[Guest post] The compromise text of the new regulation on crafts and industrial geographical indications: A compromise on sustainability?

The IPKat has received and is pleased to host this guest contribution by Devanshi Saxena (PhD Researcher at the University of Antwerp and Visiting Researcher at the CIIPC NLU Delhi) concerning the sustainability requirements in geographical indication (GI) law. Here’s what Devanshi writes:

The compromise text of the new regulation on crafts and industrial geographical indications: A compromise on sustainability?

by Devanshi Saxena

As a researcher on GIs and sustainable development, I have been enthusiastically following the developments on the two new proposals for EU regulations on GIs (Regulation 2022/0115 and Regulation 2022/0089). One of these is the recently adopted GI Regulation 2022/0115 (COD) on crafts and industrial GIs (see The IPKat here).

In this guest post I share my curiosity about the fate of the sustainability provisions that featured in the amendments proposed by the Committee on internal market and consumer protection and the Committee on International Trade to the original draft of Regulation 2022/0115. I wonder why these provisions were not included in the adopted text and what this can mean for similar provisions in the draft Regulation 2022/0089 on agricultural GIs that is currently with the Parliament.

Sustainable Development and Sustainability through GIs

GIs are often presented in literature as a tool for enhancing the sustainability of the product value chain as well as for the sustainable development of a certain region (e.g., here and here). This is because of GIs’ potential to valorise the natural and human connections of the product to the place. Regulation 2022/0089 on agri-GIs is proposed, in alignment with the objectives of the Common Agricultural Policy, “to respond to societal demands on economic, social and environmental sustainability outcomes of agricultural production”. The proposal on non-agri GIs is introduced in order to respond to the societal demands on sustainable development.

In 2020, a committee within DG Grow (where the non-agri GI proposal originated) published a study on economic aspects of GI protection at the EU level for non-agricultural products. This report considered the impact of non-agri GIs on regional and sustainable development. The authors referred to the linkage with collective action required to protect GIs with economic and non-economic impacts such as “promotion of a shared cultural heritage, of transparent, responsible and sustainable production practices, or social cohesion”.

It is unclear what sustainability or sustainable development mean for GI law concretely. These terms are not synonymous but are sometimes used interchangeably. The Commission tried to make the meaning of these terms more concrete for GI law through these proposals. This came with the reasonable disclaimer that “sustainability should not be imposed on GI producers but encouraged” and “gradually integrated” (see explanatory memorandum here).

Draft Proposal on GIs for alcoholic drinks and agricultural products

The preamble to the proposed Regulation 2022/0089 for agri GIs included a concern for underuse of GIs for sustainable production. Accordingly, Article 12 allows producers to include “sustainability undertakings” in the product description. Under Article 12(1), a producer group may undertake to apply “a sustainability standard higher than mandated by Union, or national law and go beyond good practice in significant respects in terms of social, environmental or economic undertakings.” In addition, the Commission would be responsible for defining sustainability standards per sector and “laying down criteria for the recognition of existing sustainability standards to which producers of products designated by geographical indications may adhere” (Article 12(4)).

Optional responsibilities of crafts and industrial GI producer groups

The phrase ‘sustainability undertaking’ was also included in Regulation 2022/0115 for non-agri GIs in its original draft. Article 40(3) therein explains the powers and responsibilities of producer groups. Following the logic of not imposing sustainability standards, producer groups could optionally “agree sustainability undertakings, whether or not included in the product specification or as a separate initiative”. This wording changed in the adopted text. The revised provision now under Article 45 (2)(c), changes the wording to “agree to undertake commitments with regard to sustainability, whether or not included in the product specification or as a separate initiative.” This is a vague version of the “sustainability undertaking” idea which is explained in a separate article under Regulation 2022/0089. There, the Commission also has a mandate to define sustainability standards per sector. Not including the same wording creates incoherence in the understanding of sustainability in the two Regulations. It might be that the same wording is adopted in the agri GI Regulation as well.

It is noteworthy that Regulation 2022/0089 originates within DG Agriculture and Regulation 2022/0115 originates within DG Grow - Internal Market, Industry, Entrepreneurship and SMEs. The two departments seem to have worked independently of each other on the respective GI proposals. It could have helped if there had been some interaction between them on the sustainability provisions in the two regulations as it would strengthened the coherence on these provisions.

In March 2023, the Committee on Legal Affairs published a report with opinions of the Committee on Internal Market and Consumer Protection and the Committee on International Trade. The original draft for Regulation 2022/0115 proposed that producer groups may carry out analyses into the economic performance and sustainability of production of the GI product amongst other things. The Committee on International Trade proposed to define ‘sustainable jobs’ in both the Recitals and the text of the Regulation. Namely, sustainable employment would include decent work conditions, better employment opportunities for women and young people that cannot be easily outsourced. In addition, producers could “promote training in the areas of sustainability undertakings, proper working conditions, workers’ rights and corporate social responsibility in the sector of craft and industrial GI.” The Committee on the internal market and consumer protection also proposed a small modification to say that both economic and ecological performance may be analysed by producer groups under Article 40(2)(d)(iii).

The new Recital 8 in the adopted text of Regulation 2022/0115 does not define sustainable jobs as including decent work conditions. It is curious why such an explanation was found unnecessary for a legislation that values sustainability especially when it is uncertain what sustainability concretely means. The other suggestion on ecological analysis has also been dropped. Sustainability of production under Article 45(2)(d)(iii) would arguably include an ecological assessment. However, there is value in highlighting the ecological analysis for crafts and industrial goods as well. I hope that producer groups will still consider it under Article 45(2)(g), which allows them to take any other action to ensure that the GI has adequate legal protection. The explanatory text in the report does not state why the Committees thought that these provisions could be useful and there is no explanation on why they are absent from the adopted regulation.

To its merit, the adopted text includes a provision ensuring inclusivity when forming the producer group: this can also be seen as an important condition for sustainability. Article 40 (1) of the original draft included an obligation for Member States to regularly verify that the “producer group operates in a transparent and democratic manner and that all producers of the product designated by the geographical indication enjoy right of membership in the group”. This provision is included in a stronger way in the adopted text. Article 45(1) changes “transparent and democratic” to “transparent, open and non-discriminatory” and requires verification by Member States that all producers of the product can join the producer group, “at any point in time”.

Final thoughts

While I agree that sustainability provisions need to be adopted after due consultation with producer groups, sustainability is clearly an important rationale for both the proposed Regulations for GIs. It is reflected more strongly in the Regulation on agricultural goods at the moment, than the one on non-agricultural goods. This is so even though the necessity for sustainability of the terroir, including both the human and the environmental elements, remains the same.