A. ARGENTINA.............................................................................................................................C- 1 B. BRAZIL ............................................................................................................................... .....C-5 C. CANADA ............................................................................................................................... .C-10 D. CHINA............................................................................................................................... .....C-19 E. COLOMBIA.............................................................................................................................C- 25 F. INDIA............................................................................................................................... ......C-26 G. MEXICO............................................................................................................................... ..C-27 H. NEW ZEALAND ......................................................................................................................C-31 I. SEPARATE CUSTOMS TERRITORY OF T AIWAN, PENGHU, KINMEN AND MATSU .............................................................................C-43 EXHIBIT NZ-1.........................................................................
Document: E. COLOMBIA.............................................................................................................................C- 25 F. INDIA............................................................................................................................... ......C-26 G. MEXICO............................................................................................................................... ..C-27 H. NEW ZEALAND ......................................................................................................................C-31
Document codes: WT/DS174/R/Add.3
Complainant: U.S.
Respondent: EU
Third parties: Argentina, Australia, Brazil, Canada, China, Taiwan, Colombia, Guatemala, India, Mexico, New Zealand, Turkey
Dispute stage: Panel
Agreements cited: Art. 1.1, 2.1, 3.1, 4, 16.1, 20, 22.1, 22.2, 24.5, 41.1, 41.2, 41.4, 42, 44.1, 63.1, 63.3, 65.1  Intellectual Property (TRIPS)Art. I, III:4  GATT 1994

the defined geographical area. Additionally, the EC Regulation in turn includes in Article 2(3) a
sub-classification pursuant to wh ich "[c]ertain traditi onal geographical or non-geographical names
designating an agricultural product or a foodstuff or iginating in a region or a specific place, which
fulfil the conditions referred to in the second indent of paragraph 2(a) shall also be considered as
designations of origin." In this regard, Argentin a draws attention to the fact that, in the case of
"traditional names", the EC Regulation affords th e possibility of protection being granted to non-
geographical names, in stark contrast to the practice of WTO Members and the spirit of the TRIPS
Agreement. This tendency of the European Comm unities to provide for protection other than that
envisaged by the TRIPS Agreement is reinforced by Article 2(4) of the EC Regulation, according to
which, under certain circumstances, certain geograp hical designations shall be treated as designations
of origin where the raw materials of the products concerned come from a geographical area larger
than or different from the processing area.
4. Argentina points out that, under Article 2(2) of the EC Regulation, protection is extended by
allowing a degree of independence in the concept of a geographical indication from a geographical
area (Article 2(3)), and by including certain raw materials from a geographical area larger than or
different from the processing area, subject to three r estrictions (Article 2(4)). Argentina is of the
opinion that this is inconsistent with Article 22 of the TRIPS Agreement.
(b) Coexistence of protection systems
5. One protection system may not prevail at the expense of or to the detriment of the other,
given that this would create a conflict of pred ominance between Sections 2 (Trademarks) and 3
(Geographical indications), both of which are found in Part II of the TRIPS Agreement. However, the
obligations set out in these two sections are not mutu ally exclusive: each category must be granted
the degree of protection conferred by the provisions of the Agreement. In other words, Members
must ensure that protection is afforded both to trademarks, under Article 16. 1, and to geographical
indications, under Article 22.2, without, in so do ing, undermining in any way the protection granted
under the other Article. By providing for the co existence of a trademark with a geographical
indication or designation of origin and making su ch coexistence conditional upon a given temporal
relationship, the EC Regulation violates Article 16.1 of the TRIPS Agreement (which provides for the
exclusive right to use a trademark, so the possibility of coexistence restricts the right of the owner of
the trademark), Article 22.3 (which neither provides for coexistence, nor establishes a specific cut-off
date, as is the case of the EC Regulation), and Article 24.4 (which provides for a critical time different
from the cut-off date established in the Regulation).
6. Article 24.5, in addition to establishing a differe nt cut-off date from that laid down in the
Regulation, prejudices eligibility for and the validity of the registrati on of a trademark, and the right
to use a trademark, on the basis that such a tradem ark is identical with, or similar to a geographical
indication. Moreover, Article 24.5 does not provide for the possibility of restricting the right of a
trademark owner, as is the case in the Regulation, wh ich provides for coexistence. Strictly speaking,
it is Article 24.5 which determines the confines of the alternatives available to WTO Members with
regard to the application of measures related to the protection of geographical indications and their
interrelation with trademarks.
(c) The registration procedure is inconsistent with the TRIPS Agreement
7. Argentina considers it important that particul ar reference be made to the registration
procedure established in the Regulation in the lig ht of the obligations laid down in the TRIPS
Agreement. To this end, there follows an objectiv e description of each of the various steps involved,
together with comments on their inconsistency with the TRIPS Agreement, as deemed appropriate.

(i) Application for registration / Compliance with specifications
8. Article 4 of the Regulation provides that "to be eligible to use" a protected designation of
origin (PDO) or a protected geographical indication (PGI), an agricultural product or foodstuff must
"comply with a specification ". In this respect, the Regulation gives rise to great uncertainty, given
that, while it sets forth a series of nine elements – Articl e 4.2(a), (b), (c), (d), (e), (f), (g), (h) and (i) –
with which compliance is mandatory, it is precisel y subparagraph (i) which allows for the possibility
of other requirements being " laid down by Community and/or national provisions". Such uncertainty
is related to the familiarity with or identifi cation of the relevant Community and/or national
provisions in order to comply with the registration requirement, and the means for complying with the
requirement laid down in subparagraph (i), bear ing in mind the above-mentioned difficulty in
identifying pertinent legislation. Knowledge of Community and/or national legislation is obviously
even more complicated for a foreign applicant.
9. Furthermore, by mentioning "Community and/or national provisions" without stating whether
this refers to regulations specifically related to the protection of geographical indications, the said
provision expands yet further the legislative univer se with which a potential applicant must comply
and could act as a market-access restriction on a product applying for effective protection by means of
a PGI / PDO. That is to say th at, while the requirements of subparagraphs (a) to (h) are binding upon
applicants, this does not mean that the list of requi rements is exhaustive, given that, by virtue of
subparagraph (i), it can be extended by means of a series of conditions which can be provided for in
Community and/or national legislation and compliance w ith which is also – in principle – mandatory.
It should be recalled at this point that, pursuant to Article 12 of the Regulation, the third country shall
be able to give guarantees identical or equivalent to those referred to in Article 4, extending it to the
requirement laid down in Article 10.
10. Argentina also makes a further comment on re quirements relating to Article 4(h), which
refers to the inspection structure(s) provided for in Article 10. The question here is what the criteria
for identifying these inspection structures would be in the case of a foreign applicant. It should be
noted that, for a foreign applicant and with regard to this stage, Article 12 provides that "the third
country concerned has inspection arrangements (...) equivalent to those laid down in this Regulation."
This creates an obstacle which is altogether immune to any decision by a foreign natural or legal
person to "accept" the Article 4 requirement, given that the decision to creat e the inspection bodies
referred to in Article 10 is restricted to State leve l. Provision is not made for inspection structures in
all third countries and, even supposing that they we re provided for, such structures could fail to meet
the equivalence requirement under Articles 10 and 12 of the Regulation.
(ii) Application for registration at the national level (of a member State) / Transitional protection
at the national level
11. Pursuant to Article 5(4) of the Regulation, app lications shall be sent to the member State in
which the geographical area is located. The member State is then responsible for checking that the
application is "justified" and, "if it considers that it satisfies the requirements of this Regulation", it
forwards the application, including the product specification and other documents on which it has
based its decision, to the Commission. That memb er State may then grant transitional protection at
the national level. Such protection ceases when protection is granted at Community level.
Furthermore, it is incumbent on the member State to consult another member State or a third country
if the application concerns a name designating a border geographical area or a traditional name
connected to that area, regardless of whether it is situated in another member State or in a third
country.

(iii) Role of the Commission / Examination of applications / Publication of
applications/Objections
12. At this stage, it falls to the Commission to c onduct, within a period of six months, a formal
investigation to verify whether the registration app lication includes all the particulars provided for in
Article 4. The Commission shall inform the member State of its findings and publish the registration
applications and their filing dates. The purpose of publication is to permit the notification of
statements of objection. Three possibilities exist, (a) No statement of objections is notified and the
name is entered in the Register of Protected Designations of Origin and Protected Geographical
Indications, as published in the Official Journal of the European Commun ities; (b) there are
objections to the registration – Article 7 – within six months of the date of publication in the Official
Journal of the European Communities; and (c) the Commission concludes that the geographical
indication does not qualify for protection and deci des not to proceed with publication. The
Commission may in all cases request the opinion of the Committee on Designations of Origin and
Geographical Indications – Article 15 – prior to publication.
(iv) Amendment of a specification
13. Article 9 authorizes any member State to requ est the amendment of a specification to take
account of developments in scientific and technical knowledge or to redefine the geographical area.
(v) Failure to comply with specifications / Right of complaint / Intervention of the Commission /
Cancellation of registration
14. Any member State may submit that a condition la id down in the product specification has not
been met – pursuant to Article 11 – by making its submission to the member State concerned. The
member State concerned shall examine the compla int and inform the other member State of its
findings and of any measures taken. The Commission will have to intervene in the event of repeated
irregularities. If the member States concerned fail to come to an agreement and file a duly
substantiated application, the Commission will ex amine the application by consulting the member
States concerned and, where appropriate, having c onsulted the specific committee and considering it
pertinent, will take the necessary steps, includi ng cancellation of the registration. Article 11 bis
establishes the cases in which the registration may be cancelled.
15. To sum up, Argentina emphasizes the uncertainty with regard to: (a) the possible
implementation of these provisions in the case of non-Community countries, and (b) their consistency
with the characterization of intellectual property ri ghts in the TRIPS Agreement, by requiring that
States manage the registration of geographical indica tions instead of their legitimate owners, persons
under private law (not to mention what appears yet more serious: the covert subordination, established
by the Regulation, of governments of non-member st ates vis-à-vis EC institutions). Therefore, and
contrary to the assertions of th e European Communities, the EC Regulation does indeed make a
distinction on the basis of nationality. Evidence for this are the provisions under Articles 5, 6, 7
and 10.
16. In short, the reciprocity and equivalence requirements laid down in Council Regulation (EEC)
No. 2081/92 are inconsistent with the national treatment clause in Article 3 of the TRIPS Agreement.
(d) Applicability of equivalence and reciprocity criteria to WTO Members
17. Argentina observes the European Communities' attempt to reduce the entire issue raised by
the complainants to a mere question of the interpre tation of the relevant Community legislation. To
this end, Argentina submits a brief interpretation to demonstrate that the Regulation provides for a
method inconsistent with the Euro pean Communities' obligations in the WTO in the light of the
TRIPS Agreement. In Argentina's opinion, the expl anation by the European Communities in its first

written submission of the application of reciprocity and equivalence criteria is not convincing. Had
the intention been to make a distinction not only between EC member States and non-Community
countries but also, as the European Communities maintains, between WTO Members and third
countries, the distinction could have been made mo re explicitly. However, even a simple amendment
to that effect would not resolve the substantive issu es previously raised regarding the application of
this regulation to non-Community countries, given that the only registration and objection procedures
provided for are through the intermediary of member States and that the requirements are laid down
for the establishment of inspecti on structures which are not binding on any country other than EC
member States. The requirements mentioned ab ove clearly deviate from the national treatment
obligation in Article 3 of the TRIPS Agreement.
3. Points raised in response to the Panel's questions
18. Argentina is not aware of any group or person ev er having filed with its authorities either an
application for or an objection to a registration pur suant to the EC Regulation. As to the question
whether Argentina would be willing or able to tr ansmit such applications, without prejudice to its
willingness to cooperate in any procedural aspect involving the transmission of an application for
registration, on behalf of any domes tic group or person, that eventually the Government of Argentina
could hypothetically show at any point in time, Argentina would like the Panel to note that, as a non-
EC member, it has never delegated any sovereign right to the supranational institutions of the
European Union. Hence, there would be no legal obligation for the Argentine State to fulfil any
requirement imposed by the EC legislation, even less in a case like the one in question, which
involves a private right, as established in the prea mble of the TRIPS Agreement. Argentina's
legislation allows direct access by GI applicants to the national authority irrespective of nationality.
19. Argentina's domestic law establishes the excep tions to trademark rights provided for in
Article 17 of the TRIPS Agreement, under the cond itions and with the scope provided therein.
Argentina is not aware of any GIs registered under the EC Regulation that are identical or confusingly
similar to Community protected trademarks owned by nationals of Argentina. It notes, however, that
this should not be interpreted as saying that this would never happen, as the EC Regulation provides
for the possibility of broadening the applicability of the Regulation, by making products which are
not currently included in the list of products covered by this Regulation, subject to it in the future.
20. Argentina believes that there is – in principl e – no conflict between Articles 16.1 and 22.3 of
TRIPS Agreement. However, given the broad di scretion given by the TRIPS Agreement to the
Members in implementing its provisions (Article 1.1 of the TRIPS Agreement), such a conflict could
arise as a consequence of the way a Member chooses to implement it. In other words, there is no
contradiction arising from the textual reading of either provision, but for those that could eventually
arise during, or as a consequence of its implementation.
21. Argentina is of the view that the EC Regulation is challengeable under the TRIPS Agreement,
due its mandatory nature.
B. B
RAZIL
1. Introduction
22. Brazil has a systemic interest in the matter subject to this dispute. Brazil has no geographical
indications ("GIs") as yet registered in the EC under the procedure set out in the measure at issue, but
private parties in the country have demonstrated increasing awareness of the implications stemming
from the development of a culture fostering the registration of Brazilian GIs, both in Brazil and
elsewhere.

2. Reciprocity and equivalence requirements in the registration of, and objection to, a GI
23. Both Australia and the United States claim that Article 12(1) of the EC Regulation fails to
comply with the national treatment obligation provid ed for by Article 3 of the TRIPS Agreement and
Article III:4 of GATT 1994 since, in order to be nefit from the Regulation, it requires that WTO
Members meet certain conditions, such as recipr ocity and equivalence. Brazil supports this
understanding. In fact, the requirements set forth in Article 12(1) of the EC Regulation, despite
assertions to the contrary by the European Comm unities, clearly establish "extra hurdles" for WTO
Members. The several requirements spread throughout Article 12 create a bias against third countries
and violate national treatment obligations. As a matter of fact, these inconsistent requirements
pervade most of the Regulation and taint its practical operation to the detriment of other WTO
Members. In a nutshell, and as abundantly argued by the complainants and other third parties, WTO
Members, before they can apply for protection under Article 12(1), must adopt an internal system for
GI protection that guarantees equivalence to the EC Regulation and that must also provide reciprocity
to "corresponding" EC products. These requirement s, if they do not amount to something close to
"extra-territoriality", certainly collide with the essen ce of the national treatment obligations enshrined
in Article III of GATT 1994 and Article 3.1 of the TRIPS Agreement.
24. As graphically shown by New Zealand in the e xhibits to its submission, nationals from WTO
Members are at a disadvantage with regard to EC nationals. The GATT and WTO underlying
principle of national treatment would be comple tely voided of any meaning if it were made
conditional on requirements of reciprocity and adop tion of equivalent legislation. The European
Communities in its first submission argues that the proviso in Article 12(1) – "without prejudice to
international agreements" – excludes WTO Members from the scope and requirements of Article 12.
Brazil welcomes this novel and official interpretation by the European Communiti es to the effect that
"international agreements" include the WTO agreemen ts and that consequentially Articles 12(1) and
12(3) of the Regulation do not apply to WTO Member s. Irrespective, however, of this interpretation
by the Commission, which would not necessarily withstand scrutiny by a judicial body, it would seem
unlikely that provisions in the EC Regulation that re fer to "third countries" would have been drafted
only with a handful of non-WTO Members in mind. Furthermore, the utilization of the terms "third
countries" and "Community" in Article 12(2) suggests that, in this opposition, "third countries" mean
all those countries which are not EC member States. If, on any account, one were to accept the EC's
arguments about the proviso, i.e. that it excludes WTO Members, it could, a contrario senso, indicate
a recognition by the European Communities that th e reciprocity and equivalence requirements in
Article 12 violate national treatment obligations in the GATT 1994 and TRIPS Agreement. Brazil
takes note, however, of the use in the Regulation of the terms "WTO members" and "third countries"
in Articles 12b(2)(a) and (b) and 12d(1), somethi ng that could indicate that third countries are
confined to those non-WTO Members. Therefore, Brazil is of the view that the language of
Article 12(1) should clearly specify that WTO Members are exempt from offering reciprocity and
equivalence in order to be in compliance with the national treatment obligation.
25. As regards the issue of objection procedures to registration of GIs, Brazil is equally concerned
with the fact that the procedures, set forth in Artic le 12d(1), can be subject to the same inconsistent
requirements of reciprocity and equivalence applic able to the registration procedure as explained
above.
3. Aspects of the registration and objection procedures for GIs
26. Brazil also calls the attention of the Panel to two specific procedural aspects of both the
registration and the objection procedures as stated in Articles 12a(1) and (2) and 12d(1), which appear
to be inconsistent with the agreed multilateral rules.
27.
 These provisions require that WTO Members "pre-approve" the application for registration of
geographical areas located in their territories before they forward it to the European Commission.

