INTERNAL CONTROL FOR GEOGRAPHICAL INDICATIONS INTERNATIONAL EXPERIENCE AND APPLICATION FOR THANH HA LYCHEE OF VIETNAM

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY DISSERTATION INTERNAL CONTROL FOR GEOGRAPHICAL INDICATIONS: INTERNATIONAL EXPERIENCE AND APPLICATION FOR THANH HA LYCHEE OF

MINISTRY OF EDUCATION AND TRAINING

FOREIGN TRADE UNIVERSITY

DISSERTATION

INTERNAL CONTROL FOR GEOGRAPHICAL INDICATIONS: INTERNATIONAL EXPERIENCE AND APPLICATION FOR

THANH HA LYCHEE OF VIETNAM

Master of International Trade Policy and Law

Tran Thi Thanh Tam

Ha Noi - 2016

FOREIGN TRADE UNIVERSITY

DISSERTATION

Internal control for Geographical Indications: international experience

and application for Thanh Ha lychee of Vietnam

Master of International Trade Policy and Law

Full Name: Tran Thi Thanh Tam

Supervisor: Assoc Prof Dr Le Thi Thu Ha

Hanoi - 2016

STATEMENT OF ORIGINAL AUTHORSHIP

The work contained in this thesis has not been previously submitted to meet requirements of an award at this or any other higher education institution To the best of

my knowledge and belief, the thesis contains no material previously published or written

by another person except where due reference is made

ACKNOWLEGEMENT

This research would not have been possible without the kind support of many people I would like to sincerely thank my supervisor, Assoc Prof Dr Le Thi Thu Ha, who read my numerous revisions and helped shed light on the confusions Also I highly appreciate the support provided by the leaders and members of Thanh Ha Lychee Production and Commercialization Association, the colleagues at Hai Duong Department

of Science and Technology, Thanh Ha People’s Committee, specifically Economic and Infrastructure Division and Agriculture and Rural Development Division, as well as local and foreign experts I would also like to express my gratitude to my classmates at the programme Master of International Trade Policy and Law, who shared this long process with me, always offering help

TABLE OF CONTENT

INTRODUCTION 1

CHAPTER 1: THEORETICAL OVERVIEW 7

1.1 Overview of GI 7

1.1.1 Definition of GI 7

1.1.2 Role of GI protection 11

1.1.2.1 From perspective of consumers 11

1.1.2.2 From perspective of producers 12

1.1.2.3 From perspective of Governmental Authorities 12

1.1.3 Right to use GI 13

1.2 GI control 14

1.2.1 Layers of GI control 14

1.2.2 Importance of GI control 16

1.2.2.1 From the perspective of consumers 16

1.2.2.2 From the perspective of producers 17

1.2.2.3 From the perspective of Governmental Authorities 18

1.3 GI internal control 18

1.3.1 Definition of GI internal control 18

1.3.2 Activities of GI internal control 20

CHAPTER II: INTERNATIONAL EXPERIENCE IN GEOGRAPHICAL INDICATION INTERNAL CONTROL 22

2.1 Experience in Europe: GI internal control in France 23

2.1.1 Overview on GI in France 23

2.1.1.1 GI registration in France 23

2.1.1.2 GI management in France 30

2.1.1.3 GI protection in France 33

2.1.2 GI internal control in France 34

2.1.2.1 Organisation in charge of internal control: GI association 34

2.1.2.2 Tools for internal control 37

2.1.2.3 Internal control process 39

2.1.2.4 Summary and remarks 41

2.1.3 Case study: Oignon doux des Cévennes 42

2.1.3.1 Introduction about Oignon doux des Cévennes 42

2.1.3.2 Organisation in charge of internal control: GI association of the Oignon doux des Cévennes 43

2.1.3.3 Tools for internal control of the Oignon doux des Cévennes 47

2.1.3.4 Internal control process of the Oignon doux des Cévennes 49

2.2 Experience in Asia: GI internal control in Thailand 50

2.2.1 Overview on GI in Thailand 50

2.2.1.1 GI registration in Thailand 51

2.2.1.2 GI management in Thailand 56

2.2.1.3 GI protection in Thailand 57

2.2.2 GI internal control in Thailand 59

2.2.2.1 Organisation in charge of internal control: GI operators groups 59

2.2.2.2 Tools for internal control 61

2.2.2.3 Internal control process 62

2.2.2.4 Summary and remarks 64

2.1.3 Case study: Sakon Nakhon Mak Mao Berry and Juice 64

2.1.3.1 Introduction about Sakon Nakhon Mak Mao Berry and Juice 64

2.1.3.2 Organisation in charge of internal control: Sakorn Nakorn Mak Mao Club 66

2.1.3.3 Tools for internal control of the Sakon Nakhon Mak Mao Berry and Juice 67

2.1.3.4 Internal control process of the Sakon Nakhon Mak Mao Berry and Juice 67

CHAPTER III – GEOGRAPHICAL INDICATION INTERNAL CONTROL FOR THANH HA LYCHEE OF VIETNAM 69

3.1 GI in Vietnam and Thanh Ha lychee as a GI 69

3.1.1 GI in Vietnam 69

3.1.1.1 GI registration in Vietnam 69

3.1.1.2 GI management in Vietnam 75

3.1.1.3 GI protection in Vietnam 77

3.1.2 Thanh Ha lychee as a GI 78

3.1.2.1 About Thanh Ha and Thanh Ha lychee 78

3.1.2.2 Thanh Ha lychee registered as GI 80

3.2 Current status of internal control for Thanh Ha lychee of Vietnam 81

3.2.1 Organisation in charge of internal control: Association of Production and Trade of Thanh Ha lychee 81

3.2.1.1 Establishment of the Association 81

3.2.1.2 Membership mechanism of the Association 83

3.2.1.3 Organisational structure of the Association 85

3.2.1.4 Functions of the Association 88

3.2.1.5 Budget maintenance of GI association 88

3.2.2 Tools for internal control 89

3.2.2.1 GI specification 90

3.2.2.2 Internal control plan 90

3.2.3 Internal control process 91

3.2.3.1 Continuously monitoring the production practices 91

3.2.3.2 Organising annual internal audit 92

3.2.3.3 Managing the use of the branding recognition tools 92

3.2.3.4 Facilitating technical trainings 93

3.2.4 Summary and remarks 95

3.3 Recommendations for internal control of Thanh Ha lychee Vietnam 96

3.3.1 Recommendations for Authorities 96

3.3.2 Recommendations for the Association 97

REFERENCES 103

APPENDICES 114

LIST OF TABLE

Table 1: Size of the Oignon doux des Cévennes 49

Table 2: Control plan related to size of the Oignon doux des Cévennes 49

Table 3: Function of authorities in GI protection in Vietnam 70

LIST OF FIGURES

Figure 1: Procedure for GI registration in EU Member States 23

Figure 2: Number of registered, published or applied PDO, PGI, TSG in EU, 2016 27

