CC BY
26
Ш
research article
https://doi.org/10.17059/ekon.reg.2022-3-18 UDC 339.544, 339.56
Kerstin Pezoldt a> © Evgeniia A. Mikheeva b>, Alexandra G. Koval c> (3D E, Maryana A. Gubina d> ©
a) Ilmenau University of Technology, Ilmenau, Germany b) ANO «Center of Expertise on the Issues of the World Trade Organization», Moscow, Russian Federation
c d) Saint Petersburg State University, Saint-Petersburg, Russian Federation
protection of geographical indications in international
trade: prospects for russia
Abstract. Geographical indications (GIs) represent the intellectual property rights, which protection could play a significant role in the increasing regional and national trade. The paper reveals the impact of protected GIs on international trade and provides certain recommendations for Russia. There is an evident gap in the study of the GIs effect on the development of trade links, especially for Russian enterprises. The paper applies the gravity model of trade and tests three hypotheses, whether the more protected geographical indications both exporting and importing countries have, the higher the volume of export of GI protected goods going out of this particular country and whether the existence of a trade agreement with specific provisions on the GIs protection increases trade between its members. The findings support one hypothesis that the more protected GIs the exporting country has, the higher the volume of exports of GI protected goods. Based on this result, we analyse the current situation of the GIs protection in Russia and indicate the positive trends in development of the national legislation and modern challenges in the implementation of GIs protection for the national development. The federal and regional support as well as the changes in the business strategies could lead to an increase in the Russian competitiveness. GIs could encourage the brand origin and promote the Russian products on the foreign markets.
Keywords: intellectual property, geographical indications, international trade, gravity model of trade, regional trade agreement, Russia, TRIPS, competitiveness, regional development, brand origin
For citation: Pezoldt, K., Mikheeva, E. A., Koval, A. G. & Gubina, M. A. (2022). Protection of Geographical Indications in International Trade: Prospects for Russia. Ekonomika regiona/Economy of regions, 18(3), 882-894, https://doi.org/10.17059/ ekon.reg.2022-3-18.
1 © Pezoldt K., Mikheeva E. A., Koval A. G., Gubina M. A. Text. 2022. Ekonomika Regiona [Economy of Regions], 18(3), 2022
исследовательская статья
К. Пецольдт а) О, Е. А. Михеева б), А. Г. Ковальв) © И, М. А. Губинаг) ©
а) Технический университет Ильменау, г. Ильменау, Германия б) АНО «Центр экспертизы по вопросам Всемирной торговой организации», г. Москва, Российская Федерация в г) Санкт-Петербургский государственный университет, г. Санкт-Петербург, Российская Федерация
охрана географических указаний в международной торговле
Аннотация. Поскольку географические указания (ГУ) являются объектами интеллектуальной собственности, их охрана может сыграть важную роль в растущей региональной и национальной торговле. В связи с недостатком исследований на тему влияния ГУ на развитие торговых связей в настоящей статье анализируется значимость охраняемых географических указаний для международной торговли, а также даются рекомендации для российских компаний. При помощи гравитационной модели оценивались три гипотезы. Согласно двум первым гипотезам, количество охраняемых географических указаний как в экспортирующих (гипотеза 1), так и в импортирующих странах (гипотеза 2), прямо пропорционально влияет на объем экспорта товаров. Третья гипотеза предполагает, что наличие торгового соглашения, содержащего положения об охране ГУ, приводит к увеличению объема торговли между его участниками. Полученные данные подтвердили первую гипотезу о прямо пропорциональной связи между количеством охраняемых географических указаний в стране-экспортере и объемом экспорта товаров, защищенных географическими указаниями. На основе этих результатов авторы проанализировали охрану географических указаний в России. Выявлена положительная тенденция развития национального законодательства, отмечены проблемы в осуществлении охраны географических указаний. Повышению конкурентоспособности России могут способствовать реализация федеральных и региональных мер поддержки, а также изменение бизнес-стратегий отдельных компаний. Развитие системы прав на географические указания может стимулировать местные бренды и продвигать российскую продукцию на зарубежные рынки.
ключевые слова: интеллектуальная собственность, географические указания, международная торговля, гравитационная модель торговли, региональное торговое соглашение, Россия, соглашение ТРИПС, конкурентоспособность, региональное развитие, происхождение бренда
для цитирования: Пецольдт К., Михеева Е. А., Коваль А. Г., Губина М. А. (2022). Охрана географических указаний в международной торговле: перспективы для России. Экономика региона, Т. 18, вып. 3. С. 882-894. https://doi.org/10.17059/ ekon.reg.2022-3-18.
1. Introduction
Geographical indication (GI) as a form of intellectual property has been historically used for identification and protection of products of specific geographical origins that guaranteed quality. According to the World Trade Organisation (WTO) Agreement, GIs "identify good as originating in the territory of a state, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin"1.
In general, GIs are distinctive signs or symbols used to differentiate competing goods by identifying them as originating in a particular region and of a particular quality that is attributed to this region and cannot be replicated elsewhere. Because the place of origin is essential to the product, producers of the same product from other regions
1 The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1994, Section 3. Retrieved from: https://www.wto.org/english/docs_e/legal_e/27-trips_04b_e. htm#3 (Date of access: 24.09.2020).
cannot use this particular GI (Raustiala, Munzer, 2007). Thus, GIs are valuable intangible assets, but it is a matter of national law and consumer perception whether a sign or symbol functions as a GI.
