TWN Info Service on WTO and Trade Issues (Feb16/01)
3 February 2016
Third World Network

US move on Havana Club doesn't resolve dispute, say EU and Cuba
Published in SUNS #8167 dated 27 January 2016

Geneva, 26 Jan (Kanaga Raja) -- The European Union and Cuba have joined in telling the United States at the WTO Dispute Settlement Body (DSB) on Monday that the US issuance of a specific licence to the Cuban government agency Cubaexport for the renewal of the trademark registration of the Havana Club rum brand in the US did not resolve and end the dispute.

The dispute over the Havana Club rum brand trademark in the US dates back to
1999, and a ruling of the WTO Appellate Body in 2002 against the US that its related legislation violated the WTO TRIPS agreement.

On Monday, the US told a regular meeting of the DSB, on its agenda item of surveillance of implementation of recommendations adopted by the DSB, that the US Patent and Trademark Office had recently issued a specific licence to the Cuban government agency Cubaexport for the renewal of the trademark registration of the Havana Club rum brand in the US.

The US added, in its statement at the DSB, that "these important steps resolve a longstanding issue of concern to the European Union and others."

While welcoming this development, the European Union, which had brought a dispute against the US over this issue back in 1999, as well as Cuba, however, considered the dispute to be still unresolved, and called for Section 211 of the US Omnibus Appropriations Act, the subject of the dispute, to be repealed. Only such repeal, the two said, would fully comply with the WTO ruling and the DSB recommendation in adopting it.

According to trade officials, at the DSB meeting on Monday, Bolivia, Ecuador, Brazil, Zimbabwe, Mexico, Vietnam, Nicaragua, China, Angola, Argentina, Venezuela, India, Peru, Jamaica, Uruguay, Russia and El Salvador voiced support for Cuba.

They welcomed the recent positive developments in this dispute, with most of them saying that Section 211 should be repealed and that the issue should remain on the DSB agenda until it is fully resolved.

The dispute concerned a complaint raised by the European Communities over Section 211 of the US Omnibus Appropriations Act of 1998 that prohibited the registration or renewal of trademarks and trade names used in connection with businesses or assets that were confiscated by the Cuban government after the January 1959 revolution.

The law had provided that "no US court shall recognize or enforce any assertion of such rights".

The dispute was raised by the European Communities in 1999 on behalf of a European company (Pernod Ricard, a joint venture partner of Havana Club Holding together with the Cuban government agency Cubaexport) that was operating in Cuba.

The subject of the dispute was the use of the Havana Club rum brand in the United States by the American company Bacardi.

In a ruling issued on 2 January 2002 (WT/DS176/AB/R), the Appellate Body had found, among others, that some parts of Section 211 of the Omnibus Appropriations Act violated the national treatment and most-favoured-nation obligations under the TRIPS Agreement.

According to information posted on the WTO website, following the expiry of the fourth extension of the reasonable period of time on 30 June 2005 to implement the ruling, the European Communities and the United States had notified the DSB of their Understanding whereby the European Communities agreed not to request, at this stage, authorization from the DSB to suspend concessions or other obligations pursuant to Article 22.2 of the DSU.

Following from this, the United States has been providing status reports on its progress in the implementation of the DSB recommendations in this dispute.

At the DSB meeting on Monday, under the agenda item of surveillance of implementation of recommendations adopted by the DSB, the US said it is pleased to announce "significant positive developments" in relation to the Havana Club trademark at issue in the Section 211 dispute.

The US noted that action on a petition for renewal of the Havana Club trademark was suspended in 2006 pending the final disposition of certain litigation. That litigation has since concluded, it said.

The US further said that earlier this year, on January 11, 2016, it had issued a specific licence to Cubaexport that allowed it to pay fees for the renewal of the US trademark registration (for the period 2006-2016).

Two weeks ago, added the US, the US Patent and Trademark Office granted the petition to renew the trademark registration. Therefore, the Havana Club trademark was successfully renewed.

According to the US, that office is currently processing the trademark holder's renewal application for the period 2016-2026.

