GRADUATION THESIS THE IMPACT OF VIETNAM – EU FREE TRADE AGREEMENT ON GEOGRAPHICAL INDICATIONS: A CASE STUDY OF HUNG YEN LONGAN

VIETNAM NATIONAL UNIVERSITY
UNIVERSITY OF ECONOMICS AND BUSINESS
THE FACULTY OF INTERNATIONAL BUSINESS AND ECONOMIC
--------o0o--------

GRADUATION THESIS
THE IMPACT OF VIETNAM – EU FREE TRADE AGREEMENT ON
GEOGRAPHICAL INDICATIONS:
A CASE STUDY OF HUNG YEN LONGAN

SUPERVISOR: DR. NGUYEN CAM NHUNG
STUDENT: PHAM NGOC MY LINH
CLASS: QH - 2012E – KTQT – CLC
TRAINING FORM: FULL – TIME

HANOI, MAY 2016

1


ACKNOWLEDGEMENTS
First and foremost, I would like to express my deep gratitude to Dr Nguyen
Cam Nhung, my research advisor, for her guidance and valuable comments during
the fulfilment of this research. Her suggestions enhance my analytical skills and
enrich my knowledge about international trade. In addition, her willingness to
discuss whenever I have any problems is highly appreciated.
I would also like to acknowledge the support and guidance from the Faculty of
International Business and Economics, VNU University of Economics and
Business. It would have been much more difficult to finish this study if it had not
been for the helpful guidance from the faculty staff and facilities.
Last but not least, I would like to express my appreciation to all the authors and

organizations whose studies and reports were quoted and mentioned in this paper. It
is thanks to their works that I have the proper knowledge and information to build
up my own framework and analysis, for which I am greatly thankful. The names of
those authors and organizations will be presented in the Reference.
For any errors or inadequacies that may remain in this work, of course, the
responsibility is entirely my own and I would try my best to improve the paper as it
is to be developed further in the future.

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TABLE OF CONTENT
Abbreviations
FTA(s)
WTO
EU
EC
VEFTA
GDP
GI(s)
TRIPS
WIPO
AO
PDO
PGI
USD
IGO
IPL
TSG
DNA

FDI
TPP
RCEP
EFTA
PCA
ASEAN
IPL
DOP
GSO

Meanings
Free Trade Agreement(s)
World Trade Organization
European Union
European Commission
Vietnam – EU Free Trade Agreement
Gross domestic product
Geographical indication(s)
Trade-Related Aspects of Intellectual Property
World Intellectual Property Organization
Appellation of origin
Protected designation of origin
Protected geographical indication
United State Dollar
Indication of origins
Intellectual property law
Traditional Speciality Guaranteed
Deoxyribonucleic acid
Foreign Direct Investment
Trans-Pacific Partnership

Regional Comprehensive Economic Partnership
European Free Trade Association
Partnership and Cooperation Agreement
The Association of Southeast Asian Nations
Intellectual Property Law
Protected Denomination of Origin
General Statistics Office

3


LIST OF TABLES

4


LIST OF FIGURES

5


LIST OF PICTURE

6


INTRODUCTION
1. Rationale of the study
Nowadays, globalization is becoming a trend in almost countries in the world
with a variety forms. Following the trend, Vietnam also have had manifold FreeTrade Agreements (FTAs) and negotiations with countries and regions on the earth.

Since the implementation of open door policy initiated in 1986, Vietnam has made a
transition from a centrally planned economy to a market-oriented system with
remarkable achievements, characterized by high economic growth and strong
economic integration (Dang, V. et al., 2013). Being a member of World Trade
Organization (WTO) in 2007, Vietnam has taken a crucial phase in the process of
integration with more than 150 countries and strict requirement for each member in
each area. After that, Vietnam has signed successfully 16 FTAs with countries and
region around the world (see ) which open the door
for Vietnam to access the giant markets and powerful countries and regions such as
EU, the United State, Australia, Singapore, etc.
One of the most salient FTA recently in Vietnam has been Vietnam – EU FreeTrade Agreement (VEFTA) signed in 2015 have given potential opportunities for
Vietnamese products to export into an enormous global market, having 28 European
countries and over 508 million people which accounted for 20 per cent of world
trade and 26 per cent of world GDP (Vo Tri Thanh, 2015). European commission
and Vietnam has considered carefully on tariffs, non-tariff barriers, intellectual
property rights, corporation and investment environments, environmental protection
and human rights (WTO center, 2015). Then, both parties have released a full text
with 21 chapters. In chapter 12 of full text, there are strict articles on intellectual
property rights, specially geographical indications.
The chapter on intellectual property rights (chapter 12) has emphasized with the
articles on geographical indications (GIs). Indeed, European countries have used
Geographical indications as an effective tool to maximize the benefit of these
7