As there is no universal method of GIs protection, several approaches are used separately or in a combination by different countries on the national level. Every country has its own legal tradition, historical and legal conditions, which developed these GIs protection approaches that might apply differently for particular products: wines and spirits, foods, handicrafts. The difference between the approaches is in protection's conditions and scope. GIs can be protected under a sui generis system (sui generis right), a trademarks system, or laws focusing on business practices.
Providing that there is a developed protection system and proper support from consumers, producers and governments, GIs might be considered as a country's brand, as one of the attributes of a nation that constitute its competitive advan-
tage. GIs and their well-functioning protection systems help producers compete successfully on the international market, enrich country's ability to achieve sustainable economic growth, and increase volume of trade in GI protected goods. Consumers' willingness to pay a price premium for GI protected goods contributes to GIs development. Producers ensure sustainability of GI protected goods and fair competition on local and global levels. Governments from their side provide the necessary institutional framework.
GIs contribute to product differentiation, creation of added value for producers, decrease search costs for consumers, and correct information asymmetry between producers and consumers. Moreover, if well managed, GIs might become a valuable asset for a country, contribute to its competitiveness on the global market, hence, economic development, and preservation of indigenous culture. In regional studies, GIs have proved to increase rural incomes and induce economic growth (Bramley, Bienabe, Kirsten, 2009).
According to the position of the European Union, a strong advocate of GIs, GIs can play an important role in trade, rural development, and conservation of national cultural heritage. This position has been preserved since the adoption of the first GI Regulation in 1992 (Calboli, Loon, 2017). The growing attention to GIs worldwide today is being supported by an increasing number of countries that adopt or update GI-related legislations. The Russian Federation is not an exception. After several stages of approval, a law establishing geographical indications as a new type of means of goods' individualisation was signed by the President of the Russian Federation on July 27, 2020 - Federal Law of July 26, 2019 No. 230-FZ "On amending Part 4 of the Civil Code of the Russian Federation and Articles 1 and 23.1 of the Federal Law on the state regulation of the production and circulation of ethyl alcohol and alcoholic drinks and on restricting the consumption (drinking) of alcoholic products"1. These amendments introduced geographical indications in the list of the results of intellectual activity in the article 1225 of the Civil Code.
The research aims to indicate the impact of protected geographical indications on international trade and make appropriate recommendations
1 Federal Law of July 26, 2019 No. 230-FZ "On amending Part
4 of the Civil Code of the Russian Federation and Articles 1 and 23.1 of the Federal Law on the state regulation of the production and circulation of ethyl alcohol and alcoholic drinks and on restricting the consumption (drinking) of alcoholic products". Retrieved from: http://kremlin.ru/acts/bank/44560 (Date of access: 24.09.2020). (In Russ.)
for the Russian Federation. Does GI really matter for the growth of national export? This study answers the question by the application of the gravity equation model. We test several hypotheses on the influence of GI protection on trade of wine and spirits for main exporting and importing partners.
The research is structured as follows. The next section covers the literature review including the recent studies on the impact of protected GIs on trade. Then the paper presents the data and research methodology. The research results provide important implications, which have valuable outcomes for the Russian trade. We also give recommendations for the Russian trade policy and define the prospective strategies for the business development. The conclusion presents the final remarks.
2. Literature Review
In majority of studies, scholars examine geographical indications from the perspective of legal regulation. For instance, Blakeney (2014) thoroughly examines the EU legal regime on geographical indications, paying particular attention to the enforcement mechanism and relations to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). A diverse analysis of the GIs' phenomena from the multi-disciplinary perspective is presented in the volume "Research Handbook on Intellectual Property and Geographical Indications" (Gangjee, 2016). Scholars of different backgrounds (legal, political, historical, geographical, sociological, economical, and anthropological) covered distinctive features of GIs and explored controversial issues of their protection. In Russia, where geographical names received protection as appellations of origin (AOs) only in 1992, the literature on legal aspects of their protection is sufficient but limited by the topics on examination of the current legislation and proposals to its improvement (Gorlenko, 2004; Eremenko, 2012).
There are much less investigations on the economic impact of GI protection. Some of them relate to conference proceedings on individual case studies (Vandecandelaere et al., 2018a), others — to publications by international organisations: Food and Agriculture Organisation (FAO) (Vandecandelaere et al., 2018b), Organisation for Economic Cooperation and Development (OECD)2, United Nations Conference on Trade and Development (UNCTAD) (Rangnekar, 2004). The
2 Appellations of Origin and Geographical Indications in OECD Member Countries: Economic and Legal Implications. OECD, 2010. Retrieved from: http://www.oecd.org/offlcialdocuments/ publicdisplaydocumentpdf/?cote=COM/AGR/APM/TD/
publications refer to particular geographical regions and identify GIs as a powerful tool for economic development, especially for development of rural areas; however, it is noted that this tool should be implemented with caution in order to let all economic actors benefit from it. There are very few recent Russian studies, including some cases of the Russian regions on their product competitiveness with the GI protection (Chepeleva, 2019). Nevertheless, the intellectual rights protection has become one of the modern fields of international trade studies (Koval, Trofimenko, 2020). That fact gives a significant value for this particular research.
