Geographical Indications (Wine and Spirits) Registration Bill

JOHN HAYES (National—Wairarapa) Link to this

I rise to support the Geographical Indications (Wine and Spirits) Registration Bill this afternoon. I do so particularly because I have consulted with the wine industry in parts of my electorate, and also with the industry more generally though its high-level bodies, and it is clear that there is broad-based support for the bulk of this bill. There is just one area where we would part company with the Government on the proposals being promoted by the Minister in respect of this bill, and that is essentially around the mechanism that drives the process. The bill proposes that a Registrar of Registered Geographical Indications is appointed by the Minister and that this person be a public servant—a member of the Ministry of Economic Development. The committee would then have, as proposed by this bill, two additional people. One is the Surveyor-General and one is the Registrar of Registered Geographical Indications. Neither of those two people have the slightest competence to determine the geographic locale of a particular wine, because a wine—if we listen to people in the industry—has something called character. The character of a wine is dependent on soil type, on climate, on the winemaker, on the process used to make the wine—on a whole lot of factors, none of which are about putting lines on maps or determining place names.

Minister Tizard, through her Supplementary Order Paper, is proposing the option of one person from the wine industry being appointed to the committee. But the National Party will propose that the bill be amended, particularly clauses 36, 51, and 52, to allow a registrar to be appointed We have no problem if that person is a bureaucrat, but the industry must nominate the other two members of the committee, so that those members are known to have competence in the issues being discussed by the committee. We are asking that those amendments be made. I have tabled a Supplementary Order Paper.

Basically, the National Party supports this legislation in its general sense, but it does not agree that the process should be run by bureaucrats. We view this bill as a make-work scheme designed by bureaucrats and put forward by a Labour Minister, for no particular purpose. The bill specifically excludes competent people from being employed to make decisions on behalf of the industry. This is very, very poor public policy that we want to change.

I will reserve the right to come back and discuss the detail of these issues in due course, but I am just setting out that, yes, we support the bill, it is important for the industry, but we do not support the mechanism that is being proposed. I hope we will have support from other parties in this House. If we do not get that support, I serve notice now that were the Government to change, the changes proposed in my Supplementary Order Paper would be brought in by a National-led Government.

TIM GROSER (National) Link to this

Like my colleague John Hayes I rise to support the Geographical Indications (Wine and Spirits) Registration Bill, but also to raise the question that my colleague has just introduced. I will talk a little bit about Part 1 and the ultimate purpose of the bill, in the first instance.

I appreciate, in the unlikely event that a large number of New Zealanders are listening to this debate, that the term “geographical indications” must seem almost incomprehensible. But this bill is quite an important part of the policy infrastructure that this country needs in order to advance an objective that is probably held in common by all the parties in this Chamber. That objective is to move away from commoditisation, to move up the value-added chain, to apply the knowledge of New Zealand entrepreneurs, and to secure it through intellectual property rights that are modern, up to date, and in keeping with our long-term strategic interests.

In the more distant past many of us have struggled to come to grips with this issue, but it has suddenly come to the top of the agenda as the years have ticked by. Although many people would have been familiar with intellectual property law, such as copyright, in respect of our creative industries, and would have understood the concept of patents in respect of our industrial intellectual property rights, few people, until a few years ago, would have quite understood the significance of adequate intellectual property law around the fabulous products that come out of New Zealand’s extraordinary resource base, including, in this case, the wine industry. If members want to look at the growing evolution of understanding in New Zealand, they have merely to look at another agricultural industry and the difference in the history of the Hayward variety of kiwifruit compared with the Gold variety. New Zealand scientists and farmers, and the industries that support them, developed this fruit, originally from China, into the Hayward, and did not take adequate intellectual property protection. The rest is history, and members know what happened and how that diminished our resource base as a consequence.

But we learnt a lesson. The industry has found a very novel way of protecting its intellectual property rights in this new variety of Gold kiwifruit. We can see the difference, particularly in the Japanese market, when we ensure that we protect our intellectual property rights and protect the commitment of our New Zealand people who put their hard work into these resource-based industries. This is an area of considerable importance to this country’s future. It is very important as we move up the value-added chain, and it is entirely appropriate that we should be looking to strengthen our intellectual property law in this way.

