Champagne in glasses on restaurant background

Trade Tensions Bubble Beneath the Surface of Your New Years’ Eve Champagne

Some Mixed Emotions

One of the most familiar sounds preceding New Year’s Eve countdowns is the pop of a champagne cork. Americans consume over 360 million glasses of this sparkling wine on News Years’ Eve.

It’s the drink of choice to celebrate many of life’s milestones and one country in particular benefits the most from this tradition: France. The United States imported over 23 million bottles of Champagne (with a capital C) from France last year alone.

Although the name Champagne has become synonymous with almost any bubbly drink served in tall flutes at your holiday party, the beverage is named after a storied winemaking region in France found 90 miles northeast of Paris known for its chalky soil. The European Union (EU) wants to ensure that only sparkling wines produced in the Champagne region can be labeled by law as Champagne, an approach in trade law called a geographical indication (GI). You may have noticed labels on some of your favorite bottles have changed from Champagne to “sparkling wine” for this reason.

We associate toasting Champagne with happy times, but due to disputes over what products are protected under GIs, American-European trade tensions have been bubbling beneath the surface of your glass for more than one hundred years.

An Unfamiliar Term for the Most Common Product Names

A geographical indication is defined by the World Intellectual Property Organization (WIPO) as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.”

Champagne from France isn’t the only familiar product that falls under these guidelines. If you’re planning to serve a holiday cheese plate featuring Gruyere from Switzerland, Roquefort from France, or Parmigiano Reggiano from Italy, you’ll be purchasing your fair share of GI products this holiday season. And while the majority of GIs tend to refer to agricultural projects, food, wine or spirits, it doesn’t stop there. If your gift wish list includes a Swiss Made watch or a Thai silk scarf for example, you’re also hoping for GI product in your stocking this year.

GIs are considered a form of intellectual property, and thus have their own section in the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. However, registering and enforcing GI protections is largely done on a national level, which can lead to disagreements between nations.

Over 100 Years of Champagne Drama

The United States and the European Union have long been at odds over geographical indications. Europe, home to a number of classic GI products, has a stringent GI protection scheme. The United States, on the other hand, tends to put more weight on trademarks over locations and thus favors the use of generic names.

Champagne has been at the center of these disagreements in the past. In the 1800s, American winemakers started producing their own versions of sparkling wine reminiscent of the French original. The Korbel brothers were perhaps the most famous, making a California sparkling wine which they labeled “Champagne” in the 1880s.

French producers disagreed with the use of Champagne on the label, saying U.S. producers were misusing their name and misleading consumers. The conflict was eventually partially addressed in the TRIPS agreement, which the United States and EU both signed in 1996. However, it contained certain exceptions, including one that allowed the continued use of GIs in the United States that had already been established via trademarks before TRIPS became active, thus allowing Korbel’s “California Champagne” to remain on shelves.

The United States and EU continued to debate this issue for another ten years before they signed a specific agreement on trade in wine in 2006. The United States agreed to ban 17 semi-generic wine terms (including Champagne) from wine labels not produced in the EU. But the EU agreed to some exceptions as well, including a grandfather clause that allowed American producers (like Korbel) who already bore the brand before signing the agreement to continue selling their products.

New Battlefields for the GI War

The saga continued when the United States and EU sat down to negotiate the Transatlantic Trade and Investment Partnership Agreement (TTIP) in 2013. Unsurprisingly, GIs were again a central source of conflict. Those talks have since been shelved indefinitely.

Since they couldn’t work it out in their own TTIP agreement, each side began pushing their own version of GI protection in trade agreements with other nations. Take the Comprehensive Economic and Trade Agreement (CETA) signed between the EU and Canada in 2016, for example. The EU pushed for 143 protected GIs within the agreement, which “claw back” the generic usage of some terms like Gouda cheese.

On the other hand, the United States has been busy negotiating a new NAFTA agreement with Mexico and Canada (now dubbed the United States-Mexico-Canada Agreement (USMCA)). Because Canada had already agreed to protecting European GIs under CETA, the new USMCA agreement must reflect those commitments already negotiated with the EU. However, because the EU doesn’t have the same agreement with Mexico, the United States and Mexico agreed to a side deal which allows exports between the two countries to utilize generic names for 33 cheeses, including – you guessed it— Gouda.

Canada and Mexico aren’t the only battle grounds for this continued GI war. In its recent agreement with Japan, the EU secured protection of over 200 European products under GIs. The United States has stated its interest in negotiating a future FTA with Japan, as well, which could prove another battleground for GI debates in the near future.

What’s Next in the “Wine Wars”?

With TTIP talks currently sidelined, it’s not likely the United States and EU will come to a comprehensive agreement on GIs anytime soon. In July, US President Trump and EU President Juncker did agree to holding future trade talks, but agriculture was said not to be included.

Similar to arguments that inevitably break out over the holiday dinner table— this one will most likely play out in side discussions between key family members. One day, the United States and EU may be able to get together, pop a bottle of Champagne and cheers to a New Years’ resolution on GIs. Until then, the “wine wars” are likely to continue.