The European Union and South Korea signed a free trade agreement on October 15 that could hinder U.S. dairy processors from exporting cheese products to customers in South Korea. In response, IDFA filed comments last week with the U.S. Trade Representative, explaining how this new pact, if ratified, would undermine provisions in the trade pact between the United States and South Korea.

In particular, the new pact aims to undercut well-established trademark protections and expand restrictive EU geographic indications, or rules, regarding names of cheese that would limit the types of cheeses the United States could export to South Korea. U.S. dairy exports to South Korea have reached $47.6 million so far in 2009, and the Pacific Rim represents the U.S. dairy industry's fastest growing export market.

Geographic indications often are used in an effort to protect product names, such as Feta cheese or Parmesan cheese, which have already become generic in the marketplace. IDFA believes these names should not be restricted to producers in specific geographic locations, like Parma for Parmesan cheese, because consumers identify the names with a type of product produced in many countries. The EU disagrees, saying the names should be reserved for products from the geographic regions.

The U.S.-Korea Free Trade Agreement requires parties to "refuse or cancel the registration and prohibit the use of a trademark or geographical indication that is identical or similar to a well-known trademark" (Article 18.2.8). However, the EU-South Korea agreement would require both parties to provide protection to all products with geographic indications, regardless of whether or not the product is identical or similar to a preexisting trademark. A complete list of affected products is available here.

"IDFA is concerned that this provision would impair the ability of U.S. dairy processors to export their products to consumers in Korea," said Katie Sparrow, IDFA manager of international affairs. "Furthermore, the EU is actively negotiating other free trade agreements, and if this trend is not stopped, the negative impact on U.S. dairy exports could be worldwide. Expanding the EU geographic indications to cover well-established generic names for cheeses will force U.S. exporters to spend significant sums on new packaging and marketing just to sustain existing sales."

Under the new pact, IDFA believes consumers would be confronted with new and unfamiliar names, and scarce marketing funds would need to be spent to educate them on why the words on the packages have changed.

"In addition, this text would require U.S. companies to re-name many food products, thus depriving them of any return on their hard work and large expenditures to enhance brand recognition," Sparrow said.

The EU-South Korea must be ratified by both countries before it can go into effect.