products against the international pressure and to protect their origin products from
imported ones since 1992 (IPR2, 2011), while GIs in Vietnam has started in 2005
with copious flaws on registration procedure, right of use, control, examination,
supervision, anti-imitation and roles of competent organizations related to origin
products (Trong Binh Vu, 2006). Therefore, as can be conspicuously seen that there

is an extensive gap between the development of GIs in the EU countries and these
in Vietnam. The former has a long time to prepare and protect their origin products
while the latter is in the development process of GIs. A stank example is that EU
has 171 GI products, however, Vietnam has only 39 GIs (Full text of VEFTA,
2015).
Furthermore, Vietnam is an agricultural country, however, the main products
exporting to EU market are garments, footwear, coffee, wooden items, aquaproducts. Therefore, Vietnam are not using its competitive advantages on
agriculture. Beside, when the stakeholders, producers and manufacturers of Vietnam
export GIs products into the EU market, they would confront a copious of barrier
derived from the low technology, small scale of manufacturing, management and
standard quality of products.
Hung Yen longan, for instance, although Hung Yen has competitive advantages
on longan with a special taste, the activities of Hung Yen longan in the domestic and
foreign market are not enhanced and improved as its potential value. Generally, the
geographical indications products in Vietnam are not managements and
developments as its values leading to the waste of using geographical indications
protections. The GIs protection in Vietnam only have purposes of fighting against
the violation and unhealthy competitiveness in market as well as the imitation and
abuse of products while the EU use GIs protection to develop and identify the
different of a product with the others, it then gradually builds brand name and
trademark of a product in the customer mind (Trong Binh Vu, 2006).
With the internal and external factors, in the short-term of performing VEFTA,
Vietnam would meet difficult to gain the benefit from exported geographical
8


indication products because of manifold visible and invisible barriers of European
countries. This study, therefore, analyzing the case study of Hung Yen’ longan, a
geographical indications product to answer the main question “How to increase the
competitive advantages of Geographical indications – Hung Yen Longan of Vietnam

in the Vietnam – EU free-trade agreement?” In doing so, the author firstly analyzes
the scale of VEFTA as well as the background on geographical indications of both
parties prior to studying the case study of Hung Yen’s longan. From the case studies
in the world as well as the realities in Vietnam, the author would like to propose
some prescriptions to contribute to the GIs development in Vietnam.
2. Objectives and research questions:
The thesis has two main objectives as follows:
- Analyzing the trade scale between Vietnam and EU, the article
Geographical indication in VEFTA and the background on geographical
-

indication of both parties.
Applying case study of Hung Yen longan.

Thus, this study focuses on answering the main question:
-

How to increase the competitive advantages of Geographical indications
– Hung Yen Longan of Vietnam in the Vietnam – EU Free-Trade
Agreement?

In order to solve the main question, I will have some Sub-questions:
-

How about the geographical indications regulation in the Vietnam – EU

-

free-trade agreement?
How about the reality of geographical indications in Vietnam?

What should Vietnam do to increase the competitive advantages of
geographical indications in Vietnam – EU negotiation?

