Feasibility Research on Mutual Recognition of Geographical Indications for Agricultural Products between China and Russia

Introduction

Trade in agricultural products between Russia and China, both countries having well-developed specialised agricultural industries, makes up an important part of significantly increased overall Sino-Russian trade volumes. In the context of international trade, due to the lack of an overall international convention open to the participation of all member states, Geographical Indications of Agricultural Products (GIs) are generally the subject of bilateral or multilateral recognition. In 2011, China and the EU began the negotiation of the China-EU Agreement on Geographical Indications (CEAGI). The “strong protection” model adopted in the CEAGI, which involves a large number of mutually recognised geographical indications and a high level of protection (Song, 2021), has already played a positive role in balancing agricultural trade between China and Europe (Zappalaglio, 2021). Russian legislation on GIs is similar to the corresponding EU legislation in important respects. Thus, the necessary mutual recognition of GIs for agricultural products between China and Russia can either be explored through a package arrangement of the China-Russia Free Trade Area or by referring to the 10+10 early-stage model of mutual recognition of GIs between China and the European Union, paying attention to their convergence with existing multilateral trade mechanisms.

Mutual Recognition of Geographical Indications of Agricultural Products in International Trade

Representing an indispensable part of human life, agricultural products are primary products of human society and civilisation. As well as the varying climate, soil and related factors, there are different types of agricultural germplasm resources, resulting in a wide variety of complex types of agricultural products in the world (Prud’homme, Zhang, 2019). Following a long period of elimination and selection, some particular varieties of agricultural products have gained the favour of consumers in terms of their yield, quality and taste. However, due to asymmetric market information and quality standards, consumers are often unable to judge the origin of agricultural products. Thus, the concept of geographical indications of agricultural products arose in order to protect the unique advantages of certain agricultural products and enhance their competitiveness in the market. While the origin of GIs lies in domestic legal arrangements, with growing global trade, they have increasingly been the subject of international recognition (Qian, Dong, Liu, 2023). Recognition of a country’s agricultural products by other countries in terms of geographical indications based on their natural regional characteristics typically proceeds via treaties or other international negotiations (Simanjuntak, 2021).

Following a long period of development, the 1994 WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) lists geographical indications as one of eight separate intellectual property rights in parallel with trademarks, patents and copyrights, etc. In clarifying the concept of geographical indications for the first time, TRIPS provisions on geographical indications represent a kind of intellectual property rights concerning place of origin and associated quality marks, etc. Although TRIPS requires member states to provide protection for geographical indications, specific protections are not stipulated. Various modes of protection and degrees of protection for geographical indications in different countries exist due to the differences in the natural environment, historical environment, and legal traditions of different countries. In some countries or regions where more agricultural GIs are specified, such as the European Union, strict laws have been formulated for the protection of particular GIs (Song, 2018), while in other parts of the world, such as the United States, GIs are protected in trademark and competition law. This situation has created a dichotomy of “strong protection” modes applying in the old world and their “weak protection” counterparts applying in the new world. Due to this inconsistency of protection mechanisms among countries, GIs tend to be recognised bilaterally or multilaterally in international trade rather than forming an international convention open to the participation of all member countries.

Negotiation history and institutional arrangements for the Agreement on Geographical Indications in China and Europe

At present, the most comprehensive mechanism for the protection of GIs and the highest standard of protection in the world is the European Union (EU). Both China and EU countries have a long history and culture, which is expressed in high number of quality products having a geographical designation. Following nearly 30 years of repeated negotiations and continuous promotion, the China-EU Agreement on Geographical Indications (CEAGI) will be completed in November 2019, marking the mutual recognition and protection of GIs for agricultural products in China and the EU.

Co-operation between China and the EU on GIs started in the 1990s with negotiations with France on the protection of designation of origin. In 2004, China and Italy signed the Memorandum of Understanding on Sino-Italian Cooperation in the Protection of Geographical Indications, while the Memorandum of Understanding on Mutual Recognition of Geographical Indications between China and Italy in 2005 initiated the process of mutual recognition of GIs between China and the EU. 2007 saw the launch of the ‘10+10’ Mutual Recognition of Geographical Indications Programme between China and the EU. In 2007, China and the EU launched the ‘10+10’ Mutual Recognition of Geographical Indications project, according to which10 products from China and 10 products from the EU became the first batch of mutually recognised GIs. Once a Chinese GI product is registered in the EU, the Chinese name of the Chinese GI product and its translated name in the official language of each EU member state will enjoy the same special protection in all EU member states. At the same time, the GIs registered by the EU in China will enjoy the same protection as the Chinese GIs. At the same time, China and the EU have registered mutually recognised products in each other’s territories: in 2009, French Cognac’s application for a Geographical Indication in China was approved; in 2010, Scotch Whisky was granted GI protection in China. Thereafter, in 2011, China and the EU launched negotiations on the China-EU Agreement on Geographical Indications, which will eventually conclude in 2019. The Agreement, which will provide for the mutual recognition of 275 GIs on each side of the border, including 100 GIs for agricultural products on each side, will enter into force in 2021. It is expected that by 2025, four years after the entry into force of the agreement, China and Europe will have added 175 agricultural products and foodstuffs each to the second list of protected GIs as planned.