In this work, a particular attention ought to be paid to the studies on trade effect of GIs. Melony and Swinnen (2018) explored GI as a trade regulation tool through the analysis of historical cases. Since the world's first GIs were in the wine sector and played an important role in regulating the wine market in Europe, the authors considered them for the research. Analysing historical cases in the context of interaction between trade and terroirs, authors concluded that export to foreign markets (United Kingdom) was crucial for the Porte and Chianti; domestic trade with Paris was essential for Burgundy; however, not export, but a pressure from imported wines and new wine-producing regions were factors of the most importance for Champagne. Thus, from the historical point of view, GIs were used not only for export growth but also for protection of local producers. Additionally, political factors — in particular, interests of traditional vineyards and merchants and their relations with the ruling politicians — played a crucial role in GIs development and delimitation.
Yet another study by Sorgo and Larue "Geographical indication regulation and in-tra-trade in the European Union" (2014) analysed double nature of geographical indications: whether they enhance or divert trade. The authors relied on a panel data on intra-trade of agricultural products among the 27 countries of the European Union that covers three years: 1999, 2004 and 2009. Their findings suggest that GIs create trade when both, importing and exporting, countries have GI protected products and GIs divert trade when importing country does not have GI protected products. Thus, countries tend to export less in other countries that do not have GIs protection system. Authors imply that this effect might be explained in a way that consumers in countries with GIs have greater "love for
WP%282000 %2915/FINAL&doclanguage=En (Date of access: 24.09.2020).
variety" than consumers in countries without GI protection. Furthermore, GIs contribute to national branding and improve an image of a country. There is also an empirical evidence on border-enlargement effect arising from European GI protection that means GIs have a trade depressing effect, which affects mainly poorer countries without GIs. The authors conclude that the European sui generis regulation of protection of GI products can be seen as a non-tariff measure by countries without GIs. However, authors noted that these results should be applied very carefully when analysing trade between the EU and other countries, because they focused only on intra-EU trade.
The study "The trade effects of the European Union geographical indications policy" by Raimondi et al. (2018) examines trade-quality relation using the European Union GIs quality schemes.
The authors put forward three hypotheses about the effects of GI on trade. First, an export-promotion effect of the GI policy should affect both the probability to trade (extensive trade margin) and the volume of trade (intensive trade margin). Second, an import-reducing effect of the GI policy increases a vertical differentiation. Finally, there is an average increase in the export unit values (prices) in countries where firms adopt the GI policy.
The results obtained show that geographical indications influence trade flows differently depending on whether the products protected by GI are produced in an exporting or importing country. Additionally, geographical indications significantly increase both the extensive and intensive trade margins of exporters, especially in cases where destination countries are not producers of GI protected goods. When both countries produce GI protected goods, the effect is lower, mainly due to the intensive trade margin. These findings are confirmed for both internal and external EU trade flows. The main results of this study show that the EU's GIs policy is an export promotion tool when implemented by exporters, and a trade reduction tool when analysed from the perspective of the importing country.
Finally, some scholars study GIs in the context of international management and marketing. GI helps to create a brand origin (BO). BO is a place, region or country to which the brand is perceived to belong by its target consumers (Thakor, Kohli, 1996). From the marketing perspective, BO is a manner to differentiate a product from another competitive product to make it more attractive. The GI effect influences the purchase deci-
sion in various areas. Communicated by "Made in..." or "Manufactured in..."-labels with GIs influence consumers' product evaluation. Not only the product name but also the brand name plays an important role in influencing the evaluation of geographical brands (Hulland, 1999). GI has a positive and direct influence on the perceived quality of different products and brands. Products from developed countries are rated much more favourable than those from emerging markets (Iacob, 2016). GI (general country attributes and general product attributes) has a positive influence on purchase intention (Lee, Lee, 2011). Thus, GIs promotion could play a crucial role in the improvement of the brand of products in the specific regions and so far raise the competitiveness of the domestic companies.
This research expands the study of the GI effect on international trade of both developed and developing countries and focuses on the impact of regional trade agreements including GI protection on trade. The findings will help provide certain recommendations for the development of GI protection as a part of the Russian trade policy. Moreover, the study provides also some practical implementations on how Russian companies can use the GI effects for their international marketing.
3. Methodology
The research methodology is based on the gravity model of trade. This econometric model, developed by Jan Tinbergen in 1962, is extensively used for analysis of international trade flows (De Benedictis, Taglioni, 2011). The model itself utilises the gravitational force concept as an analogy to explain the volume of bilateral trade flows. The model is successfully used for analysis of a wide spectrum of interactions in international economics. The gravity equation postulates that the amount of flow between two locations increases with their economic sizes and decreases as the cost of transportation between them raises (Folfas, Kuznar, 2013). The model became one of the most popular econometric tools for international trade analysis because of its high explanatory power and easily available data on international trade in goods. Hence, the versions of the gravity equation are numerous, and the spectrum of independent variables seems to be unlimited. Many of the recent studies utilising the gravity model of trade have focused on empirical specification and estimation (Sorgo, Larue, 2014).
The present study is concentrated on the analysis of a dependency of wine export volume on the availability of protected GIs for wines and on
the protection granted to GIs in regional trade agreements.
The following hypotheses are tested:
Hypothesis 1 — The more protected geographical indications the exporting country has, the higher the volume of export of GI protected goods going out of this country.
Hypothesis 2 — The more protected geographical indications the importing country has, the higher the volume of export of GI protected goods coming to this country.
Hypothesis 3 — The existence of a trade agreement with specific provisions on the protection of geographical indications increases trade between these countries.
The gravity model of trade is used to analyse trade in goods under HS 2204 nomenclature (Wine of fresh grapes, including fortified wines, grape must other than that of heading 2009) from 15 countries (top HS 2204 exporters) to 15 countries (top HS 2204 importers) for the year 2018 in order to study whether the trade volume depends on the amount of protected GIs. The rating of exporters and importers was compiled on the basis of the Trade Map statistics.