Figure 3: Number of French registered PDO, PGI, TSG over the years 27

Figure 4: French GI breakdown according to product class, 2016 28

Figure 5: French GI breakdown according to processing level, 2016 29

Figure 6: GI control in France before 2006 30

Figure 7: GI control in France after 2006 32

Figure 8: Organisational chart of GI association for the Oignon doux des Cévennes 45

Figure 9: Breakdown of the fees collected by GI association for the Oignon doux des Cévennes 47

Figure 10: Procedure for GI registration in Thailand 52

Figure 11: Number of newly-protected GI in each year in Thailand 55

Figure 12: Thai GI breakdown according to product class, 2016 55

Figure 13: GI control in Thailand 56

Figure 14: Procedure for GI registration in Vietnam 71

Figure 15: Number of newly-registered GI in each year in Vietnam 74

Figure 16: Vietnamese GI breakdown according to product class, 2016 74

Figure 17: Vietnamese GI breakdown according to processing level, 2016 75

Figure 18: GI management system in Vietnam 77

Figure 19: The cultivated area of lychee in Thanh Ha over the years (ha) 79

Figure 20: Organisational structure of the Association 87

Figure 21: Process of distributing labels for Thanh Ha lychees 93

LIST OF APPENDICES

Appendix i: List of registered GI in Vietnam 114

Appendix ii: List of registered GI in France 116Appendix iii: List of registered GI in Thailand 123

Appendix iv: Geographical Indication Certificate Numbered 0009 of Thanh Ha lychee 125

LIST OF ABBREVIATIONS

ACFS Thai National Bureau of Agricultural Commodity and Food Standards

ASEAN Association of Southeast Asia Nations

COFRAC Comité français d'accréditation

DARD Department of Agriculture and Rural Development

DOST Department of Sciences and Technology

ECAP EU-ASEAN Project on the Protection of Intellectual Property Rights

EVFTA EU-Vietnam Free Trade Agreement

FAO Food and Agriculture Organization of the United Nations

GlobalGAP Global Good Agricultural Practices

INAO Institut national de l'origine et de la qualité

INTA International Trademark Association

ISO International Organization for Standardization

MARD Ministry of Agriculture and Rural Development of Vietnam

MOST Ministry of Sciences and Technology of Vietnam

NAFIQAD National Agro-Forestry-Fisheries Quality Assurance Department

NOIP National Office of Intellectual Property of Vietnam

QSDS Queen Sirkit Department of Sericulture of Thailand

TISI Thai Industrial Standards Institute

STAMEQ Directorate for Standards, Metrology and Quality

Thai GMP Thai Good Manufacturing Practices

TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights

VietGAP Vietnamese Good Agricultural Practices

WIPO World Intellectual Property Organisation

INTRODUCTION

1 Rationales

Recent developments in the international economic integration, including the Vietnam Free Trade Agreement (EVFTA), the Tran-Pacific Partnership Agreement (TPP) and the ASEAN Economic Community (AEC), have created opportunities for Vietnamese products to expand their markets worldwide To realise the full potentials of Vietnamese products, specifically high-quality products related to their geographical origins, Vietnam needs to continue its efforts in developing Geographical Indications (GI)

EU-as a tool to strengthen the presence of Vietnamese products in international markets The benefits of GI protection depend enormously on the efficiency of GI control Indeed, GI control has the key role to play by ensuring traceability, securing products’ quality and controlling the production procedures Failure in GI control results in significantly damaging the image of the GI products and their economic prospect both domestically and internationally On the other hand, success in GI control brings about clear perception by the consumers that the country’s GI products are of high quality There are several layers in GI control, the inefficiency in any of which will lead to a gap in the entire control system Thus looking for ways to improve each of the layers is an indispensable need

The research focuses on GI internal control in the case of Thanh Ha lychee, which is one of the most well-known and typical GIs in Vietnam yet still faces long-lasting issues

in internal control, either addressed or unaddressed As Vietnam has a later start in GI development and control in comparison to other selected countries in the world, the research will adjust the lessons learnt from international experience to Vietnam’s situation

For the above-mentioned rationales, the author has selected the topic of “Internal

control of Geographical Indications: international experience and application for Thanh Ha lychee of Vietnam” for the dissertation

2 Literature review

Overseas and in Vietnam, the study of GI and GI control has received more and more attention recently

International Research:

There exist a large number of researches about various aspects of GI protection in

general including from both social-economic and legal perspective Amikar Parwar

(2009) analysed in a structured way the importance and benefits of GI in the growing IPR world, while Nishidh Patel (2011) provided insights into both advantages and disadvantages of GI protection Besides, the relation between GI and trade, agriculture and rural development is a common research topic of several authors such as Daphne Zografos (2008) describing the close link between GI and socio-economic development

or Pradyot Ranjan Jena, Chuthaporn Ngokkuen, Dil Bahadur Rahut & Ulrike Grote (2015) providing the interactions between GI protection and rural livelihoods based on insights from India and Thailand Studying GI protection from a legal point of view is also an angle in several papers: Michael Handler (2016) analysed the GI extension debate that has recently reached an impasse at the World Trade Organisation (WTO) These other papers provide analysis on GI-related case laws For example, Utsav Mukherjee (2008) provided his viewpoint from GI perspective about the Basmati Case (India-US Basmati Rice Dispute), or Michele Giannino (2015) proved that unfair competition provisions can protect GI not having a community registration with reference to the Salame Felino case