3. Structure of the content:

9


-

Introduction
Chapter 1: Theoretical framework and literature review
Chapter 2: Background of Vietnam – EU Agreement and the

-

Geographical indications in Vietnam and EU
Chapter 3: Research results
Chapter 4: Recommendation for the development of Geographical

-

indications products: Case study of Hung Yen Longan
Conclusion

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CHAPTER 1: THEORETICAL FRAMEWORK AND
LITERATURE REVIEW

1.1. Definitions
1.1.1. Geographical indications and relevant terminologies
The term “Geographical indications” has confirmed in the late 19 th century, the
first one is the Paris Convention (1883) (Daniele Giovannucci, 2009) as
“indications of source of appellations of origin”. After that, there were copious
agreements commenting about GIs. The Paris Convention (1883) and the Marid
System (1891) use term “indication of source”, then the Lisbon System (1966)
contains the term “appellation of origin (Geneva, 2003). However, the regulation
and forms of protection has performed in recent decades.
Article 22 of WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) defined GIs as indications which a good as originating in
the territory of a Member, or a region or locality in that territory, where a given
quality, reputation or other characteristic of the good is essentially attributable to
its geographical origin. Accordingly, a GI product is a link between product and a
specific location so that the product is confirmed about its quality, characteristics
owing to its region. In TRIPS, there are two level of GI protection, a higher for
wines and spirits and one else lower for all other goods (TRIPS, 2016).
This term slightly differs from the definition of World Intellectual Property
Organization (WIPO) that a GI is a type of intellectual property right that may
apply to any type of food. Geographical indications are like trademarks and
commercial names, it means it is distinctive signs that permit identification of
product and/or product attributes on the market. WIPO showed that the GI only
apply on food and it can be use like trademarks, it means GIs have three main
benefits: 1) source-identifiers, 2) guarantees of quality, and 3) valuable business
interests.
Nevertheless, in the world, each country has been protected in different forms,
11


namely, sui generis systems, trademarks, certification marks, collective membership

marks, and denominations of origin (Daniele Giovannucci, 2009).
Furthermore, in some case, a product could be protected in one country but not
in another or the forms and scope of protection are often different from country to
country. Fortunately, both of Vietnam and EU used term GI and require formal legal
registration to protect GIs.
The use of GIs is not limited to agricultural products. It may also highlight
specific qualities of a product that are due to human factors found in the product’s
place of origin, such as specific manufacturing skills and traditions. That is the case,
for instance, for handicrafts, which are generally handmade using local natural
resources and usually embedded in the traditions of local communities (WIPO
publication No. 952)
There are some relevant terms with GIs:
Appellation of origin (AO): this is the earliest forms of GI recognition in Paris
Convention and in the Lisbon Agreement. In the Lisbon Agreement, AO defined as
the geographical name of a country, region or locality which serves to designate a
product originating therein, the quality and characteristics of which are due
exclusively or essentially to the geographical environment, including natural and
human factors. (Article 2, Lisbon Agreement). The term “appellation” is sometimes
understood as narrower than “indication” but is used increasingly less as one of its
key distinctions.
By comparison, the term “Geographical indication” is broader than Appellation
of origin because GI can be given to goods, whereas the AO is limited that the
quality and the characteristics of the product in question be due to, exclusively or
essentially, the geographical environment, including natural or human factors
(Geneva, 2003)
Collective mark: are used only by the members of a cooperative, association or
other group to identify their goods or services as having a connection to the
collective and its standards. The collective mark may or may not have a geographic
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identity. In the US, it uses collective mark for geographical origin products instead
of geographical indication. However, in the EC, Collective marks use as trademarks
that used by the member of a collective group to distinguish their offerings from
those of non-members. A group that benefits from “protected designation of origin”
(PDO) or “protected geographical indication” (PGI) may also apply for a collective
trademark for their GI product’s name or graphic representation. The PDO/PGI
designation provides a protected indication of quality and origin relationship that is
separate from other intellectual property rights. (Daniele Giovannucci, 2009)
Indications of Source: used from Paris Convention and in the Madrid
Agreement, however, the term “indication of Source” are not defined in both events.
According to WIPO on “Geographical Indications Historical Background, Nature of
Right, Existing Systems for Protection and Obtaining Protection in Other
Countries”, “Indications of source” are defined as “all goods bearing a false or
deceptive indication by which one of the countries to which this agreement applies,
or a place situated therein, is directly or indirectly indicated as being the country or
place of origin shall be seized on importation into any of the said countries.”
Therefore, it is clear that an indication of source is more general and refers to a
country, or location in that country, as being the place of origin.
1.2.1. Geographical indication under the perspective of Trade
In some countries, people use Geographical indication protection as trademarks
so that they could increase their products’ competitive advantage in the global
market. Although geographic terms or signs are not able to be registered as
trademarks in case of they use geographically descriptive of the origin of the goods.
However, if they use geographic sign to identify the source of the goods or services,
thereby recognizing it as identifying a particular company or manufacturer of
producers, in this case, the geographic sign would describe the unique “source” of
goods or services. (Daniele Giovannucci, 2009)
According to WIPO, a trademark is a sign capable of distinguishing the goods
13