WTO Member national authorities must first analyse and deem that the requirements of the EC
Regulation are satisfied. Brazil opines that, if this requirement applies to WTO Members, it is in
striking violation of the national treatment oblig ation under Article 3 of the TRIPS Agreement and
Article III:4 of GATT 1994. The inconsistencies appear to be twofold: first, that an additional
national procedure is introduced, whereas in the EC, the application sent to an EC member State by an
EC applicant is tantamount to a mere formality (A rticle 5(5) of the Regulation); second, and most
disturbing, the analysis by the national authority in the WTO Member must be undertaken according
to the EC Regulation, and not to its own domestic ru les – Article 12a(2) of the Regulation. In this
situation, assuming that the State concerned will lik ely have its own standards to assess the adequacy
of the application vis-à-vis the EC Regulation, it is only fair to assume that more often than not, the
Commission, in its turn, will not deem appropriate the evaluation carried out by the WTO Member,
which could then lead to further procedural delays . Thus, a more balanced treatment of the issue
would be to grant applicants from WTO Member s direct access to the Commission for registration
purposes. This direct access by the applicant to th e national authority, irrespective of nationality, is
provided, for example, by the Brazilian legislation. In sum, even if in formal terms the treatment
given to applications from EC member States and WTO Members is similar, the effects that are
produced by such procedure are clearly different and detrimental to interested parties located in the
latter.
28. Article 12d(1) of Regulation 2081/92 requires th at, whenever a natural or legal person from a
WTO Member wishes to object to the registration of a geographical indication submitted by an EC
member State, it should do so by sending a duly substantiated statement to the country in which it
resides. Brazil is of the opinion that this re quirement establishes an "u nnecessarily complicated or
costly" procedure concerning the enforcement of inte llectual property rights, in breach of Article 41.2
of the TRIPS Agreement. Brazil sees no "necessity " that would justify pr eventing private parties
from addressing their objections directly to the European Commission. Many countries, like Brazil,
have domestic legislations that allow for direct acce ss by foreigners in order to object to registration
procedures. The EC has not provided convincing reas ons to deny interested parties direct access to
the EC bodies. If, according to its Article 12d( 2), the Regulation already determines that the
"Commission shall examine the admissibility of objec tions", Brazil fails to see the need for requiring
prior submission of the objection to the WTO Member in which the objector resides or is established.
4. Remarks on the coexistence of trademarks and GIs
29. While Brazil recognizes that both trademarks and GIs are "signs" that represent products or
services, one cannot overlook the fact that geographical indications that are identical to trademarks are
likely to create confusion and, consequently, may aff ect the value of trademarks. Brazil recalls that
Article 16.1 of the TRIPS Agreement protects the ow ner of a registered trademark from the use by
third parties of identical or similar signs for goods or services identical or similar to those in respect of
which the trademark is registered, where such use would result in a likelihood of confusion.
Therefore, what seems clear is that the protecti on the TRIPS Agreement mandates countries to offer
to owners of trademark comprehends the use of any sign (and not only that of a trademark) that might
cause confusion. In Brazil's view, Article 16.1 of the TRIPS Agreement deals with trademarks in
general, and not only with those referred to in th e narrow terms of Article 14(3) of the Regulation,
which establishes that a geographical indication shall not be registered where, "in the light of a
trademark's reputation and renown a nd the length of time it has been used, registration is liable to
mislead the consumer as to the true identity of the product".
30. Despite a theoretical hypothesis of coexiste nce between a trademark and a geographical
indication in terms of Articles 24.5 and 16.1 of th e TRIPS Agreement, when read in conjunction,
Brazil believes that without disregarding the peculiar features surrounding the use of a geographical
indication and the need to protect it, one must not do so at the expense of both the trademark owners
and the consumers. Otherwise, the commercial va lue of a trademark may be undermined, which runs
contrary to the "exclusive rights" of a trademar k owner provided for in Article 16.1 of the TRIPS

Agreement. It should also be noted that pursuant to Article 16.1, in cases of the use of an identical
sign for identical goods or services, "a likelihood of confusion shall be presumed". Regulation
2081/92 does not have any provision incorporating such a presumption. Brazil does not agree with
the EC's argument that there was no need to "rep roduce explicitly" this presumption, on the grounds
that it would suffice that domestic law grants the regi stering authority or to the courts the adequate
level of discretion to apply this provision. Brazil submits that even if domestic law incorporated the
presumption in each EC member State, this woul d not mean automatically that Community-level
registration, regulated by Regulation 2081/92, would have also provided for its incorporation.
Therefore, the European measure would still remain inconsistent with the TRIPS Agreement.
31. Brazil also highlights another possible imbalan ce between the protection of EC nationals and
WTO Member nationals as regards the effective us e of the protection mechanism of Article 22.3 of
the TRIPS Agreement in that, through the use of the EC Regulation, the EC national would much
more rapidly and efficiently protect a GI to the de triment of a previous registered trademark, than
would a WTO Member national be in a position to defend trademark owner rights vis-à-vis the
application for registration of a new GI.
5. Points raised in response to the Panel's questions
32. Brazil is not aware of any group or person ever having filed with its authorities either an
application for, or an objection to, a registration pur suant to the EC Regulation. As to the question
whether Brazil would be willing or able to transmit su ch applications, it states that, the issue here is
not simply a matter of mechanistic, bureaucratic "tra nsmittal" of applications. Article 12a(2) of the
EC Regulation requires from authorities of third countr ies a thorough analysis of the applications in
light of that Regulation before transmitting them to the Commission. Brazil also recalls that there is
no legal provision in Brazilian law establishing th e need for Government intervention in the
registration of GIs in foreign countries. Moreover, the Brazilian authorities would be devoid of legal
competence to perform the analysis of the applica tion as required by the EC Regulation, especially in
light of the principle of legality, enshrined in Article 37 of the Brazilian Constitution.
33. Brazil calls the Panel's attention to the existe nce of the Patent Cooperation Treaty ("PCT").
This Agreement imposes that requests for internatio nal search and preliminary examination of private
parties' patent applications be transmitted to the Office of the PCT by national governments. The
European Communities, through Regulation 2081/92 – rather than through an internationally agreed
mechanism – seeks to impose unilaterally its own rules and parameters on all other countries,
something which would amount to extra-territoria lity. Harmonization of rules or standards on
intellectual property rights can only be obtaine d through multilateral or bilateral cooperation
agreements. The European Communities' stance, if taken ad absurdum, could allow a situation where
other countries would also issue their own strict legislation and procedures and would request that all
other countries analyse applications for registration in accordance with those unilaterally-fixed rules.
34. Brazil understands that the interpretation of "na tionals" as used in Articles 1.3 (including its
footnote 1), 3.1 and 4 of the TRIPS Agreement and Article 2 of the Paris Convention, depends on how
a national legal system defines the "nationality" of a legal person. Due to particular features
pertaining to geographical indications – which are n ecessarily bound to a given territorial basis – it is
reasonable to assume that the legal person holding the right over their use, will be a group or
association established in the territory of the Member in which the GI is located, without prejudice to
the provision of Article 2(2) of the Paris Convention. This is tantamount to saying that the
geographical area from which a geographical indica tion originates determines the nationality of the
interested parties seeking to register it and that the parties applying for registration of non-EC GIs will
most likely be legal persons that are "nationals " of non-EC countries. The European Communities
concedes that Regulation 2081/92 provides for differe nt treatment regarding "geographical areas".
1

1 European Communities' first written submission, para. 125.

Thus, in most cases, discriminating between geogr aphical areas is equivalent to discriminating
between nationals. In other words, the area in wh ich a geographical indication is located is actually
linked to the nationality of the applicant.
35. Brazil agrees that the words "country of the Union" in Article 2(1) of the Paris Convention
(1967), as incorporated in the TRIPS Agreement by its Article 2.1, should be read mutatis mutandis to
refer to "WTO Member". This reasoning is in accordance with the understanding of the Appellate
Body in US – Section 211 Appropriations Act.2
36. Brazil's views on the relationship between the national treatment obligation under the TRIPS
Agreement and GATT 1994 are threefold. First, Brazil notes that on a theoretical level not all
"different treatment" amounts to "less favourable treatment". Second, Brazil understands that a less-
favourable-treatment-situation in violation to na tional treatment obligation arises where a measure
"modifie[s] the conditions of competition in the market to the detriment of imported products", which
appears to be the case with reference to the EC Regulation at issue. Third, as the Appellate Body
stated in US – Section 211 Appropriations Act , "[t]he Panel was correct in concluding that, as the
language of Article 3.1 of the TRIPS Agreement, in particular, is simila r to that of Article III:4 of the
GATT 1994, the jurisprudence on Article III:4 of th e GATT 1994 may be useful in interpreting the
national treatment obligation in the TRIPS Agreement".3
37. Brazil is not aware of any GIs registered unde r the EC Regulation that are identical or
confusingly similar to Community protected trademarks owned by Brazilian nationals.
38. Brazils recalls that previous WTO panels and Appellate Body reports have considered that
there is a presumption against conflict in public in ternational law, and it quotes two panel reports in
this regard.4 If it can be assumed that there is a presumption against conflicts between international
legal instruments, one can also reasonably expect that the same presumption applies to apparent
conflicts within the same agreement. Therefor e, in addressing the issue of the conflict between
Articles 16.1 and 22.3 of the TRIPS Agreement, Braz il submits that Article 22.3 imposes two tests in
order to allow a trademark registration to be refuse d or invalidated. In turn, Article 16.1 grants the
trademark owner the exclusive right to prevent thir d parties from using identical or similar signs for
goods or services which are identical or similar to those in respect of which the trademark is
registered, where such use would result in a likelihood of confusion. The protection of the
distinctiveness of the trademark is thus contingent upon the likelihood of conf usion brought about by
signs which are identical or similar. One shoul d consider that, without disregarding the peculiar
features surrounding the use of a geographical indicati on and the need to protect it, this must not be
done at the expense of both the trademark owners a nd the consumers. In other words, it means that
the approach to the issue should be carried out taki ng due account of the fact that: a) geographical
indications do not a priori prevail over registered trademarks; an d b) other factors must be borne in
mind when deciding whether to allow either the coexistence between trademarks and geographical
indications or the predominance of one over the other, such as, for instance, the length of time a given
trademark has been used.
39. Brazil's Industrial Property Law (A rticle 132) sets out exceptions to the exclusive right of a
trademark owner. Accordingly, a trademark owner cannot: (a) prohibit retailers or distributors from
utilizing distinctive signs pertaining to their bus inesses along with a product trademark for marketing
purposes; (b) prohibit parts manufacturers from utilizi ng a trademark in order to indicate the product
destination, provided fair competition practices ar e met; and (c) prohibit the mentioning of a

2 Appellate Body Report on US – Section 211 Appropriations Act, para. 238.
3 Ibid., para. 242.
4 Panel Report on Indonesia – Autos, para. 14.28 and fn. 649; and Panel Report on Turkey – Textiles,
para. 9.92.

trademark in a speech, scientific or literary work or in whatever sort of publication, as long as
deprived of commercial meaning and without prejudice to its distinctive character.
40. Brazil notes that in US – Section 211 Appropriations Act , a dispute dealing with the
interpretation of several TRIPS provisions, the A ppellate Body confirmed the Panel's view in US –
1916 Act and stated that "a distinction should be made between legislation that mandates WTO-
inconsistent behaviour, and legislation that gives ri se to executive authority that can be exercised with
discretion".
5 On the other hand, the Appellate Body in US – Corrosion-Resistant Steel Sunset Review,
did not express a view on whether the mandatory/di scretionary distinction is a legally appropriate
analytical tool for panels to use. It observed that "as with any such analytical tool, the import of the
mandatory/discretionary distinction may vary from case to case. For this reason, we also wish to
caution against the application of this distinction in a mechanistic fashion". 6 Thus, while the
distinction can certainly be applied under the TRIP S Agreement, as a jurisprudential construction, it
must be used with caution ( cum granum salis). Brazil also remarks that the mandatory/discretionary
distinction is always centred on a specific measure taken by a Member. As to the issue of "omissions"
or "failures" to take certain required actions, Brazil is of the opinion, firstly, that an omission can also
be considered a violation of a provision and, secondly, that, by definition, the
"mandatory/discretionary" distinction cannot be applicable to instances of failure to take action, i.e. an
omission, for there would be no concrete legisla tion issued by a Member upon which the distinction
could focus.
C. CANADA
1. Introduction
41. Canada has a systemic interest in the interpre tation of the national treatment obligations of
WTO Members under the TRIPS Agreement, specifi cally as these apply to the implementation of
intellectual property rights for the protection of geographical indications.
42. Canada focuses its views mainly on two issues related to national treatment obligations under
the TRIPS Agreement as they are interpreted and applied in the present case. These are:
– the degree to which Articles 2.1 and 3.1 of the TRIPS Agreement prevent a WTO
Member from requiring reciprocity and equivalence when protecting the intellectual
property rights of nationals of other WT O Members, including whether or not such
reciprocity and equivalence is in fact required by the EC Regulation; and

– the implications of the reference to nationals in Articles 2.1 and 3.1 of the TRIPS
Agreement, in particular the degree to which such references permit WTO Members
to discriminate in a manner not directly based on nationality when protecting
intellectual property rights.

2. Reciprocity and equivalence requirements of the EC Regulation
43. The national treatment obligations under the TRIPS Agreement prevent the European
Communities from requiring reciprocal and equiva lent protection in non-EC WTO Members as a
condition for protection in the European Communities of geographical indications originating in the
territory of those WTO Members. The national tr eatment obligations of WTO Members with regard
to the protection of intellectual property are cont ained in two separate provisions of the TRIPS
Agreement. First, the earlier national treatment ob ligations of the Paris Convention are incorporated
by reference into Article 2.1 of the TRIPS Agreem ent. Second, national treatment applies in the

5 Appellate Body Report on US – Section 211 Appropriations Act, para. 259.
6 Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review, para. 93.

TRIPS Agreement more broadly by virtue of the requirement in Article 3.1 that a WTO Member
"accord to the nationals of other Members treat ment no less favourable than it accords to its own
nationals with regard to the protection of intell ectual property". These obligations mean that any
intellectual property right provided by a WTO Member within its territory must be made available to
nationals of all other WTO Members, without rega rd to the conditions of substantive protection
available in those WTO Members. Requiring r eciprocal and equivalent treatment – that is,
conditioning the protection of rights of foreign nati onals in the domestic ju risdiction on equivalent
protection being afforded to domestic nationals in the foreign jurisdiction – runs precisely counter to
national treatment obligations.
44. All parties to the present case substantially agree on the fundamental importance of the
national treatment obligations under the TRIPS Agreement . The main issues of contention are: (i)
whether the EC Regulation treats geographical i ndications originating outside the European
Communities less favourably than geographical i ndications originating within the European
Communities; (ii) and whether this less favourable treatment applies also to geographical indications
originating in the territory of other WTO Members.
45. The European Communities submits that a signifi cant feature of the EC Regulation is the
provision of separate procedures for the registrati on, and objection to registration, of geographical
indications originating from an area within the European Communities (in Articles 5, 6 and 7) and the
parallel procedures set out for the registration, and objection to registration, of geographical
indications originating from areas outside the European Communities (in Articles 12, 12a, 12b, 12c
and 12d). While the two separate procedures in the EC Regulation do exhibit certain similarities, a
significant difference is that Article 12 provides th at the EC Regulation "may" apply to geographical
indications originating from the territory of a third c ountry but only if that third country meets certain
conditions. One of these conditions is the require ment in Article 12(1) that "the third country
concerned is prepared to provide protection equivalent to that available in the Community to
corresponding agricultural products [or] foodstuffs coming from the Community." Article 12(3)
further requires the European Commission to examine the national legislation of the third country to
certify that it satisfies the "equivalence conditions" specified in Article 12(1).
46. In other words, applicants for intellectual property protection in the European Communities of
geographical indications originating in third countries that do not meet the conditions in Article 12(1)
are automatically disqualified from eligibility for such protection simply on the basis of the absence of
equivalent protection in their home jurisdiction. This requirement imposes a condition on applicants
for geographical indications originating outside the European Communities that does not exist for
applicants for geographical indications origina ting within the European Communities. The EC
Regulation therefore accords less favourable tr eatment to geographical indications from outside
European Communities than it acco rds to geographical indications from within the European
Communities. The European Communities in fact admits that Article 12 of the EC Regulation
requires reciprocity and equivalence for registrati on for protection in the European Communities of
geographical indications originating from outside th e European Communities (see, e.g., recital 9 of
EC Regulation No. 692/2003, which says that "[t] he protection provided by registration under
Regulation (EEC) No 2081/92 is open to third count ries' names by reciprocity and under equivalence
conditions as provided for in Article 12 of that Regulation"). If these de jure discriminatory
provisions were to apply to WTO Members, they would violate the European Communities' national
treatment obligations under the TRIPS Agreement.
47. The European Communities contends in its firs t written submission that the reciprocity and
equivalence requirements contained in Articles 12( 1) and (3) simply do not apply to WTO Members
since these countries already must provide adequate protection for geographical indications by virtue
of their obligations under the TRIPS Agreement. To justify this interpretation of Article 12, the
European Communities points to the reference in Arti cle 12(1) to "[w]ithout prejudice to international
agreements", arguing that this clause preserv es the rights of WTO Members to access the EC

registration system on a national treatment basis. H eartening as this contention is in principle, when
read in the context of Articles 12a, 12b and 12d, Article 12 cannot support the interpretation advanced
by the European Communities. The ambiguous refere nce to "international agreements" in Article 12
is simply insufficient to counter the clear wordi ng of Articles 12, 12a, 12b, and 12d, which, when
taken together suggest an interpretation opposite to that offered by the European Communities.
48. First, if the European Communities' interpre tation of Article 12(1) and (3) were to be
accepted, there would not appear to be an alternativ e legal basis for an applicant with a geographical
indication originating from the territory of a non- EC WTO Member to commence an application for
registration in the European Communities. The EC Re gulation is drafted in such a way that the only
starting point for third countries, WTO Members as well as non-Members, is Article 12 (additionally
to Canada it remains unclear why the European Co mmunities argues that these sub-articles operate in
this manner whereas Article 12(2) does not). The European Communities response is that the relevant
starting point for WTO Members is Article 12a, su ggesting that these countries pass immediately to
the procedures provided for in that article for re gistration of geographical indications from third
countries. While Article 12a is th e operative paragraph governing the transmission of an application
to the European Communities, this provision does not appear to operate in the manner suggested by
the European Communities. Article 12a(1) of the EC Regulation provides that "[i]n the case provided
for in Article 12(3) … a group or a natural or legal person … shall send a registration application to
the authorities in the country in which the geogr aphical area is located" [emphasis added]. The
underlined portion of that provision suggests that th is procedure is only available in the case of those
third countries that have already qualified according to the procedure laid out in Article 12(3), which
requires meeting the conditions specified in Article 12(1). Even Article 12a(2), which governs the
actual transmission of the applications from the th ird country to the European Communities, depends
on the country first being identified by the proced ure in 12a(1). Therefore, Article 12a does not
provide an independent basis for a geographical indication originating from a non-EC WTO Member
to be registered in the European Communities.
49. Second, the European Communities refers to di stinctions made in Ar ticles 12b(2)(a) and (b)
(objections to registrations of geographical indica tions originating from areas outside the European
Communities) and 12d(1) (objections to registrations of geographical indications originating within
the EC). Those provisions distinguish between a "WTO Member" on the one hand and, respectively,
"a third country meeting the equi valence conditions of Article 12(3) " and "a third country recognized
under the procedure provided for in Article 12(3)". The European Communities' argument seems to
be that the distinction in these latter provisions implies the existence of a distinction between WTO
Members and third countries for the purposes of Ar ticle 12(1) and (3). However, the European
Communities' own argument on a separate but related point supports precisely the opposite
conclusion. Specifically, with respect to Article 12d(1) the European Co mmunities argues that the
reference to 12(3) only applies to "third count ries other than WTO Members". The European
Communities continues: "[O]therwise, the specific reference to WTO members [in 12d(1)] would be
meaningless." Using the European Communities' own logic, if the presence of the reference to "WTO
Members" in the context of Article 12b and 12d meaningfully suggests differential application of
those provisions between WTO Members and other third countries, then the absence of a reference to
"WTO Members" in the context of Article 12 and 12a must meaningfully suggest no differential
application of those provisions between WTO Members and other third countries.
50. Thus, notwithstanding the contrary interpretation offered by the European Communities, the
clear wording of Article 12 and 12a means that those provisions apply equally to WTO Members and
other third countries. The only way for "a group or a natural or legal person" from a WTO Member to
apply for registration for a non EC-based geographical indication is for the WTO Member from which
the indication originates to qualify according to th e "equivalence conditions" of Article 12(1) and
12(3). Moreover, in the September 2002 meeting of the Council for TRIPS , the European
Communities provided its views on the application of national treatment in the context of registration
systems for geographical indications saying that "[t]he EC believes that registration systems should

be primarily aimed at the identification of domestic GIs". 7 Later in the same intervention, the
European Communities continued: "[I]t seems to us that the logical conclusion is to limit the
registration system to domestic GIs and protect foreign GIs via other means". In light of these
statements, there is no doubt about the European Communities' intention that Article 12 applies to
WTO Members.
3. National treatment of "nationals" of WTO Members under the TRIPS Agreement
51. The reference to nationals in the TRIPS Agreement cannot be interpreted so narrowly as to
render that term meaningless when it comes to nati onal treatment with regard to the protection of
intellectual property rights. This is most importa ntly the case in the context of the protection of
geographical indications, which are tied more closely to the territories from which they originate than
to the nationality of the rights holders. The European Communities acknowledges the important, and
deliberate, emphasis in the TRIPS Agreement on nationals, as opposed to the focus on products under
the GATT. Since minimum standards for intellectua l property protection is about conferring rights, it
necessarily follows that natural and legal persons are the holders of these rights, and that as a result
WTO non-discrimination obligations generally apply as between the nationals who hold these rights.
However, having acknowledged these important feat ures of the TRIPS Agreement, the European
Communities fails to fully appreciate their implications.
52. Specifically, the European Communities submits th at even if the two parallel procedures in
the EC Regulation operate differently (which the European Communities does not admit), the separate
procedures do not distinguish between nationals, but simply distinguish between geographical areas,
that is, geographic indications originating from ar eas within the European Communities, as opposed
to geographic indications originating from areas out side the European Communities. The European
Communities claims that "[w]hether the area to which a geographic indication is related is located
inside the European Communities or outside is in no way linked to the question of the nationality of
the producers or the product concerned". This st atement misinterprets the nature of intellectual
property rights generally and the nature of protec tion of geographical indications specifically. The
European Communities ignores the full meaning of Artic le 3.1 of the TRIPS Agreement, in particular
by downplaying the de facto effect on nationals of a measure th at the European Communities itself
admits discriminates on the basis of national te rritories. The European Communities further
underestimates the degree to which Article 3.1 appli es to more than just the nationality of a national
from a WTO Member, but also to the full availability and scope of the rights sought.
4. De Facto discrimination according to nationality
53. The European Communiti es claims that Articles 5 and 6 operate without distinction as
between nationals when it comes to geographical indications originating from within the European
Communities, and that Articles 12 and 12a operate in a similarly non-discriminatory fashion when it
comes to geographical indications originating from outside the European Communities. This claim
ignores the simple and incontestable reality that EC nationals are likely to register for protection of
geographical indications originating from with in the European Communities, whereas non-EC
nationals are likely to register for protection of geographical indications originating from outside of
the European Communities. The distinction between ge ographical areas is illusory if the effect of the
EC Regulation is to de facto prevent nationals from non-EC WTO Members from registering for
protection of the geographical indications from their own territories.
54. As the United States has argued, the principles de veloped in the context of national treatment
with respect to goods are instructive. In pa rticular, in assessing whether the EC Regulation de facto
affords more favourable treatment to EC nationals than it does to non-EC nationals, this Panel needs
to look beyond the literal provisions of the EC Re gulation, and examine objectively the structure and