This initiative originated in the Uruguay round, in the context of negotiations over intellectual property law that lasted 7 years. Those negotiations became a very, very large part of the overall deal. This was not foreseen at the start of the negotiations; it was something that sprang up on negotiators as the years ticked by. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs agreement), which is part of the body of World Trade Organization law, emerged from these negotiations. It is an incorporation of almost ancient intellectual property laws going back over a century, but it also contains some more novel provisions.

This bill actually implements the obligations and principles behind negotiations that were completed 12 years ago. One might ask why the negotiations took so long. The answer is that a negotiation was foreshadowed in the context of article 24 of the TRIPs agreement; it foreshadowed further negotiation on the establishment of a registrar for geographical indications for wines and spirits. Wines and spirits were picked out by the European Union, partly for political reasons, as requiring what was called a higher order of protection. The negotiation of that registrar, which I spent hundreds of hours in Geneva on, in another capacity, has gone absolutely nowhere. It is locked in a very obscure and complex procedural wrangle.

Frankly, it is right for this Parliament, given the ambiguity over the future of that negotiation, to get on and do the right thing. So, yes, this legislation to put in place our obligations and the principles of an agreement made in 1994 has been a long time in coming, but we might as well do it.

R DOUG WOOLERTON (NZ First) Link to this

New Zealand First supports the Geographical Indications (Wine and Spirits) Registration Bill. We see items of this nature as necessary evils; we see them as barriers to our trade that are put up by the European community and others. Having said that, and accepting that we have to play by their rules when it comes to exporting into their countries, I say that we need to take advantage of the barriers if we are to have them in place, and we need to make sure they work for us. I am pleased to see that in some ways this bill goes towards doing that.

We will not be supporting the amendments put up by the National Party, for two reasons. Firstly, we are satisfied that the registrar can tap into relevant expertise as he or she sees fit. We have sought clarification on that point from the Government, and we have been satisfied as to the extent that they can do that. Secondly, and this is somewhat personal, I have always wondered why industry groups would join in with the Government in a registering situation or in a judicial situation. It is a healthy tension, and a rightful one, for industry groups to have their say, then stand aside from the judicial body or the registrar or whatever it may be, so they can more fairly, more transparently, and more vehemently put their case. If they lock themselves into a situation like this, then I believe that actually weakens their case and they will have a hard job if they find that things are not working in their favour. That is a personal view formed through bitter experience in a practical farming sense over many, many years. I have never been a trade negotiator, nor do I aspire to be one, but I have always believed that people who advocate on behalf of their members—growers, in most cases—should reserve the right to challenge any decision made by the Government. I suggest to them that if they were to have a decent talk to their lawyers, their lawyers would probably advise them that that is the better way to go. It reminds me of the old story: stay outside the tent and preserve one’s integrity, and fire shots at those within.

COLIN KING (National—Kaikoura) Link to this

It is a pleasure to stand and speak to the Geographical Indications (Wine and Spirits) Registration Bill, and speaking as the member for Kaikoura, which encompasses that beautiful area of Marlborough that grows 60 percent of New Zealand’s grapes, I see this bill as highly important. I also pay tribute to the maturity that has developed over a number of years within the industry, and I pay tribute to how that maturity has taken a great step forward on the world stage. At a time when Australia is pulling out grape vines, we are still maintaining very high prices for our product on export in those countries of the world that can afford to pay it.

It is significant to note that we are moving in Marlborough to an area of some 20,000 hectares, which will be achieved in the near future. There are, say, 70 outstanding brands in that region. However, what we are finding is increased pressure from multinationals as we go forward. They do a good job, but they too want to see that we maintain the unique natures of those geographical indications that are reflected in the soil types. I am told that our soil types in New Zealand are young, as opposed to those European wines such as those grown in Bordeaux, Champagne and suchlike, or Chianti. It is so very important that we maintain their integrity, and do not allow that to be affected by the fact that we are being bought out by some very large operators, one of which is Pernod Ricard, which owns 30 brands of wine and which draws on 5,900 hectares of grapes within the Marlborough region. When I spoke about 15 months ago to the general manager of Montana, which is one of the company’s brands in this country, the manager said the company was still importing more sauvignon blanc than it was purchasing in Marlborough. Therein lies the risk: we have to have in place good solid international regulations around what can be called a Marlborough sauvignon blanc. So I would put back to the member from New Zealand First that we are not dealing in cooperative models like Fonterra or PPCS and meat companies. We are actually dealing with a product that could easily and subtly be watered down with product from outside.