The institutional arrangements of the Agreement on Geographical Indications of China and Europe are mainly represented in the following aspects:

Application of the “strong protection” model to trade in geographical indications in China and Europe

At the same time as negotiating the China-EU Agreement on Geographical Indications (CEAGI) with the European Union, China was also negotiating the China-United States First-Phase Economic and Trade Agreement (CPETA) with the United States. By completing the negotiations on the CEAGI Agreement prior to its signing of the US-China First Stage Agreement, China avoided the acceptance of the US “weak protection” model for GI protection. At the same time, it also forced the US to include GIs in the first phase of the Agreement to prevent US agricultural products imported by China from becoming infringing products in China. The adoption of the “strong protection” model in the Sino-European Agreement on Geographical Indications will affect China’s future negotiations with other countries on trade agreements and other documents related to GIs.

The number of mutually recognized geographical indications is huge

The appendices of the CEAGI incorporate a total of 550 GIs from both sides (275 from each side), covering wines, teas, agricultural products, foodstuffs, etc. Among Chinese GIs for agricultural products are including the internationally renowned Anxi Tieguanyin and Shaoxing wines, while European GIs for agricultural products include champagne and Parma ham (Yang et al., 2022). The protection will be carried out in two batches: the first batch of 100 GIs (listed in Appendices III and IV respectively) will be mutually recognised by both parties and the protection will start from the effective date of 1 March 2021; the second batch of 175 GIs will complete the relevant protection procedures within four years after the entry into force of the agreement. Compared with the previous China-EU ‘10+10’ on Geographical Indications, the number of GIs to be mutually recognised under the CEAGI Agreement is significant. In the future, China and Europe will continue to promote the mutual recognition of GIs, as well as including more GIs for agricultural products.

High level of protection

In terms of the content of protection, the CEAGI Agreement adopts the ‘upgraded’ protection provided for in Article 23 of TRIPS, which will be reviewed every two years thereafter. The scope of protection will be expanded in batches, including the commitments listed in Article 1(2), i.e., the Parties agree that, taking into account the development of the legislation of the two Parties, upon the entry into force of the Agreement, to Consider extending the scope of GIs covered by this Agreement to categories of GIs not covered by the scope of the provisions of the laws listed in Article 2, in particular handicrafts. In addition, some products that have gradually become generic names have been reclassified as GIs for agricultural products as a result of the Agreement, which has been opposed by some trade associations.

Impact of the Central European Agreement on Geographical Indications on trade between China and EU

The CEAGI represents a trade breakthrough between China and Europe based on mutual trust and recognition. At a time when China’s domestic business environment continues to be optimised, including steady improvement in the freight logistics capacity of the China-Europe Railway Express, the Agreement guarantees the quality of goods forming the subject of trade between China and Europe. CEAGI safeguards the basic interests of producers and operators through the protection of company rights by reinforcing the unique characteristics related to the geographical origin and traditional expertise of agricultural products to guarantee consumers’ right to know. The CEAGI Agreement, which mainly regulates the circulation of agricultural products between China and Europe, is expected to open up value-added space for agricultural producers by protecting their dignity and reputation through institutional regulation by increasing the value of agricultural technology on both sides.

Since most of the GIs for agricultural products exported from China to Europe involve agricultural products having Chinese characteristics, while the GIs for popular agricultural products exported from Europe to China have European characteristics, the potential for complementary rather than competitive trade is obvious (Xiaobing, Kireeva, 2007). However, CEAGI has created some problems for China’s imports of agricultural products from other countries (Moir, 2017). Some relevant industry associations oppose the conversion of generic names into GIs, which not only affects agricultural products exported to China from these countries, but also raises infringement issues. Among the product names involved in the CEAGI, each of them needs to be carefully screened one by one to see if it has become a generic name and whether it involves other countries’ exports to China; moreover, some of them have been given different buffer times (Giovannucci, Josling, Kerr, O’Connor, Yeung, 2009). Since there are huge business opportunities and embedded economic interests behind each name, different parties have their own focus on such negotiations. Due to the presence of controversial elements involved in the mutual recognition of GIs for agricultural products that have already become or will become GIs, the export of agricultural products from other countries to China is subject to greater uncertainty.