7 See the minutes of that meeting in document IP/C/M/37/Add.1, at p. 80.

overall application of the Regulation, including the unde rlying criteria used to allow registration of a
geographical indication.
8 The structure of the EC Regulation clearly provides two different
procedures for the registration of geographical indica tions. The sole criterion used in determining
which procedure an application for registration shall follow is geographical area , with the only
difference being whether or not the geographical area is within the boundaries of the European
Communities. This choice of the boundaries of the European Communities as the only criterion raises
significant concerns about the neutrality of the provisi ons as to the nationality of the applicants. This
is particularly the case for geographical indications that, by definition, are tied to the production of
goods originating in the area identified by the geographical indication and, by extension, producers in
that area. Given this explicit requirement that physical production of the associated good take place in
the same area as indicated by the geographical indi cation, an applicant for a geographical indication
that refers to an area within the European Communities will, in all probability, be a national of an EC
member State. Conversely, an a pplicant for a geographical indication referring to an area in a third
country will, in all probability, be a national of that third country. As a result, despite the apparently
neutral application of the EC Regul ation regarding nationality, it is clear that the procedure set aside
for geographical indications originating within the European Communities (Articles 5 and 6) de facto
serves EC nationals, whereas the procedure set aside for geographical indications originating outside
the European Communities (Article 12 and 12a) de facto serves nationals of third countries, including
nationals of other WTO Members.
55. The European Communities claims that caution mu st be exercised in finding that the EC
Regulation provides de facto less favourable support to non-EC na tionals, citing the Panel report in
Indonesia – Autos .
9 The Panel in that case failed to find discrimination between nationals on the
grounds that the Indonesian National Car Programme (which forced applicants to the programme to
choose between the mark of the local programme and their global marks) applied equally to
Indonesians and foreigners. The Panel found no discr imination between nationals on the basis that
both nationals and non-nationa ls faced the same choice. 10 That is not the case here. The EC
Regulation does not require all applicants to c hoose between registering a foreign geographical
indication (or global mark) and an EC-based geogra phical indication. Rather, the EC Regulation
requires all applicants to choose between register ing an EC-based geographical indication and not
registering a geographical indication at all. Appli cants of non-EC nationality are, by definition, not
likely to be registering an EC-based geographical indication.
56. The European Communities further cites with favour the finding of that same Panel regarding
the application of TRIPS Agreement national treatment obligations to matters not directly related to
equal treatment of nationals. The Panel found that it would be unreasonable to use the national
treatment obligations in relation to intellectual property rights to challenge domestic support measures
not involving intellectual property rights, on the grounds that such measures could have the de facto
effect of giving an advantage to domestic nationals. 11 Once again, that is not the case here. Invoking
national treatment concerns against an EC system that de facto favours EC nationals, as does the EC
Regulation, is not about challenging a non-intell ectual property support measure to enforce equal
treatment of nationals with regard to intellectual pr operty rights. On the contrary, it is precisely about
challenging the operation of an inte llectual property measure in order to enforce equal treatment of
nationals with regard to that same intellectual property measure. The findings of the Panel in
Indonesia – Autos have no bearing on this case.

8 Appellate Body Report on Japan – Alcoholic Beverages II, DSR 1996:I, at 120.
9 Panel Report on Indonesia – Autos, paras. 14.271 and 14.273.
10 Panel Report on Indonesia – Autos, para. 14.271.
11 Panel Report on Indonesia – Autos, para. 14.273.

5. De jure discrimination according on nationality
57. The EC Regulation de facto discriminates between EC nationa ls and non-EC nationals in a
manner that violates the national treatment obligations contained in Articles 2.1 and 3.1 of the TRIPS
Agreement.
58. Canada submits that the EC Regulation discrim inates between nationals of WTO Members as
a matter of legal construction. C onsider further the example of an inventor seeking patent protection
for her invention. In all but the rarest of cases, an invention is also independent of the location of
production and the location of eventual patent protec tion. Further, an inventor could be a natural
person with nationality in her country of origin, or an inventor could be a legal person whose
nationality, so to speak, will be in the country in which it has such legal personality. In either case,
when patent protection is sought in Europe, the nati onality of the inventor is usually retained. It is
therefore equally important that European patent law not deny the inventor a patent over the invention
because of nationality, and of course it cannot.
59. Contrast those two scenarios with the case of an applicant for protection of a geographical
indication. First, unlike copyrighted works or pa tented inventions, which are independent of the
location of their creation, geographical indications ar e by definition tied to the particular location that
they represent. Second, determining the nationality of the rights holder of a geographical indication is
a different matter than it is for the creator of a copyrighted work or a patented invention. In the
specific case of the EC Regulation, the rights hol der will only in exceptional cases be a natural person
or even an individual producer. Rather, the rights holder will generally be a group or association of
local producers, established for the purpose of market ing their similar products, and it is these groups
that subsequently authorize individual producers to use the geographical indication. Since these
groups are the "interested parties" referred to in provisions on geographical indications in the TRIPS
Agreement, it is the nationality of these groups that is relevant for the purposes of national treatment,
and not the nationality of individual producers. The nationality of these groups or associations will
invariably be in the jurisdiction in which they operate.
60. Combining these two features of geographical indications – a group of local producers (by
design) registering a local indication (by definition) – virtually guarantees that the nationality of the
rights holder will be in the country from which the geographical indication originates. In other words,
the geographical area from which a geographical indication originates determines the nationality of
the interested parties seeking to register it. For example, if a Canadian farmer establishes operations
in Belgium to produce a product to be marketed wi th a geographical indication from Belgium, that
farmer's nationality will not alter th e Belgian nationality of the local group that is the registered rights
holder of the geographical indication. As a result, despite the apparently neutral application of the EC
Regulation regarding nationality, it is clear that th e procedures set aside for geographical indications
originating within the European Communities de jure serve EC nationals, whereas the procedures set
aside for geographical indications originating outside the European Communities de jure serve
nationals of third countries. Therefore, by discr iminating according to geographical area, the parallel
procedures in the EC Regulation not only discrim inate between nationals of WTO Members as a
matter of simple probabilities, they discriminate between nationals of WTO Members as a matter of
legal construction.
61. This problem is best illustrated with reference to other branches of intellectual property rights.
Consider, for example, an author claiming protection under copyright for a work such as a book. The
book can be written anywhere in the world, so the act of creation is independent of the location of
production and the location of eventual copyright prot ection. Further, the author is likely to be a
natural person with citizenship in his country of or igin, and if he seeks protection in Europe for the
book, he is likely to retain his na tionality. It is important then that European copyright law not deny
him copyright in the book because of his nationality, and of course it cannot.

6. National treatment applies to geographical area
62. While the prohibition on discrimination between nationals in the TRIPS Agreement is
fundamentally different from the pr ohibition on discrimination between products that is central to
national treatment under the GATT, it is possible, as the European Communities has done in its
submission, to make too much of that distinction. The reference to nationals in the TRIPS Agreement
cannot be divorced from its context in a trade agre ement under the WTO. It cannot, for example, be
reduced to a source of a general right to be free fro m discrimination on the basis of nationality (in the
sense of citizenship) in the laws and practices of domestic instit utions. The European Communities
appears to be suggesting that as long as nationality is not specifically cited by a WTO Member as the
reason for refusing the registration of an intellectua l property right, that WTO Member would not be
in violation of its national treatment obligations. If Article 3.1 of the TRIPS Agreement referred only
to nationality, the European Communities argument might have some merit. However, the TRIPS
Agreement provides national treatment to nationals "with regard to the protection of intellectual
property" and not simply their nationality. "Protec tion" is further defined in footnote 3 to include
"matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual
property rights as well as those matters affecting the use of intellectual property rights specifically
addressed in this Agreement" [emphasis added] . The European Communities notes that non-EC
nationals are eligible to acquire, without discrimination, intellectual property rights under Articles 5
and 6 of the EC Regulation, as long as the geograp hical indication for which protection is sought
originates within the European Co mmunities. However, the protection of intellectual property rights
in geographical indications involves more than just acquisition; it also involves, inter alia , the
availability and scope of those rights. The full scope of the requirement to provide national treatment
to nationals of all WTO Members is not restricted to the nationality of the party seeking registration,
but extends to all facets of the protection of right s. By the European Co mmunities' own admission,
Articles 5 and 6 of the EC Regulation limit the availability and scope of protection available to a non-
EC national to rights in geographical indications originating in a narrowly defined geographical area
(i.e. within the European Communities). To av ail themselves of the full scope of rights over
geographical indications, non-EC nationals must turn to Articles 12 and 12a, an avenue that is closed
off for nationals of all but a few WTO Members. The requirement to provide national treatment
under the TRIPS Agreement to nationals therefor e extends beyond the mere nationality of the
applicant, and applies to the availability and scope of the rights for which registration is sought. By
providing more favourable treatment to geographical indications from a narrow geographical area, the
EC Regulation violates Articles 2.1 and 3.1 of the TRIPS Agreement.
63. Canada requests this Panel to find that EC Regulation 2081/92 violates the European
Communities' national treatment obligations cont ained in Articles 2.1 and 3.1 of the TRIPS
Agreement. In particular this Pa nel should find that the EC Regulation de jure
 accords less
favourable treatment to geographical indications originating from outside the European Communities
than it does to those originating within the territo ry of the European Communities, and further that,
contrary to the European Communities' interpreta tion of its own Regulation, this less favourable
treatment applies to WTO Members. This Panel sh ould further find that th e European Communities
may not rely on an artificial dis tinction between nationality and geogr aphical area to mask what is
otherwise de facto less favourable treatment in the EC Regul ation of non-EC nationals than EC
nationals, both with regard to the fact that ge ographical indications originating from outside the
European Communities are sought by non-EC nationals and vice versa, and with regard to the fact
that the scope of protection against discrimination in the case of geographical indications extends to
include geographical area.
7. The relationship between WTO Members, the EC, EC member States and nationals
64. The EC Regulation, and the European Commun ities' first written submission in defence of
that regulation, confuse the respective rights a nd responsibilities of these various actors, and as a
result improperly imposes burdens on nationals of WTO Members in the name of equal treatment.

The TRIPS Agreement requires WTO Members to implement in their domestic laws minimum
standards concerning the protection of what are ultimately private rights. WTO Members are also
required to ensure that these domestic private rights regimes – whether based on the minimum
standards or reflecting more extensive protecti on – are equally accessible to nationals from other
WTO Members. These requirements establish a direct relationship between WTO Members and
foreign nationals, a relationship th at is independent of any involvement of the government of the
foreign nationals. The European Communities disregar ds this point completely when it claims that it
"finds it remarkable that the United States woul d invoke its own unwillingness to cooperate in the
registration process in order to demonstrate a nati onal treatment violation on the part of the EC".
12 In
fact, the United States would be entirely justifie d in invoking any unwillingn ess to cooperate in the
registration process, because the United States is un der no obligation to facilitate the acquisition of
private rights by its nationals in the European Co mmunities. That obligation falls exclusively on the
European Communities. The Eur opean Communities cannot then re quire another WTO Member to
assist it in fulfilling its obligation to protect the righ ts of foreign nationals, regardless of whether or
not that assistance would be "burdensome".
65. The European Communities then takes the confus ion a step farther by drawing EC member
States into the equation. It is not Canada's pla ce to interpret the internal EC rules governing the
division of competence between the European Co mmunities and its member States when it comes to
the implementation of the TRIPS Agreement – and Canada will not do so here. Instead, Canada relies
on the European Communities' own st atements that: (i) it has adopted the EC Regulation on the basis
of its own competence; (ii) the European Communities is an original Member of the WTO; (iii) it is
irrelevant that the EC member States are also Members of the WTO; and (iv) the subject matter of the
present dispute falls within the exclusive competence of the European Communities.13 On the basis of
these explanations provided by the European Commun ities, Canada concludes that the EC Regulation
is the equivalent of a national measure, and that any functions carried out by EC member States for
the purposes of implementing the EC Regulation are carried out as sub-national units of the European
Communities. As a result, Canada is not surprised that the EC Regulation delegates certain functions
to EC member States that it cannot delegate to th e sovereign governments of third countries. Of
particular note, Article 5(6) provides that "EC member States shall introduce the laws, regulations and
administrative provisions necessary to comply with th is Article." There is no equivalent provision in
the sections that set out the procedures that apply to third country governments; nor could there be.
66. However, having established its exclusive co mpetence over the registration of geographical
indications within the European Communities, the European Communities then confuses its
relationship toward sub-national units of the Eu ropean Communities with its relationship toward
sovereign WTO Members. 14 In particular, the European Communities seeks to defend the
requirement that third country governments, includi ng those of WTO Members, assist applicants to
comply with the requirements of the EC Regulatio n. This position by the European Communities
effectively equates the downward delegation of res ponsibility to sub-national units with the outward
delegation of responsibility to s overeign WTO Members. The European Communities apparently
considers it "equal treatment" to require nationa ls of sovereign WTO Members to depend on the
action of their governments (over which the European Communities has no authority) in the same way
nationals of the European Communities depend on the action of their own governments (in
circumstances where European Communities law requir es that action). This is not equal treatment; it
is less favourable treatment. The EC Regulati on therefore imposes on WTO Members a requirement
for reciprocal and equivalent treatment that is in violation of the national treatment obligations
contained in Articles 2.1 and 3.1 of the TRIPS Agreement.

12 European Communities' first written submission, para. 130.
13 European Communities' first written submission, paras. 253-255.
14 European Communities' first written submission, para. 129.

8. Points raised in response to Panel's questions
67. Canada interprets the term "nationals", based on the ordinary meaning of this term as used in
various provisions of the TRIPS Agreement, to re fer to those natural and legal persons that have
certain kinds of legal status in a given WTO Member, either through citizenship, in the case of natural
persons, or through place of incorporation, in th e case of legal persons such as corporations or
associations. As such, natural and legal persons wi ll be "nationals" of a WTO Member when they
acquire such legal status. Only in the case of sepa rate customs territory Members of the WTO, and in
the case of nationals of non-WTO-Members residing or operating in the territories of WTO Members,
does domicile or commercial establishment become a relevant factor for determining whether a
natural or legal person is eligible for treatment ot herwise available to nationals of a WTO Member.
This distinction is clear from the provisions of th e TRIPS Agreement, and from related provisions in
the Paris Convention (1967) and the Berne Conventio n (1971), incorporated by reference into the
TRIPS Agreement. For instance, Article 1.3 of the TRIPS Agreement provid es that nationals "shall
be understood as those natural or legal persons th at would meet the criteria for eligibility for
protection provided for in the Paris Convention (196 7) [and the] Rome Convention (1971)". Article 3
of the Paris Convention (1967) sets out how to treat nationals from countries that are not members of
the Union, and in doing so makes an explicit dis tinction between natural or legal persons who are
"nationals of countries outside the Union who are do miciled or who have real and effective industrial
or commercial establishments" in a country of th e Union, on the one hand, and "nationals" of a
country of the Union on the other. Similarly, Ar ticle 3(2) of the Berne Convention (1971) makes an
explicit distinction between authors who are "not na tionals of one of the countries of the Union but
who have their habitual residence" in a country of the Union on the one hand, and "nationals" of a
country of the Union on the other. In both these cases, as a result of their domicile, habitual
residence, or industrial or commercial establishmen t, natural or legal pers ons who are not otherwise
nationals of a country of the respective Unions are accorded treatment similar to that accorded
nationals of a country of one of the Unions. However, they do not become nationals, for the purposes
of granting rights, of the country in which they reside. Therefore, as a result of the explicit reference
to this distinction, the ordinary definition of "nationals" does not "necessarily include" natural persons
who are domiciled, and legal pers ons who have an industrial or co mmercial establishment in a WTO
Member.
68. Canada believes that the words "country of the Union", used in Article 2(1) of the Paris
Convention (1967) as incorporated in the TRIPS Ag reement by its Article 2.1, should be read mutatis
mutandis to refer to "WTO Members". The TRIPS Ag reement incorporates by reference certain of
the substantive provisions (Articles 1 through 12, and Article 19) of the Paris Convention (1967) such
that the obligations contained in those provisions apply to WTO Members as if they were all members
of the Paris Union. While WTO Members who are not a "country of the Union" have no rights under
the Paris Convention per se , the TRIPS Agreement incorporates these provisions of the Paris
Convention (1967) for all WTO Members such that the Paris Convention (1967) provisions become
WTO provisions. Therefore, for the purpose of the operation of the provisions thus incorporated, the
words "country of the Union" are the same as "WTO Members". For example, Article 3 of the Paris
Convention operates such that it grants national treat ment to certain natural and legal persons for the
purposes of the operation of the Convention. As a r esult of incorporation into the TRIPS Agreement,
that provision should be read as: "Nationals of Non-WTO Members who are domiciled or who have
real and effective industrial or commercial establishm ents in the territory of a WTO Member shall be
treated in the same manner as nationals of WTO Members."
69. Canada understands that, in traditional trade di sciplines, which are generally prohibitions on
trade-distorting discriminatory behaviour, a WTO Me mber may have a legal measure that is broad
enough to be applied by domestic statutory authorities either consistently or inconsistently with that
Member's international trade obligations. The ques tion in such a case is whether the fact that the
measure could be applied in a manner inconsistent with international trade law is sufficient to
challenge the measure as such. In the case of in tellectual property rights, the TRIPS Agreement

establishes minimum standards of the protection. It requires WTO Members to implement domestic
legislation that grants rights to private rights app licants as long as they meet the minimum criteria for
eligibility established by the TRIPS Agreement. While a WTO Member has flexibility in deciding
how to protect these rights, all Members must protect the same rights according to at least the
minimum standards. Given that it is the specific rights that are prescribed by the TRIPS Agreement,
once a Member has decided how it intends to gran t those rights, the implementing measure cannot
authorize the exercise of discretion other than in a manner consistent with the minimum standards.
Otherwise, there would be no minimum standards for rights.
D. C
HINA
1. Introduction
70. China submits that a successful resolution of this dispute requires the removal of ambiguity
in, and proper interpretation of, the following issues:
– applicability of Article 12 of the EC Regulation to non-EC WTO Members;

– verification and publication affecting non-EC WTO Members; and

– product specifications and inspection structures affecting non-EC WTO Members.