"These important steps resolve a longstanding issue of concern to the European Union and others," the US maintained.

The US further said that it has notified the EU of these positive developments. "In light of this step, we are moving this dispute into a more cooperative phase that we hope may create conditions for achieving a final resolution of this dispute."

As part of its collaboration with the EU, the US said that it will be providing the EU directly with information and updates regarding this matter going forward.

The US said it expects that these recent positive developments also will be welcomed by other WTO Members.

In its statement at the DSB, the EU considered the grant of a specific licence by the US Office of Foreign Assets Control (OFAC) to constitute a "very positive step".

"However, we do not consider the issue to be resolved in the meaning of Article 21.6 of the DSU. To resolve the issue, the US would have to repeal Section 211."

The EU further said that although the issue has not been resolved, in view of this positive development, and for the time being, the EU does not consider it necessary that the US would provide monthly reports for the agenda of regular DSB meetings.

However, the EU said that it retains all its rights in relation to this issue.

In light of the US statement that it is not in full compliance, it is understood that should this item be re-inscribed on the agenda upon request by the EU, it would appear as a point 1 item, it said.

The EU said that its agreement to the removal of this item from the agenda of regular DSB meetings, despite the fact that the issue has not been resolved, is subject to this understanding.

The EU said it further understands that the US agrees to confer closely with the EU to achieve the full resolution of this dispute.

In its statement, Cuba said it recognises that the renewal of the registration of the trademark of Cubaexport by the US Patent and Trademark Office "is a just and positive step" of the US administration as it recognised the rights of a Cuban company as the owner of the trademark.

However, Cuba noted that while Section 211 remains in effect, it prevents recognition by the US courts of Cuban trademarks and patents, and thus under this law, there is the possibility that the registration can be cancelled at any time by a decision of a US court.

Cuba said that while Section 211 remains in force, it will continue to demand its repeal.

Cuba also rejected the request made by the EU (for the conditional removal of this agenda item from the DSB surveillance agenda) at this meeting, since the object of the dispute, Section 211, is still in force, without any change, which means that the resolutions adopted by the DSB in relation to this Act, remain unfulfilled.

Hence, the monitoring of the implementation of such resolutions must be kept on the agenda of the DSB meetings, as provided for in Article 21.6 of the DSU, said Cuba.

In an intervention on this issue, China said that the prolonged non-compliance is highly inappropriate with the principle of prompt compliance under the DSU, in particular since the interests of a developing country member are seriously affected in this dispute.

China therefore urged the US to implement the DSB rulings and recommendations without any further delay.

According to trade officials, when the Chair of the DSB, Ambassador Harald Neple of Norway, concluded the discussion by saying that the "DSB may revert to this matter", Cuba requested an explanation as to why the Chair had used the term ‘may'.

The Chair replied that it was for the EU to decide on putting the matter back on the agenda (under the agenda item of surveillance of implementation of recommendations), although any member has the right to put the issue under another agenda item.

Cuba said that it officially requests that the issue be put on the DSB agenda until it is fully resolved.

Meanwhile, under Other Business, the Chair reported on the current workload of the Dispute Settlement System.

According to trade officials, he said that concerning appeals, the Appellate Body is currently dealing with one appeal.

Based on the projected dates for the circulation of the next panel reports, the Appellate Body can expect that up to three appeals may be filed in the first quarter of 2016.

Concerning panels and arbitrations, the Chair said that there are currently 20 active panels (including two compliance panels under Article 21.5 of the DSU).

He said that he was counting multiple disputes that are being considered simultaneously by the same panel as one. For example, the Australia - Tobacco Plain Packaging panels, which are in fact four active disputes, are counted as a single panel in the report.

The Chair also said that the Rules Division and the Legal Affairs Division are working together to reduce the queue of panels awaiting availability of staff to assist the panels that have been composed.

In the last two months, a number of panels in the queue as of October 2015 have been assigned staff and established their timetables.

As of today, there are four composed panels awaiting staff to assist them, and that there are eight panels at the composition stage, said the Chair. +