IP in the New Mercosur-EU Trade Agreement
Jul 11, 2019
The European Union and the Mercosur trade bloc finally published an Agreement in Principle document describing the future rules of trade between Europe and the South American countries. Negotiations began in the 1990s and, after a stall lasting several years, negotiations picked up in late 2016, culminating in a “trade deal” announcement at the 2019 G20 meeting.\
EU Commissioner for Trade Cecilia Malmström said, “Today’s agreement brings Europe and South America closer together in a spirit of cooperation and openness. Once this deal is in place, it will create a market of 780 million people, providing enormous opportunities for EU businesses and workers in countries with whom we have strong historical links and whose markets have been relatively closed up to now. The agreement will save European companies over €4 billion in duties at the border”.
However, there is still a level of uncertainty of what final terms of trade, especially in regard to IP protection, will be. There is no official text of the future agreement and the published text remains non-binding. The next step, as the webpage of the EU Commission explains, will be the translation of the principles into all official EU languages and “submit the Association Agreement to EU Member States and the European Parliament for approval”.
The main goal of the agreement is to liberalize trade in goods. The memorandum published alongside the Agreement in Principle states that “in terms of tariff lines, Mercosur will fully liberalize 91% and the EU 95% of lines in their respective schedule”. The agreement addresses many issues concerning the international market, such us, the access for agricultural goods, rules of origin, customs and trade facilitation, sanitary and phytosanitary measures, trade remedies, technical barriers to trade, services and establishment, public procurement, competition, subsidies, state-owned enterprises and the ones with owned privileges, trade sustainable development, and transparency, among others.
The memorandum, published by the EU states “for the first time the EU and Mercosur will have a structured bilateral framework with clear legal commitments and opportunities to discuss issues relating to IPR in detail”. They include copyrights, trademarks, industrial designs, protection of plant varieties, protection of trade secrets, provisions on civil and administrative enforcement of IPR.
Related to copyrights, the agreement will protect the rights in the way promoted by the EU acquis. The EU Commission webpage explains that the EU acquis are the “EU’s regulatory framework for copyright and neighboring rights, that have been influenced by the Berne Convention, the Rome Convention, the TRIPS Agreement and the WIPO Agreement such us the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.” Its objective is to protect IP rights as a way to promote innovation, because “by setting harmonized standards, the EU law reduces national discrepancies, ensures the level of protection required to foster creativity and investment in creativity, promotes cultural diversity and ensures better access for consumers and business to digital content and services across Europe”.
This future agreement may signify for Latin American countries the reduction of the existing gap between their protection of IP rights and the EU. For instance, Finland, New Zealand and Switzerland are in the top 5 in the world for IP protection according to the International Property Rights Index; while Mercosur countries fall far behind. The prospect of these provisions in the possible trade agreement is a promising sign for the future of Mercosur countries that want to improve their protection of IP rights, despite the fact that they are working to achieve that goal now. As an example, Brazil recently joined the World Intellectual Property Organization (WIPO)’s Madrid International trademark system, which will enter into force for Brazil in October 2019. Brazil’s minister of Foreign Affairs, Ernesto Henrique Fraga said in that opportunity that “by joining this agreement, Brazil signals its commitment to modernizing its economy and to encouraging economic prosperity and innovation, in a market-economy environment”.
The mean IP score for Mercosur is 5.06 (without Venezuela), the mean IP score for EU is 7.00. The IP protection of every member of Mercosur is below the mean of IP protection in the EU. Venezuela’s Mercosur membership was suspended in 2017 in a resolution that stated the “rupture of democratic order” currently going on in the country.
The EU webpage explains that “Venezuela has been an observer in the on-going negotiations of an EU-Mercosur Association Agreement since 2010 as candidate country to Mercosur. Despite its accession in July 2012, Venezuela has decided to remain an observer in these negotiations for the time being.”
On trademarks the treaty requires Mercosur countries to adopt the Madrid Protocol for the international Registration of Trademarks and the Nice Agreement concerning the international classification of goods and services for the purposes of registering marks. According to the memoranda, trademarks rights will improve on three fronts: the registration procedures, the rights conferred to the trademark holder and the invalidation of applications in bad faith.
Patents will follow the lines of the WTO/TRIPS rules. The agreement encourages all parties that haven’t signed the Patent Cooperation Treaty to do so to “speed up international patent applications and to provide more legal certainty to the process” . It also includes provisions to protect trade secrets. The agreement in principle offers no clues on test data protection for biologics or patent terms will be extended.
Finally, the Principle Agreement includes a section on geographic indicators or “signs used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”. The Principles statement notes a negative list of “355 names of food, wine and spirit products will be protected in Mercosur at a level comparable to that of the EU”, while “the EU will protect 220 GIs from Mercosur,” the list is not public yet.
Although the treaty has the intention to protect IP rights in different areas, it does not disclose detailed information on how those rights will be protected on a day-a-day basis, and in many cases those details have yet to be agreed. For example, the terms of protection for copyrights on literary, artistic, musical, cinematographic or audiovisual work have not been released. The EU suggested a term of 70 years after the death of the author, and that broadcasting rights belonging to broadcasting organizations may have a term of protection of 50 years after the first broadcast, but if Mercosur will accept these specific terms is still unknown.
The principle agreement and accompanying fact sheets suggest a new era of advanced IP protection and liberalized trade between Europe and Latin America is on the horizon. However, without a completed text and negotiations to continue, observers shouldn’t be surprised if the two-decade long talks continue a few more years.