Export of goods under the heading code HS 2204 was selected for the analysis as a dependent variable because GIs for wines and spirits account for the biggest share of 51.1 % of all GI protected goods according to WIPO's statistics1. Moreover, GIs for wines are the most valuable as was presented by the European Union Intellectual Property Office research on infringement of protected geographical indications for wine, spirits, agricultural products and foodstuffs in the European Union2.
The following standard and specific for the research variables were included in the model (Table 1).
The following sources were used for the data collection (Table 2).
Tables 3 and 4 present specific data of exporters and importers. At this point, it should be noticed that among top exporters on Trade Map database such countries as Singapore and Hong
1 World Intellectual Property Indicators 2019. World Intellectual Property Organisation. Retrieved from: https://www.wipo.int/ edocs/pubdocs/en/wipo_pub_941_2019.pdf (Date of access: 24.09.2020).
2 Infringement of protected geographical indications for wine, spirits, agricultural products and foodstuffs in the European Union (2016). European Union Intellectual Property Office. Retrieved from: https://euipo.europa.eu/tunnel-web/secure/ webdav/guest/document_library/observatory/documents/ Geographical_indications_report/geographical_indications_re-port_en.pdf (Date of access: 24.09.2020).
Table 1
Model Variables
Type of Variables Variables
dependent variable Export — export of HS 2204 goods for 2018
Standard independent variables Y_e — exporter's gross domestic product (GDP) (total in current US dollars, 2018) Y_i — importer's GDP (total in current US dollars, 2018) Dist — geographic distance between capitals of countries, ComLang — common official language, ComBorder — common border.
specific variables concerning GIs GI_e — a number of exporter's protected GIs, GI_i — a number of importer's protected GIs, FTA — membership in regional trade agreements that have particular provision on GI protection.
Table 2 Data
Database Source
Export — export of HS 2204 goods for 2018 UN Comtrade Database
Y_e — exporter's GDP (total in current US dollars, 2018) World Bank Statistics
Y_i — importer's GDP (total in current US dollars, 2018) World Bank Statistics
Dist — geographic distance between capitals of countries CEPII, Gravity Dataset
ComLang — common official language CEPII, Gravity Dataset
ComBorder — common border CEPII, Gravity Dataset
GI_e — a number of exporter's protected GIs national GIs registers, IP offices
GI_i — a number of importer's protected GIs national GIs registers, IP offices
FTA — membership in regional trade agreement that have particular provision on GI protection WTO database on regional trade agreements
Table 3
Data on exporting countries
№ Exporter Export (HS 2204, USD, 2018) GI (wines) Sui generis system Trademarks, Collective, Certification GI Register
1 EU-28" 13 643 512 331 1607 v yes
2 Australia 2 160 160 531 116 v v yes
3 Chile 1999110 418 82 v yes
4 USA 1448123429 — v no
5 New Zealand 1 202 011 941 29 v v yes
6 Argentina 819503857 103 —
7 South Africa 782 176 775 0 — — —
8 China 364 558 825 — — — —
9 Georgia 196991520 20 v v yes
10 Moldova 137 933 778 7 — — yes
11 Switzerland 131 596035 62 v v yes
12 Canada 66 584 261 — — — —
13 Macedonia, North 60172219 — — — —
14 Israel 47 043 000 0 v v yes
15 Thailand 42 287541 1 — — —
Source: Compiled by authors based on Trade Map. Retrieved from: https://www.trademap.org/; UN Comtrade. Retrieved from: https://comtrade.un.org/; National registers and IP offices, Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications (2018). WIPO Working document SCT/40/5 PROV.2. Retrieved from https://www.wipo.int/meetings. * excluding intra-EU trade.
Kong are presented. These countries do not possess vineyards and wine production due to their geographical peculiarities. Consequently, they were excluded from the list of top exporters and were replaced by the following countries from the ranking: Israel and Thailand. The presence of
Singapore and Hong Kong in the export statistics may be explained by re-export.
Additionally, it is worth pointing out that as the United States and Canada do not have specific GIs registers, GIs can be found only in the trademarks databases by reviewing each regis-
Source: Compiled by authors based on Trade Map. Retrieved from: https://www.trademap.org/; UN Comtrade. Retrieved from: https://comtrade.un.org/; National registers and IP offices, Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications (2018). WIPO Working document SCT/40/5 PROV.2. Retrieved from: https://www.wipo.int/meetings/ en/details.jsp?meeting_id=46441 (Date of access: 24.09.2020). * excluding intra-EU trade.
Table 4
Data on importing countries
№ Importer Import (HS2204, USD, 2018) GI (wines) Sui generis system Trademarks, Collective, Certification GI Register
1 USA 6 449 227 701 — v no
2 EU-28* 3 145 250 306 1607 v yes
3 China 2 855 247 094 — — — —
4 Canada 1 996426 442 — — — —
5 Japan 1 688 914 030 0 v yes
6 Hong Kong, China 1 538 652 672 3 — — —
7 Switzerland 1 214 705 001 62 v v yes
8 Russian Federation 1 051 033 087 23 v v yes
9 Singapore* 658527352 70 v v —
10 Australia 644 192 449 116 v v yes
11 Brazil 375640852 19 — — yes
12 United Arab Emirates 311 204 983 0 — — —
13 Mexico 271125780 0 v v yes
14 South Korea 244 001 146 0 v yes
15 New Zealand 143 397 945 29 v v yes
tered mark for the presence of a GI. This proved to be difficult because there are numerous marks registered under the Nice Class 33 (alcoholic beverages, except beers; alcoholic preparations for making beverages). Moreover, some marks use geographic names but would not qualify as GIs (Giovanucci et al., 2009). Therefore, the results of the search in the trademark databases of the United States and Canada provided ambiguous data, from which a clear list of trademarks protecting wine GIs could not be distinguished. Additionally, Chinese trademark database is available only for registered officials. South Africa did not have a register for GIs when the research was carried out.
