Geographic Indications and International Trade (GIANT)

 

TED Case Studies Number 720 June, 2004 By Katy Littlefield

Creme de Cassis Image courtesy of L'Heritier Guyot, Dijon, France

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I. Identification

1. The Issue:

Creme de Cassis is a blackcurrant liqueur that was at the center of controversy in a 1979 case at the European Court of Justice. As a result of the ECJ's ruling, the principle of mutual recognition of national standards became a prominent component in the free market of the European Union. While not completely disregarding individual domestic differences in standards and regulations, the court established a requirement for "urgent needs" in order for such divergences to be permitted. This case set an important precedent for future non-tariff barriers to trade in regulatory standards of the EU's free movement of goods and services.

Image courtesy of Virginia Tech University

2. Description:

When Rowe-Zentral AG, a German importing and exporting company, attempted to market the French Creme de Cassis de Dijon in its home country, it met crippling restrictions on alcohol characteristics. The liqueur did not meet the high alcohol content requirements for liquor nor the low alcohol content requirements for beer. Specifically, provisions necessitate fruit liqueurs to have a minimum alcohol content of 25%; Creme de Cassis has an alcohol content of only 15-20%. Citing health concerns, the German Federal Monopoly Administration for Spirits prohibited the sale of the Cassis liqueur. The German importing company took the case to the European Court of Justice citing a restriction on the free movement of goods among member states of the European Union.

Within international trade, non-tariff barriers to trade are elusive devices used by member-states of multilateral agreements to protect domestic industries from outside competition. In addition to subsidies and quotas, regional trade divergences can be an instrument for national governments to create an unfair advantage for domestic goods when competing with imports. The free movement of goods is essential to the collectivity of the EU and ECJ rulings reinforce the importance of this concept. The Cassis de Dijon decision built upon the 1974 Dassonville ruling that challenged the validity of national legislation attempting to introduce non-tariff barriers to trade. This case is one of the most famous of the EU rulings and very significant in the development of the single European market.

The EU has grown into a prominent and powerful international regime, creating increasing competition for world power. Through economic and political integration, the EU countries have produced a very influential and prominent union while still celebrating national cultures and diversity. The Cassis de Dijon court ruling demonstrates the regional differences that arise throughout Europe as well as the rest of the international community and how such distinctiveness should be encouraged instead of suppressed.

Environmental Information

Crème de Cassis was first produced by French monks in the 16th century and was known as a remedy for jaundice. Although Crème de Cassis is produced throughout the world, the government-partitioned region of Cassis de Dijon, France, is the liqueur's true home. Dijon has been the leading manufacturer of this unique liqueur. Of the 20 million bottles of Creme de Cassis produced annually in France, 17 million of come from the Dijon region. Creme de Cassis makes up 22 percent of French liqueurs on the market, with sales growing at 4 percent each year.


Image courtesy of www.hortresearch.co.nz

The chalky clay soils of Hautes-Côtes de Nuits and the Hautes-Côtes de Beaune, located in the western part of the Côte d’Or region of France, and the Saone River plain, are highly suitable for producing the best and most precise black currant berries for the creation of Crème de Cassis. This region is “perfectly composed to produce exceptionally aromatic, concentrated black currants.” “Noir de Bourgogne” and “Royale de Nacre” are two of the best varieties of berries for Crème de Cassis because they “yield a low quantity of rich, high-quality fruit” The temperature variations and traditions found in Dijon also contribute to its high-quality production of Crème de Cassis because black currant buds develop best under very distinctive conditions and harvest practices. The distinctive environment and weather of Dijon define the flavor and taste of the black currant berries and, consequently, the Crème de Cassis liqueur. To produce Crème de Cassis, the black currant berries are steeped in alcohol for a minimum of two months to extract their color and flavor. French law dictates that the process is completely natural, with no added fruit juice, coloring, or flavoring. Crème de Cassis, like other fortified wines such as port or sherry, has a higher alcohol content (at least 15 percent) than wine (commonly 8 to 14 percent).