It is quite significant that when one looks throughout New Zealand, one sees that we have some outstanding regions. We have the Martinborough area in the Wairarapa where John Hayes represents the National Party—he is a very good member indeed. We have Waipara in North Canterbury and we have Marlborough. We have Central Otago, the Hawke’s Bay, and Nelson. These regions are all uniquely different. They specialise in different grapes; what grows remarkably well in the Hawke’s Bay does not do quite so well in Marlborough, and on that basis we have to protect the entrepreneurship and investment of those viticulturists.

It is appropriate, then, that we see that the Agreement on Trade-related Aspects of Intellectual Property Rights is entered into. On that basis we should adhere to it not only for the integrity wrapped around the 85 percent factor but from the point of view that those people who continue to invest in viticulture in New Zealand, which will continue to grow, can have the certainty that where they buy they can guarantee that if that name is held up with integrity around those international agreements, their investments will be future-proofed.

I wish the bill all the very best, as we are prepared to support it, but I strongly recommend that members look at giving the responsibility to the industry of being able to set up those particular geographical indications boundaries. Industry members are the ones who know the very intricacies of the wine industry and as such we should welcome their expertise onside, so that they know from the inside just what is going on. If we do not allow them that, then there will be every chance of diluting those brands and allowing them to drift off into insignificance, and those who have changed from one land use—like pastoral farming—into the viticulture industry will lose those returns.

JOHN HAYES (National—Wairarapa) Link to this

I want to address some comments made by my parliamentary colleague from the New Zealand First Party Doug Woolerton. One of the problems we face in this country is that the bureaucrats have taken over the business of governance from this House. They can do that because a number of political colleagues in the House do not do their homework. I believe that the Minister who introduced the Geographical Indications (Wine and Spirits) Registration Bill, Judith Tizard, did not understand a word she was saying, and Doug Woolerton from New Zealand First clearly did not understand what he was talking about. He has not read the bill. We heard that he is a farmer and has done various other things, and that he has an understanding of Federated Farmers, but that is totally irrelevant to this bill.

We are debating Part 1, which contains the purpose clause—clause 3. Paragraph (a) of clause 3 states that the purposes of the Act are to “contribute to the development and continual growth of, and innovation in, the wine and spirits industries in New Zealand by providing a suitable legal framework for the registration of geographical indications;”. I ask Doug Woolerton how that requires decisions by the Government. The man completely misunderstands the bill. I do not believe he has read it. Under paragraph (b) the purposes are to provide “a sound trading and marketing environment that facilitates, rather than creates barriers to, the trade in wine and spirits;”. I ask Mr Roberts—

KEITH LOCKE (Green) Link to this

I point out to members that the Green Party has moved an amendment to Part 2. It is an amendment to Supplementary Order Paper 66 in the name of the Hon Judith Tizard. The essence of our amendment is to give the industry representation on committees that may be set up to discuss boundaries and indicators. The present amendment contained in Supplementary Order Paper 66, in the name of the Hon Judith Tizard, is an amendment to clause 52(2) and adds the following paragraph: “(c) 1 or more persons who, in the Registrar’s opinion, have appropriate knowledge of the wine or spirits industry, as the case may be.” It became quite clear at the Foreign Affairs, Defence and Trade Committee that the industry has a huge knowledge of indicators and boundaries. It is a pretty well-organised industry with two organisations, New Zealand Winegrowers and, on the spirits side, the Distilled Spirits Association of New Zealand. Those organisations were concerned at the way the bill was constructed; they said it did not allow the experience of the industry to have full play in the decisions of a committee set up to consider the registration of a geographical indication, the alteration of a registered geographical indication, or the removal of a registered geographical indication from the register.