71. The provisions of the EC Regulation of particular concern to China are those relating to
non-EC WTO Members. In this respect, ambiguiti es remain in the EC Regulation. Its frequent
references to "third countries", "conditions for protection", etc., are without any express delineation as
to whether certain provisions are applicable to a non-EC WTO Member or not. The interpretations
and cross-references offered in the European Communities first written submission fail to remove
these ambiguities.
2. Applicability of Article 12 of the EC Regulation
72. The European Communities' textual interpreta tion of Article 12, including the wording
"[w]ithout prejudice to international agreements" is not accompanied by any evidentiary support,
whether in terms of actual implemen tation or of judicial deliberation. Nor is there any regulatory
language in the provisions to expressly exclude the applicability of these provisions to non-EC WTO
Members. While paragraph (10) of the recitals sp eaks specifically of a right of objection granted to
nationals of WTO Member countries on the basis of the "without prejudice" chapeau, the preamble of
the EC Regulation's amendments does not expressly exclude WTO Members from the Article 12
applicability of the reciprocity and equivalence requi rement to third countries. Had the drafters
intended that Article 12 would not apply to non-EC WTO Members, a clause to that effect sitting next
to the express reference to the right to object in the Preamble would have been inserted.
73. The European Communities itself admits that the EC Regulation does require that conditions
be met in respect of "specific geographical indicati ons from third countries" which, more likely than
not, includes WTO Members, where it stated that it does require that the product specifications and
inspection regimes with regard to specific GI s from third countries meet the conditions of
Regulation 2081/92.
15
74. Immediately after that paragraph, the European Communities continues to argue that, in the
event that the above equivalence and reciprocity requirements with respect to product specification
and inspection regime were challenged by the complain ants in this case, it would not be inconsistent
with Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention.

15 European Communities' first written submission, para. 118.

75. The language of Article 12 does not support the European Communities' interpretation that it
was not applicable to WTO Members. That interpretation requires steps in reasoning with precise
attention to the WTO TRIPS Agreement. The "without prejudice" chapeau is too general to reflect
such reasoning.
76. Putting aside the legitimacy of such specification and inspection issues, it is worth noting that
the European Communities' reversion to demanding e quivalence and reciprocity in respect of certain
components of its GI protection regime is particularly significant. It further added complication to the
proper interpretation of Article 12 as quoted above. By reintroducing the equivalence and reciprocity
requirement for specifications and inspections in relation to specific GIs from WTO Members, the
European Communities appears to admit that portions of Article 12, particularly in respect of the
whole first indent and the first portion of the sec ond indent of Article 12(1), apply to WTO Members,
in contradiction to its earlier argument that the whole Article does not apply.
77. The language of Article 12 does not suggest a split in the applicability of, for example, the
registration requirement versus th e overall protection regime. The leading sentence "this Regulation
may apply to an agricultural product or foodstuff from a third country provided that" appeared to
suggest that the overall applicability of the wh ole Regulation would be available or withheld
depending on whether equivalence would be met. The European Communities' split interpretation
could only be understood easily if there were a sepa rate set of provisions regarding applicability of
this Article to non-EC WTO Members, or if WTO Members are expressly excluded from the
definition of third countries in relation to specific indents of this Article.
3. Verification and publication affecting non-EC WTO Members
78. Other provisions pertaining to verification a nd publication in the EC Regulation did not
appear to afford clarity. As the European Communities describes, verification and publication
bifurcated to two "parallel" sections of the GI Regulation, Article 6 in relation to GIs from the
European Communities, and Article 12b in relation to GIs from third countries. However, in the same
portions of its first written submission, the Euro pean Communities avoids setting out in detail the
different verification and publication procedures as they respectively apply to applications from EC
member States and those from third countries, incl uding WTO Members. A closer reading of the two
articles reveals that, while parallel in form, they ar e not the same in substance. If no less favourable
treatment is granted to GIs from WTO Members in comparison to those from EC member States,
Article 6 should govern both EC member States and WTO Members, and non-WTO third countries
should be governed by Article 12b.
79. Under Article 6, within six months of its receipt of an application transmitted from an EC
member State, the EC Commission is required to verify and investigate whether the application
contained all product specification requirements unde r Article 4. If the Commission finds "that the
name qualifies for protection", publication for objec tion and ultimate registration would ensue; if the
Commission concludes otherwise, the name is not published. Prior to publication, the Commission
may request the opinion of a Committee composed of representatives of EC member States; in the
event that the Commission differs with the Committe e, or if the Committee delivers no opinion, the
matter is required to be submitted to the EC Counc il for final determination on the basis of qualified
majority.
80. Article 12b, on the other hand, requires the EC Commission to verify and investigate
"whether the registration request sent by the third country [including WTO Members] contains all the
necessary elements", a wording different from "wheth er the application includes all the particulars
provided in Article 4" in respect of applications from the European Communities. A transmission
from WTO Members, together with non-WTO third c ountries, is treated as a "registration request" in
contrast to an "application" from within EC member States. Such a difference in terminology, albeit
slight, is significant as a scrutiny of whether the re quest contains "all the necessary elements" is wider

and more intensive than a verification of whethe r the application includes all the particulars under
Article 4. For verification by the Commissi on of requests from third countries, including WTO
Members, Article 12b does not simply refer to Article 4 particulars. It appears to suggest that a third
country, including a WTO Member in transmitting its re quest, has more to satisfy than a EC member
State in transmitting an application. The sugges tion is further borne out by the requirement under
Article 12a(2) that the third country, including a WT O Member must "deem the requirement of this
Regulation to be satisfied" before transmitting in contrast to the Article 5(5) requirement that a EC
member State only has to "check that the application is justified".
81. Further indication of the difference and likely extra burden is the Article's reference to
"conditions for protection". In place of the paralle l requirement that the EC Commission shall make
the determination of whether to publish or not b ased on whether a EC name "qualifies for protection"
under Articles 6(2) and 6(5), Article 12b requires that the Commission make the determination of
publication by analyzing whether a third country name, including a name from a WTO Member,
"satisfies the conditions for protection".
82. The EC Regulation fails to define what "all th e necessary elements" and what "the conditions
for protection" are. Yet these requirements tend to lead WTO Members to look to the direction of the
prior European Communities' insistence upon reciproc ity and equivalence requirements, at least in
respect of product specifications and inspection regimes.
83. Prior to publication of names from all third countries including WTO Members, the
Commission may request the opinion of a Comm ittee composed only of representatives of EC
member States. In the event that the Commissi on differs with the Committee, or if the Committee
delivers no opinion, the matter is then required to be submitted to the EC Council for final
determination on the basis of qualified majority. This resolution of possible disputes on publication
was again available to names from WTO Members, but the process does not invite WTO Members to
participate.
4. Product specifications and inspection structures affecting non-EC WTO Members
84. Article 10 contains relatively detailed provisi ons with respect to the obligations on EC
member States to establish inspection structures to ensure quality of EC GIs; the EC Regulation does
not contain express parallel provisions for WTO Members in connection with their own GIs. The
European Communities insists that its EC Regulati on does require that the product specifications and
inspection regimes with regard to specific geogr aphical indications from third countries, presumably
including WTO Members, meet the conditions of Regulation 2081/92.
16
85. There is no express definition or cross-reference as to what these conditions are in relation to
WTO Members. Article 12a(2) provides that a WTO Member must attach certain documents to its
transmitted registration request. The EC Commission, pursuant to its verification and publication
powers under Article 12b, determines whether the above attachment transmitted by the WTO Member
satisfies the conditions of the EC Regulation. It is not clear that the above requirements are the only
conditions for WTO Members to satisfy. Again, in possible cases of doubt, the EC Council would
have the final power to make sure a determination, under Article 12b, without participation from other
WTO Members.
86. In contrast, the parallel provision of Article 5(4) does not require EC member States to
guarantee Article 10 inspection structures, as they ar e obligated to establish the structure pursuant to
the requirements under the Article; nor are EC memb er States required to describe their domestic GI
protection system. Subsequently, EC member States can expect a relatively simple prima facie
verification process, involving only a review of whether the application contained all the particulars.

16 European Communities' first written submission, para. 118.

87. A further example of the European Communities' ambiguity under Article 10 is the silence on
whether designated inspection authorities in non-EC WTO Members can be readily accepted by the
EC Commission and how that acceptance relates to the particulars of its inspection structure which is
to be reviewed by the Commission. Under Article 10(2), EC member States, while obligated to
establish their respective inspection structures, can reasonably expect no objection by the Commission
to accept their designated authorities. With respect to "approved inspection bodies" in third countries,
the EC Regulation specifically requires that "third countries recognized pursuant to Article 12(3)" are
to comply with "[t]he equivalent standard or the a pplicable version of the e quivalent standard" "to be
established or amended in accordance with the pr ocedure laid down in Article 15", a procedure
without representation from other third countries. Ambiguity exists as to whether WTO Members are
required to comply with this requirement. Again, since the European Communities in its first written
submission in interpreting Article 12 admits that WTO Members are required to meet the conditions
of the GI Regulation in respect of product specifi cation and inspection structure, it appears that under
the GI Regulation, WTO Members are required to establish "equivalent standard" for private
inspection bodies and possibly for "designated inspection authorities".
88. No clarification as to what that equivalent standard is was available until the European
Communities gave its first written submission. It provides no guidance as to what constituted
equivalent standard for WTO Members. It refers to ISO/IEC Guide 65:1996, but only as "an
example"
17, and it is also not clear whether that sta ndard has passed the Commission's Article 15
procedure, as required under Article 10(3) of the Regulation below.
89. If the European Communities' interpretation th at "third countries recognized pursuant to
Article 12(3)" did not include WTO Members for the purpose of awarding right to object 18 is to be
acceptable, the EC Regulation is again silent as to wh at the equivalent standard for private inspection
bodies is for WTO Members except for the general stat ement made in its first written submission that
it did require reciprocity and equivalence in respect of inspection structures, or it would be
contradicting itself by implying that ISO/IEC Guide 65:1996 applies to WTO Members. Such a
contradiction does not assist in the proper interpretation of the EC Regulation.
90. Notwithstanding the above inconsistency, the European Communities insists upon reciprocity
and equivalence conditions, both in terms of product specifications and in particular inspection
structure, whether appearing in the form of requi site attachments or the outright requirement for
equivalence. WTO Members are required to have a prior established set of legal rules for the
protection and inspection of GIs, including GIs from the European Communities, before they can
expect to transmit registration requests from their nationals to the European Communities for EC GI
protection. In making a transmission, no WTO Me mber would ignore the EC Regulation's "all the
necessary elements" and "the conditions for protection" requirement set out by the European
Communities under Article 12b(1) or the European Communities' express insistence upon
equivalence in product specifications and inspection st ructures. The safest approach in order to have
their respective registration request accepted for pu blication is to meet the European Communities'
equivalence conditions.
91. In that respect, China believes that produc t specification and inspection structures are
quintessential for the value and quality of GIs, just as the European Communities argued.
19 A n
overall GI protection system built upon reciprocal and equivalent product specification and inspection
from WTO Members can hardly be described as reci procity and equivalence, neutral for such WTO
Members. In arguing that its reciprocity and equi valence conditioning would only be limited to these
two components of its GI protection regime and not be applicable to its overall GI regulatory
protection system, the European Communities is far from convincing. The essential link between

17 European Communities' first written submission, para. 54.
18 European Communities' first written submission, para. 74.
19 European Communities' first written submission, paras. 48-55 and 121.

product specification and inspection structure and the overall GI protection cannot be artificially
separated.
5. Other points raised in response to the Panel's questions
92. China refers to the example of the Patent Cooperation Treaty ("PCT") as an international
arrangement according to which national governments c ooperate by acting as agents or intermediaries
in the protection of private rights. To the best of China's knowledge, there is no other international
arrangement established under the legislation of one of the parties to that arrangement. In the case of
international arrangement established under PCT, application requirements and procedures are applied
universally and equally among members. If an intern ational arrangement in respect of protection of
private rights is to be established under the legisla tion of one of the parties to the arrangement, such
legislation or international arrangements, establishe d thereunder, shall not impose extra burdens with
respect to availability, acquisition, scope, maintena nce and enforcement of private rights as well as
those matters affecting the use of such private rights.
93. China understands that the term "nationals" as us ed in Article 1.3, including footnote 1, and
Articles 3.1 and 4 of the TRIPS Agreement and Artic le 2 of the Paris Convention (1967) relates to
national treatment in this dispute. In the context of protection of intellectual property rights, natural
persons who were domiciled, or legal persons who had a real and effective industrial and commercial
establishment in a specific member are required under the TRIPS Agreement and Paris Convention
(1967) to be treated in the same manner as nationals of that Member. In this regard, China believes
that "nationals" as used in Article 1.3, including footnote 1, and Articles 3.1 and 4 of the TRIPS
Agreement and Article 2 of the Paris Convention (1967) covered both natural or legal persons holding
the nationality of a certain Member of the TRIP S Agreement as well as natural persons who are
domiciled, or legal persons who had a real and ef fective industrial and commercial establishment in
that Member.
94. China does not consider that the words "country of the Union", in Article 2(1) of the Paris
Convention (1967), as incorporated in the TRIPS Agreement by its Article 2.1, should be read
mutatis mutandis to refer to "WTO Member" for the following reasons. First, the text of the two
international agreements does not support such an in ference. According to Article 1(1) of the Paris
Convention (1967) the words "country of the Union" refer to a member state of the Paris Convention
(1967). In contrast, "WTO Member" means a part y to the Agreement Establishing the World Trade
Organization. The Paris Convention and the Agre ement Establishing the World Trade Organization
are two international agreements among different member states. The TRIPS Agreement was one of
the series of WTO agreements. The member states of each of these two international agreements
promised to take on different obligations a nd are entitled to different rights under different
international agreements of which they are memb er states. Although certain Articles of the Paris
Convention are incorporated by Article 2.1 of the TRIPS Agreement, the two agreements still remain
separate and independent internati onal agreements, and both are in force. The incorporation does not
affect other existing obligations between other me mber states under TRIPS and the Paris Convention.
Second, the factual member status does not allow su ch inference. In fact , there are more member
states of the Paris Convention than of the WTO; while the Paris Convention has 160 member states,
the WTO has 147 Members.
95. China considers that that different treatmen t of GIs under the EC Regulation would also
amount to less favourable treatment of like products. It quotes the view of the Appellate Body in
Korea – Various Measures on Beef that according "treatment no l ess favourable" means according
conditions of competition no less favourable to the imported product than to the like domestic product
and that this should be assessed by examining whether a measure modified the conditions of
competition in the relevant market to the detriment of imported products. 20 Therefore, in the current

20 Appellate Body Report on Korea – Various Measures on Beef, para. 135.

case, if different treatment accorded to names by the EC Regulation is found to result in modification
of the conditions of competition under which like products, imported products and EC like products,
competed in the EC market to the disadvantage of imported products, then the different treatment
granted to names would amount to less favourable treatment of like products. China therefore
believes that evidence in respect of different treatment of names is relevant to a determination of less
favourable treatment of like products.
96. China believes that measures that came into fo rce after this Panel was established are within
the terms of reference of this Panel. The compla inants had specified the concerned amendments in
their request for the establishment of a panel, a nd those contents accordi ngly have been properly
included in the terms of reference of this pane l. The European Communities claims that only
measures in force at the time that the Panel was est ablished are within the terms of reference of the
Panel. However, there is no requirement in th e DSU or in WTO dispute settlement practice for
arguments that the Panel's jurisdiction is only limite d to measures that had already come into force
when the Panel was established. The European Communities does not provide any legal basis for its
claim nor could it find support from the functions a nd the objective of the terms of reference, as
explained by the Appellate Body in Brazil – Desiccated Coconut . The parties and third parties,
therefore, were given sufficient information concerni ng the claims at issue in the dispute, and were
allowed enough opportunity to respond to the complain ant's case. It is irrelevant in this respect
whether the concerned amendments came into effect before or after this Panel was established.
Furthermore, following the European Communities' lo gic, when a measure was challenged before the
DSB, once the respondent had replaced the challenge d measure with an amendment before the Panel
was established, and that new amendment came into force immediately after the establishment of the
Panel, then the Panel would not be able to examine either the old measure or the amendment, because
the challenged old measure no longer had any effect by the time of the Panel's establishment, while
the new amendment had not yet come into effect.
97. China considers that the mandatory/discretionary distinction in GATT and WTO
jurisprudence fully applies under the TRIPS Agre ement and that the nature of the concerned
obligations under the TRIPS Agreement therefore shall not affect the application of the distinction. It
is irrelevant whether the nature of some TRIPS oblig ations is to prohibit or to oblige Members to take
certain actions in respect of the application of the mandatory/discretionary distinction. The nature of
the concerned obligations under the TRIPS Agreement th erefore shall not affect the application of the
distinction. It is established under WTO law that a Member could challenge measures of another
Member on a per se basis when those measures mandate, in cer tain circumstances, a violation of its
WTO obligations. There is a considerable bod y of dispute settlement practice concerning the
mandatory/discretionary distinction, or per se violation rule, as it is more commonly referred to. In
the relevant panel and Appellate Body reports addressing the mandato ry/discretionary distinction,
nowhere is it stated that the nature of the concer ned WTO obligations as distinguished by the Panel in
this question shall affect the application of the dist inction. Furthermore, certain obligations, (e.g. the
national treatment principle under TRIPS), inter alia , on one hand, that oblige Members to take
certain actions, are also prohibitions in nature on the other. The national treatment principle in
Article 3.1 of the TRIPS Agreement, prohibits a Me mber according to the nationals of other Members
treatment less favourable than that it accords to its own nationals. Therefore, from the text of this
provision, it is clear that the nature of the nati onal treatment principle is an obligation which both
obliges each Member to accord to the nationals of other Members treatment no less favourable than
that it accords to its own nationals , and prohibits Member from according to the nationals of other
Members treatment less favourable than that it accords to its own nationals.