Since the signing of the Agreement on Geographical Indications between China and the EU, the trend of trade between China and the EU has undergone significant changes. In 2022, the EU’s exports of agricultural products to China amounted to €15.2 billion, accounting for 7 per cent of the EU’s total exports of agricultural products, while the EU’s imports of agricultural products from China amounted to €10.8 billion, accounting for 6 per cent of the EU’s total imports of agricultural products. By contrast, in the first half of 2020, China’s top five agricultural exports to the EU (fish, vegetables, sausages, nuts and edible seed oils) totalled €1.68 billion, while China’s top five agricultural imports from the EU (pig products, dairy products, alcohol and wines, wheat products and hemp products) totalled $8.28 billion. This fully demonstrates the positive role played by the signing of the CEAGI in balancing agricultural trade between China and the EU.

Overview of Geographical Indications for Agricultural Products and Trade between China and Russia

As an established agricultural country, Russia has also provided detailed legislation on GIs in its domestic law. 1992 saw the enactment of the Federal Law on ‘Trademarks, Service Marks and Appellations of Merchandise Origin’¹, which provides for the legal protection of appellations of origin as intellectual property rights. 2006 saw the consolidation of all the separate laws and regulations on intellectual property in Part IV, Title VII of the Civil Code, ‘Results of Intellectual Activity and Personalised Signs’². In 2006, Russia consolidated all the separate laws and regulations on intellectual property in Part IV, Title VII of the Civil Code ‘Results of Intellectual Activity and Individual Signs’, while in 2019, it adopted the Law ‘On Amendments to Part IV of the Civil Code of the Russian Federation’³. One more important legal document concerning intellectual property rights in the Russian Federation is the Law ‘On the Production and Circulation of Ethyl Alcohol, Alcoholic Beverages and Products Containing Alcoholic Beverages’⁴. This is aimed at promoting regional brands by linking products to a specific region, thus guaranteeing the quality and the reputation of the producer, as well as increasing the number of applications for products related to the place of production.

The amendment to the Civil Code of the Russian Federation⁵ introduced a new independent intellectual property object, ‘geographical indications’ (Articles 1517–1537 of Chapter 76, Section III, ‘Right to Geographical Indications and Appellations of Origin’). The protection of appellations of origin continues to apply, with the exception of provisions on liability for failure to register a GI or for illegal use of a geographical indication. Protection of GIs and appellations of origin in Russia is provided by granting state registration and providing exclusive rights for their application, examination, registration, issuance of certificates, invalidation, termination, etc., which are centrally regulated by the Federal Agency for the Enforcement of Intellectual Property Rights, with the main responsibility of the Department for Examination of Appellations of Origin and Geographical Indications of the Department of Trademarks and Industrial Designs, under the Federal Academy of Industrial Property, an agency directly under the Russian Intellectual Property Office.

In Russian legislation, GIs and appellations of origin are distinctive names of products that are used to identify products that have a specific geographical origin and possess certain qualities or reputations due to that origin. Appellations of origin are required to contain the name of a geographical area, while GIs are required to link the product in question to a specific geographical area. Although both designations require a qualitative link between the product concerned and the place of origin, it is clear that the appellation of origin is more strongly associated with the place of origin. With appellation of origin, the raw materials of the product originate in a specific geographical area, along with all the stages of production or the whole process of production of the product, whereas for a GI, the designation of a single stage of production within a specific geographical area is sufficient. It follows that an appellation of origin can be regarded as a special type of geographical indication.

While for the most part similar to the current EU legislation on GIs, Russian legislation on GIs tended to be adopted later. Currently, Russia is working towards accession to the Geneva Text of the Lisbon Agreement on Appellations of Origin and Geographical Indications. The inclusion of GIs in Russia’s system of intellectual property protection, which is aimed at promoting regional brands and foster regional economic development, is in line with global trends. The granting of legal protection and the provision of exclusive rights to GIs and appellations of origin represents a confirmation by the state of the declared quality of a product and a guarantee of quality, which increases the trust of buyers and contributes to an increase in the volume of sales of the product. At the same time, an effective mechanism for the protection of GIs and appellations of origin can be of assistance to enterprises in the region wishing to use personalised logos for the identification of their products, helping to build confidence in the quality of the products on the part of the producer and improve their motivation. The effective protection mechanism can also help enterprises in the region that wish to use personalised logos to identify their products.