or services of one enterprise from those of other enterprises. Trademarks are
protected by intellectual property rights.
Therefore, the sign that is protected first, whether it is a trademark or a GI, shall
take precedence over and prevent the use of any conflicting subsequent sign. The
phrase “first in time, first in right” would be the heart of trademark law. (Frank Z
Hellwig, 2003)
One problem with resolving the GI conflict in a manner other than “first in
time, first in right” is that it would lead to an illegal seizure of property without
compensation. Since trademark rights are property, the seizure of a trademark,
either by cancelling the right entirely, or by taking away the right to exclude others,
would violate the most basic right guaranteed to private property.
Therefore, in some countries and regions, they choose the way of co-existence
between trademarks and GI, EU, for example, in EC Regulation 2081/92 regarding
geographic indications, has established a system that specifically allows for coexistence between a prior trademark and a later GI. Even in TRIPS Agreement
Article 16.1 has stated that “The owner of a registered trademark shall have the
exclusive right to prevent all third parties not having the owner’s consent from
using in the course of trade identical or similar signs for goods or services which
are identical or similar to those in respect of which the trademark is registered
where such use would result in a likelihood of confusion”.
Table 1.1: The key distinctions between trademarks and GIs
Feature

Ownership

Trademarks
Anyone.

Geographical indications

Producers or government

Typically individual entity
or corporation, sometimes
collective or government

Transferability

To anyone, anywhere

Linked to origin.

Cannot be de-localized
Rights to origin First in time – first in rights Distinguishes legitimate rights to
name

origin, not first to apply for name.
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Registration confers rights to all
legitimate producers
Public
Protection

Use

Private.

Government responsible but some

Burden entirely on owner

private burden to identify

Trademark: typically

infringement
Collective, open to all producers

private, can license

that comply with rules

Collective mark: closed
group
Certification mark: open
according to set rules
Private. Usually not

Quality

Name or sign

Disclosed in standards or

specified except sometimes specifications and obligatorily
for certification marks
May be created

linked to origin
Must exist already and must link

May or may not have

to terror.

geographic linkage
(Source: Adapted from work of Marette, Clemens and Babcock 2007)
1.2. Literature review
1.2.1. Review on Geographical Indications Studies
With the development of GIs laws in agreements and regulations in each
country, the number of scholars on GIs increased remarkably in the whole world. In
this respect, most of the previous studies has attempted to answer for the question
“How have countries protected their geographical indications products around the world?”
Guide to geographical indications – Linking products and their origins (2009)
This study has considered as one of the most important document in the
geographical indications area. Derived from international agreements, case studies,
research documents, the study offers a global overview of GIs and their distribution
15


worldwide by country and by product as well as the important of GIs in the world. In the
first chapter, the authors support the basics information of GIs. The GIs are defined:
“A Geographical Indication identifies a good as originating in a delimited
territory or region where a noted quality, reputation or other characteristic of
the good is essentially attributable to its geographical origin and/or the
human or natural factors there”
The GIs are popular because it provides certain information and offer a
guarantee. GIs protection are important of GIs for producers, rural areas and regions