E. COLOMBIA
1. Introduction
98. Colombia has a systemic interest in this di spute in that it attaches great importance to
determining the scope of the obligations assu med by WTO Members under the TRIPS Agreement.
As a country that has protected one of its main export products with a trademark, Colombia is
interested in ensuring that WTO Member countries c ontinue to be entitled to allow their nationals to
decide whether they must choose one of the inte llectual property protection instruments or whether
they are in fact entitled to combine those instrume nts according to the specificities of the different
markets.
2. Reciprocity and equivalence requirement
99. In response to the argument made by Australia and the United States with respect to the
violation of the national treatment provisions for the registration of, or objection to, a geographical
indication, the European Communities has stated that the expression "without prejudice to
international agreements" included in Article 12(1) and (3) of the EC Regulation ensures that the
rights of WTO Members are preserved. Accord ing to the European Communities, the WTO
membership of the country to which the applicant for registration belongs is a sufficient guarantee that
there is protection of geographical indications.
21 If this is the correct interpretation of the legislation,
Colombia thinks the Panel should recommend that the European Communities amend its legislation to
ensure that the clause in question is given the scope and meaning that the European Communities
attributes to it in its submission as such an interpretation cannot be drawn from a simple reading of the
clause in its current version.
100. Even if Colombia were to accept, for the sake of discussion, that this is the scope of the clause
with respect to international agreements, there is still a point that remains unclear, namely the way in
which the third country would transmit the registra tion application under Article 12a(2). Indeed,
Colombia wonders whether the country of origin of the applicant, being required in any case to
describe the legal provisions protecting the said designation and the way in which its inspection
structures operate, is not subject to a certification or equivalency process. In practice, Colombia sees
this requirement as a condition involving an evaluati on of protection systems in force in the country
of origin of applicants for geographical indicati ons. Consequently, Colombia sees protection as being
clearly contingent on the evaluation of the applicant's system, and this is contrary to Article 1.1 of the
TRIPS Agreement.
101. Colombia does not agree with the Europ ean Communities' argument that drawing a
distinction between geographical areas or territori es is not a violation of the national treatment
principle. Any distinction that in any way iden tifies the geographical indications of the European
Communities as opposed to the others would clearl y result in a violation of national treatment
commitments.

21 European Communities' first written submission, para. 66.

3. Relationship between trademarks and geographical indications
102. With respect to the relationship between trad emarks and geographical indications, Colombia
agrees with the argument that the TRIPS Agre ement does not establish any supremacy of one
instrument of protection over another. This do es not mean, however, that the European Communities'
regulations can simply ignore the right of the trademark owner under Article 16.1 of the TRIPS
Agreement. To do so is a clear violation of the European Communities' WTO commitments.
F. I
NDIA
1. Points raised in response to the Panel's questions
103. India is not aware of any group or person ever having filed with its authorities either an
application for, or an objection to, a registration pursuant to the EC Regulation. If such filing was to
occur, India would be willing to transmit such an application to the European Communities.
However, the question whether the Government w ould be able to do so would depend upon what the
transmission entails, in particular whether it may involve any procedures or need for any
infrastructure for which there may be capacity constraints. India allows direct access by GI applicants
to its national authority irrespective of nationality. In respect of applicants who do not have a
principal place of business in India, it is necessary to indicate an address for service in India. In case
of applicants from other WTO Member countries, it is necessary to include a certificate by the
Registry or competent authority of the Geographical Indications Office of the WTO Member country
in the application for registration and it is necessar y to include the particulars of the geographical
indication, the country and date of filing of the first application in the WTO Member country and such
other particulars as may be required by the Registrar.
104. India understands that the European Communities has stated that it does not provide less
favourable treatment to geographical indications located in other WTO Members.
22 At the same time,
it is not very clear to India from the European Communities' statement whether providing no less
favourable treatment to nationals of other WT O Members along with providing less favourable
treatment to geographical indications located out side the EC member States would satisfy the
requirement of national treatment in Article 3.1 of th e TRIPS Agreement. It is India's view that the
only valid interpretation of the terms "treatment…with regard to the protection" in Article 3.1 is that
"no less favourable treatment" to nationals of other WTO Members cannot be provided unless "no less
favourable treatment" is also provided to the geogr aphical indications applied for by them, whether
located inside the EC member States or located in other WTO Members. The only deviations
permitted are the procedural ones, such as tho se provided in Article 3.2, whereby additional
requirement for judicial or administrative proce dures can be imposed upon applicants of other WTO
Member countries.
105. In India's view, the words "country of the Uni on" in Article 2(1) of the Paris Convention
(1967) as incorporated in the TRIPS Agreement by its Article 2.1, should be read mutatis mutandis to
refer to "WTO Member".
106. India is not aware of any GIs registered under the EC Regulation that are identical (or
confusingly similar) to Community protected trademarks owned by Indian nationals.
107. India sees no apparent conflict between Articles 16.1 and 22.3 of the TRIPS Agreement.
Article 16.1 deals with rights of a trademark owner against "third parties" in the context of use of
identical or similar signs which may cause confusion. It also provides that these rights shall not
prejudice any existing prior rights. Article 22.3 entitles WTO Members to refuse or invalidate the
registration of a trademark which c onsists of or contains geographical indication with respect to the

22 European Communities' first written submission, para. 125.

goods not in the territory indicated if such use is of a nature as to mislead the public as to the true
place or origin. Any potential conflict would be a voided in India as provisions of Section 25 of the
Geographical Indications of Goods (Registration and Protection) Act, 1999 of India provide for
refusal or invalidation of registration of trademarks that contain or consist of geographical indications
that may cause confusion.
108. Under Section 12 of India's Trade Marks Ac t of 1999, registration by more than one
proprietor of trademarks which are identical or similar may be permitted in the case of honest
concurrent use. However, GIs are not covered by that provision. Section 26 of India's Geographical
Indications (Registration and Protection) Act of 1999 provides that where a trademark contains or
consists of a geographical indication and has been applied for or registered in good faith under the law
relating to trademarks or where rights to such tr ademark have been acquired through use in good faith
either (a) before the commencement of the Act, or (b ) before the date of filing of the application for
registration of such geographical indication under the Act, nothing contained in the Act will prejudice
the registrability or the validity of the registration of such trademark or the right to use such trademark
on the ground that such trademark is identical w ith, or similar to, such geographical indication.
India's Geographical Indication Act does not discrim inate between GIs and trademarks of European
Communities and non-EC countries.
G. M
EXICO
1. Introduction
109. Mexico presents arguments in support of its view that the EC Regulation is inconsistent with
the TRIPS Agreement. It addresses the following points which it considers fundamental to this
dispute:
 – the national treatment obligation;

 – the MFN treatment obligation;

 – the protection of trademark rights under Articles 16.1 and 24.5 of the
TRIPS Agreement; and

 – cochineal: a product of Mexican origin.

2. National treatment
110. Like the complaining parties, Mexico submits that Article 12(1) of the Regulation violates the
principle of national treatment in that it accords less favourable treatment to third countries than it
accords to EC member countries. Under Article 12(1) of the Regulation, foreign countries cannot
enjoy the same benefits as EC nationals with resp ect to the registration of geographical indications
unless they meet certain conditions of reciprocity. The language of Article 12(1) of the Regulation is
precise and unequivocal: a third country must "give gua rantees identical or equivalent" in order to be
able to receive the same protection as EC member countries; otherwise, nationals of other WTO
Members cannot enjoy the protection accorded by the Regulation. This is clearly contrary to the
principle of national treatment contained in Artic le 3.1 of the TRIPS Agreement. Moreover, the
Regulation violates the principle of national treatment by once again imposing conditions of
reciprocity and preventing nationals of countries that are not EC members from submitting their
objections with respect to applications for the regi stration of geographical indications directly to the
European authorities. Indeed, Article 12d(1) of the Regulation stipulates that objections from WTO
Member countries must be submitted first to the gove rnment of the country in question, which must
then transmit the objection to the European Commi ssion. In other words, unlike the EC member
countries, WTO Member countries that do not belong to the European Communities bear the

additional burden of first having to address themselves to their national authorities, and then having to
delegate to those authorities the task of following up the objection process.
3. MFN treatment
111. The Regulation also represents an infringeme nt of the principle of most-favoured-nation
treatment established in Article 4 of the TRIPS Agreement. By limiting intellectual property
protection exclusively to third countries that provide equivalent guarantees, the European
Communities is denying equal treatment to non-EC me mber States. Article 12(1) of the Regulation
provides for treatment that discriminates between th ird countries to the detriment of those which fail
to comply with the reciprocity conditions laid down in the Regulation. In other words, the
advantages, favours and privileges of the Regulation are available to certain third countries only, and
are not accorded immediately and unconditionally to the nationals of all other WTO Members as
stipulated in Article 4 of the TRIPS Agreement.
4. Protection of trademark rights under Articles 16.1 and 24.5 of the TRIPS Agreement
112. This dispute touches on the delicate subject of the relationship between trademarks and
geographical indications. Indeed, these two forms of protection of intellectual property rights can
easily become the subject of conflicts, since they can protect, albeit from different angles, one and the
same product with the same distinctive sign. The TRIPS Agreement addresses, and tries to resolve,
these possible confusions through Articles 16.1 and 24. 5, which establish the rights of trademark and
geographical indication owners. In this connection, Mexico notes that the Regulation violates at least
two provisions of the TRIPS Agreement, namely Articles 24.5 and 16.1.
113. Article 14(1) of the Regulation clearly viol ates Article 24.5 of the TRIPS Agreement.
Contrary to what is provided for in the TRIPS Agr eement, this provision of the Regulation gives clear
preference to geographical indications over trademar ks that were registered subsequently. This
priority for GIs takes as a time reference the day of registration or application of the trademark with
the EC authorities and rejects the possibility of a tr ademark having previously been registered in a
non-EC member country. The deliberate failure to recognize prior registrations in third countries
violates not only Article 24.5 of the TRIPS Agreement, but also Article 4 of the Paris Convention. In
its written submission, the European Communities confirms its position by stating that the only
relevant date for the purposes of Article 24.5 is the da te of filing of the application before the national
authorities, in this case before the EC authorities. This argument clearly does not justify a deviation
from Article 24.5 of the TRIPS Agreement.
114. The exclusive right conferred by Article 16.1 is severely impaired by Article 14(2) of the
Regulation, which permits coexiste nce between a previously registered trademark and a subsequent
geographical indication. This means that in the Eu ropean Communities, the fact that a trademark was
registered prior to a subsequent geographical indi cation does not constitute an obstacle to invalidating
the registration of the geographical indication. In its first written submission, the European
Communities goes so far as stating that the TRIPS Agreement not only permits the coexistence of
trademarks and geographical indications, but, in f act, requires such coexis tence. In the same
submission, the European Communities admits that co existence of the two types of protection is not
the perfect solution, but it is preferable to a rigi d application of the "first-in-time" rule. Mexico
considers these justifications to be insufficien t. By acknowledging that the solution implemented
under the Regulation may not be the perfect solution, the European Communities is recognizing the
inconsistency of its legislation. Similarly, by ignoring the "first-in-time" approach, the European
Communities is violating not only Article 24.5 of the TRIPS Agreement, but also a recognized
general principle of law.

5. Cochineal: a product of Mexican origin
115. Mexico considers that "cochineal" should be removed from Annex II of the Regulation.
Annexes I and II of the Regulation specifically me ntion the products falling within the scope of
application of the Regulation. Article 1 of the Regulation establishes the relationship between
Annexes I and II and the other provisions. The li st of products in Annex II includes a product of
Mexican origin, "cochineal" ( Coccus Cacti ), a small insect which lives on the nopal cactus, or
Mexican cactus, and which produces an intense red co lour used as textile dye and food colouring.
The use of cochineal in Mexico dates back to the pr e-colonial period. The Aztecs used this colouring
matter for centuries before Hernán Cortés arrived in Mexico from Spain in 1519. The first export of
the product to Spain took place in 1523, a few years af ter Cortés's invasion of Mexico. Subsequently,
cochineal bugs were cultivated in parts of Spain in which the climate and c onditions were similar to
those of Mexico. Thus, cochineal is now also produ ced in Spain, specifically in the Canary Islands.
Given that the product exists simultaneously in Me xico and the European Communities, registration
of cochineal from Mexico in the European Communities would clearly be refused under the
Regulation.
116. Mexico submits that, according to the definition of geographical indications in Article 22 of
the TRIPS Agreement, the product in question must be of a quality, reputation or other characteristic
essentially attributable to its geographical origin . In the case of cochineal, a number of its
characteristics can be attributed essentially to th e territory of Mexico. The product's history
demonstrates that, if there is a country to which th e special qualities of cochineal can be attributed for
the purposes of intellectual property protection, it is Mexico. Consequently, it would make no sense
to register cochineal as a geographical indication in any territory which is not in Mexico. Hence,
Mexico requests that the Panel rule that the in clusion of the product "cochineal" as eligible for
protection as a geographical indication of the European Communities is illegal.
117. In response to a question from the Panel, Mexico explains that it considers cochineal a
product classification which is capable of being regi stered as a geographical indication under the EC
Regulation. The categories of "product classification" and "geographical indication" are not mutually
exclusive. The EC Regulation is the "specific meas ure at issue". Since Annex II is part of such
Regulation, it is clearly contained in the "specific me asure at issue". Mexico is fully aware that this
Panel has standard terms of reference and is, ther efore, limited to examining the claims made by
Australia and the United States. As a third part y, Mexico does not intend to submit, and is not
submitting, claims which are different from those raised by the parties. In fact, Mexico is only
addressing some of these claims. In this respect, Mexico is providing arguments to support at least
two of the three claims made by the parties, na mely the violation of the principles of national
treatment and MFN treatment and the violation of the TRIPS rules regarding the relationship between
trademarks and geographical indications. Mexico br ings cochineal as a real-world example of how
the EC Regulation violates these rules and it simp ly intends to support the United States' and
Australia's arguments in these respects. From Mexico's perspective, it is clear that Mexican producers
of cochineal are required to go through specific procedures which EC nationals (national treatment) or
countries which give equivalent guarantees to nationals of the European Communities (MFN
treatment) are not. Furthermore, Mexico would observe that the Panel is fully entitled under
Article 19.1, second sentence, of the DSU, to sugg est ways in which a Member may implement the
Panel's own recommendations and rulings. There is no requirement in the DSU that such a request
has to be forwarded by a party to the case. In the past, panels have issued suggestions for Members to
withdraw their measures which have b een found to be WTO-inconsistent. 23 Given that Mexico's
interest in cochineal is so specific, Mexico does not request that the Panel suggest that the European
Communities repeal its legislation as a whole, but me rely to solve Mexico's very specific problem in
this way. If the Panel does not deem it appropria te to suggest specifically that the European

23 Panel Report on Guatemala – Cement I , para. 9.6; and Panel Report on US – Offset Act (Byrd
Amendment), para. 8.6.

Communities remove the name of cochineal from Annex II of the Regulation, Mexico would certainly
obtain the same result if the Panel suggested th at the European Communities comply with its
recommendations and rulings by withdrawing the Regulation.
6. Points raised in response to the Panel's questions
118. Mexico is not aware of any group or person ever having filed with its authorities either an
application for or an objection to a registration pur suant to the EC Regulation. As to the question
whether Mexico would be willing or able to transm it such applications, according to Article 6.III of
Mexico's Industrial Property Law (LPI), the Mexi can Institute of Industrial Property (IMPI) is the
administrative authority in charge of ensuring the protection of appellations of origin. The IMPI,
acting through the Ministry of Foreign Affairs, would thus be empowered to request or, where
appropriate, to transmit an application for registration of an appellation of origin to any international
agency. The use of this procedure, including the submission of an application for registration of a
Mexican appellation of origin unde r the EC Regulation will, howeve r, depend on the findings made
by this Panel. Mexico's LPI makes no distinc tion on the basis of nationality. According to its
provisions, the owner of appellations of origin is th e Mexican State and authorization to use them is
issued by the IMPI to any natural person or le gal entity that complies with the requirements and
procedures in Articles 169-178 of the LPI.
119. Mexico submits that foreign GIs are protect ed under the TRIPS Agreement, the Lisbon
Agreement for the Protection of Appellations of Or igin and their International Registration, and
treaties which Mexico has concluded with other countries. As established in the Paris Convention, the
principles of national treatment and of assimilation to nationals imply that, with respect to industrial
property, each member State is required to afford nationals of other member States the same treatment
as that afforded to its own citizens without cond itioning such treatment on reciprocity. Hence,
nationals – i.e. both natural persons and legal entiti es – enjoy the industrial property rights granted by
the member State without any requirement as to domic ile or establishment. Pursuant to Article 2(3)
of the Paris Convention, however, member States may apply the domicile requirement for the purpose
of judicial or administrative procedures. Additionally, the fact that Article 2(1) of the Paris
Convention is incorporated by reference in Arti cle 2.1 of the TRIPS Agreement, means that WTO
Members are required to comply with Articles 1 thr ough 12 and Article 19 of the Paris Convention in
respect of geographical indications as regulated in Part II of the Agreement.
120. Mexico is not aware of any GIs registered under the EC Regulation that are identical or
confusingly similar to trademarks in the Europ ean Communities registered by Mexican nationals.
Mexico also considers that Articles 16.1 and 22. 3 of the TRIPS Agreement apply to different
situations. Article 16.1 of the TRIPS Agreement d eals with trademarks, and more specifically with
the rights conferred on trademark owners and situat ions relating to existing prior rights and rights
made available on the basis of use. Article 22. 3 regulates the protection which WTO Members are
required to provide for geographical indications a nd specifies the circumstances in which registration
of a trademark which contains or consists of a geographical indication may be invalidated or refused.
121. Under Mexican law, and specifically the LPI, ther e are two situations in which registration of
a mark is not effective against third parties, as we ll as exceptions to the use of a mark being classified
as an administrative infringement. In the first instance, Article 92.I of the LPI specifies that the owner
of a registered mark may not prevent a third pa rty acting in good faith from using the same or a
confusingly similar mark for the same or similar pr oducts or services, provided that such use is made
in good faith and occurred prior to the date of filing th e application for registration, or the date of first
declared use of the mark. In the second instance, Article 213.X of the LPI provides that, in the case of
comparative advertising, a third party may use a registered mark for the purpose of informing the
public, provided that the comparison is not tendenti ous, false or exaggerated within the meaning of
the Federal Consumer Protection Law. Application of these two scenarios to geographical indications

is governed by the provisions of the TRIPS Agreem ent and other international instruments to which
Mexico is party.
122. Mexico does not believe that previous panel decisions constitute binding jurisprudence for
subsequent panel determ inations, including previous decisi ons on the mandatory/discretionary
distinction in GATT and WTO. In this sense, Mexi co agrees with the statement by the Appellate
Body24 that panel reports bind the parties to the disp ute but do not create definitive interpretations of
the relevant provisions.
H. NEW ZEALAND
1. Introduction
123. New Zealand has a significant systemic inter est in ensuring that the WTO disciplines
applicable to intellectual property rights are respected. These disci plines seek to ensure that such
rights are adequately and effectively protected wh ile also ensuring that the measures Members adopt
to enforce these rights do not of themselves become barriers to legitimate trade. New Zealand has a
significant interest in maintaining protection for the intellectual property rights of New Zealand
producers who have invested in innovation and in the promotion of their products, and in ensuring
that the market access and ability to brand New Zealand products is not precluded. As a major
exporter of agricultural products a nd foodstuffs, New Zealand has an interest in ensuring that its
producers are able to brand and promote their agri cultural products in export markets, including the
European Communities.
124. In the present case New Zealand brings forwar d arguments to support the claims of the
complainants that the EC Regulation violat es the European Communities WTO obligations.
New Zealand focuses its arguments on the claims rai sed by the complainants under Articles 2.1, 3.1,
16.1 and 22.2 of the TRIPS Agreement and Article III:4 of GATT 1994. New Zealand also supports
the arguments made by Australia that the EC Regula tion is inconsistent with Articles 2.1 and 2.2 of
the TBT Agreement but, for the sake of brevity, does not address them in its submissions.
2. The EC Regulation is inconsistent with national treatment obligations under the TRIPS
Agreement and GATT 1994
(a) Introduction
125. The national treatment obligation is "a cornerstone of the world trading system that is served
by the WTO".25 In the TRIPS Agreement, this obligation is incorporated into the legal framework for
protection of intellectual property rights by way of Article 2.1 (which requires WTO Members to
comply with, inter alia , Article 2(1) of the Paris Convention) and Article 3.1. By virtue of
Article 2.1, the European Communities is obliged to provide nationals of other WTO Members with
"the same protection" as its own nationals. Under Article 3.1, the European Communities is obliged
to provide "treatment no less favourable than that it accords to its own nationals with regard to the
protection of intellectual property". The European Communities is also obliged under Article III:4 of
GATT 1994 to accord to imported products of the territo ry of any contracting party "treatment no less
favourable than that accorded to like products of nati onal origin in respect of all laws, regulations and
requirements affecting their internal sale." The European Communities does not dispute that these
national treatment obligations apply to the EC Regulation.