This vibrant city, located in the Burgundy region of France, values eating and drinking as a part of life. This city is also famous for its mustard, wines, escargots, and, of course, kir. This beloved apéritif, known as “vin blanc cassis” in France, is dry white wine flavored with Crème de Cassis. The kir royale is an equally favored drink, substituting champagne for white wine to combine with the liqueur. Both concoctions became immortalized in the 1970s after the death of their namesake, Cannon Félix Kir, a mayor of Dijon, priest, and hero of the French resistance during World War II. Cannon Kir always served the vin blanc cassis apertif at special occasions. The city of Dijon thrives on its invaluable culture and part of this is the region’s individual ability to produce the best quality Crème de Cassis liqueur.

The controversy over the Crème de Cassis liqueur derives from cultural differences between France and Germany, specifically the definition of different types of alcohol by content. As such conflicts arise in the free trade area of the countries of the European Union, many national distinctions will be threatened. Because of its high alcohol content, Crème de Cassis was not able to be properly marketed in Germany, creating a negative effect on the people of Dijon. This unique liqueur should not be punished for its diversity, instead the cultural differences throughout the European Union should be celebrated. While such small disputes may appear insignificant, in fact they reflect the roadblocks to globalization and international integration. With any international integration project like the EU, the various member states will meet difficulties in accepting their differences, but this is also what makes such organizations essential during this time of heightened globalization.

The German laws defining various types of alcohol discriminated against the uniquely high alcohol content of the Crème de Cassis liqueur. Citing health standards and the safety of children, the German alcohol standards became non-tariff barriers to trade that directly hurt the sale of Crème de Cassis in this foreign country. By not being able to equally compete in the German market, producers of Crème de Cassis from Dijon lost many important opportunities as well as valuable profits. The courts ruled in favor of the Rowe-Zentral AG company, establishing the ideal of mutual recognition and continuing the progress towards complete economic integration within the EU.

3. Related Cases:

Foods

Chocolat -- Although the EU has tried to focus on standardizing goods throughout their fifteen member-states, such restrictions have yet to be applied to chocolate. Seven of the EU countries allow chocolate to be made with substitutes, while the remaining eight countries demand that pure chocolate can only be made with cocoa butter.

Germbeer -- Even though legal restrictions were lifted in a 1987 ECJ case, Germany's beer market is incredibly difficult to enter because of tight cultural adherance to the purity of the product.

Eugenban -- Discusses the details surrounding the genetic engineering controversy and how it has affected the trade relationship between the EU and the United States because of differing opinions regarding this issue.

Wildlife

Grouse -- This case concerns differing restrictions for wildlife protection among the EU countries. Specifically, the United Kingdom and Denmark have different endangered species and laws regarding the shooting and posession of certain animals.

Goods

Germauto -- Germany's diminishing available land for waste disposal brought on a proposal to have automobile manufacturers be responsible for reclaimation and disposal of their products.

Many of these cases are related to national standards for food products, similar to the standards surrounding the Cassis de Dijon case in the European Union. Most obviously, the Chocolat and Germbeer cases are a few that emphasize the international relationships and problems emerging from the free market implementation in the EU. Other cases that were most prominent included concentrations in modified food (Eugenban, Milk, Eumeat) and national regulations in for manufacturing of products (Sulfer, Germauto). The most prominent correlation among these cases and the Cassis de Dijon case is the subject of national regulatory standards and how they are enforced in an international context.

4. Author and Date:

Katy Littlefield - Wednesday, April 7, 2004

II. Legal Clusters

5. Disagreement and Complete:

The European Union’s policy of mutual recognition is one of the organization’s most significant and essential laws in the progress of instituting free trade among the member states. Mutual recognition ensures that reasonable national regulatory standards will be respected by other member states as their own laws. Such guidelines enable all goods and services to compete equally throughout the European Union countries and their markets.