Under clause 52, the Registrar can appoint a committee and its members. At the present time the committee must include the Surveyor-General or a representative of the Surveyor-General and a member of the New Zealand Geographic Board who is not the Surveyor-General. The Registrar can then appoint another person as appropriate, including a representative of the wine or spirits industry in New Zealand. But there is no requirement to have on any such committee anyone from the wine or spirits industry in New Zealand. So in response to the very good presentations from New Zealand Winegrowers and the Distilled Spirits Association of New Zealand, the Green Party thought it worthwhile to come forward with an amendment, because the Supplementary Order Paper as it stands refers just to someone who has appropriate knowledge of the wine and spirits industry. The person may not even be from the industry or be a member of an industry organisation; he or she just needs to have appropriate knowledge. I think that is a bit vague.

To make it more specific, our proposed amendment, which is on the Table, is to omit paragraph (c) from the Supplementary Order Paper amendment and substitute a new paragraph (c): “1 or more persons from New Zealand Winegrowers or the Distilled Spirits Association of New Zealand or another organisation representing wine and spirits producers.” I think that covers the field and guarantees that there will be on each committee someone from the wine and spirits industry, not just some individual who happens to have a vineyard. There will be someone from an industry organisation. The two organisations specified in the bill are the main organisations, but another organisation may form that deserves some representation on the committee. So it is just a simple amendment to cover that point about industry representation, and the Green Party hopes that it will meet with the support of others in the Committee.

TIM GROSER (National) Link to this

I will take just a brief call on this issue, following on from my colleague Mr Hayes. Under the principle that it sometimes takes a thief to catch a thief, I have to say that Mr Hayes and I, who have worked as officials for probably rather more time than we would care to admit, are extremely conscious of the times and occasions when we really need the expertise of an official, and the times and occasions when there are severe limitations in relying just on officials. So on the basis of that old principle we have been surprised, right through the Foreign Affairs, Defence and Trade Committee process, that there has actually been a fundamental resistance on the part of the Government to the industry’s perspective on this.

Let me explain to the Committee the reality that I see coming through this, instead of using abstract terms. What will happen is that the Ministry of Economic Development will appoint as the registrar, if the legislation goes through in its current form, an extremely bright young intellectual property lawyer, whom it will have recruited at some recent point. That person will, because he or she will be extremely well informed about the policy frameworks, know his or her way right around the World Intellectual Property Organization legislation, the Agreement on Trade-Related Aspects of Intellectual Property Rights, and all the other relevant conventions, and have a very clear view, from his or her academic training, as to what is required.

When it comes to the rather subjective nature of what is terroir, which is a word I think we use in English now to indicate the characteristics of wine, he or she will have only as much experience as he or she will have acquired at the University of Otago—it may be rather more than at other universities—through the consumption of wine up till that point. To make decisions here is not just a matter of applying the cadastral boundaries drawn up by the Surveyor-General; it requires deep knowledge of the industry and of the very subjective characteristics that make up the raw ingredients in a decision on what constitutes a geographical indication.

So this young person will be beavering away, working very hard and very earnestly on this, and trying to comprehend the very subjective information coming from industry, from the people who have been years in the business. That person will then be promoted within the department—this is the reality. I have heard this complaint about the official process 100 times from the industry—not necessarily in this context or in the context of the Ministry of Economic Development, but right across the board of Government—when a person with high levels of expertise and deep background is needed. That person will then move up in his or her career path within the ministry, or A J Park will recruit him or her at twice the salary, because intellectual property lawyers are very handsomely remunerated in the private sector. Then the industry has to start again, essentially by educating some other bright young thing.

How much better it would be if we could just understand the reality that this requires deep knowledge of the industry. It is not something that can be purely and simply acquired from studying intellectual property law at any of New Zealand’s excellent law faculties. It is something whereby one requires a deep involvement and some sympathy.

This proposal put forward by my colleague Mr Hayes to try to centre the process on the people with the expertise is simply common sense. It has been utterly mystifying to me why, in the course of putting this bill forward—and the Foreign Affairs, Defence and Trade Committee has worked in very good spirit—there has been such resistance. One always had the feeling that the resistance was not from the elected representatives of the Government, but from their fronting up for the officials who had a particularly sharp view about wanting to control the process. So I urge the Committee to consider quite carefully the human and other issues involved in this, and to support my colleague.

