2018 – part1 – 1 – 4

Australian agribusiness winners under revised TPP: considerations for sustaining a winning position

The CPTPP, the details of which are still to be published, promises to provide new trade rules to make it easier and cheaper to invest and export amongst the member countries of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, including the elimination of 98% of tariffs in the trade zone. Trade barriers are expected to be reduced on key Australian products, including beef, cotton, dairy, horticultural produce, seafood, sheep meat, wine and wool. New quotas are expected for rice and wheat to Japan and sugar into Japan, Canada and Mexico. South Korea, Thailand and Indonesia are rumoured to be considering joining. The absence of the USA, previously seen as the start of the end of the deal, might even be a bonus to Australian primary producers, as they have traditionally been a cost competitor in some sectors. Altogether, these are conditions which signal more opportunities for Australian producers to sell their wares into these export markets.

Whilst the CPTPP has gained much of the recent press, there are other agreements in play which are also set to offer export opportunities for Australian producers. The China Australia Free Trade Agreement (ChAFTA) eliminates tariffs on the likes of beef, dairy, pork, wine and seafood and is said to give Australian producers an advantage over other competitors in this growing market. The Regional Comprehensive Economic Partnership (RCEP), which includes China, India and ASEAN members, focuses on lowering barriers to trade, including lowering or abolishing tariffs.

With all of these developments, it’s easy to become enthusiastic about starting or expanding business endeavours in these lucrative and growing markets. In the excitement of doing deals overseas, it’s also easy to forget about some of the arguably smaller (but important) details, such as proper and timely securing of trade marks – Australian companies rarely appreciate that failure to do so has the potential to limit or halt the supply of product into these foreign markets.

Consider this hypothetical scenario.

An Australian producer of high value seafood products undertakes trade missions in a number of Asian countries, including Japan, China and select ASEAN members. With a great product that can leverage demand from Australia’s strong reputation for ‘clean and green’, and favourable trading conditions as a result of promises from various trade agreements, it’s all steam ahead to launch the product in key Asian markets. Distributors are found, deals are done and a happy team returns to Australia, ready to export their first batches into Asia. In the flurry of travel and deal making, no thought is given to protecting the brand in any of the export markets. Unbeknown to the Australian team, the savvy Chinese distributor takes it upon itself to register the brand in China, understanding that the first person to file a trade mark application in China will own the brand in China. Having secured ownership and registration of the brand, the distributor can then legitimately exercise control of the brand in the Chinese market, potentially putting the Australian’s supply security at risk. The Australian team is now faced with a legal battle to reclaim their brand back in China, unless their distributor decides to act cooperatively and assign the brand rights over to the Australian company.

While this scenario is hypothetical, the basic premise happens all too often, particularly when entering Asian markets whose trade mark systems operate on a ‘first to file’ system, which includes the significant and lucrative trading partner of Japan.

The key message here is that it is best to file for trade mark registration and file early for key brands in key export markets to avoid another party taking ownership of an important product brand. Trade marks should ideally be registered well in advance of any business dealings in key export markets, particularly those that operate with a first to file trade mark system. Whilst trade mark registration may be perceived as more red tape and an additional cost when first entering export markets, the cost and effort to do so is really quite minimal and is significantly less expensive and troublesome than trying to wrestle a brand back or having supply security compromised.

Source: Lexology