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03.16.2009  
 

'Clos' to Go -- What About 'Chateau?'

European Community challenges use of 'traditional expressions' on domestic wine labels

 
by Kate Lavin
 
 
Alternative text
 
Napa Valley icon Clos du Val ceased shipping to nearly every country in the European Union after the European Commission removed the derogation protecting words such as chateau, vintage and clos on wine imports from the U.S.
 
Washington, D.C. -- In the 37 years since French winemaker Bernard Portet planted vines in Napa Valley's Stag's Leap District, Clos du Val has built an international reputation, exporting to nearly every country in the European Union. But that all came to a halt March 10, when the European Community removed the approval for certain traditional expressions such as "chateau," "vintage," and -- unfortunately -- "clos."

Permissions to use more than a dozen such expressions expired March 10, 2009 (the three-year anniversary of the 2006 wine trade agreement between the United States and the EC), and certain U.S. imports "no longer conform to the applicable labeling rules," according to a letter sent to the deputy U.S. Trade Representative. All of which is to say that wineries that export to the EC with banned words on their labels are at risk of having their product stopped from entering the European marketplace.

The change removes terms previously permitted under Appendix I, Part A of the trade agreement, which says the EC "shall permit the use of the terms" "chateau, classic, cream, crusted/crusting, fine, late bottled vintage, noble, ruby, superior, sur lie, tawny, vintage, vintage character."

Window of confusion

In a letter dated Aug. 9, 2008, a representative from the European Community informed deputy U.S. trade representative John Veroneau that "the Community does not extend the period for use of these terms…beyond 10 March 2009." Currently the office of the U.S. Trade Representative is waiting for the European Community to submit new labeling requirements (expected before the end of March, and possibly this week), which leaves a distinct window of confusion for U.S. wineries that sell their products in Europe.

What that means for Clos du Val, says public relations director Mary Ann Vangrin, is that exports have been stopped to every country except the United Kingdom, where the winery's name was trademarked prior to 2002, when trade agreement talks began between the two governments.

"We do have an EU trademark on our label, granted in August 2008, but unfortunately this legislation overrides that trademark," Vangrin says.

The EC recently issued another letter stating that as of March 10, European retailers would be permitted to sell through their remaining stocks of non-complying wines, according to San Francisco attorney Susan Cagann, who provides risk assessment for the wine industry as special counsel at Farella Braun + Martel. "That was a red light," she says. "It means that they might be serious about this, and may take some action to against various companies who aren't heeding the ban."

U.S. trade officials last week visited Brussels to meet with members of the European Commission's agricultural arm, but they came home with more questions about the future of traditional expressions in labeling.

"To a certain extent, our ability to work things out will depend on how flexible they are, and whether they're willing to clarify some of these issues or not," said a U.S. trade official who asked to remain anonymous. "I'm reluctant to say what (wineries) should or shouldn't do, because we just don't know at this point what the European Union is going to do, now that this derogation has ended. We don't have a good understanding of what kind of enforcement the member states will be taking, if any."

Schools of thought

Officials at the TTB and Wine America told Wines & Vines that business will continue as usual. When the U.S. government does have news on the labeling regulations, it will come from the USDA Foreign Agricultural Service office, TTB spokesman Art Resnick says.

According to J. Scott Gerien of the law firm Dickenson Peatman & Fogarty, there are three separate issues coming to the fore of the wine trade between Europe and the United States. First is the current regulation, which bans the use of traditional expressions. Secondly, Europe is currently revising their regulations. And finally, there are separate bilateral negotiations between the European Union and the United States.

"The new regulations may say something completely different, or they might say the exact same thing.…They are negotiating internally as to what those standards will be," Gerien says. Until the new standards are revealed, U.S. wineries are bound to the ban on traditional expressions, he adds.

Joseph Rollo, director of international trade policy for the Wine Institute, says the EC will have to notify the World Trade Organization of the proposed trade changes, and member countries will have two weeks to comment. Most of the terms on the list are used to describe dessert wines, he says, and since U.S. winemakers are prohibited from exporting "Port" and "Sherry" to the EC, such a restriction wouldn't amount to much.

Of course "clos" and "chateau" carry more widely felt consequences, as they are used in the brand names of dozens of U.S. labels. According to Wines & Vines Directory and Buyer's Guide, there are 15 U.S. wine labels that use the word "clos" in their proper name, and 60 domestic wineries market labels under "chateau."

Rollo says it is important that wineries doing business in Europe check the dates of their trademark registrations in member countries. At the moment, having pre-agreement paperwork in-hand will allow wineries to have their products grandfathered into the distribution system, Cagann says, but that could change in August.

Phase II

According to Rex Stults, industry relations director for Napa Valley Vintners, the first phase of the wine accord took years to solidify, and labeling talks are likely to take time, as well. NVV is devoted to protecting and promoting the Napa name, so Stults empat hizes with Europeans seeking to protect words like Bordeaux and Sherry.

"We believe in the rights of wine regions to protect their place names," he says. "When it comes to the use of words not used to describe a place or an origin, we don't have strong opinions about that."

Stults added that Australia and the EU recently reached an agreement that touches on a lot of the same issues being batted about, but the United States will have to sort out an agreement of its own.

In terms of the situation's effect on Clos du Val, Vangrin says she's hopeful that the U.S. Trade Representative will be able to assist in helping affected wineries renew their export businesses. "I think there are a number of wineries that are in the same boat," she says.
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LATEST READER COMMENTS
 
 
Posted on 03.17.2009 - 12:28:01 PST
 
The EU is in the process of revising its wine regulations which may or may not result in changes to Article 24(3) of Regulation 753/2002. This is what the U.S. is waiting to see and what will be forwarded to USDA and must be submitted to the WTO for a two week comment period by the U.S. and others. However, it is not currently business as usual as Regulation 753/2002 is in full effect and any wine with a trademark encompassing a traditional term that does not qualify for the exception of Article 24(3) that is exported to an EU country after March 10, 2009 could be prevented entry or subsequently seized if entry were mistakenly allowed. I believe that this article muddles the issue and leads to misunderstanding of the current state of affairs.
 
Sgerien
 
Napa, CA USA
 

 
Posted on 03.17.2009 - 12:18:01 PST
 
I believe that this story mischaracterizes the present state of matters in the EU related to the use of traditional terms by US wineries. EC Regulation No. 753/2002 is currently in full effect. Article 24(3) of Regulation No. 753/2002 prohibits the use of traditional terms such as "clos," "chateau," etc. as part of trademarks unless the wine qualifies for use of such a traditional term (i.e., it is from the EU country that recognizes the term and meets that country's requirements). If a mark containing a traditional term was registered in a particular EU country prior to the date of official recognition of the traditional term under the EC regulation (7/4/2003 for clos and chateau), or acquired legitimate rights in such EU country before such date based on use, and was used in good faith since such registration or acquisition of right, then the trademark is exempt from the regulation provision, but only in the country where there was registration or acquisition of right. see next
 
Sgerien
 
Napa, CA USA
 
 
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