24 Appellate Body Report on Japan – Alcoholic Beverages II, at pp 13-14.
25 Appellate Body Report on US – Section 211 Appropriations Act, para. 241.

(b) Interpretation of the EC Regulation
126. The European Communities disputes as a factua l matter the complainants' interpretation of
Article 12(1) of the EC Regulation on which the na tional treatment violation arguments are based.
The European Communities claims this interpre tation "is based on a misunderstanding" of its
Regulation.
26 The European Communities argues that Ar ticle 12(1) of Regulation 2081/92 clearly
applies "without prejudice to international agreements ". It goes on to state that such international
agreements include the WTO Agreements, and for th is reason "Article 12(1) and (3) of Regulation
2081/92 do not apply to WTO Members". 27 Rather, the European Communities continues, WTO
Members are to follow the procedures set out in Article 12a and 12b of the EC Regulation. This
novel interpretation of the European Communities does not withstand close scrutiny. First, it runs
counter to the usual meaning of the phrase "without prejudice to international agreements". Second, it
is inconsistent with the wording of the EC Regula tion itself. Third, to New Zealand's knowledge, this
is the first time that this interpretation has b een raised by the European Communities, despite
consultations being held on the interpretation of its Regulation.
127. The European Communities interprets the phrase "without prejudice to international
agreements" in a manner which acknowledges its obligations under the TRIPS Agreement. 28 I t
appears to New Zealand that the European Co mmunities is effectively admitting that requiring
nationals of WTO Members to follow the procedures set out in Article 12(1) and 12(3) of the EC
Regulation would be contrary to its WTO obligatio ns. However, in New Zealand’s view there are
sufficient internal inconsistencies between the European Communities' novel interpretation and the
wording of the EC Regulation to doubt whether any reliance can be placed on this interpretation of the
EC Regulation in the future. The European Communities notes the distinctions made in
Articles 12(b)(2)(a) and (b) and Article 12d(1) betw een "WTO countries" and "third countries" in
support of its interpretation. It also states that the procedure provided for in Article 12(3) does not
apply to WTO Members. New Zealand notes, however , that Article 12a is prefaced with the phrase
"[i]n the case provided for in Article 12(3)". If Article 12(3) does not apply to WTO Members then,
based on the European Communities' own argumen ts, Article 12(a) would not apply to WTO
Members. Taken to its logical conclusion, ther efore, the European Communities' argument would
mean that there is in fact no application procedure in the EC Re gulation under which a national of a
WTO Member could apply for GI protection. In th at case the Panel must find that the European
Communities is in breach of its national treatment obligations under the TRIPS Agreement and GATT
1994 by failing to provide a WTO-consistent app lication procedure for GI registration for WTO
Members. New Zealand does not believe that th e European Communities would agree with this
consequence of its interpretation. New Zealand notes that this is the first time this interpretation has
been raised, despite numerous consultations on the EC Regulation, including under the DSU. As the
Appellate Body has indicated, all parties engaged in dispute settlement under the DSU should be fully
forthcoming with respect to the facts, and consu ltations "do much to shape the substance and the
scope of subsequent panel proceedings."29
128. Essentially, the European Communities' argument that Article 12(1) and 12(3) of the EC
Regulation do not apply to WTO Members rests on the claim that the Regulation will indeed be
interpreted in the manner the European Communities s uggests, that is, in a WTO consistent manner.
But the European Communities can offer no basis for assuring WTO Members that this will be so.
The European Communities' position is even less cred ible where the interpreta tion that the European
Communities puts forward is one that is not suggested by the ordinary meaning of the text of the EC
Regulation. The alternative interp retation, and one which is consiste nt with the wording of the EC

26 European Communities' first written submission, para. 65.
27 European Communities' first written submission, para. 66.
28 European Communities' first written submission, para. 65.
29 Appellate Body Report on India – Patents (US), para. 94.

Regulation, is that adopted by the complainants, namely that Article 12(1) and (3) apply to WTO
Members.
(c) Article 2.1 of the TRIPS Agreement (incorporatin g Article 2(1) of the Paris Convention) and
Article 3.1 of the TRIPS Agreement
(i) The EC is obliged to provide no less favour able treatment to other WTO Member nationals
than it does to EC nationals
129. Article 2.1 of the TRIPS Agreement requires WTO members to comply with, inter alia ,
Article 2(1) of the Paris Convention. The Eur opean Communities is theref ore obliged to provide
nationals of other WTO Members with "the same pr otection" as provided to foreign nationals. It is
also required to accord to nationals of other WTO Me mbers "treatment no less favourable than that it
accords to its own nationals with regard to the prot ection of intellectual property" under Article 3.1 of
the TRIPS Agreement. There are three essential components of the national treatment obligation
under Articles 2.1 and 3.1 of the TRIPS Agreement. First, it is the treatment received by "nationals"
that is key. Second, the standard for comparison with the treatment received by foreign nationals is
the most favourable treatment received by domestic nationals. Third, foreign nationals must receive
no less favourable treatment than that accorded to nationals.
130. The national treatment obligations in the TRI PS Agreement are owed to nationals, that is,
natural or legal persons (see Article 1.3). In th e context of the present case, this means that the
standard for comparison is simply with EC nationals , since all EC nationals are potentially eligible to
apply for GI registration under the EC Regulation.
131. In the present case, the European Communities has raised a creative but nevertheless
erroneous interpretation of "nationa ls" in an attempt to claim that its conditions for registration and
objections do not breach its national treatment oblig ations. In particular, the European Communities
claims that "the conditions and procedures contai ned in Regulation 2081/92 for the registration of
geographical indications do not depend on nationality". 30 New Zealand submits that this
interpretation of the national treatment obligation as a pplying to persons of a particular "nationality"
cannot be correct. The WTO Agreements are to be interpreted according to the ordinary meaning of
the words in their context, and in light of their object and purpose (see Article 31(1) of the Vienna
Convention on the Law of Treaties). In the cont ext of the TRIPS Agreement the term "nationals"
clearly has a geographical connotation. Support fo r this is gleaned from both the TRIPS Agreement
and the Paris Convention (incorporated by reference into the TRIPS Agreement). Article 1.3 of the
TRIPS Agreement provides that "[M]embers sha ll accord the treatment provided for in this
Agreement to the nationals of other Members. In respect of the relevant intellectual property rights,
the nationals of other Members shall be understood as those natural or legal persons that would meet
the criteria for eligibility for pr otection in the Paris Convention " (emphasis added). One particular
category of natural or legal persons that meet th e criteria for eligibility for the same protection as
nationals under the Paris Convention are those elig ible under Article 3 [Same Treatment for Certain
Categories of Persons as for Nationals of Countries of the Union] of the Paris Convention. This
provides that "[n]ationals of countries outside th e Union who are domiciled or who have real and
effective industrial or commercial establishments in the territory of one of the countries of the Union
shall be treated in the same manner as nationals of the countries of the Union" (emphasis added).
The Paris Convention therefore includes not only a "nationality" element to the national treatment
obligation, but also includes a "geographical" elem ent relating to the person’s place of domicile or
establishment. This is further supported by footnot e 1 to Article 1.3 of the TRIPS Agreement which
also adopts a geographical element to the term "nat ionals" when used in the relation to separate
customs territories.

30 European Communities' first written submission, para. 123.

132. In the geographical context of GIs, therefore, the term "nationals" includes not only natural or
legal persons of a particular nationality, but also those who are domiciled or who have a real and
effective industrial or commercial establishment in a particular WTO Member. Those legal or natural
persons who are domiciled or have an establishment in the third country to which the GI relates are
therefore "non-EC nationals" for the purpose of the national treatment obligation under the TRIPS
Agreement. As a consequence of its erroneous interp retation of "nationals", the European
Communities asserts that it is the area where the GI is located that determines which procedure under
the EC Regulation applies in a given case, not th e "nationality" of the producers of the product
concerned. Therefore, it claims there is no br each of the national treatment obligations. If this
argument were correct, it would mean that even if a Regulation provided that only EC GIs could be
registered, there would be no violation of the na tional treatment obligati on because in theory the
nationals of any country could live in the European Communities and register their GIs. This would
gut the TRIPS Agreement of the national treatment ob ligation with respect to GIs. In any case, the
EC Regulation as drafted does not support the Eur opean Communities assertion. In particular,
New Zealand submits that the plain meaning of the wo rds "a group or a natural or legal person … in a
third country" in Article 12a of the EC Regulation is that all persons domiciled or with a real and
effective industrial or commercial establishment outside of the European Communities are subject to
the procedure in Article 12a of the EC Regulation (provided that the requirements of Article 12(3)
have been met
 ). So a person’s location is indeed relevant to which application process applies. The
EC Regulation, therefore, adopts two different re gistration procedures – one for EC nationals in
respect of GIs located in the EC; and one for nationals "in a third country". The European
Communities is obliged by its national treatment obligations to provide a no less favourable
application process for nationals "in a third country" than it does for EC nationals.
133. New Zealand supports the complainants argum ents that a WTO Member cannot require
reciprocity of a higher standard of treatment than that required by the TRIPS Agreement before the
right to that higher standard accrues under national tr eatment. To do otherwise would in effect result
in a WTO Member being able secure concessions that it was unable achieve at the negotiating table.
134. In determining whether a particular measure vi olates the national treatment obligation, a first
line of inquiry is whether there is a difference in treatment in the applicable laws. A difference in
applicable law, by itself, is not sufficien t to constitute a breach of national treatment. 31 I t m us t b e
demonstrated that "less favourable treatment" or so me disadvantage accruing to the foreign national
as a consequence of the differe nce in treatment has occurred. 32 In terms of what may amount to a
disadvantage, the Appellate Body has found that subjecting foreigners to additional procedures
constitutes a breach of national treatment. The Appellate Body in US – Section 211 Appropriations
Act concluded that "even the possibility that non-United States successors-in-interest face two hurdles
is inherently less favourable than the undisputed fact that Un ited States successors-in-interest face
only one".33 Thus an "extra hurdle" faced by forei gners constitutes "less favourable treatment" under
Article 3.1 of the TRIPS Agreement. Further, wh ether or not "less favourable treatment" is accorded
to nationals should be assessed "by exam ining whether a measure modifies the conditions of
competition in the relevant market". 34 In other words, treatment no less favourable in Article III:4 of
GATT 1994 calls for "effective equality of opportunities".35

31 See the GATT Panel Report on US – Section 337, cited by the Appellate Body in US – Section 211
Appropriations Act, at para. 261.
32 See the Appellate Body Report on Korea – Various Measures on Beef, at para. 135.
33 Appellate Body Report on US – Section 211 Appropriations Act, para. 265.
34 Appellate Body Report on Korea – Various Measures on Beef, para. 137.
35 GATT Panel Report on US – Section 337, para. 5.11.

(ii) Registration procedure provides less favourable treatment to WTO Member nationals
135. The complainants have demonstrated that nationals from WTO Members are subject to
different registration procedures from those applyi ng to EC nationals. New Zealand has summarized
the differences between the registration processes a pplicable to the European Communities and WTO
Member applications.36 The particular difference at issue between the two registration procedures is
the requirements of equivalence and reciprocity in Article 12(1) of the EC Regulation (this argument
takes as its premise the fact that Article 12(1) and 12(3) of the EC Regulation apply to WTO
Members.). Further, while the requirement to su bmit all applications through government applies
equally to applications from the European Communi ties and WTO Member nationals, its effect is to
disadvantage nationals from WTO Members.
136. New Zealand submits that the effects of the di fferences in registration process mean that, at
worst, the benefits of registration are entirely unavailable to producers from countries outside the
European Communities. Indeed, New Zealand is not aware of any successful registration applications
from nationals from WTO Members made under the pr ocess set out in the EC Regulation, whereas
there have been more than 600 successful applicati ons for registration of EC GIs. At best, WTO
Member nationals are subject to "extra hurdles" and are as a consequence, disadvantaged under the
EC Regulation when compared to EC nationals. An "extra hurdle" exists for WTO Member nationals
if WTO Members are required to comply with the eq uivalence and reciprocity requirements in the EC
Regulation. The complainants have shown that be fore a WTO Member national is eligible to apply
for protection under Article 12(1) of EC Regulation, th e country of origin of that national must grant
reciprocal treatment for EC GIs under an equivalent system.
137. Not only are these requirements for reciprocity and equivalence a breach in and of themselves
of the national treatment obligations, but they also mean that WTO Member nationals do not have the
same opportunities to protect their GIs through regi stration as do EC nationals. In such case, an
individual’s right to apply for registration under the EC Regulation is conditioned on factors over
which the applicant has no control, in other wo rds, whether the appli cant’s government applies
reciprocal and equivalent treatment. New Zealand notes that applications for registration under the
EC Regulation are to be submitted by governments, rather than by individuals (Articles 5(5) and
12a(2) of the EC Regulation). The European Co mmunities claims that the "rules relating to the
registration of such geographical indications from outside the EC … closely parallel the provisions
applicable to geographical indications from inside the EC".
37 It is worth recalling, however, that a
breach of national treatment may arise from the application of formally identical laws.38 New Zealand
argues that in this case "formally identical legal provisions" (or closely parallel legal provisions) in
the EC Regulation do indeed result in less favour able treatment for WTO Member nationals. EC
nationals have an enforceable right that applications that satisfy the requirements of the regulation are
forwarded to the Commission. This right exists by vi rtue of Article 5(6) of the EC Regulation. Thus,
for an EC national, submission vi a their member State government becomes essentially a formality.
Failure to submit an application may be judiciable according to the member States' applicable national
laws. WTO Member nationals have no such enfor ceable right to ensure that submission occurs.
Thus, WTO Member nationals face significant "extra hurdles" in order to obtain protection for their
GIs under the EC Regulation and are thus accorded l ess favourable treatment than an EC national.
Furthermore, the Panel should find that the Eu ropean Communities is in breach of its national
treatment obligations by conditioning the receipt of intellectual property protection on provision of
reciprocal equivalent treatment.
138. For producers able to register a GI under th e EC Regulation, registration grants certain
advantages, including: (i) being able to protect GIs from certain conduct set out in Article 13(1) of

36 See Exhibit NZ-1 reproduced at the end of this Annex.
37 European Communities' first written submission, para. 62.
38 See the GATT Panel Report on US – Section 337, para. 5.11.

the EC Regulation; (ii) being able to prevent the GI term from becoming generic under Article 13(3)
of the EC Regulation; (iii) being able to obtain such protection of GIs on a Community wide basis;
and (iv) according to the EC Regulation's preamble, being able to secure higher incomes as a result of
"a growing demand for agricultural products or foodst uffs with an identifiable geographical origin".
Accordingly, not being able to register GI s under the EC Regulation results in commercial
disadvantage for WTO Member nationals. They are unable to obtain the same level of protection on a
Community-wide level as EC nationals and are unabl e to "secure higher incomes", as claimed by the
European Communities to be a consequence of th eir GI protection. Thus the conditions of
competition faced by WTO Member nationals are modi fied by the operation of the EC Regulation.
As a consequence, the EC Regulation effectively operates as a barrier to trade.
(iii) Objections procedure provides less favourable treatment to WTO Member nationals
139. As stated in its preamble, the EC Regulation also provides an objection procedure to enable
"any person individually and directly concerned in a member State to exercise his rights by notifying
the Commission of his opposition". The objection pr ocedure can potentially result in an application
for registration but not for a proceeding. Consequen tly, not having the right to object is a loss of a
valuable right in the arsenal of a producer to prot ect his or her commercial interests or intellectual
property rights. The complainants have demonstr ated that nationals from WTO countries are subject
to different objection processes from EC nationals. New Zealand has summarized and compared the
applicable objection procedures.
39 The process for objections from WTO nationals suffers from the
same shortcomings as the process for registrations: na mely, objections are subject to reciprocity and
equivalence requirements and must be submitted through governments.
140. The European Communities has, however, asserted that the requirements for reciprocity and
equivalence do not apply to WTO Members and thus are not preconditions for the admissibility of
objections from WTO Members. In particular, the European Communities has argued that "[t]he
phrase [in Article 12d(1) 'recognised under the procedur e provided for in Article 12(3)' only refers to
third countries other than WTO Members".
40 As has been indicated earlier, New Zealand finds the
above argument unconvincing. Such an intenti on (to refer to third countries other than WTO
Members) is not clear from the language of the EC Regulation. The fact that the rest of the EC
Regulation and, in particular, the application pr ocedure under Articles 12 and 12a, fail to explicitly
distinguish between WTO Members and third count ries suggests that there is in fact no such
distinction. The distinction could have been ma de clear in Article 12d(1) by inserting a comma or
words in the phrase to make it apparent that the pr ocedures provided for in Article 12(3) apply only to
third countries and not to WTO Members. However, no such distinction is apparent from the face of
the EC Regulation. Therefore the conclusion must be drawn that the EC Regulation requires both
WTO Members and third countries to be recognized under the Article 12(3). New Zealand submits
that the complainants' interpretation of Article 12d(1) is the correct interpretation. WTO Members are
required by the EC Regulation to provide equivalent and reciprocal treatment as a precondition to the
initiation of the objection procedure by their nationals. Accordingly, the objection procedure breaches
the European Communities' national treatment obliga tions for the same reasons that the registration
procedure does. The effect of the differences in objection processes means that, at best, WTO
Member nationals are disadvantaged under the EC Re gulation when compared to EC nationals. At
worst, the benefits of the right to object are entirely unavailable to producers from countries outside
the European Communities. As a result, the European Communiti es has in place a system that
virtually guarantees no objections w ill be received from WTO Member nationals to applications for
the registration of EC GIs.