and countries. Therefore, GIs would have great influence on economic of countries
in the world. The total market for sales of GI products worldwide is at well over 50
billion USD in which EU is the regions that has the largest number of protected GIs
(6021 produces including 5200 wines – spirits and 821 foods).
Nevertheless, in the world, each country has been protected in different forms,
namely, sui generis systems, trademarks, certification marks, collective membership
marks, and denominations of origin. Therefore, after analyzing the pros and cons of
GIs prior to analyzing the model of development of GIs with the different
characteristics of GIs as follow:
- Competitiveness and economics GIs are a potentially unique form of competitive
advantage, even for smallholders. They are not easy to erode because they
depend less on common factors of competition such as cost of production.
Instead, GIs build on unique local factors born of tradition, know-how, and
special agro-ecological endowments. A viable GI essentially leverages these
assets to develop its reputation and value in much the same manner as a brand.
- Smallholders, employment, and rural enterprise: in the world, GIs offer a giant
value of income for farmers, producers, France, for example, GIs offer a primary
source of income for 138,000 (mostly smaller) farms in and 300,000 Italian
employees.
- Society and culture: the potential long – term value of GIs is not only at the
economic level but also at a cultural level which is the recognition of customary
16


and value – adding traditional that can convey a deep sense of a person, their
culture and their long-standing relationship to a region.
Environment and ecology that GIs tent to value the land and its particular agro
– ecological characteristics. The case for GIs promoting environmental value may
be valid but is less certain. The scientific literature regarding the effects of GI
systems on the environment is limited but the documented observations and case

studies that do cover this aspect usually point to positive and mutually reinforcing
relations between the two areas.
Subsequently, the authors consider GIs protection on policies and approaches
around the world with four main regions, namely, EU, the United State, China and
India. In each country and region, the author considers policy, the objectives of GIs
From the case study of regions, the authors propose a detail process of
undertake a GI for a product from the successful case study in the world with
specific steps and strategic plans. As can be seen from the study, there are four main
factors that influence the success of GIs, namely, organizational and institutional
structures, equitable participation, market partners and legal protection.
Therefore, the study supports the reader an overview knowledge on
Geographical indication through both of theoretical and practical case studies.
Indications of Geographical Origin as part of the Intellectual Property Law
(2003)
Professor Marianne Levin (2003) give the reader a glimpse of this rather special
but just as important part of intellectual property law. Furthermore, the author gives
the reader a clear understanding of what an IGO is and why this field of intellectual
property law still is so un-uniform, and an insight of different on-going
developments in the field of IGOs. In the end of the study, the author also makes
short summaries of certain case-law of particular interest. On the first hand, the
study has an international focus, but there will be some references to national
systems in other countries as well. Using a giant source of information from legal
scholars, articles, case-law, international symposia and from juxtapositions from
17


international WTO-meetings, etc., submitted from the Internet.
Geographical indication protection systems around the world (2003)
In the article, using the methodology of case study, the authors firstly define the
relevant terminologies on GIs and overview the history of GIs in negotiations,

agreements and regions priors to analyzing the issues between trademark and GI
throughout the scientist in the areas.
In the study, the authors focus on resolving the relationship between GI and
trademark because of the overlap in two terms. After that, the authors review the
GIs and trademarks in developing countries through case studies of Cheese, and
Wines and Spirits. Thanks to the study, I could comprehend the overlap between
Trademarks and GIs so that I have found the answer for question “why do some
countries use Geographical indications protections as trademarks?”
1.2.2. Review on Case study methodology about Geographical indication:
The case study method embraces the full set of procedures needed to do case
study research. These tasks include designing a case study, collecting the study’s
data, analyzing the data, and presenting and reporting the results. The qualitative
case study is an approach to research that facilitates exploration of a phenomenon
within its context using a variety of data sources. This ensures that the issue is not
explored through one lens, but rather a variety of lenses which allows for multiple
facets of the phenomenon to be revealed and understood. The review on
Geographical Indications Case study have given me the overview on Case study
methodology so that I could apply into my study.
In the area of Geographical indications, there are a variety of case study of GIs
products around the world, as follows:
The protection of Geographical Indication in India – Case study on
“Darjeeling Tea” (2009)
In the study, Sudhir Ravindran and Arya Mathew (2009) analyzed the case
study methodology of Darjeeling tea. Darjeeling tea is a premium quality tea
18