ERIC ROY (National—Invercargill) Link to this

I did not intend to take a call, but I have been persuaded to do so by my colleague’s argument. There are some very good things about this bill and some things that have missed the mark, so first I will just say what is good. It is good that New Zealand now has a wine industry that has come of age, so we want to protect our identity. Members will recall that in the 1960s New Zealand wine was a joke around the world. We used to see it featured on various television programmes made in the UK as some kind of mistake, or as something that certainly did not have the prestige that it has today. So it is good that the wine industry has come of age. The wine that comes out of New Zealand is synonymous with quality and with quite a few specialty areas. A number of New Zealand wines, such as sauvignon blanc and pinot noir, can stand up anywhere in the world, and the good thing about New Zealand is that it has a diverse climate that allows it to produce a great variety of boutique wines. That is good.

But I am concerned about the process of registering geographical indications. I think that the comment from my colleague Mr Groser as to how this process will function hits upon the issue. It seems to me that we are setting up a bureaucracy in the wine industry that is not mirrored in other areas where there is an appellation strategy—that is, a naming, branding strategy—where we hand it to the industry and say that it is the industry’s responsibility. Maybe—and I do not know much about this area—an international geographical indication, which is what Part 2 provides for, needs the kind of protection provided by an Act of Parliament. I do not know that, but I accept it may be the case. However, I do not accept that we have to create a registrar, a registry, and a whole lot of laws around that. I believe it is the industry’s responsibility to determine how it wants to do that and how it wants to progress.

At various times we have had illustrations of how this Labour Government has created myriads of increased bureaucratic offices around the capital. I forget how many more tennis court - sized office spaces there are, but the number is significant. And here it seems that we are setting up another bureaucracy. That rings a few alarm bells for me. As I read through Part 2 and saw precisely what it does, I became more and more convinced that this is something we should do in the same way that we have done with regard to the dairy industry and its branding, or to the branding of any other sector, and say it is the industry’s responsibility to set the system up.

In one of my other roles in Parliament, I sit on the Regulations Review Committee. When I reached the end of Part 2, I saw in clause 55 a whole raft of regulation-making powers, and that just made me quiver with concern. Clause 55 states: “The Governor-General may from time to time, by Order in Council, make regulations …”. Set out are 11 different subclauses, prescribing the areas that the regulations can be set up for. I can see that there are not really a great deal of checks and balances in that. We are setting up a registrar and giving that official the power to co-opt and appoint people on to his or her own committee, and then they will draft regulations as they deem fit, without having any responsibility back to the industry, as far as I can determine, in terms of Part 2. I invite the Minister or anybody else who is promoting this bill to show me how that process works. I ask to be shown the responsibility the registrar has to the industry—the consultation process, and the authority that the registrar has to operate on the industry’s behalf. It is Parliament that is giving authority to the registrar, not the industry. Not only are we doing that but the registrar is going to keep the registry surrounding geographical indications—

JOHN HAYES (National—Wairarapa) Link to this

I would particularly like to thank Keith Locke for his constructive suggestion and his amendment. The problem with it is that if it were adopted it would still leave control with bureaucrats. Sure, there would be slightly better defined industry representation, but I have talked to industry representatives about this issue and asked them who are the sorts of people they would put up. They have named people such as professors at Auckland University, and people who are outside the day-to-day administration of the industry—and I hope Doug Woolerton is listening to that comment, because it is not about the industry necessarily appointing people from within the industry; it is about the industry appointing recognised experts in the field.

I say to Mr Locke that I particularly feel that his suggestion, while constructive, does not go far enough. If we are going to amend the bill, and the Minister’s Supplementary Order Paper, we have to begin further back down the track. What we need to do is create a geographic indications committee that will sit on all applications except for geographic indicators registered under an international agreement. We suggest that the committee comprise three members, but it could take advice if needed. Where the application involved a wine geographic indicator, two members of the committee must be nominated by the New Zealand wine industry; that is, if my recommendations are accepted. The committee is the authoritative decision-making body—not the registrar. The registrar does what he is told by the committee, and its decisions are registered by the registrar, who does not participate in the decision-making process, because he is incompetent. He has no competence whatever to get involved in the decision.