39 See Exhibit NZ-2 reproduced at the end of this Annex.
40 European Communities' first written submission para. 74.

(d) GATT 1994
(i) The EC Regulation is inconsistent with Article III:4
141. New Zealand considers that the complainants have demonstrated that all three elements
constituting a violation of Article III: 4 of GATT 1994 have been satisfied. 41 First, the European
Communities agrees that the EC Regulation is a m easure affecting the internal sale of products.
Second, the European Communities appears not to rai se concerns about whether the products at issue
must be "like products." New Zealand notes, in any case, that the United States is correct that for
measures of general application the issue is whethe r the measure makes distinctions between products
based solely on origin, rather than whether particular traded products are "like". It follows that the
only issue under debate is whether the EC Regul ation confers "less favourable treatment" on imported
products. As the phrase "less favourable treatment" is the same as that used in Article 3.1 of the
TRIPS Agreement, all arguments raised by New Zealand under Artic les 2.1 and 3.1 of the TRIPS
Agreement apply equally to Article III:4 of GATT 1 994 and demonstrate that the EC Regulation also
breaches Article III:4 of GATT 1994.
(ii) The EC Regulation cannot be justified under Article XX(d)
142. The European Communities has also claime d that the measure is justified under
Article XX(d) of GATT 1994. In particular, the European Communities claims that "the requirements
at issue are necessary in order to ensure that only those pr oducts which conform to the definition of
geographical indications contained in Article 2( 2) of Regulation 2081/92, which is itself fully
consistent with GATT 1994, benefit from the prot ection afforded to geographical indications by
Regulation 2081/92" (emphasis added). 42 New Zealand agrees with the United States that the
European Communities' claim cannot be sustained. Whether a measure is "necessary" is assessed
against the high standard of whether the measure is the "least-trade restrictive" option available to the
party. Hence, if another WTO-consistent altern ative can be employed, then a measure will not be
justified under Article XX(d).
143. The European Communities claims that it is n ecessary for all applications to be submitted
through government "to ensure that only those products which confirm to the definition of
geographical indications contained in Article 2(2) of the EC Regulation … benefit from the protection
afforded to geographical indications". Given th at the European Communities itself conducts a six-
month investigation into precisely the issue of whethe r the products conform to the definition of a GI
(that is, as set out in the product specification required under Article 4 of the EC Regulation),
New Zealand submits that it is not necessary for applications to be passed through a government filter.
The European Communities provides no claim with respect to the necessity of reciprocity and
equivalence requirements imposed on non-EC produc ts. Further, this claim does not apply to
objection procedures, which are also transmitted through governments. New Zealand therefore
submits that the EC Regulation cannot be justifie d on the basis of Article XX(d) of GATT 1994. The
Panel should find that the EC Regulation violates Article III:4 of GATT 1994 as well as Articles 2.1
and 3.1 of the TRIPS Agreement.
3. The EC Regulation is inconsistent with Article 22.2 of the TRIPS Agreement
144. Article 22.2 of the TRIPS Agreement provides a negative right, or a right to prevent certain
actions, rather than a positive right, such as a right to authorize use. Consequently, it is an important
legal right for "interested parties" to ensure appropriate use of geographical indications. The
complainants have demonstrated that the European Communities has failed to provide this right to
nationals of WTO Members by requiring reciprocity and equivalence as preconditions to admissibility

41 See the Appellate Body Report on Korea – Various Measures on Beef, para. 133.
42 European Communities' first written submission, para. 226.

of registration applications and objections, and by requiring that all a pplications be submitted through
government. New Zealand raises three points to support the complainants' views.
145. First, New Zealand submits that the phrase "legal means" is used to indicate any laws, rules
and regulations through which redr ess for misleading uses and acts of unfair competition "in respect
of geographical indications" can be obtained. Va rious models of legal m eans are envisaged under
Article 22.2 of the TRIPS Agreement, consistent with the principle that WTO Members are free to
determine the most appropriate method of implementation within their own legal system and practices
(see Article 1.1 of the TRIPS Agreement). For GI users, registration of their GI under the EC
Regulation provides the legal means to prevent a ra nge of uses, including misleading uses and acts of
unfair competition under Article 22.2 (see Article 13(1) of the EC Regulation). Once a GI has been
registered under the EC Regulation, persons affected by use of that GI have extremely limited options
to challenge the use of that registered GI. Indeed , they have no such options under the EC Regulation
itself for only repeated failure to comply with the product specification or a request for cancellation
by the natural or legal person or group authorized to seek cancellation may result in the registration
being cancelled. Thus the right to object to an app lication for registration of a GI prior to registration
occurring is a crucial aspect of the legal means that the European Communities must provide under
Article 22.2 of the TRIPS Agreement.
146. Second, New Zealand submits that "interested parties" is a broad term. "Interested" is defined
as meaning "having an interest, share, or co ncern, in something; affected, involved".
43 "Parties"
encompasses any legal or natural person, or group of legal or natural persons. In the context of the
TRIPS Agreement, "interested parties" has a broad meaning and includes persons with an interest in,
or affected by, a GI. The term "interested parties" can be contrasted with specific terms used in other
provisions which confer rights on pa rticular groups of people. For example, when setting out the
particular rights accruing to persons that have re gistered a trademark, Article 16.1 of the TRIPS
Agreement refers specifically to "the owner of a registered trademark". Likewise, Section 1 of Part II
of the TRIPS Agreement refers to "authors" in Article 11, "right holders" in Article 13, and
"performers" and "producers of phonograms" in Ar ticle 14. The European Communities claims that
Article 22.2 "cannot be invoked by a trademark right holder in order to prevent the use of a
geographical indication which supposedly infringes its trademark right". 44 This assertion reveals the
European Communities' particular bias toward syst ems of GI protection analogous to its registration
model. It fails to acknowledge that WTO Memb ers implement their obligations on GIs under the
TRIPS Agreement in a variety of ways, including for example through collective and certification
trademarks. Some trademark owners clearly do have a concern or are affected by use of geographical
indications. A trademark holder can, and should in pa rticular circumstances, be able to defend use of
a trademark under Article 22.2 of the TRIPS Ag reement. The European Communities' narrow
interpretation of the phrase "interested parties" in Article 22.2 of the TRIPS Agreement cannot be
justified.
147. Third, New Zealand submits that the obligation in Article 22.2 to provide a legal means to
prevent misleading uses or acts of unfair competition mu st be read together with the other provisions
of the TRIPS Agreement, including in particular th e national treatment obligations in Articles 2.1 and
3.1 of the TRIPS Agreement. Thus the European Communities is obliged to provide "the same
protection" or "the same legal means" to WTO na tionals as it does to EC nationals. The European
Communities has argued that there are other means of preventing the acts mentioned in Article 22.2 of
the TRIPS Agreement available in the European Co mmunities. However, in failing to provide the
opportunity for WTO nationals to register under the EC Regulation at the centre of the present
dispute, the European Communities fails to provide the same legal means to WTO nationals as it has
to the more than 600 GI users in the European Communities that have had their GIs registered.

43 The New Shorter Oxford English Dictionary, (4th edition, 1993), Vol. 1, p.1393.
44 European Communities' first written submission, para. 412.

4. The EC Regulation is inconsistent with Article 16.1 of the TRIPS Agreement
148. The European Communities is obliged under Artic le 16.1 of the TRIPS Agreement to give
owners of registered trademarks the "exclusive right " to prevent confusing uses of similar or identical
signs by "all third parties". This right recogni ses the utility of trademarks to their owners as
marketing tools. While Article 16.1 of the TR IPS Agreement provides an "exclusive right" to
registered trademark owners, this is not an absolute right to prevent all use of the sign by other
parties. The right is subject to certain limitations explicitly set out in the TRIPS Agreement in the
same way that the rights to GI protection in Artic les 22.2 and 22.3 are also explicitly limited by the
terms of Articles 22 and 24 of the TRIPS Agreement. In any given case, for example, a registered
trademark owner bringing an infringement clai m against a GI user might not succeed under the
requirements of Article 16.1 of the TRIPS Agreement. The trademark owner may fail to prove that
the GI is identical or similar to th e trademark; or that the use of the sign is in respect of goods that are
identical or similar; or that use of the GI would result in a likelihood of confusion. Alternatively, the
GI user may successfully argue in defence that th e trademark misleads the public as to the true place
of origin of the goods and should therefore be invalidated under the national law implementing
Article 22.3 of the TRIPS Agreement. Article 16.1 does, however, guarantee the entitlement of a
trademark owner, whether a national of the European Communities or another WTO Member, to a
"day in court" to argue his or her rights against all third parties.
(a) Relationship between Articles 16.1 and 22.2 of the TRIPS Agreement
149. New Zealand agrees with the observations of Au stralia and the United States regarding the
relationship between Articles 16.1 and 22.2 of th e TRIPS Agreement. Despite appearances of a
conflict between the two rights on the face of both provisions due to the "exclusivity" of the rights
they both accord, there is a presumption of c onsistency between inte rnational obligations.
45 Further,
any exception to an obligation must be explicit in the text of an Agreement. 46 The rights in
Articles 16.1 and 22.2 of the TRIPS Agreement must ther efore be balanced – each must be read to the
fullest extent permissible under the text of the re levant provisions without conflicting with the other
right. In other words, the protection of one right cannot be enhanced at the expense of the other.
Where the negotiators intended a conflict between tw o rights to be resolved by compromising this
exclusivity, they specifically provided for this in the TRIPS Agreement. Article 24.5 of the TRIPS
Agreement is one example of this. In all other cases, upholding the rights granted in both Article 16.1
for trademarks and Article 22.2 for geographical indica tions is required. To the extent that the EC
Regulation compromises the exclusive rights guaranteed to registered trademark owners in ways not
foreseen by the TRIPS Agreement, it is inconsistent with Article 16.1 of the TRIPS Agreement.
(b) The EC Regulation is inconsistent with Article 16.1 of the TRIPS Agreement
150. New Zealand agrees with the complainants that the EC Regulation violates Article 16.1 of the
TRIPS Agreement. New Zealand addresses three aspects of the EC Regulation in particular that
violate Article 16.1 of the TRIPS Agreement, na mely Articles 14(2), 14(3) and 7(4) of the EC
Regulation.
151. Article 14(2) of the EC Regulation provides that use of a prior registered trademark that
engenders one of the situations prevented by Article 13 of the EC Regulation "may continue
notwithstanding the registration" of a GI. The effect of this provision is that under the EC Regulation
a registered trademark and a registered GI can "c o-exist" despite the exis tence of a likelihood of
confusion between the two. The United States is correct in pointing out that under Article 14(2) of the
EC Regulation the best that the owner of a valid pr ior registered trademark can hope for is the ability
to continue using his or her trademark, but wit hout the ability to exclude all others from using a

45 See the Panel Report on Indonesia – Autos, para. 14.28.
46 See the Appellate Body Report on EC – Sardines, paras. 201-208.

confusingly identical or similar GI. In effect, Ar ticle 14(2) of the EC Regulation excludes registered
GI users from the scope of the group of "all parties" against whom the owner of a prior registered
trademark owner should be entitled under Article 16.1 of the TRIPS Agreement to defend the
trademark. This is inconsistent with the exclusive rights of the trademark owner under Article 16.1 of
the TRIPS Agreement.
152. Article 14(3) of the EC Regulation provides for an exception to the presumption of
coexistence of prior registered tr ademarks and registered GIs in Ar ticle 14(2) of the EC Regulation,
taking into account the "reputation, renown and the length of time trademark has been in use".
However, just as there is no basi s for coexistence under Article 14(3), there is no basis in Article 16.1
of the TRIPS Agreement for conditioning a prior re gistered trademark owner’s right to prevent
misleading use on such factors. New Zealand agrees w ith the United States that the exclusive right in
Article 16.1 to prevent confusing use is not limited to owners of trademarks that are longstanding,
renowned or reputable. Rather, it is an exclusive ri ght that must be provided to all owners of valid
prior registered trademarks, irrespective of how lo ng the trademark has been used, or its reputation
and renown.
153. Article 7(4) of the EC Regulation provides the criteria by which the admissibility of a
statement of objection to an application for registrati on of a GI is judged. The criteria in Article 7(4)
of the EC Regulation apply to objections from nati onals of the European Communities, as well as
from nationals of WTO members by virtue of Artic le 12d(2) of the EC Regulation. One such
criterion of admissibility is if the objection "shows that the proposed registration of a name would
jeopardise the existence of an entirely or partly identical name or of a mark…" (Article 7(4) of the EC
Regulation). If the proposed GI registration is iden tical to the prior registered trademark, however,
under Article 16.1 of the TRIPS Agreement there is a presumption of confusion and the trademark
owner should have the right to prevent the use of th e GI. Consequently, New Zealand agrees with the
arguments by Australia that the EC Regulation breaches Article 16.1 of the TRIPS Agreement
because the owner of the registered trademark may not be able to successfully object to a proposed GI
even if its use would constitute use of an identical or similar sign that would result in a likelihood of
confusion.
(i) Article 24.5 of the TRIPS Agreement does not permit "coexistence"
154. The European Communities relies on Article 24.5 of the TRIPS Agreement as envisaging
coexistence of GIs and earlier trademarks. The European Communities adopts a flawed interpretation
as the basis for its argument that coexistence of GIs and earlier trademarks is envisaged under
Article 24.5 of the TRIPS Agreement. It argues that Article 24.5 distinguishes the "right to use" a
trademark, which may not be prejudiced, from the right to prevent others from using the trademark
sign, which may be prejudiced. New Zealand submits that this interpretation is incorrect for two
reasons.
155. First, the purpose of Article 24.5 is to prevent the implementation of new forms of intellectual
property resulting from the negotiations of the TRIPS Agreement from prejudicing rights to
intellectual property legitimately acquired prior to the entry into force of the TRIPS Agreement.
Trademark owners who had registered a trademark or acquired rights to a trademark through use had
the rights both to use and to prevent others from usi ng their trademarks prior to the entry into force of
the TRIPS Agreement. New Zealand contends that the TRIPS Agreement was not intended to
detrimentally affect the private rights of indivi duals by removing trademark owners' entitlement to
prevent all third parties from using their trad emark where its existence pre-dated the TRIPS
Agreement.
156. Second, Article 24.5 covers trademark rights ac quired by registration as well as trademark
rights acquired by use. The rights protected under Article 24.5 are dealt with separately. Thus "where
a trademark has been applied for or registered in good faith" GI protection measures "shall not

prejudice eligibility for or the validity of the registration of a trademark". And "where rights to a
trademark have been acquired through use in good faith" GI protection measures "shall not prejudice
the right to use a trademark".
157. The European Communities' reading of Article 24.5 confuses the two concepts of registration
and use. It suggests that registered trademarks reta in the right to use as well as rights to the continued
eligibility for or validity of registration. If this r eading were correct, the corollary would also be true,
namely that trademark rights acquired by use would continue to be eligible for registration, despite the
owner not having submitted an application for registra tion prior to the entry into force of the TRIPS
Agreement. As the purpose of Article 24.5 is to protect private rights existing immediately prior to
the entry into force of the TRI PS Agreement, it is clear that it was not intended that unregistered
trademark owners would gain the right to registra tion through use, despite having failed to safeguard
their rights through registration prior to the entry into force of the TRIPS Agreement. Thus
New Zealand agrees with the complainants that Ar ticle 24.5 of the TRIPS Agreement does not permit
coexistence of "grandfathered" trademarks and GI registrations.
(ii) The EC is not required to ma intain coexistence on the basis of Article 24.3 of the TRIPS
Agreement
158. The European Communities goes on to argue that , irrespective of whether coexistence of
geographical indications is consiste nt with Article 24.5, it is requi red to maintain coexistence under
Article 24.3 of the TRIPS Agreement. The purpose of this Article appears to be the same as
Article 24.5, namely to prevent the entry into force of the TRIPS Agreement from detrimentally
affecting the private rights of individuals. Howeve r, despite the EC Regulation having entered into
force on 14 July 1993, the first registration of a geographical indication under the regulation did not
occur until after the entry into force of the TRI PS Agreement on 1 January 1995. So while the EC
Regulation provided for coexistence prior to the entry into force of the TRIPS Agreement, in fact the
EC Regulation conferred no rights to individuals at that time. In any case, New Zealand submits that
the phrase "[i]n implementing this Section" that prefaces Article 24.3 does not justify a breach of
other sections of the TRIPS Agreement, including Section 2 on trademarks.
(iii) Coexistence is not a limited exception under Article 17 of the TRIPS Agreement
159. The European Communities also argues in the a lternative that coexistence is justified as a
"limited exception to the rights conferred by a tr ademark" under Article 17 of the TRIPS Agreement.
In New Zealand’s view the exclusion of an entire group of producers from the parties which a
registered trademark owner has the right to prev ent from using an identical or similar mark in
confusing manner is not a " limited exception". Rather, it is a major exception to the rights granted to
a registered trademark owner.
5. Points raised in response to the Panel's questions
160. New Zealand has not received any registration ap plications or objections to registrations
pursuant to the EC Regulation from persons or gro ups in its territory. New Zealand notes that its
Government and potential New Zealand applicants and objectors understood the EC Regulation to
mean that no applications or objections would be accepted or considered by the European
Communities without New Zealand meeting the reciproc ity and equivalence requirements. As to the
question of what would be New Zealand's position if such filing was to occur, New Zealand notes that
this is a hypothetical question and it is difficult to answer in the abstract. Despite no formal procedure
for the transmission of applications for registra tion or objections to registration under the EC
Regulation existing in New Zealand, New Zealan d would consider any registration or objection
submitted to New Zealand authorities on a case-by-case basis. In any event, the issue before the Panel
is the consistency of the EC Regulation with the WTO Agreements, not whether other WTO Members
would comply with the requirements of a WTO-inconsistent measure.