As there is no global wine GIs register, the data collected through national registers and IP offices should be interpreted with caution, as some registers might not contain up to date data. It should be also mentioned that the data on GI were collected at the beginning of the year 2020; hence, the data reflects the situation for the year 2019. Since GIs registration is usually a rather lengthy procedure, it is assumed (in the framework of the present research) that the data from 2019 does not differ significantly from the data from 2018. Where "-" is indicated in Tables 3 and 4, the data is unavailable or was not provided by the country in case of a working document of the WIPO Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications.
Additionally, GI protection systems of each country are included in Tables 3 and 4 in order to present a complex nature of protection regimes. This data is according to the countries' answers compiled into the working document of the WIPO Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications.
The data on following variables - Export, Dist, ComLang, ComBorder, FTA — is not presented here as it was collected for each particular pair of countries in the dataset for STATA. Based on the data provided in Tables 3 and 4 above and on the CEPII gravity dataset, a gravity model dataset for 218 exporter-importer pairs was compiled for the equation estimation in STATA, a statistical software package.
4. Results
The initial regression with all variables was estimated (Fig. 1). According to the results, the regression is significant (Prob > F = 0) and 67 % of all observations can be explained by the equation (R-squared = 0.67). However, several insignificant coefficients occurred for the following variables lnY_e, lnG_i, lnDist, ComBorder, FTA11.
Test for heteroskedasticity indicated that there was no heteroskedasticity (Prob > chi2 =
1 In the analysis, the data for the FTA variable was decoded, hence the new name of the variable (FTA1) was automatically introduced by the STATA.
. reg InEirport InYe In Y i InGIe InGIi lnDist CoraLang ComBorder PI AI
Source SS df HS
Kodel 573. 217838 S 71.6522297
Kesidual 279 329947 55 5.07872631
Total 852 547785 63 13.5325045
Number of obs F(B, 55)
Adj R-squared =
64
14.11 0.0000 0.6724 0.6247 2.2536
lnExporL CoeC. Std. Err. t P>|t| [951 Conf. Intervall
In Ye .0752605 .1953485 0 .39 0.702 -.3162267 .4667477
loY_i .8047787 .3295809 2 .44 0.018 .1442838 1.465274
InGIe .9382094 .2032347 4 .62 0.000 .S30917S 1.345501
lnGI_i -.1820642 _2484579 -0 _73 0-467 679985 -3158566
lnDist -.7967213 .4398102 -1 .81 0.076 -1.678121 .084678
ConiLanej 2.712817 .8556499 3 .17 0.002 .9980566 4.427578
ComBorder .451078 1.122942 0 .32 0.752 -2.400561 3.302717
FTA1 .4022529 .5992019 0 .67 0.505 -.7985746 1.60308
coos -6.307524 10.9166 -0 .58 0.566 28.18487 15.56982
Fig. 1. Initial regression
= 0.81 >0.05) as did the test for multicollinear-ity (VIF = 1.98 < 10). The first test for joint significance for the variables lnY_e, lnG_i, lnDist, ComBorder, FTA1 showed that all these variables could be excluded from the estimated equation (Prob > F = 0.087 > 0.05). However, previous studies have showed that distance between trading partners plays an important role as well as GIs protected in importing countries to some extent; thus, we cannot exclude these coefficients straight away. Yet, exporting country's GDP, existence of a common border and presence of a trade agreement (since the minimum level of protection for geographical indications is already set out in the TRIPS Agreement), indeed, might not play a role.
The second test for joint significance was conducted under the following conditions:
lnY_e = 0, lnGI_i = 1, ComBorder = 0, FTA1 = 0, lnDist = 1,
and showed that the coefficient for variables lnGI_i and lnDist was significant and other coefficient for the variables lnY_e, ComBorder, FTA1 was insignificant (Prob > F = 0.0000 < 0,05).
Thus, the variable FTA1 proves to be insignificant and Hypothesis 3 is not supported:
Hypothesis 3 — The existence of a trade agreement with specific provisions on the protection of geographical indications increases trade between these countries.
Nevertheless, it ought to be noted that even though the variable FTA1 is insignificant in the model, in the real world the existence of a trade agreement with GI provisions between countries or regional blocs may impact trade. For instance, the newly signed EU-China bilateral
agreement with a significant list of protected GIs is expected to improve trade in GI products1. Moreover, any differences of opinion over GI regulation might affect the signing of these agreements, and therefore the volume of trade in GI products between countries may deteriorate. For example, GIs question was among the points of disagreement during the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) that started in 2013 and ended unsuccessfully in 2016. The ongoing EU-Australia FTA negotiations have also encountered contradictions on the issue of GIs. From the EU side, a substantial list of protected GIs was presented for inclusion in the Agreement. Thus, Australian manufacturers will not be able to use these GIs, and a public objections procedure was launched in Australia concerning terms proposed by the European Union. No commitments on GIs have been made yet2.
