements on TRIPS, whilst safeguarding the legal principle underlying it?

Joint answer to Written Questions E-0820/00 and E-0821/00 given by Mr Lamy on behalf of the Commission

(14 April 2000)

The Honourable Member refers to several aspects relating to the dispute with the United States concerning the compatibility of Section 211 of the United States Omnibus Appropriations Act 1998 with the provisions of the Agreement on trade-related aspects of intellectual property rights (TRIPs Agreement) of the World Trade Organisation (WTO).

As regards the recognition by countries of foreign uncompensated expropriations, the current WTO dispute does not concern the question whether or not foreign uncompensated expropriations have to be recognised by other third countries. In fact, American trademarks were not and could not be expropriated by the Cuban government. Individuals and companies expropriated by the Cuban government remained the owners of property outside Cuba. In particular, their rights in trademarks registered in the United States were unaffected by the Cuban revolution.

The WTO dispute rather relates to the treatment of American trademarks which were abandoned by their previous Cuban owners and which can be registered, renewed and enforced in the United States by the new owner only under certain conditions. These conditions are contained in Section 211 which was adopted by the United States almost 40 years after the Cuban revolution. Section 211 does not contain or reinforce the principle, cited by the Honourable Member, of non-recognition of foreign expropriations.

After a detailed analysis of Section 211, the Commission came to the conclusion that Section 211 violates certain provisions of the WTO TRIPs Agreement, notably its national treatment provisions, the trademark provisions and the enforcement provisions. This analysis was shared by all Member States.

Concerning the discriminatory effects of Section 211, the Commission would reiterate that the WTO dispute does not concern the question of uncompensated expropriations of trademarks. The conditions for trademark registration and enforcement contained in Section 211, in the view of the Community and its Member States, violate the TRIPs Agreement, notably in so far as Section 211 affects only so-called designated nationals, including Cubans and Cuban companies. The United States did not demonstrate during the WTO consultations held in September 1999 and December 1999 that similar conditions are placed upon nationals from the United States or third countries other than Cuba.

In the WTO dispute, the main aim of the Commission remains the proper implementation and application by the United States of the WTO TRIPs Agreement bearing in mind that Section 211 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.

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 EU-US summits and in the WTO TRIPs Council in order to find an amicable solution to the matter. However, the American administration constantly refused to engage into 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 1999 and December 1999, but the United States maintain the view that Section 211 is compatible with the American international obligations.

Having evaluated the outcome of the WTO consultations and the economic and political interests involved, the Commission came to the conclusion that the only course available to the Community and its Member States to ensure the proper application of the WTO TRIPs Agreement by the United States in this instance is the request for a WTO Panel.

Finally, with reference to the alleged impact on the Commission decision making procedure of the expression by a European company of its interests in the dispute, the Commission would like to reiterate that it remained concerned about the proper implementation and application by the United States of the WTO TRIPs Agreement. Although Section 211 has, so far, only been applied once, it has the potential to affect all European companies dealing with Cuba. The Commission assures the Honourable Member that it continues to resist all attempts by any interested party to manipulate its position.