161. New Zealand provides the legal means for the protection of geographical indications, as
required by Article 22 of the TRIPS Agreement, through its trademarks legislation (including
collective trademarks and certification trademarks ), and through consumer protection law (Fair
Trading Act, common law tort of passing off). These legal means are available to all interested
parties irrespective of nationality. A geographi cal indication (that meets the requirements for
registration) may be registered as a trademark thr ough applying, including via the internet, directly to
the Intellectual Property Office of New Zealand. An interested party may also apply directly to the
Intellectual Property Office to oppose or seek invalid ation of the registration of a trademark. For
geographical indications other than those registered as trademarks, nationals of any country may take
action in New Zealand courts to enforce thei r rights under the Fair Trading Act 1986, and the
common law tort of "passing off". The New Zealand Parliament has enacted a Geographical
Indications Act, but this is not in force.
162. New Zealand submits that, by virtue of Ar ticle 2.1 of the TRIPS Agreement, all WTO
Members must comply with Article 2(1) of the Paris Convention. All WTO Members are therefore
"countries of the Union" for the purposes of that Article of the Paris Convention as incorporated in the
TRIPS Agreement.
163. New Zealand submits that Article 22.1 of the TRIPS Agreement defines geographical
indications as indications that "identify a good as originating in the territory of a Member, or a region
or locality in that territory, where a given quality, reputation or other characteristic of the good is
essentially attributable to its geographical origin". By definition, therefore, a geographical indication
must relate to a particular good. As a conse quence, the indication and the good are inextricably
linked. The EC Regulation claims that commerc ial benefits are confe rred on goods or products
bearing a registered geographical indication. In ot her words, it claims that the conditions of sale are
positively affected by the products bearing registered geographical indications. As a result of the
different treatment accorded to EC nationals and nationals of WTO Members, only products bearing a
registered EC geographical indication have the oppor tunity to obtain any commercial benefits which
are claimed by the European Co mmunities to ensue from protection under the EC Regulation. The
foreign like product does not have this opportunity a nd therefore receives less favourable treatment.
New Zealand considers that evidence of disadvant ages accorded to foreigne rs in applying for and
objecting to protection of particular geographical indications is relevant to whether like products
receive less favourable treatment.
164. Under New Zealand's trademark legislation, a trademark (including a geographical
indication for which registration as a trademark has been sought) that would otherwise be considered
identical or similar to a registered trademark may be registered if: (i) the owner of the registered
trademark consents to the registration of the later filed trademark; or (ii) the Commissioner of Trade
Marks (or Court) considers that a case of honest conc urrent use exists or other special circumstances
exist, which makes it proper for the trademark to be registered. In making such a determination, the
Commissioner of Trade Marks (or Court) will have regard to, inter alia, whether confusion is likely to
occur, the degree of that confusion, and whether any confusion has in fact been proved. A registered
trademark may be used for the purpose of comparativ e advertising provided that the mark is used in
accordance with honest practices in industrial or commercial matters. Use of a sign (including a
geographical indication) will not amount to infringeme nt of a registered trademark if, in accordance
with honest practices in industrial or commerc ial matters, the sign is used to indicate, inter alia , a
person's name, place of business, or the kind, quality, geographical origin or other characteristic of the
goods or services. If the use of the trademark is misleading or is likely to cause confusion then its use
is unlikely to be considered "in accordance with honest practices"
165. In New Zealand, the concurrent use of geogra phical indications with prior trademarks would
not be permitted where this would result in a breach of the Trade Marks Act, the Fair Trading Act or
the common law tort of "passing off". Confusion is relevant to all three causes of action.
Infringement proceedings may be taken under the Trad e Marks Act (section 89) for use of a sign that

is identical or similar to a registered trademark wh ere such use would be likely to deceive or confuse
(note, however that there is a presumption of in fringement under the Trade Marks Act where a mark
that is identical to a registered trademark is used in respect of identical goods). The Fair Trading Act
(section 9) prohibits conduct in trade that is decep tive or misleading or likely to deceive or mislead,
while passing off is aimed at preventing misreprese ntation that can result from use of a confusingly
similar mark. A geographical indication could not be protected as a registered trademark if its use
would be likely to deceive or cause confusion, partic ularly with a prior registered mark (sections 17
and 25 of the Trade Marks Act).
166. New Zealand believes that the mandatory/discre tionary distinction has limited application
under the TRIPS Agreement. As indicated by the Appellate Body in US – Section 211 Appropriations
Act, the characterization of legislation as mandatory or discretionary is not the only relevant inquiry
for a panel.47 Nor should a finding that the legislation is discretionary be conclusive as to whether a
State has complied with WTO rules. In particular, the "extra hurdles" in the EC Regulation that
disadvantage foreigners and breach national treatme nt apply regardless of whether or not that
legislation is deemed "discretionary". Further, the granting of intellectual property rights necessarily
involves the exercise of discretion, as does for exam ple the initiation of anti-dumping investigations.
The objectives of the TRIPS Agreement would be undermined if the European Communities can be
excused from its TRIPS obligations on the basis that its implementing legislation is discretionary.
New Zealand notes that obligations prohibiting certain action and obligations requiring certain action,
whether in the TRIPS Agreement or in other WTO Agreements, are all binding and mandatory
obligations upon WTO Members. Accordingly, Ne w Zealand cannot see that WTO jurisprudence on
the mandatory/discretionary distinction should apply differently depending on whether the obligations
prohibit certain action, or require certain action.
I. S
EPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU
1. Introduction
167. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu (hereinafter referred
to as "Chinese Taipei") has a trade and systemic interest in the proper interpretation of the TRIPS
Agreement, specifically, the national treatment requirements contained in the TRIPS Agreement and
Paris Convention, the MFN requirement contained in the TRIPS Agreement, and in the relationship
between geographical indications ("GIs") and trademarks.
2. National treatment
168. National treatment is a long-standing and funda mental obligation in the multilateral trading
system. The European Communities completely ignor es the fact that the protection of intellectual
property plays a part in the national treatment provisions. By citing the specific paragraph in the
Panel Report of Indonesia – Autos cautioning against reading extraneous obligations into a provision,
the European Communities also seems to suggest that the protection of intellectual property rights is
not in fact an objective of the TRIPS Agreement, and that one should not read the protection of
intellectual property into Article 3.1 of the TRIPS Agreement. The drafters of Article 3.1 of the
TRIPS Agreement and Article 2(1) of the Paris Convention recognize that, in the context of the
protection of intellectual property, nationals and th e intellectual property rights they hold cannot be
divorced from each other. Conceptually, to grant national treatment to nationals who are not holders
of intellectual property rights would be illogical. Similarly, intellectual property rights by themselves
cannot enforce the requirement of national treatment without their attendant holder-nationals. The
two national treatment provisions would simply be in comprehensible if the protection of intellectual
property were taken out of the equation. Furthe rmore, Article 3.1 of the TRIPS Agreement and
Article 2(1) of the Paris Convention do not specify the origin of the intellectual property being held by

47 See the Appellate Body Report on US – Section 211 Appropriations Act, para. 260.

the "nationals". The focus of the national treatme nt provisions is on the nationals who have an
intellectual property to register or the rights to en force, not on the origin of the actual intellectual
property. Be it domestic nationals holding domestic intellectual pr operty rights, domestic nationals
holding foreign intellectual property rights, fore ign nationals holding domest ic intellectual property
rights, or foreign nationals holding foreign intellectual property rights, national treatment applies in all
scenarios in the same manner.
169. In order to demonstrate how the TRIPS Agre ement and Paris Convention national treatment
obligations apply in this case, Chinese Taipei presents the following chart:
GI EC
National EC

 1
GI Non EC
National EC

3
 2
GI EC
National Non EC
4
GI Non EC
National Non EC

170. The four quadrants represent the four possi ble scenarios. The European Communities,
focusing only on nationals in its interpretation, is essentially arguing that it can establish a separate set
of rules for and discriminate against non-EC GI s as it wishes. To the European Communities,
quadrants 1 and 2 are completely independent from quadrants 3 and 4. As long as the national in
quadrant 2 is treated no less favourably than the nati onal in quadrant 1, and the national in quadrant 4
is treated no less favourably than the national in quadrant 3, the national treatment obligation,
according to the European Commun ities, is satisfied. However, as already presented above, there
exists two linked elements in the TRIPS Agre ement and Paris Convention national treatment
obligations, and the four quadrants need to be examin ed as a whole. This means that quadrants 2, 3,
and 4 all cannot be treated less favourably than qua drant 1. Therefore, the Panel should examine,
whether the EC Regulation results in any one of the quadrants 2, 3, or 4 being treated less favourably
than quadrant 1. If even one of the quadrants is treated less favourably, the EC Regulation would be
inconsistent with the national tr eatment obligations. Chinese Taipei agrees with the submissions of
the United States and Australia in their analyses of how Article 12 of EC Regulation results in less
favourable treatment being afforded to non-EC nati onals. Since the scenarios in quadrant 2 and 3 in
practice happen infrequently, it would suffice to exam ine only the consistency of the EC Regulation
with regard to the scenario under quadrant 4. By applying the same arguments the two complainants
made with regard to EC Regulation Article 12, the Panel would be able to see a blatant violation in
the scenario represented by quadrant 4.
171. Chinese Taipei also agrees with the United Stat es and Australia that Article 12.1 of the EC
Regulation constitutes conditions on WTO Members in exchange for the recognition of GIs from non-
EC sources. Such conditions violate Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris
Convention. The European Communities conditions the protection of GIs, an explicit obligation
under Article 22 of the TRIPS Agreement, on recipr ocity and equivalence. Such requirements do not
exist in Part II Section 3 of the TRIPS Agreemen t which deals with GIs nor anywhere else in the
TRIPS Agreement as preconditions to implementi ng an explicit TRIPS Agreement obligation.
Furthermore, Article 12.3 of the EC Regulation provides that, "[t]he Commission shall examine, at the
request of the country concerned…whether a thir d country satisfies the equivalence conditions and
offers guarantees within the meaning of paragraph 1 as a result of its national legislation". Therefore,
even if a WTO Member deems its GI specifications, inspection arrangements, the right to object and
protection of EC GIs to be equivalent, the Europ ean Communities still holds the final say on whether
the equivalence conditions have been met. The Eu ropean Communities has yet to give an indication
as to what it considers to constitute "equivalence" , but the existence of this requirement to gain
approval from the Commission suggests that the standard for equivalence is high.

172. In essence, the European Communities is requiring other WTO Members to adopt a system of
GI protection substantially similar to, if not the same as, the European Communities and be prepared
to accept automatically all EC GIs. By requiri ng the reciprocity and equivalency conditions, the
European Communities ignores the fact that the second sentence of Article 1.1 of the TRIPS
Agreement provides that, "Members shall be free to determine the appropriate method of
implementing the provisions of this Agreement within their own legal system and practice", and that
Article 22 of the TRIPS Agreement does not specify an y particular "legal means" for the protection of
GIs. In this connection, Chinese Taipei agrees with the United States that the TRIPS Agreement
recognizes more than one acceptable GI protection sy stem. Moreover, reciprocity and equivalency
may be better addressed in the context of bilatera l or multilateral negotiations, should the European
Communities wish to do so. But they cannot co nstitute conditions on the implementation of an
explicit TRIPS Agreement obligation to provide national treatment to foreign producers with regard to
intellectual property. Additionally, if a Member such as the European Communities believes that
another Member is not granting the proper protectio n to GIs as stipulated in the TRIPS Agreement,
the recourse is the WTO dispute settlement, not the denial of national treatment. As it is, these
reciprocity and equivalence conditions are simply extra hurdles to be fulfilled by WTO Members
before producers with GIs from their territories can gain protection from the European Communities.
These extra hurdles constitute an additional burde n on non-EC nationals seeking to register, and
enforce non-EC GIs within the European Commun ities as compared to the requirements on EC
nationals. Thus, the EC Regulation violates the nati onal treatment provisions pursuant to Article 3.1
of the TRIPS Agreement and the Article 2(1) of the Paris Convention.
3. MFN treatment
173. Chinese Taipei also shares the view of the Un ited States and Australia that, just as the EC
Regulation violates the national treatment obligati on under the TRIPS Agreement, the measure also
violates the TRIPS Agreement MFN obligation. It should be noted, in light of the arguments
presented above on national treatment, that the MFN obligation with regard to nationals should be
viewed with respect to the protection of intell ectual property, from the perspective of nationals
holding intellectual property rights. Similarly, as with TRIPS and Paris Convention national
treatment obligations, Article 4 cannot be interpreted as an obligation on nationals alone.
174. The chart presented in the context of national treatment above can be slightly modified to be
applied here:
GI approved
National approved

 1
GI not approved
National approved

3
 2

GI approved
National not approved
4

GI not approved
National not approved

175. The above chart sets out how the MFN treatment comparison should be made. With regard to
the protection of intellectual property, the MFN treatment in essence requires the Member in question
to grant equal treatment to the nationals of all othe r Members. Therefore, the basic premise of this
quadrant is that both the GI and the national are non-EC in origin (Chinese Taipei takes no position
with regard to the issue raised by the complainants that the individual members of the European
Communities who are also Members of the WTO should be viewed as separate non-EC Members of
the WTO under MFN treatment). The term "national" in the table is used in the same manner as the
word "nationals" in Article 4 of the TRIPS Agreem ent, but with the above premise in mind. The
terms "approved" and "not approved" relate to the approval schem e in Articles 12(1) and 12(3) of the
EC Regulation under which a third country GI may be protected within the European Communities

after determination by the EC Commission that th e "equivalence conditions" have been satisfied.
"Approved" thus means that the GI or national originated from a WTO Member which has been
deemed by the EC Commission to have satisfied the c onditions set out in Article 12(1). On the other
hand, "not approved" means that the GI or national originated from a WTO Member which has not
been deemed by the EC Commission to have satisfied the conditions set out in the Article 12(1). The
GI and the national may have different origins, hence the existence of quadrants 2 and 3.
176. Under the MFN treatment, the scenarios under quadrants 2, 3, and 4 must all receive the same
treatment from European Communities as the treatment received by quadrant 1, or else the European
Communities has violated the obligation. Having granted full protection under the EC Regulation to
the nationals of an approved WTO Member holding GIs originating from the territories of that
member, the European Communities cannot deny the same "advantage, favour, privilege or
immunity" to the nationals of other WTO Members holding GIs originating from other territories.
But this is exactly what EC Regulation does. On ce again, quadrant 4 shows where the EC Regulation
most blatantly violates the MFN treatment obligation.
4. Relationship between GIs and trademarks in the TRIPS Agreement
177. Unlike other types of intellectual property such as patents and copyrights, which tend to be
independent concepts and manifest themselves in different forms, trademarks and GIs are closely
related. The purpose of both is to inform consumer s about the source and indirectly the quality of the
product. Because of this purpose, GIs and trademarks can and tend to manifest themselves in similar
forms, i.e., as prominent and distinguishing signs. The close relationship between GIs and trademarks
and the possible overlap in their physical manifestations and protection are recognized in the TRIPS
Agreement. Articles 22.3, 23.2 and 24.5 dir ectly address the relationship between GIs and
trademarks. The rights are derived from the need to prevent consumers from being misled about the
qualities of the product, and thus the provision in Ar ticle 16.1 for trademarks and Article 22.2 for GIs
spelling out the extent of the rights.
178. However, the text of these two TRIPS provisions must be given their full scope in a manner
that would not cause conflict. This is consistent with the established principle of international treaty
interpretation, which requires that the "interpretation must give meaning and effect to all the terms of
a treaty". Furthermore, "[a]n interpreter is not free to adopt a meaning that would result in whole
clauses or paragraphs of a treaty to redundancy or inutility".
48 An interpretation or implementation of
these two provisions that creates conflict would inev itably render one of the provisions inutile. Thus,
the Panel in Indonesia – Autos concluded that, "in public international law there is a presumption
against conflict".49 However, the EC Regulation creates precisely such a conflict by allowing a later
registered GI to be used alongside a prior trademark, even when such use has the potential of resulting
in the likelihood of confusion on the part of the consumer. Thus, Article 14(2) of the Regulation
negates the right of trademark owners contained in Article 16.1 of the TRIPS Agreement. Likewise,
under Article 14(3) of the EC Regulation, a potential GI is only prevented from being registered if the
trademark fulfils the conditions of reputation, renow n, and length of time, the provision negates the
right granted to trademark owners pursuant to Article 16.1 of the TRIPS Agreement. The result of the
EC Regulation is the creation of a hierarchy betw een GIs and trademarks, when the two are equal
under the TRIPS Agreement. GIs within the Eur opean Communities have a superior status than
trademarks, and the protection of GIs is granted at the expense of trademarks. Such a hierarchy is
simply not contemplated in the TRIPS Agreement.
5. Points raised in response to Panel's questions
179. Chinese Taipei is not aware of any group or person ever having filed with its authorities either

48 Appellate Body Report on US – Gasoline, DSR 1996:I, at 21.
49 Panel Report on Indonesia – Autos, para. 14.28.

an application for, or an objection to, a registrati on pursuant to the EC Regulation. In any case, it
does not believe that whether its Government is ab le and/or willing to transmit to the European
Communities an application from persons interested in a GI or objection has any bearing on the issues
in this dispute. Even if its Government is able and/or willing, the fact remains, that the TRIPS
Agreement does not contain any obligation for Members to comply with an internal regulation of the
European Communities. The European Communities is free to require its member States to do so, but
to require WTO Members to transmit applications fo r registration or objections to registration when
no such obligation exists in the TRIPS Agreement w ould be to create an additional hurdle for non-EC
nationals who wish to register their GIs within th e European Communities, thus violating Article 3.1
of the TRIPS Agreement and Article 2 of the Paris Convention.
180. Chinese Taipei's legislation protects trademarks and collective marks of foreign nationals in
the same manner as that of domestic nationals, and nothing in its legislation prevents foreign nationals
with a potential GI from applying for the registration of a trademark or collective mark.
181. Chinese Taipei believes that footnote 1 of the TRIPS Agreement is meant to apply the term
"nationals" to separate customs territory Members of the WTO. The first clause of the footnote makes
the application of the definition to the entire Agre ement clear with the words "in this Agreement".
The definition therefore applies to the European Communities, as a separate customs territory, with
regard to Articles 3.1 and 4 of the TRIPS Agreement. There is no logical reason to believe that the
term "nationals" in Article 2 of the Paris Conven tion should be interpreted any differently from the
TRIPS Agreement, with respect to the European Co mmunities. It is established jurisprudence that
Articles 1 through 12 and Article 19 of the Pari s Convention are incorporated into the TRIPS
Agreement. Article 3 of the TRIPS Agreement, whic h is the parallel provision to Article 2 of Paris
Convention, makes explicit reference to the applicability of the exceptions in the Paris Convention. If
key terms such as "nationals" are interpreted di fferently in the TRIPS Agreement and the Paris
Convention, incorporation and direct applicability of certain provisions would be difficult, if not
impossible. Therefore, unless there is an explicit r eason to believe otherwise, the term "nationals" in
Article 2 of the Paris Convention should be interpreted in the same manner as in the TRIPS
Agreement.
182. Chinese Taipei understands that Articles 16.1 and 22.3 of the TRIPS Agreement do not, and
should not be, interpreted to conflict. The establis hed principle of international treaty interpretation
requires that any interpretation shall give meaning and effect to all terms of a treaty. An interpretation
that creates a conflict between two provisions woul d inevitably render one of the provisions inutile.
The third sentence of Article 16.1 states that, "t he rights described above shall not prejudice any
existing prior rights". Therefore, the "exclusive right" granted to trademarks under Article 16.1 is
dependent upon existing prior rights. Similarly, a nd in a parallel manner, the rights obtained pursuant
to GI protection are curtailed by Article 24.5, wher e the right of a prior trademark owner, which is
exclusive, is guaranteed. The combination of Articles 16.1, 22.3 and 24.5 establishes a protection
scheme where a prior existing right, be it under tradem ark or GI, bars any later requests to register
trademarks or GIs that would confuse or mislead the public. The EC Regulation creates a conflict
between the protection of trademarks and GIs, wh en no such conflict exists, by disregarding the
exclusive right of prior trademarks owners and favour ing the right of GI owners. Such a hierarchy is
not contemplated by the TRIPS Agreement.