Proceeding with the estimation of an adjusted regression (Fig. 2), we again got an insignificant coefficient for the variable lnGI_i that was supported by the test for joint significance.
Hence, our Hypothesis 2 is not supported:
Hypothesis 2 — The more protected geographical indications the importing country have, the higher the volume of exports of GI protected goods coming to this country.
1 EU-China agreement protecting geographical indications enters into force. Retrieved from: https://ec.europa.eu/info/news/ eu-china-agreement-protecting-geographical-indications-en-ters-force-2021-mar-01_en
2 Public objections procedure concerning terms proposed by the European Union for protection as geographical indications in Australia. https://www.dfat.gov.au/trade/agreements/ negotiations/aeufta/public-objections-gis/Pages/default
. reg InExport lnYi lnGl e InGli lnDist ComLang
Source SS df MS
Modul 569. Э18393 5 113.983679
Residual 282. 629392 58 4.87292055
Total 852. 547785 63 13.5325045
Number of obs - 64
F<5, 58) 23-39
Prob > F 0.0000
R-squared - 0.6685
Adj K-squared - 0.63Э9
Root USE = 2.2075
InExport Coef. Std_ Err. t P>ltl [95% Conf- Intervall
lnY i .7784088 .3049181 2 .55 0.013 .168043 1.388769
InGI e .9917609 .1667462 5 .95 0.000 .6579821 1.32554
InGI i -.1489805 .2370793 -0 .63 0.532 -.6235464 .3255853
lnDist -.9344175 .3063352 -Э .05 0.003 -1.547614 -.3212209
ComLang 2.830675 .749995 3 .77 0.000 1.329396 4.331953
cons -2.091826 8.S8S25 -0 .24 0.808 -19.27707 15.09342
Fig. 2. Adjusted regression
. reg 1aExport lnYi InGIe loDist ComLang
Source ss df ms
Rodel 1033.00536 4 258.251341
Residual 544.445932 121 4.49955316
Total 1577.4513 125 12.6196104
Number of obs = 126
F<4, 121) 57.39
Prob > r 0.0000
K-squared - 0.6549
Adj R-squared — 0.6434
Root USE = 2.1212
InExport Coef. Std. ЕГГ. t P>|t| [95% Conf. Intervall
lnY i .8482283 .1365816 6 .21 0.000 .577829 1.118627
InGI e 1.086552 .1081113 10 05 0.000 .8725175 1.300587
lnDist -.6199353 .2582694 -2 40 0.018 -1.131248 -.1086228
ComLang 2.132686 .4983869 4 28 0.000 1.145998 3.119375
cons -7.584852 4.442841 -1 .71 0.090 -16.38063 1.210924
Fig. 3. Final regression
In the final regression, we included variables, which coefficients proved to be significant. The estimation results are presented in Fig. 3.
According to the estimation, the regression is significant (Prob>F = 0) and 65 % of all observations can be explained by the equation (R-squared = 0.65). Test for heteroscedasticity indicated that there is no heteroscedasticity (Prob > chi2 = 0.22 > 0.05), as did the test for multicollinearity (VIF = 1.13 < 10). All coefficients are significant, including lnGI_e, which supports Hypothesis 1:
Hypothesis 1 — The more protected geographical indications the exporting country has, the higher the volume of exports of GI protected goods going out of this country.
Therefore, as a result we get the following gravity equation:
lnExport = 0.84 lnY_i + 1.08 lnGI_e -
- 0.62 lnDist + 2.1 Comlang (1)
The coefficients of this equation might be interpreted as following:
— 0.84 lnY_i — a 1 % increase in importer's GDP leads to a 0.84 % increase in export of HS
2204 goods into this country (other variables are const);
— 1.08 lnGI_e — a 1 % increase in number of registered GIs in exporting country lead to a 1.08 % increase in export of HS 2204 goods from this country (other variables are const);
--0.62 lnDist — a 1 % increase in distance
leads to a 0.62 % decrease in export (other variables are const);
— ComLang — if exporter and importer share a common language trade in HS 2204 goods will increase for eA0,62 = 185 % (other variables are const).
Thus, to conclude, the volume of export of HS 2204 goods depends on an importer's GDP, distance between countries, and presence of a common language. The number of protected GIs in exporting country also proved to have a positive impact on trade. This result partially supports findings by Sorghoa and Larue (2014) that GIs create trade when both, importing and exporting, countries have GI-protected products (applicable to in-tra-EU trade).
Also, it supports the results obtained by Raimondi et al. (2018) showing that geographical indications influence trade flows differently, depending on whether the products protected by GI are produced in the exporting or importing country, and that the EU policy concerning GIs acts as an export promotion tool when implemented by exporters (applicable to intra-EU trade).
5. Implications for Russia
Geographical indications can be seen in the names of many Russian products such as Moscow bun, Kostroma cheese, Tambov ham, etc. These names are well-known and valued for their quality among consumers, but they are not registered as appellations of origin, though, could be, according to the Russian legislation1. The names registered as AOs are Khokhloma Painting, Gzhel Porcelain, Essentuki Mineral Water, Russian Vodka, Abrau-Durso Sparkling Wine. There are also several famous foreign names registered as AOs in order to get protection on the territory of the Russian Federation: Asti, Prosecco, Tequila, Proscuitto Di Parma, Parmigiano Reggiano, Gorgonzola.
As of July 1, 2020, there are 245 AOs registered: 200 — by local producers (in force), 41 — by foreign producers (in force), 4 — out of force2. Among 200 AOs, there are 81 referred to mineral waters, 55 — handicrafts, 53 — agricultural products and foodstuff, 9 — alcoholic drinks, 2 — other. The European Union, in contrast, has more than 3000 GIs and AOs protected (Furmanova, 2019).