The Cassis de Dijon case was brought before the European Court of Justice by an export-import company, Rowe Zentral AG, that wanted to sell the blackcurrant liqueur in Germany. Having been initially denied the ability to sell Cassis de Dijon in Germany based on discrepancies in alcohol content, Rowe Zentral AG charged that the German government’s regulations were an illegal non-tariff barrier to trade. In February 1979, the court decided that the German prohibition on imports was void because the Cassis de Dijon met standards set forth in France, thus establishing the concept of mutual recognition. This ideal dictates that the regulations set forth by individual countries must be recognized by other member countries instead of differing international regulations being used as non-tariff barriers to trade.

The Cassis de Dijon and mutual recognition concept enabled the European Union to improve the harmonization of their free trade policies and allowed for greater economic integration. By breaking down the non-tariff barriers to trade, the single European market was able to further integrate the member states of the European Union and allowed the organization to continue its development. Although the EU has brought together many nations and their varying cultures, every member state has a obligation to respect and honor each other's differences.

The court allowed a few exceptions where national standards were allowed to control imports and their conditionality. “Obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defense of the consumer.” Although the German government argued that their alcoholic standards were instituted for health standards pertaining to controlling beverages and their alcoholic contents within the German market.

Image courtesy of members.aol.com/jazzybrother/ sub2.htm

6. Forum and Scope:

The Cassis de Dijon case and the mutual recognition concept continue to influence the standards for which products are subjected to in foreign countries. The Single European Market has enable the countries of the European Union to grow and prosper economically. Mutual recognition has facilitated the expansion of free trade in the European Union and amplified the level of integration among the organization’s member states. As fifteen more European countries seek membership in the EU, the Cassis de Dijon ruling and the law of mutual recognition will become even more significant. The open market between the member states of the EU encourage its longevity and success, creating great importance for breaking down any barriers to free trade.

7. Decision Breadth:

European Union Member Countries (Belgium, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Spain, Austria, Denmark, Finland, Ireland, Portugal, Sweden and the United Kingdom)

8. Legal Standing: Treaty

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Europe

b. Geographic Site: Western Europe

c. Geographic Impact: Germany

10. Sub-National Factors: No

11. Type of Habitat: Temperate

IV. Trade Clusters

12. Type of Measure:

13. Direct v. Indirect Impacts: Indirect

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes - Alcohol

b. Indirectly Related to Product: Yes - Fruit

c. Not Related to Product: No

d. Related to Process: Yes - Intellectual Property

15. Trade Product Identification:

Creme de Cassis de Dijon

16. Economic Data:

Blackcurrant Production (measured in metric tonnes)

World Total 550,903 MT

The blackcurrant berry that becomes the basis for Crème de Cassis liqueurs requires specific environmental and growing conditions. The plants are native to the northern and high-altitude areas, including Europe, Asia, and North America. Commercial production of this crop is concentrated in Europe and Russia. Production in North America has been hindered by disease, adaptation problems, and bans on production in many states because the plants serve as host for a timber disease.

The blackcurrant shrub is a low-growing bush with greenish-white flowers and small berries requiring loamy but not deep soils. The short maturation period and intolerance of summer heat make currant plants well-adapted to northern climates where tree fruit cannot survive. The plant produces edible berries, deep purple in color, with a high natural vitamin C content. Blackcurrant plants can be used in a variety of ways: extraction of essential oils, herbal tea from the leaves, fruit jams and juices, extraction of pigments for dying, and juice extraction for alcoholic beverages.

17. Impact of Trade Restriction: High

18. Industry Sector: Food

19. Exporters and Importers: France and Germany

V. Environment Clusters

20. Environmental Problem Type:

21. Name, Type, and Diversity of Species

Name:

Type:

Diversity:

22. Resource Impact and Effect: Low and Regulatory

23. Urgency and Lifetime: Low and 100 Years

24. Substitutes: Liqueurs, Wines, Liquors, Fruit Juices

VI. EU and Regional

25. Culture: No

26. Trans-Boundary Issues: No

27. Rights: Yes

28. Relevant Literature

www.law.uvic.ca/mcobrien/300/ documents/CassisdeDijon.doc

www.american.edu/projects/mandala/TED/cassis.htm

www.theage.com.au/articles/2004/01/30/1075340843619.html?from=storyrhs