GI control is also a popular aspect of GI that has drawn attention from researchers

and scholars worldwide However, though being addressed as one of the link in the entire chain of control, internal control has not been comprehensively analysed in these papers Instead, they concern the entire control even with more focus on external control For

example, Marie-Vivien, D et al (2015) analysed the recent developments in the

governance of the link to the origins in France, which focuses only on State control and external control in France The FAO-AFD Project on the Promotion of Rural

Development through Development of GIs at Regional Level in Asia also has a study to provide diagnostics and recommendations to assess national GI control/ certification systems and to identify certification options at national/ regional levels in 2016 but about the entire GI control system in Thailand, Laos, Cambodia and Vietnam

Research in Vietnam:

During the last decade, in Vietnam, the GI topic has no longer been a fresh and brand-new issue in both theory and practice, but it is still relatively new in comparison to other types of Intellectual Property Rights (IPR) There have been several scientific

researches, theses and dissertations on GI protection in general from both legal and

commercial perspective Examples include the thesis by Vu Hai Yen (2008) analysing GI protection in the context of international economic integration, or the thesis by Nguyen Hoang Linh (2015) about the establishment of a multilateral registration system for Geographical Indications in Doha Round with recommendations on policy making and implementation for Vietnam, both of which provided a legal view on GI On the other hand, the dissertation by Le Thi Thu Ha (2010) provides a close insight into GI protection under trade perspective in the context of Vietnam’s economic integration

There have been a few studies with respect to GI control in Vietnam The most

notable references include the presentation at workshop “EU and Vietnam commitments

on Geographical Indications in the FTA” organised by EU-MUTRAP of Dao Duc Huan (2016) describing current situation and orientations for improvement of management and control of Vietnamese GI and the article on External Economic Review by Le Thi Thu

Ha (2010) analysing management of GI in Vietnam from the French’s experience However, these studies concern the entire control system without focus on internal control

Concerning the control of Thanh Ha lychee as a GI, there have been only studies

in the form of project assessment papers or purely information-providing articles Also, according to the author’s knowledge, there have been no concrete studies narrowing down

to the internal control rather than the entire control of Thanh Ha lychee

Based on the literature review, it can be concluded that the topic of “Internal

control of Geographical Indications: international experience and application for Thanh Ha lychee of Vietnam” covers the existing research gap As a Master dissertation

majored in International Trade Policy and Law, the research will provide a comprehensive analysis on this topic

3 Research questions

Major questions that the research needs to answer include:

 What are the advantages and disadvantages of different GI internal control models in the world?

 What lessons can be learnt for a more effective GI internal control of Thanh Ha lychee?

4 Research purposes

The outstanding purposes of the research is to shed light on the legal, economic and technical foundations of GI internal control; to analyse and evaluate international experience in internal control practices and compare to Vietnam’s situation; and to

provide recommendation for a specific case of Vietnam which is Thanh Ha lychee

In order to serve the above purposes, specific research tasks include:

 To shed light on the theoretical foundations of GI control including its definition, its importance and its layers, one of which is internal control;

 To shed light on the foundations of GI internal control from legal perspective (i.e clarifying legal framework governing GI internal control), economic perspective (i.e emphasising commercial benefits contributed by GI internal control), and technical perspectives (i.e detailing the activities in GI internal control) – such foundations have made GI internal control be considered from both theoretical and practical perspectives;

 To analyse the experience in the development of GI internal control of countries

in the world with two focused examples: one is from Europe (France) with a

long history of GI protection and an advanced legal and economic situation in comparison to Vietnam, while the other is from Asia (Thailand) with more similar legal and economic situation to Vietnam;

 To shed light on the current situation of GI internal control in Vietnam in general and of Thanh Ha lychee in particular in both regulation framework and

in practice, from which to conclude on the key challenges that the GI internal control of Thanh Ha lychee is now facing;

 To provide recommendations for both policy makers/Government Authorities and the private stakeholder, i.e Thanh Ha Lychee Production and Trade Association in the case of Thanh Ha lychee

Several field trips to Thanh Ha District were done during the course of researching, which enormously contributes to the findings of the research, helping to better capture the current situation of the research object – Thanh Ha lychee, from which suitable recommendations have been drawn

6 Research layout

The research includes three chapters:

 Chapter 1 - Theoretical overview

 Chapter 2 – International experience in Geographical Indication internal control

 Chapter 3 – Geographical Indication internal control for Thanh Ha lychee of Vietnam

CHAPTER 1: THEORETICAL OVERVIEW

1.1 Overview of GI

1.1.1 Definition of GI

Since the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS Agreement) included a section on Geographical Indications (GI), this form of intellectual property (IP) has attracted increasing attention from policymakers, trade negotiators as well as producers, lawyers and economists worldwide Though the wordings in GI definitions by each organisation are different, the basic concept underlying GI is simple and familiar to any shopper who chooses “Roquefort” over other kinds of cheese or “Buon Me Thuot” coffee over other kinds of coffee

Article 22.1 of the TRIPS Agreement defines: “Geographical indications are, for

the purposes of this Agreement, indications which identify 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”

To define GI, the TRIPS Agreement uses the term “indication”, which means “a

remark or sign that shows that something is happening” as per Oxford Dictionary In

practice, an “indication” can be either a name (such as name of places, compound name

or non-geographical name), a logo, a graphic or a visual representation Hence, the TRIPS Agreement allows a large space for the selection of GI’s form of expression because it is not limited to expressly a geographical name An example of a GI not being a geographical name is Pecorino Romano cheese of Italy which is made out of sheep's milk:

the word “Pecorino Romano” derives from the Italian word pecora, which means sheep,

and the word “Romano” is due to the fact that its method of production was first created

in the countryside around Rome as described by Latin authors about 2,000 years ago Other forms of expression of GI can be a symbol (e.g., a picture of the Eiffel Tower, the Statue of Liberty, an orange tree),or the outline of a geographic area (e.g., the outline of

the state of Florida or a map of the Dominican Republic), a colour or anything else capable of identifying the source of a good or service (Manilal, 2011, p 6)

