Exploring the Economic Rationale for Protecting Geographical Indicators in Agriculture

TLDR

Global competitive advantage increasingly rests on local knowledge and relationships, and the EU protects the misappropriation of regional names such as Parma, Roquefort and Champagne through Geographical Indications, a right also recognized by the WTO, because place of origin can signal quality or capture regional resources as quality attributes. This article evaluates whether South Africa should adopt a similar Geographical Indications system. The authors analyze how Geographical Indications reduce information asymmetry by emphasizing the name’s meaning, create niche markets, enable monopoly formation, add value, and foster rural development by leveraging specific and general regional resources. They conclude that economic arguments strongly support introducing Geographical Indications in South Africa, which would protect indigenous resources and names and directly contribute to rural development.

Abstract

Abstract "The enduring competitive advantages in a global economy lie increasingly in local things—knowledge, relationships, motivation—that distant rivals cannot match" (Porter, 1998) The misappropriation of the names of geographical regions such as Parma, Roquefort and Champagne is protected in the European Union by a system of Geographical Indications, and is acknowledged by the World Trade Organization as an important intellectual property right. This article addresses whether there is a case for similar protection in South Africa. The article explores the economic rationale for implementing a system of Geographical Indications by addressing issues such as information asymmetry and the role of reputation; formation of niche markets; monopoly formation, value added and rural development. The economic rationale for protecting Geographical Indications derives mainly from the fact that place of origin may be used as a quality signal, or alternatively, that the resources of the region may be captured as quality attributes. In the first instance the meaning of the geographical name is emphasized in order to reduce information asymmetries. Where place of origin is used as an attribute, resources of the region are used to increase the value of the product. This includes specific resources such as production techniques, varieties and species, but also resources that are general to the region such as landscape, environment and culture. Economic arguments present a strong justification for the introduction of geographical indications in South Africa. At the same time it will afford greater protection to indigenous resources and geographical names which could, through the collective and inclusive nature of the system, directly contribute to rural development.