According to the Rospatent statistics for 2019, AOs are not very popular among producers, because dynamics of AOs registration does not grow as intense as it could be growing. In 2019, there were only 100 applications for AOs registration, including 92 initiated by Russian producers and only 8 by foreign producers. The number of AOs registered is even less — 67 (66 received by Russian producers)3. In comparison, there were 99 applications filed and 36 registrations received in 2018.
This quite low level of applications might be explained by two reasons. Firstly, producers' will-
1 An overview of legal and institutional frameworks and opportunities, challenges and recommendations for geographical indication products in Armenia, Georgia, Kyrgyzstan, the Republic of Moldova and the Russian Federation. (2018). Synthesis Report. Food and Agriculture Organsation of the United Nations. Retrieved from: http://www.fao.org/3/ CA1002EN/ca1002en.pdf (Date of access: 24.09.2020).
2 Rospatent. Retrieved from: http://new.fips.ru/registers-web/ action?acName=docList2tree (Date of access: 24.09.2020).
3 Annual Report 2018. Rospatent. Retrieved from: https://ro-spatent.gov.ru/content/uploadfiles/otchet_2018_ru.pdf (Date of access: 24.09.2020).
ingness to get an exclusive right and ensure legal protection for their products with trademarks as trademark registration gives the right's holder a monopoly on its use; while the exclusive right to use the AO in respect of the already registered name can be granted to any person who produces goods with the same special properties within the same geographical object (article 1518 of the Civil Code).
Secondly, there are difficulties with AOs registration related to the need to obtain a confirmation from the governmental authority that the applicant produces goods within the boundaries of a certain geographical region, the special properties of which are exclusively or mainly determined by the environmental conditions of the geographical region and (or) human factors (article 1522 of the Civil Code).
The Russian system of protection of appellations of origin was developed simultaneously with the legislation on trademarks only in 1992. Subsequently, the law was amended in 2002 and 2008 as a part of regulatory preparation for Russia's accession to the WTO. Russia's WTO obligations under Articles 22 and 23 of the TRIPS Agreement, which requires protection of geographical indications, were an incentive for the adoption of the Federal Law No. 230-FZ. The bill introduces GIs as a separate form of intellectual property, sets a difference between GIs and AOs and solves several existed problems. Therefore, Russian accession to the WTO, despite contradictory estimations (Sutyrin, Trofimenko, Gubina, 2019), has improved the IP protection and enforced the further development in this field.
First, the key differences between GIs and AOs are the removal of the requirements (Uroshleva, 2019):
— for the uniqueness of the good that is justified by its place of origin,
— for all stages of production to be in a particular locality.
A geographical indication can be registered if at least one of the stages of production is carried out in the territory of the geographical location concerned, so the registration procedure will not be as complicated as for appellations of origin.
Second, the bill allows associations producing and distributing the goods to use registered AOs and GIs, as according to the present legislation, only physical and legal persons are able to use them.
Third, the bill facilitates GIs' registration process by allowing foreign producers to submit any document similar to the evidence of such registration from their country of origin, as before, in or-
der to get AOs' registration in Russia, foreign producers had to submit evidence of such registration from their own country.
Moreover, this new Law is also in line with the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications. The Geneva Act modernises the 1958 Lisbon Agreement that established international registration system and makes it easier for producers to register and protect their AOs and GIs in countries other than the country of origin. International digital register (maintained by the WIPO) records, stores all registration under the Lisbon Agreement and the Geneva Act, and enables access to the data on GIs and AOs registered worldwide for all parties. Thus, in order to facilitate an accession to the Geneva Act, a Draft Federal Law «On the Accession of the Russian Federation to the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications" is prepared for a review. The participation in the Geneva Act will increase the level of protection for Russian regional brands on global market and provide new opportunities for economic development of regions.
To better position their brand origin in international markets, Russian companies firstly must reduce the reservations and scepticism of their foreign customers. Managers should study the levels of ethnocentrism and cultural affinity regarding the countries of entry in order to enhance their product image and to avoid negative spillover effects. They can benefit from their domestic country-of-origin position, because positive associations can create an immediate product identity and brand awareness in international markets.
Then, benchmarking, which compares our products and services with international ones in order to gain business insights, could improve BO-marketing. The findings provide comparability and explainability and can also serve as a basis for better positioning the BO.
Finally, Russian companies can only benefit from its BOs when the consumers are aware of it. So, one of the most important task is to communicate the BO and increase the awareness of customers with different strategies (Aichner, 2014). The most frequent strategy used to communicate the product as a BO is the "Made in..."-label. The second strategy is quality and origin label, which ensures credibility, allows ex-ante quality verification and minimises external costs for customers (Hobbs, 2004). These two strategies are usually combined. The next strategies are to embed the BO directly in the company name or to use the BO-language for the company or brand name it-
self and for slogans or the whole advertisement in any media. A very useful strategy is to use official flags, symbols, emblems or national elements. Buildings, landscapes, mountains, rivers and cities can also be used, when it allows customers quickly to associate a product as BO. The last strategy is to use famous or stereotypical people from the region where the BO is perceived to belong. Russian companies can combine two or more communication strategies1. Which strategies are combined depends on the customer's knowledge, perception and stereotypes of the foreign market. For Russian companies it is important to know cultural differences and adapt the BO-communication and marketing strategies for every foreign market.