What I am suggesting is absolutely in line with the process being used in other jurisdictions, such as Australia, but it still respects the fact that the process is being operated through the Intellectual Property Office of New Zealand.

The proposed amendments set out on my Supplementary Order Paper suggest omitting clause 36. The power to seek advice needs to be transferred to the committee if it is already making a decision. We have to omit from clause 51(1) the words “may, if the Registrar thinks fit”, and substitute the word “must”. This makes it compulsory for the committee to consider all geographical indication amendments or approvals.

The third suggestion is to omit from clause 51(2) the words “to advise the Registrar on issues relating to the boundaries and the use of a place name as a geographical indication”, and substitute the words “to decide on the matters relating to the registration of a geographical indication or the alteration or removal of a registered geographical indication”. This changes the function of the committee, from an advisory body to a decision-making body.

Then I think we have to add a new clause 51(3), “Notwithstanding (1) and (2), it is not necessary for the Registrar to establish a geographical indications committee for the registration of geographical indications in accordance with regulations made under section 55(k), or for the alteration or removal of geographical indications registered in accordance with regulations made under section 55(k).” This means the full committee is not required where foreign geographical indications are being registered, pursuant to an international agreement, and that will save the committee a heck of a lot of unnecessary work.

We will omit clause 52(1), which is unnecessary given that the number and composition of the committee is now fixed. The registrar already has the power to establish the committee, under clause 51(1). Then I think we omit clause 52(2), and substitute: “Each committee must consist of 3 persons appointed by the Registrar having knowledge or experience of the issues relevant to the application.” This clause picks up Mr Locke’s suggestion and also the Minister’s tentative move in this direction. It removes the mandate for the Surveyor-General and the New Zealand Geographic Board to sit on the committee, and it creates a fixed committee that takes into account all the relevant issues.

Then, I think, one has to omit clauses 52(3) and 52(3A) on Supplementary Order Paper 66 and substitute them with new clause 52(3) that states: “When the decision in section 52(1) relates to a geographical indication for wine, two of the members appointed to the committee must be nominated by the national industry organisation for the New Zealand wine industry.” The spirits industry, while relevant, is not actually relevant at the moment, because we do not produce spirits in New Zealand; those that did produce here have now been sold to an offshore buyer. This will allow the wine industry to nominate appropriate committee members, as the wine industry is the best place to judge who the appropriate members would be. No equivalent mechanism is suggested for the spirits industry, because, as I have said, there are no New Zealand geographical indications currently in use.

Then, I think, one omits clause 54(4)—a casting vote is not needed if the committee has only three members. Then we add a new subclause (6) to clause 54: “If the committee thinks it necessary, the committee may obtain advice on, and may consult about, any matter relating to—”, and the handwritten amendment lists the suggestions.

These are very constructive suggestions. I have consulted widely with the industry, and the suggestions are made to put the responsibility for administering this legislation on to the same basis as applies with our near neighbour, Australia, and it allows the industry to drive this, and not the bureaucrats who have no qualifications or experience in deciding what the character of a wine is and what a boundary for a wine area should be. This is a matter of considerable importance to my Wairarapa electorate, because we have areas such as Bideford, Gladstone, Martinborough, and further north into Hawke’s Bay growing wine in often small areas. This bill is very, very important to these people, but the one thing that strikes me, having moved from the bureaucracy in Wellington to the Wairarapa, is that our bureaucrats in Wellington do not understand the needs of our communities beyond the boundaries of Wellington.

This is a very big problem, and this is why I also urge colleagues in all parties to support the proposals I am putting up. It is very important that we allow the industry to drive this issue, and not bureaucrats in Wellington who are highly priced and highly paid, but are out to make work to keep themselves in gainful employment. The Surveyor-General has no expertise in this area, neither does the man who puts names on maps. We must put this process into the hands of our industry, and I serve notice again to this Committee that if it does not support this move, the next National-led Government will institute these changes forthwith, week 1, when the Government changes.