produced in the hilly regions of the Darjeeling district. The tea offers distinctive
characteristics of quality and flavors. To protect Darjeeling tea from the dishonest
business practices of a various commercial entities, Darjeeling Tea would be

marketed and branded. Furthermore, the brand of Darjeeling Tea would survive the
tea industry as well as improve its financial situation.
The authors analyzed the history of legal protection of Darjeeling Tea in Indian.
The first attempt on the part of the Tea Board of India towards protection of the
‘Darjeeling’ brand was undertaken way back in 1983, when the ‘Darjeeling’ logo
was created. The Tea Board obtained home protection for the Darjeeling logo as a
certification trade mark under the Indian Trade and Merchandise Marks Act 1958
(now the Trade Marks Act, 1999). The registration was granted in class 30 in the
name of the Tea Board in 1986. In the same year, the logo was registered as a
trademark in several other countries like the UK, the USA, Canada, Japan, Egypt,
and under the Madrid Agreement covering Germany, Austria, Spain, France,
Portugal, Italy, Switzerland and former Yugoslavia67. In the absence of a separate
law dedicated exclusively to GI’s in India during that time, the word ‘Darjeeling’
was also registered under the Trade and Merchandise Marks Act 1958 in class 30 in
the name of Tea Board in 1998. When the Geographical Indication Act in India was
enacted in September 2003, the Tea Board applied for GI protection of ‘Darjeeling’
in October 2003. In October 2004, Darjeeling was granted the GI status in India to
become the first application to be registered in India as a GI. In 1998, the Tea Board
hired a services of Compumark that monitor and report to the Tea Board all cases of
unauthorized use and attempted registration. Until 2005, there are almost 15 cases
against infringement and misuse of the word Darjeeling Tea worldwide including
Russia, USA, Japan, France, Germany, Israel, Norway and Sri Lanka etc…
Some operational aspects of managing Geographical indications (2004)
Geographical indications and the protection of indigenous resources: An
examination of how geographical indications can be utilized as a tool to protect
indigenous resources from outside exploitation and generic imitations. In the first
19


chapter of the study, the author review GIs protections histories, products and

regulations in countries, namely, French, Swiss, Australia and the US. Each
countries uses a different GIs protections system so that it protects different
products. For example, French and Australia use GIs protections law to protect
wines, whereas Swiss system protect agricultural products such as milk, preserved
meat, fruit and vegetables. Therefore, there would be different way of managing
Geographical indications. In the study, the author analyzes some way of protecting.
Firstly, DNA Fingerprinting technology. DNA polymorphisms could be used as
genetic markers in much the same way as other genetic markers: in parentage
analysis, in genetic studies on the inheritance of traits, or in the identification of
individuals. Therefore, DNA fingerprinting can isolate from any genome.
Furthermore, the authors find out the case studies that use DNA fingerprinting so
that the reader can get information easier.
Secondly, copyright of re-recorded copy through case study of Super Cassettes
Industries, a producer and marketer of Pre-recorded audio cassettes and other
records which it sells under the mark/logo T-series, and case study of Litigation
Watch, an Indian generic drug maker leading to some patents for Opposition in
Indian.
Geographical indications: review of seven case – studies worldwide (2009)
Nadja El Benni and Sohie Reviron (2009) review seven case – studies of GIs
around the world, namely, Argan oil of Morocco, Cashmere of Mongolia, Café de
Colombia and coffee of Costa Rica, Habanos of Cuba, Rooibos tea of South Africa,
and Tequila of Mexico through gathering existing information on these case-studies
such as reports, presentations, article, etc… . Thus, the study shows the way that
developing countries confronted in practice with marketing issues, collective
organization, social and environmental effects, national legal frame, and protection
on the international market. In seven case studies, there are seven different
strategies for protection the international market. The author follows the following
systematic approach during the research.
20

-

Firstly, an overview gives about the conventional market system, supply

-

chain, the uniqueness of the product and the marketing strategy.
Secondly, the study analyze how the supply chain could protect GIs in the

-

national legislation and in international negotiations.
At the end the challenges for the concerning product on the market are
described as well as social and environmental side-effects of the existing
supply chain and impact of the GI system is striped.