“Identify” means that the indication must be understood by the consumers to

describe a specific product that has a particular origin in a geographical location For example, when a consumer sees a bottle of Alicante wine displayed in a shop, he/she understands from the name “Alicante” that the wine is from the province of Alicante, Spain and possesses the traditional taste of the wine produced in that region

Besides, the definition by the TRIPS Agreement highlights the link between the

characteristic of the good and its geographical origin “Quality” refers to specific

chemical composition (such as sugar level, acidity, ingredients), physical attributes (such

as size, shape, colour, texture, appearance), and microbiological or organoleptic features,

etc., while “reputation” refers to the fact that the public knows of the specific product

originating in that place as reflected in agronomic literature, newspapers, books or consumer survey, etc Other characteristics are also possible Taking Scottish Farmed Salmon as an example, its quality is reflected by a rounded ventral body surface when viewed laterally, a body wall musculature that shows no significant tendency to collapse when carcass is eviscerated, an iridescently silver colour and a consistent flavour thanks

to the rapid chilling post-harvest The reputation of the Scottish Farmed Salmon is on account of the understanding that Scotland is famous for salmon farming with renowned quality

The quality or reputation must be a result of the product’s origin, which means there

is a link between the product and its original place of production The “essentially

attributable” link can be thanks to natural factors and/or the traditions or skills or

know-how of the local people The link to origin must be demonstrated or justified In practice, this condition is simply understood as, for example, peppers grown in an area other than the state of Sarawak of Malaysia cannot have the same distinctive characteristics as the Sarawak peppers

In Vietnam, GI is defined as “a sign which identifies a product as originating from

a specific region, locality, territory or country” according to Article 4.22 of Vietnamese

IP Law No 50/2005/QH11

Instead of “indication”, Vietnamese IP Law uses the term “sign” to define GI, which is indeed a close synonym of “indication” Similar to the definition in the TRIPS

Agreement, a sign is not necessarily a geographical name It can be a word, a symbol or

an image, though in fact, all GIs registered in Vietnam so far are in the form of a word In addition to this similarity, both definitions provide that the indication (sign) must identify

a good (product) as originating from a territory, region or locality

The only difference between the two definitions is that: the link between the product’s characteristics and its geographical origin is mentioned directly in the definition

by TRIPS Agreement, while it is not mentioned in the definition by Vietnamese IP Law However, another section in Vietnamese IP Law exclusive for GI does provide such condition Article 79 in section 6 of Vietnamese IP Law stipulates the two conditions for a

GI to be eligible for protection: (1) The product bearing the GI originates from the area,

locality, territory or country corresponding to such GI, and (2) The product bearing the

GI has a reputation, quality or characteristics mainly attributable to geographical

conditions of the area, locality, territory or country corresponding to such GI The

condition (2) in Vietnamese IP Law is similar to the condition in the TRIPS Agreement

even though the former uses “essentially attributable” while the latter uses “mainly

attributable” That is because both “mainly” and “essentially” mean “fundamentally” or

“primarily”, and are used to refer to the most important reason or a basic nature of something

In comparison to the TRIPS Agreement, Vietnamese IP Law clearly regulates

another condition: The product bearing the GI originates from the area, locality, territory

or country corresponding to such GI (condition (1) above) In case the GI is a name, this

additional condition can be understood in a simple way that the GI name must be the same as the geographical origin of the GI product

Overall, in a comprehensive and explanatory way, it can be defined that GI is an IP

right protecting certain goods whose specifications are closely linked to their specific geographical location or origin (e.g a town, a district, a province, a region or a country) and therefore are often identified with their geographical names with qualities, reputation or characteristics attributable to that place of origin

The TRIPS Agreement only fixes the definition of GI while allows space for each member to choose their legal system to protect GI Currently there are three kinds of legal systems to protect GI in the world as outlined below:

(1) The sui generis system, which means protecting GI under particular laws: This is

currently the most common legal system to protect GI in the world Generally speaking, protection is based on compulsory registration such as in the European Union (EU) under Regulation (EU) No 1151/2012 for foodstuffs, Regulation (EU) No 1308/2013 for wines and Regulation (EC) No 119/2008 for spirits Some exceptions include Singapore, India or Latvia that give GI an automatic protection called “passive” or “non-registration” protection

(2) The trademark system: Examples of countries protecting GI under the trademark system include the United States of America (the US) or Australia In these countries, GI can be viewed as a subset of trademark as it serves the same functions as trademark (United States Patent and Trademark Office, 2016, p 1)

It is interesting that under the certification marks system, Australia can also provide protection for services as GI (Ayu, 2006, p 21)

(3) Trade practices laws: The national legislations dealing with trade practices provide traders with an effective remedy against unlawful and dishonest business practices of their competitors Generally, these non-exclusive means of protection are used in parallel with others approaches As an example, though protecting GI under trademark system, Australia enacts Trade Practices Act (1974) with Article 53 forbidding the use of geographical designations likely to mislead the public (Organisation for an International GI Network, 2016)

It is common that countries choose more than one approach to protect GI For

instance, Vietnam follows sui generis system with additional protection by Trade

practices laws such as Law on Competition, Law on protecting the consumers’ rights, etc

1.1.2.1 From perspective of consumers

In many cases, the “place of origin” suggests to consumers that the product will have a particular quality or characteristic that they may value GI conveys information about the origin-bound characteristics of a product, therefore functions as product differentiators on the market by enabling consumers to distinguish between products with geographical origin-based characteristics and others without those characteristics

With GI protection, consumers would be protected better As unlawful use of GI is prohibited, consumers would be less likely to be misled to think they were buying an authentic product of a certain quality and with certain characteristics when in fact it was

an imitation (Gerz, et al., 2007, p 24) In practice, GI protection helps reduce the risks of

buying fake products for consumers by fighting against frauds and usurpations when the