Mutual Recognition of Geographical Indications for Agricultural Products between China and Russia: Model Selection

According to information from the Russian Ministry of Agriculture’s Centre for Agricultural Exports, Russia’s exports of agricultural products to China exceeded 5.5 million tonnes from January to August 2023, representing an increase of 170% year-on-year, while the value of its exports increased by 90% year-on-year. Among them, Russian oilseed products exports to China increased significantly, accounting for about 31.2% of Russia’s total foreign oilseed exports. Year-on-year, Russian rapeseed oil, sunflower oil, soybean oil, soybean meal and oil meal exports to China increased by 220% (up to 1 million tonnes), 790% (up to 615,000 tonnes), 90% (up to 82,000 tonnes) and 90% (up to 266,000 tonnes), respectively. In the same period, Russia exported 629,000 tonnes of fish products to China, up 80% year-on-year. This fully demonstrates the new development trend of China-Russia trade under the new international situation, i.e., the main commodities exported from Russia to China that represent significant growth in China-Russia trade volumes are agricultural products. This demonstrates the practical necessity of mutual recognition of GIs for Chinese and Russian agricultural products.

There are several reasons why it will be difficult for China and Russia to sign an agreement based on the CEAGI between China and the European Union. Firstly, although the trade in agricultural products between China and Russia is complementary, the number of agricultural products exported from China to Russia is significantly lower than the number of agricultural products exported from Russia to China. If a future GI agreement adopts the same number of GIs prepared by each side for mutual recognition, it may produce unequal advantages for the two countries’ agricultural exporters resulting in an unbalanced trade volume of agricultural products between the two sides. Secondly, while Russia’s domestic legislation on GIs is similar to that of the European Union, the relevant contents are obviously independent; moreover, in some categories, Russia adopts stricter protection for its own agricultural products. The relatively broad protections of GIs in China’s legislation, which includes all kinds of agricultural products from all over the country, does not realise the protection of GIs in terms of classification and grading. In this case, the share of internationally renowned GIs involved in global trade is relatively small, while the main buyers are the Chinese community. Finally, in the case of certain conflicts between EU and Russian legislation on GIs, China has already signed the CEAGI and aims to further expand the number of mutual recognition of GIs for agricultural products in the future. Thus, in realising mutual recognition of GIs for products with Russia, China will be obliged to take the content of mutual recognition with the EU into account. In the event of a conflict between the two, the export of Russian agricultural GIs to China will be at a natural disadvantage due to the primacy of the CEAGI, which has already entered into force. For this reason, conflict between China and the EU and the U.S. over the content of GIs in the relevant international treaties is certain to arise in the agreements on GIs or other free trade agreements signed between China and Russia, or other countries. The inevitability of this problem is determined by the essential characteristics of GIs.

Based on the above, the mutual recognition of GIs between China and Russia will require considerable consultation in the following areas:

1. Exploring the possibility of a package arrangement of the China-Russia Free Trade Area (FTA), including the content of mutual recognition of GIs;
2. Due to the background of the CEAGI, the timing of the completion of the negotiations and entry into force of the China-EU FTA is not clear; thus, the GI agreement will be singled out for signing first. If China and Russia sign an FTA, they can include a package of trade contents in the FTA negotiations, thus mitigating the imbalance in the number of GIs for agricultural products mentioned above.
3. If the time is not ripe for discussing a China-Russia FTA, it can be appropriate to refer to the 10+10 model of mutual recognition of GIs that was realised between China and the EU at an early stage, i.e., China and Russia may select a few or dozens agricultural GIs out of the many available. Less controversial GIs that have an important status in the trade between the two countries should be selected first for mutual recognition, with the option to then further expand their number according to practical considerations.
4. Considering that China, the EU, the U.S., and Russia all have free trade zones outside of their bilateral trade agreements, China and Russia will need to pay attention to the relationship between the negotiations of the agreement on GIs with the Eurasian Economic Union and the Belt and Road countries when negotiating an agreement on GIs to ensure that it does not conflict with existing multilateral trade arrangements.

Conclusion

While China and Russia are both large exporters of agricultural products, there are significant differences in the protection mechanisms for GIs for agricultural products that have distinctive geographical characteristics. The mutual recognition of GIs in bilateral agreements can affect the future arrangements of GIs agreements between the contracting parties and third parties. According to recent international trade trends, bilateral trade between China and Russia has been growing rapidly. It therefore becomes urgent for the two countries to realise mutual recognition and protection of GIs for high-quality agricultural products. Drawing on the CEAGI between China and the EU, China and Russia can gradually promote the mutual recognition of GIs for agricultural products to better realise trade in agricultural products on the basis of the relevant multilateral economic arrangements.