Table 1.2: Short case studies description
Country
Morocco
Mongolia

Colombia

Product
Argan oil
Cashmere wool

Coffee of Columbia

Export

of

total

Registered as

production
67%
50 – 90%

Trademark
Certification mark

(dependent on

Trademark

processing stage)
90%

GI
Trademark

Costa Rica
Cuba

Coffee
Habano Cigars

80%
90%

Certification mark
Trademark
Trademark

GI
South Africa
Rooibos tea
60&
Trademark
Mexico
Tequila
66%
GI
(Source: Geographical indications: review of seven case – studies world wide
(2009))
The first case study is Argan oil of Morocco accounting for 50000 liters old
annually (Ouraiss, 2007). The Argan oil is a traditional product which used for food
and cosmetics purposed by Moroccan women. In the late 1990s, the demand for
high –value oil markets expanded dramatically leading to the need of more sterile,
mechanized extraction and sophisticated marketing strategies. Nevertheless, the
inability to participate directly in high value Argan oil markets and the poor
transportation infrastructure. Therefore, there are two kind of cooperatives:
-

The non-mechanized sponsored by the GTZ associate
21

-

The mechanized cooperative established by Zoubida Charrouf

Argan oil is an impressive success story. The product that was traditionally used
by women and sold locally has become in a very few years a world-wide famous
product. Beyond this commercial success that has led to an increase of women’s
salaries, different positive side effects have been got such as new scientific
knowledge on chemical properties of the oil, technical improvement of processing
practices, and construction of a strong collective organization based on women’
cooperatives and commercial groups. The supply chain will have to face the
challenge of increasing production without losing the artisan characteristics of the
product. Mechanization of certain steps of processing, such as kernels crushing and
oil extraction that were traditionally made by hand by women will have to be driven
carefully in order to avoid a drift to lower quality. This technical innovation opens
too the gender issue, extracting being until now a women activity. Regarding
environment aspects, the case-study highlights specific problems in countries with
complex systems of land usage and ownership. When there is land tenure insecurity,
long term projects such as argan trees plantation are difficult to realize.
The second case study is Cashmere of Mongolia. The cashmere supply chain
plays a significant role in the Mongolian economy. With annual production of over
3’000 tons, Mongolia is the second largest producer of cashmere after China in the
world. Currently, raw cashmere and cashmere products are Mongolia’s third largest
export. It provides income and employment for an over a third of the population.
However, the commercial performance is not satisfying. The cashmere industry has
difficulties to get access to raw greasy wool because of open competition with
Chinese traders/ smugglers. The consequence of this competition for raw material is
the high price paid to producers (around 24 $ per kg). As of today, cashmere is the

most valuable livestock driven raw material for herders as it is sold for the highest
price in the market year-round. Herders are currently enjoying the relatively high
price of cashmere. But it could not last. If local processing companies cannot
increase their capacity utilization and continue to run loss in a few years to come,
22


they will have to cease operations. A number of processing companies have already
exited the industry. This will give Chinese buyers an opportunity to emerge as a
monopoly power and may drop the price they pay to the herders. A geographical
indication expected benefits are firstly organizational innovation in order to create
long term relationships between herders and the processing companies based on
trust and information sharing. Technical improvements at the herders’ level (goats
combing practice is a crucial step for getting high quality processed wool) should
increase value creation in the supply chain.
On the environmental aspects, pasture land degradation is presently a major
threat in Mongolia. Herders are worried about this ecological disaster, because of
the expected consequences on their activity in the future. A GI strong organization
may help to combine short term economic and long term environmental objectives.
The third case study review Café de Colombia and coffee of Costa Rica. With
its trademark strategy the Federation could increase the mark up on average coffee
prices. Especially the “100% Colombia Coffee” and “Juan Valdez” brand is highly
recognized by international consumers. The reason why Colombia protected the
term “Café de Colombia” in EU as GI (PGI) was to avoid the attempts of third
parties to misuse the good name of “Café de Colombia”. The aim is to defend the
economic value of an already established product, for which a reputation was
already built up with a sophisticated marketing strategy using trademarks. As
roasting does not necessarily need to be carried out in the geographical area “Café
de Colombia” could not be protected as PDO... However, if coffee beans would be
roasted in Colombia this would create a high economic added value, irrespectively