GI products are in the markets For example in Europe, the EU Members States carry out surveillance of the use of the names in marketplace, based on a risk analysis, to ensure compliance and, in the event of breaches, Member States shall take all necessary measures against the unlawful actions In France, there are specific relevant services of

the Ministry of Economy, specifically its Directorate for competition, consumption and repression of frauds

1.1.2.2 From perspective of producers

The entitlement to use a GI generally lies with regional producers, and the added value generated by GI accrues therefore to all such producers Producers can use GI as a differentiation tool in marketing strategies GI can thus be a key element in developing brands for quality-bound-to-origin products As a result, GI helps producers to make the switch from quantitative to qualitative strategies and increase opportunities in existing and new markets It enables producers to dedicate themselves to the commercialization of traditional products in response to the demands of quality-conscious consumers as well as promoting these regions’ development (WIPO, 2013, pp 15, 18, 19)

GI protection enables producers to develop new markets more easily and their investments in developing and marketing their GI products would be financially more

profitable (Gerz, et al., 2007, p 24) Indeed, according to a Eurobarometer poll, almost

half of the European consumers surveyed were willing to pay a price premium for a guaranteed origin of the product (EU Directorate-General for Agriculture and Rural Development, 2013, p 23), specifically:

 43% were willing to pay up to an extra 10% for GI products

 8% were willing to pay up to an extra 20% for GI products

 3% were willing to pay up to an extra 30% for GI products

The poll indicates the incentives for producers when GI is protected and they are entitled to produce and trade with the registered GI products

1.1.2.3 From perspective of Governmental Authorities

GI protection contributes to several goals of the Authorities in rural development and preserving traditional knowledge and cultural expressions (WIPO, 2013, pp 18, 19) With regard to rural development, GI contributes to the socio-economic dynamism in the region such as local employment creation, which ultimately helps to prevent rural exodus

With regards to the preservation of traditional knowledge and cultural expressions, GI contributes to the creation of a “regional brand”, encourages diverse agricultural, food and handicraft production In that view, the use of GI to protect indigenous knowledge, combined with appropriate marketing strategies, enable the holders of such knowledge to transform their collective knowledge into commercial income, while at the same time preserving and promoting their heritage (Zografos, 2008, p 19)

In this light, during the past decade, the interest for GI has grown worldwide Regardless of different economic and legal development situations, each country has opportunities to develop their own high-quality products related to their geographical origins and traditional production methods It is even more particularly true in Asia, making this region one of the most dynamic for GI registration Countries are enacting GI legislations and putting in place National GI registration systems to allow for the protection of domestic and foreign GI products For example in 2016, Lao PDR is joining this trend by launching its GI registration system and preparing to welcome both domestic and international GI applications in the coming time The EVFTA which was newly concluded in December 2015 also strengthens the protection of GI by recognising and protecting 169 listed GIs of the EU and 39 listed GIs of Vietnam

1.1.3 Right to use GI

Different from “trademark”, GI is a collective right, also known as “community

right” whose use is reserved for those complying with a specification that they have

defined and approved by an appropriate authority (Blakeney, et al., 2012, p 36) GI has

an unlimited duration and incapable of being transferred The right to use GI lies with the producers in the region who were issued a separate certification of using GI

In Vietnam, according to Article 121.4 of Vietnamese IP Law 2005, the owner of Vietnam’s GI is the State of Vietnam The State shall grant the right to use GI to organizations or individuals that turn out products bearing such GI in relevant localities and put such products on the market The State shall directly exercise the right to manage

GI or grant that right to organizations representing the interests of all organizations or individuals granted with the right to use GI

1.2 GI control

1.2.1 Layers of GI control

In fact, there is no official definition of GI control in regulatory documents Instead, the concept of GI control is gradually formulated during the practice of GI protection GI control, happening after GI registration, is a system built to ensure that the GI products are compliant with the GI specifications as it is in the GI application filed with the Authorities The compliance must be ensured before the products’ commercialisation including the control of traceability, production process and products’ quality

The institutional settings of GI controls vary across world In the GI system of the

EU, the creation of a common legal framework for GI protection happened in 1992 The general rules at EU level allow space for detailed legislation at the national level (Marie-Vivien, 2016, p 5) One example is France, where the GI control includes four layers:

(1) State control, carried out by the Governmental Competent Authorities;

(2) External control, carried out by an approved/ accredited certification body to

perform GI control on behalf of the Governmental Competent Authorities;

(3) Internal control, carried out by GI collective organisations, to check the running

of self-control by the producers (self-control is mentioned below);

(4) Self-control, also often mentioned as “auto-control”, which is normally carried

out by value chain stakeholders (producers, processers, packaging, traders, etc.) to comply with quality and standard regulations

The above-mentioned structure in France is a common and well-known model of GI control not only in the EU but also worldwide The GI control in Thailand is different, where the State covers the activities of external control and closely supports the internal control On the other hand, in Italy, it is interesting that there is no internal control existing but they have very efficient and strong external control and self-control in place

Vietnam follows the above-mentioned structure though there is still no clear distinction between the internal and external control Each layer of the control is implemented by a different stakeholder whereas the highest level of control is by the Governmental competent authority, for example the French National Institute for Product Origin and Quality (INAO – Institut national de l'origine et de la qualité) in the case of France, the National Office of Intellectual Property (NOIP) in the case of Vietnam, the Department of Intellectual Property (DIP) in the case of Thailand, etc Such highest Governmental Authorities have the space to decentralise the management to lower levels in the authority structure, for example to a local authority, and decide to what extent that the Governmental Authority will involve in GI control The governance of GI in each country

is characterised mainly by the degree of involvement of the State (Marie-Vivien, et al.,

2015, p 1) The choice to expand and detail the institutional settings is open in each country

In spite of different economic and legal situations and different institutional settings

of GI control in countries worldwide as mentioned above, challenges at institutional and operational levels remain in each country, one of which is to develop better capacity for

GI control at national and regional levels All countries participating in international trade and negotiations have either established, or been re-establishing, a national institutional infrastructure of GI control to guarantee the compliance to GI requirements of protected GIs This trend is driven by requests from traders, retailers and consumers, especially in developed countries but also others This covers all levels of control for agricultural products, food stuffs carried out by a long chain of stakeholders, and ranging from compliance with mandatory production standards to additional requirements relating to environmental protection, animal welfare, organic, "Fair Trade", etc (FAO–AFD project,

