Are Geographical Indications a Wise Strategy for Developing Country Farmers? Greenfields, Clawbacks and Monopoly Rents

Abstract

Currently there are proposals and negotiations regarding the strengthening of protection for geographical indications (GIs) in the World Trade Organization. A major proponent of stronger protection for GIs has been the European Union. One of the arguments it has put forward for stronger protection has been that it will provide an avenue for economic development for agricultural producers in developing countries—a way to capture rents in the markets of developed countries. This paper first outlines the proposed changes to the international protection of GIs. Second, the potential for groups of producers to generate and capture rents in foreign markets is assessed under differing assumptions pertaining to industry structure, product differentiation in the short and long run, barriers to entry, reputation and the form of legal protection in importing countries. A discussion of the resource requirements to establish and maintain a GI is also provided.

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