if the coffee is sold as GI coffee or not. As the Federation as collective producer
organization had already established a well organized supply chain (with quality
ensured by Alma café and rural development goals) the registration as PGI in the
EC took only one year. It can be estimated that with the existing supply chain
structure the additional costs were relatively low to become registered as PGI in the
European Community. The distribution of value to producers is one of the goals of
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the FNC. A lot effort was undertaken by the FNC to improve the quality of life for
instance through educational programs and infrastructure projects. The protection of
biodiversity in the coffee grow in regions is also one aim of the FNC.
Then, coffee of Costa Rica is considered. Prices paid for Costa Ricans coffee
are in general higher than for most other coffees. Between 2001 and 2006 the export
price for Costa Ricans coffee increased from 64.79 USD/46 kg bag to 122.23
USD/46 kg bag. Whereas Costa Rica coffee prices were on rank five in 2001
(behind prices paid for coffee of Ethiopia, Kenya, Colombia and Mexico) in 2006
the highest prices were paid for Costa Rican coffee (followed by Colombia, Kenya,
Nicaragua and Mexico).
Coffee producers are not included in every step of the supply chain but are
protected against volatile market prices by legal mechanisms. Support schemes are
also fixed legally and are mainly provided by the private industry. Every actor in the
supply chain defend its own interest which results in a solution that is not solely
targeting producers well-being or the distribution of value to producers. To increase
the access to the international market with high quality products ICAFE (through
which the State has the supervision and control over the coffee supply chain) has
established the program “seven regions, seven coffees”. Within this program
important coffee regions with an individual profile were identified. However, it is
still under discussion if a GI should be nation or region wide. Compared to
Colombia and as a result of the existing supply chain structure, Costa Ricans coffee

growers are less supported regarding socioeconomic aspects. However, to improve
the environmental quality in coffee producing regions several programs and
legislation were launched by the government. These programs increase the
reputation on the international market with the aim to generate higher prices.
Although coffee of Colombia and that of Costa Rica have followed two
different GI strategies, these objective is similar – green coffee- in order to increase
prices paid to producers. Supply chains are also very different. Colombia has
developed a very strong democratic efficient organization (The National Federation
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of coffee growers- FNC) that pilot’s production and the institutional system. It has
prepared and advocated with great success registration in EU (first foreign product
to be registered). Costa Rica organization is more dominated by public authorities
that control margins at different levels of the supply chain.
Habanos of Cuba is one of the most famous GI in the world and has a long
history of origin labelled product. As leader in the premium cigar segment,
Corporation Habanos SA held a 30% share of the international premium cigars
sales. Habanos cigars are one of the most usurped GI products in the world and
have deployed different tools for protection including, 15 “Appellation of origin”,
62 trade marks and 2 certification marks. It is difficult to get information on the
internal organization of the supply chain or on production practices in a country
which faced a very severe economic crisis in the 1990’s and is nowadays enduring
repeating climate problems.
Another case study, Rooibos is an impressive commercial success. Production
volume increased steadily within the last two decades. Whereas in 1995 the
production volume was about 4’200 tons, it raises to 6500 tons in 2000 up to 9700
tons in 2005. As one of the main importers of rooibos in the 1990s, Germany is still
South Africa’s major export destination for Rooibos tea with 75 % of export sales.
The product uniqueness comes from a very specific ecosystem that leads to clear

limits of the production geographical area. However, the supply chain has a low
negotiation power. About 95% of the product is currently exported in bulk. At the
international level, the market power is in the hand of German traders that can
easily dictate prices especially for conventional bulk exports. The price paid to the
producers in South Africa is very low compared to prices paid for bulk products in
Germany. On environmental aspects, the major challenge is over exploitation of
natural resources due to a growing demand.
The last case study is Tequila of Mexico. Exports have doubled in 6 years and
the part of bottled tequila has increased. The major challenge is supply in blue
agave whose market has long being characterized by production irregularity and
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