2016, p 5)

According to other viewpoint, since GI is also regarded as a market tool, the control

of it should cover the advertisement, sales and circulation of GI products in the market after commercialisation This is an important issue for GI control but in practice it is

usually managed by different public authorities such as Market Surveillance Authorities, Customs, Economic Police, etc., other than GI-related organisations

1.2.2 Importance of GI control

GI control is of paramount importance because in theory the right to use the GI is granted to all those who comply with the GI specification without any additional requirements The fulfilment of GI specifications by the value chain operators need to be properly controlled by not only independent and qualified third parties but also, more importantly, by operators themselves to maintain the value of the GI products and maximize trust by buyers/consumers locally and internationally As a result, an efficient

GI control is essential to allow for the system to benefit all counterparts, playing the role

of a key element for the GI existence and success

1.2.2.1 From the perspective of consumers

Efficiency in GI control is of high importance to consumers as the demand of consumers for quality and origin is clear Consumers tend to pay increasing attention to the geographical origin of products, and care more about specific characteristics present

in the products they buy Indeed, a poll of 25,000 people conducted in 2005 in Europe reveals that origin and quality are of great importance to European consumers (EU Directorate-General for Agriculture and Rural Development, 2013, p 23):

 37 % think of GIs as a guarantee of origin

 37 % think of GIs as a guarantee of quality

 56 % think of GIs as a guarantee of place and method of production

 17 % associate GIs with tradition

An efficient GI control can help consumers feel assured when purchasing products bearing the GI name by protecting consumers against confusion on products’ quality and lowering their search cost for high-quality products

Firstly, as the GI control ensure the quality of GI products, it acts as a signifier that

enables consumers to better distinguish among different and competing products in the

marketplace, and to associate certain qualities with particular products (Raustiala and Munzer, 2007, p 361), inform consumers about a product’s geographical origin and a quality or characteristic of the product linked to its place of origin (WIPO, 2013, p 15)

Secondly, quality guarantee by GI control can save the time and effort of consumers

in searching for the best quality products or surveying whether a brand of product is authentic and of high quality

1.2.2.2 From the perspective of producers

GI control provides producers with a standard production process as stipulated in the

GI specification that the producers must be compliant with As the production process has been standardised and agreed among a wide range of Authorities, scientists, traders and especially their peer producers, taking into consideration all relevant factors such as climate, soil, irrigation and pests, the producers can stay assured when following that process Following the standard process saves the producers from struggling with any doubts or uncertainties during the production In the case of Thanh Ha lychee of Vietnam, producers are provided with a manual which clearly provides what should be done in each month of the year to follow The manual was composed and issued by the Association the Association of Production and Trade of Thanh Ha lychee

In addition, obeying the same production procedure helps to decrease the production cost for producers in the collective organisation thanks to economies of scale (Vu Trong Binh & Dao Duc Huan, 2006, p 39) This is a significant benefit of GI control for producers in addition to stabilizing price in the market and creating reputation for the collective organisation as well as for the products

Furthermore, GI control, with a mechanism of recognition and punishment, encourages the producers to strictly follow the standard production process As the production process and the final products are subject to mandatory inspections and quality control, the producers shall have more determination in following all quality criteria Failures to follow the standards may lead to different kinds of punishment depending on

the levels of incompliance For example, incompliant producers of Thanh Ha lychee shall

be skipped when there is a new order made Instead, only compliant lychees shall be shipped If the inconformity is more severe, the producers may be revoked of their right to use GI in a specific period of time or unlimited timing Conversely, because compliant products shall be recognised by consumers and thus producers can benefit from authentic production (Raustiala and Munzer, 2007, p 346), GI control has become a pulling factor that encourages the producers to follow the standards Thanks to GI control, producers have an incentive to increase or maintain quality in order to retain consumers They can maintain the price or obtain a better price for their products in exchange for the

guarantees offered by GI control to consumers (Blakeney, et al., 2012, p 37).

1.2.2.3 From the perspective of Governmental Authorities

GI control assists the Governmental Authorities in keeping the GI alive after registration Indeed, while GI registration is considered a guarantee for the reputation of

GI products, GI control plays the role of maintaining such reputation by ensuring traceability, controlling products’ quality and production process after registration and before commercialisation in the markets

The highest governance of GI still belongs to the Authorities, helping the Authorities to maintain its management power and be able to intervene whenever necessary Whereas, decentralisation and assignment of GI control by the Governmental Authorities to the localities, third-party controllers or collective organisations can reduce the burden for the central Authorities

1.3 GI internal control

1.3.1 Definition of GI internal control

GI internal control is one of the layers in the GI control Similar to GI control, no official definition of the term “GI internal control” has been introduced The understanding of GI internal control is initiated and developed through practices of stakeholders While self-control is carried out by each producer and external control is

carried out by an independent control or certification body, either public or private, GI

internal control is carried out by the GI management organisation to control the products’ traceability, products’ quality and the production method GI internal

control is, conversely, controlled by external control

There is no single model for a GI management organisation (Blakeney, et al., 2012,

p 36) Among GI management organisations worldwide and especially in Vietnam, they can have their own structure and legal status with different names, such as an association,

a cooperative, a farm union, a consortium, a club, a GI management group or an professional organization, etc Regardless of the structure and legal status, the key principles for a GI organisation include (1) representativeness of management board; (2) transparency and democracy in its decision making; (3) equitable financial contribution from members on the basis of costs and benefits; (4) participation with the administration; and (5) a focus on communication and networking (FAO, 2010, pp 98-102)

inter-Studies have confirmed the important role of GI internal control GI internal control, conducted by producers’ management organisations in accordance with certain process and records, is a key element for GI existence and success Exportation of GI products to some key foreign markets such as the EU may need to comply with international standards such as ISO 17065, which is ultimately external control’s territory However, generally speaking, not all GI producers can afford external control by third-party certification body particularly in developing countries Besides, because of the collective approach, external control is not required to be conducted to every single producer Instead, only a proportion of producers shall be inspected each year by external control as foreseen in the control plan As a result, it is essential that internal control is continuously

provided by the GI association paralleling with external control (Blakeney, et al., 2012, p

45) The capacity to harmonise both internal control (by management organisation of producers) and external control (by accredited public or private bodies) in a cost-effective way, and the availability of relevant infrastructure and expertise for both internal and external control are crucial for GI system’s sustainable development

The importance of internal control can also be illustrated by the case of Oeste Rocha pear from Portugal (Vu Trong Binh and Dao Duc Huan, 2006, p 38) Appearing in 1836, Oeste Rocha pear is superior to other pears in terms of form and quality, which helped it become a very favourite fruit However, like other popular products, the name Oeste Rocha pear was abused when traders used it to call other low-quality pears from the same region or other regions Consequently, consumers were confused and lose confidence on this kind of pear Its price reduced and its value degraded Nevertheless, none of the producers represented to protect the pear because they thought the benefit of the pear’s reputation is not only for their sake, but also for everyone In the end, in 1992, the association of producers of Oeste Rocha pear was established by fifty producers and packagers, who were facing the same problems, to implement internal control The association then provided technical support to improve the quality and homogeny of the pears, using the same labelling standard, registered Oeste Rocha pear as an appellation of origin product in the EU With such internal control activities, Oeste Rocha pear producers were successful in stabilizing the market, meeting with the customers’ demand, and at the same time making an emphasis on the importance of GI internal control

1.3.2 Activities of GI internal control

In general, GI internal control works in the sense of product compliance with the GI specification after GI registration and before the products’ commercialization, including the control of the geographical traceability, production process and the quality of the products However, it is necessary to clearly differentiate the activities to be implemented

in each layer of control as well as their requirements and procedures

As mentioned in section 3.1, there is not an official definition of the term “GI internal control” Similarly, there is no clear list of activities in GI internal control that is trustful However, based on the reading by desk work, the Author summarises the activities in GI internal control as including but not limited to the followings:

(1) Drafting the GI specifications/ application if the management organisation is the

applicant submitting the GI registration, otherwise consulting to the applicant (in

most cases it is a public body) about the key elements to be inserted in the GI specifications Each GI specification is a specific and unique standard that is different from the control of other voluntary standards, which are identical for a category of goods, and additional to compulsory controls such as food safety

(2) Organizing traceability and controlling production procedures for GI

stakeholders including registering users, creating internal rules and regulations,

performing internal audits, printing and distributing labels and other brand identity tools, screening the GI products before releasing to the markets, etc

(3) Arranging and coordinating training sessions for its members, inviting experts

and consultants to advise about marketing strategy, all together towards a sustainable development of the GI

Indeed, the management organisations of producers have key roles to play during the life of the GI Therefore, the building of sustainable management organisations that are able to design and implement a durable and strategic approach and subsequent business plan prove to be a recipe of success for each GI It is also the key to maximize benefits from economy of scale and maximizing GI products valorization as well as to enhance economic partnerships among the GI value chain stakeholders from both private (producers, traders, buyers) and public (local, national authorities and international organizations) sectors

CHAPTER II: INTERNATIONAL EXPERIENCE IN GEOGRAPHICAL INDICATION INTERNAL CONTROL

Compared to other countries in the world, despite possessing great potentials to develop GI, GI control is still a relatively new topic and an under-developed concept in Vietnam Therefore, understanding and analysing the experience from other countries is

of crucial importance for the sustainable development of GI in Vietnam

As analysed in the Introduction section, currently there are three kinds of legal

systems to protect GI in the world: the sui generis system, the trademark system and the trade practices laws Vietnam follows the sui generis system

As GI control must be in line with the legal system, the author chooses to analyse experience from the countries that share the same approaches in protecting GI Thus it is

reasonable to select other countries also with sui generis system to protect GI as lessons

learnt for Vietnam Among countries adopting sui generis system, France and Thailand

were chosen for the following additional reasons:

Being the pioneer in GI development in Europe (Vu Trong Binh & Dao Duc Huan,

2006, p 21), France typically represents the EU system thanks to a long history on GI control (Sylvander, Isla and Wallet,2011, p 2) Also, thanks to the French support during the registration of Vietnam’s first two GIs, there has been a movement in developing GI throughout Vietnam, thus Vietnam is learning substantially from French experience (Vu Trong Binh & Dao Duc Huan, 2006, p 14)

On the other hand, Thailand represents an Asia country that possesses a similar geographical, economic and legal status to Vietnam Furthermore, Thailand is recognized

as a pioneer in Asian region in developing and utilizing GI for their agricultural products and foodstuff (Vu Trong Binh & Dao Duc Huan, 2006, p 26), and also a relatively successful country in the region in protecting and controlling GI

Vietnam can draw out precious lessons from these countries, from strategy building

to detailed solutions for GI control in general, and GI internal control in particular

2.1 Experience in Europe: GI internal control in France

2.1.1 Overview on GI in France

To study how internal control is carried out in France, firstly we look into overview

of GI registration, GI management and GI protection in France

2.1.1.1 GI registration in France

 Procedure for GI registration in France

In France, as well as other EU Member States, a two-stage process for GI registration is used: the first assessment/opposition is conducted by EU Member States, before submitting applications to the European Commission for checking and running opposition at EU level (EU Directorate-General for Agriculture and Rural Development,

2013, p 19) The procedure for GI registration in France is described in Figure 7 below

Figure 1: Procedure for GI registration in EU Member States

Source: EU Directorate-General for Agriculture & Rural Development, 2013, p 19

Definition of the product according to precise specifications

Definition of the product according to precise specifications

Analysis by national authorities GI is protected in country of origin

Examination by the EU Commission

First publication in the Official Journal

Opposition period

Registration

Rejection if the application is not complying with

EU legislation

If opposition, appropriate consultation between parties

As indicated in Figure 1, registration for a French GI need to undergo two stages, one at national level, the other at European level

 At national level

At national level, the procedure involves the below stages (Gerz, et al., 2007, p 31):

Step 1 - A collective application submitted to INAO: The application file to INAO is

similar to the file required by EU regulations (Kireeva, 2011, p 41) Article 8 of the Regulation (EU) No 1151/2012 provides the content of the application for GI registration: (a) Details of the applicant group and of the authorities or bodies verifying compliance with the provisions of the product specification;

(b) The product specification;

(c) A single document setting out the following:

(i) Main points of the product specification: name, description of the product, including, where appropriate, specific rules concerning packaging and labeling, and a concise definition of the geographical area;

(ii) A description of the link between the product and the geographical environment or geographical origin, as the case may be, including, where appropriate, the specific elements of the product description or production method justifying the link

Step 2 - Submission of the request to the National Committee for advice and

validation: Based on the complete application file submitted, INAO prepares and submits its own dossier to the National Committee The National Committee is a consulting body for all questions related to GI in France, which has the decision-making power for the recognition and fixing of the production conditions for the GI During that stage, it is possible to object to the registration and provide arguments for objections within the time limit indicated by the National Committee (at least 3 months) (Kireeva, 2011, p 42)

Step 3 – Preparation of the official decree: In the case of approval, INAO makes a

report on the application and definition of the production conditions and carries out

geographic area delimitation procedure; while the National Committee draws up the wording of the decree of recognition which sets out the product specifications

Step 4 - Transmission of the decree to the ministries for signature and publication in

the French Journal Officiel: The decree is eventually published and signed jointly by the

Ministry of Agriculture and the Ministry of Finance and then forwarded to the EU Commission for registration at European level The procedure happening in France can take from three to ten years (Kireeva, 2011, p 43)

 At European level

There are different instruments for identifying the link between the product and its geographical origin or its traditional production process in the EU known as Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Traditional Speciality Guaranteed (TSG) While the PDO covers products which are produced, processed and prepared in a given geographical area using recognised know-how, the PGI covers products closely linked to the geographical area where at least one of the stages of production, processing or preparation takes place, and the TSG highlights traditional character, either in the composition or means of production Food products are eligible for all three logos: PDO, PGI and TSG Wine is eligible for PDO and PGI while spirit drinks and aromatised wines qualified for PGI recognition (EU Directorate-General for Agriculture and Rural Development, 2016a) The registration of geographical names (PDOs, PGIs and TSGs) consists of the following stages (Kireeva, 2011, p 7):

Step 1 - Forwarding application to the Commission: The applications after the

approval in France are sent to the Commission by INAO

Step 2 - Examination of the application by the Commission: After receiving the

application, the Commission would examine the application in an appropriate manner to check whether it is justified and meets the conditions of the EU Regulation The examination should not exceed a period of 12 months If there are questions that the Commission wishes to address to the applicant group the usual timing to reply is 6 months

Step 3 - Publication of the applications: The Commission is under the obligation to

publish the list of names for which registration applications have been submitted with indications of the date of submission Where the conditions laid down in this Regulation

appear to be met, the Commission publishes the application in the Official Journal of the

EU and assures an electronic access to this publication

Step 4 - Objection procedure: Within six months from the date of publication in the Official Journal of the EU, any Member State or third country may object to the

registration proposed by sending a duly substantiated statement to the Commission The Regulation also provides the possibility to any natural or legal person having a legitimate interest to object Where an objection is admissible, the Commission will invite the interested parties to undertake appropriate consultations, which would aim at conclusion

of an agreement The outcome of consultations would be communicated to the Commission, on the basis of which the Commission would start its new examination or publish the factors that made the agreement possible

Step 5 - Registration of the name and publication of the registered name: If no

objections are made or the Commission received inadmissible objections, the name would

be registered and entry the European Register of PGI, PDO or TSG The registration will

be published in the Official Journal of the EU

 Current status of GI registration in France

Over the years France has taken the lead in identifying and protecting their GIs, and also committing to protect foreign GIs

 Number of French GIs

To compare the number of French GIs with other EU Member States, the number of GIs of each EU countries is reflected in Figure 2, separating among registered GI, GI in publishing step and also GI whose applications have just been submitted

Figure 2: Number of registered, published or applied PDO, PGI, TSG in EU, 2016

Source: EU Directorate-General of Agriculture and Rural Development, GI database, 2016b

France is the country with the second highest number of GI in the EU, following Italy and closely followed by Spain and Portugal As of 27 October 2016, France has 237 registered GIs including 98 PDO, 138 PGI and 1 TSG The country also has 5 PDO and 3 PGI currently in publishing step during the registration procedure In addition, the applications of 13 PDO and 6 PGI have just been submitted recently This is an indication for the priority of French government and people in identifying and protecting their GI

Figure 3: Number of French registered PDO, PGI, TSG over the years

Source: EU Directorate-General of Agriculture and Rural Development, GI

As the number of potential GIs in a country is limited, it will be harder and harder to have new GIs each year Not mentioning the first year 1996 with an exceptional number

of newly registered GI, however, France has witnessed a steady addition of registered GIs every year with an average of 7.65 new GIs/year This French figure is slightly higher than that of Vietnam which remains at 5-6 new GIs/year from 2010 until now

 Breakdown of French GI to class of products

Among 237 registered GI of France, the majority is fresh meet and offal (accounting for 31%); fruit, vegetables and cereals fresh or processed (accounting for 22%) and cheeses (also accounting for 22%)

Figure 4: French GI breakdown according to product class, 2016

Source: EU Directorate-General of Agriculture and Rural Development, GI

database, 2016b

Vietnam and France are using different systems to categorise GI products, thus there

is not a precise way to compare the GI breakdown in two countries However, from the observation of the author, the majority of Vietnamese GIs are plant-originated products

Class 1.1 Fresh meat (and offal)

Class 1.6 Fruit, vegetables and cereals fresh or processed

Class 1.3 Cheeses

Class 1.2 Meat products (cooked, salted, smoked, etc.)

Class 1.5 Oils and fats (butter, margarine, oil, etc.)

Class 1.4 Other products of animal origin (eggs, honey, various dairy products except butter, etc.)

Others