6. Conclusions
Geographical indications, being among the earliest means of IP protection, established to differentiate goods of a unique quality, played a significant role in trade. GIs have always been valuable assets for producers that use them to differentiate their products and get a price premium. Consumers also benefit from GIs as they can get undistorted information on products' quality and decrease their search costs. Moreover, GIs (along with their protection system, support and proper approach from consumers, producers and governments) might be considered as a country's brand, as one of the attributes of a nation that constitute its competitive advantage.
The gravity model has clearly demonstrated that GIs protection positively affects the export growth. Taking that into account, the improvement of the GIs protection in the Russian region would lead to the increase in regional trade.
GIs protection mechanism introduced by the new Russian Law No. 230-FZ can become an incentive for producers to maintain a quality level and play an essential role in the development of regions and preservation of local traditions and knowledge, as well as to increase employment opportunities. It is expected that the bill will promote development of regional brands. There is a need for a greater number of existing designations in Russia indicating the geographical origin of products, which have a certain quality and reputation but cannot be registered as AOs due to the rigorous requirements.
1 There is a variety of communication strategies, which the Russian companies could apply. One of the possible strategies, in case of a new product development related to the GI, could be a new product preannouncement (NPP) (Pezoldt et al., 2020). However, the main focus of the communication campaign should remain on the brand origin.
Introduction of GIs can liven up local production, as manufacturers will be able to obtain legal protection for their regional brands using more accessible procedure of GIs registration and, hence, attract investments and raise awareness among consumers. However, some governmental support on state and regional levels is required in order to achieve these goals. GIs can be developed as a competitive advantage of the Russian Federation on the global market of agricultural products, thus, improve country's image.
Russian companies could apply GIs for developing their brand origin and promoting their products not only at the national level, but also at the international one. The appropriate inclusion of GIs in the marketing strategy could enforce the competitiveness of companies from various Russian regions. The further investigations will focus on GIs in Russia not only from legal, but also from economic and managerial perspectives of the regional development.
References
Aichner, T. (2014). Country-of-origin marketing: A list of typical strategies with examples. Journal of Brand Management, 21(1), 81-93.
Blakeney, M. (2014). The Protection of Geographical Indications: Law and Practice. Edward Elgar, 512.
Bramley, C., Bienabe, E., & Kirsten, J. (2009). The Economics of geographical indications: towards a conceptual framework for geographical indication research in developing countries. In: The Economics of intellectual Property. Suggestions for Further Research in Developing Countries and Countries with Economies in Transition (pp. 109-141). World Intellectual Property Organization, Publication № 1012(E). Retrieved from: https://www.wipo.int/export/sites/www/ ip-development/en/economics/pdf/wo_1012_e_cover.pdf
Calboli, I. & Loon, N. W. (2017). Geographical Indications at the Crossroads of Trade, Development, and Culture. Focus on Asia-Pacific. Cambridge University Press, 570. DOI: https://doi.org/10.1017/9781316711002
Chepeleva, K. V. (2019). Geographical indicator as a factor in the competitiveness of products in the food market. Ekonomika i predprinimatelstvo [Journal of Economy and entrepreneurship], 13(11), 349-354. (In Russ.)
De Benedictis, L. & Taglioni, D. (2011). The Gravity Model in International Trade. In: L. De Benedictis, L. Salvatici (Eds.), The Trade Impact of European Union Preferential Policies (pp. 55-89). Springer.
Eremenko, V. I. (2012). On the legal protection of appellations of origin of goods in the Russia. Zakonodatelstvo i ekonomika, 5, 16-38. (In Russ.)
Folfas P. & Kuznar A. (2013). International trade in intellectual property-intensive goods. Conference paper. ETSG, Birmingham, U.K. Retrieved from: https://www.etsg.org/ETSG2013/Papers/137.pdf
Furmanova, E. (2019) Geographical Indications to be Introduced in Russia: What Does this Mean for Local and Foreign Businesses? ECTA Bulletin, XIII, 36-37.
Gangjee, D. (Ed.). (2016). Research handbook on intellectual property and geographical indications. Edward Elgar, 608.
Giovanucci, D., Josling, T., Kerr, W., O'Connor, B. & Yeung, M. T. (2009). Guide to Geographical Indications: Linking products and their origins. International Trade Center. Retrieved from: https://www.origin-gi.com/images/stories/PDFs/ English/E-Library/geographical_indications.pdf
Gorlenko, S. A. (2004). Pravovaya okhrana naimenovaniy mest proiskhozhdeniya tovarov [Legal protection of appellations of origin] (4th edition). Moscow, INIC Rospatenta, 116. (In Russ.)
Hobbs, J. E. (2004). Information asymmetry and the role of traceability systems. Agribusiness, 20(4), 397-415.
Hulland, J. S. (1999). The Effects of Country-of-Brand and Brand Name on Product Evaluation and Consideration. Journal of International Consumer Marketing, 11, 23-40.
Iacob, A. (2016). Country of origin effect on brand perception: A systematic review of the literature from the last two decades (1993-2013). In: J. Kuada (Ed.), Perspectives on International Business: Theories and practice (pp. 221-277). London.
Koval, A. & Trofimenko, O. (2020). Theoretical concepts of trade policy development and analysis: Evolution and modern challenges in the context of the international trading system transformation. St Petersburg University Journal of Economic Studies, 36(1), 27-48. DOI: 10.21638/spbu05.2020.102
Lee, H.-M. & Lee, C.-C. (2011). Country-of-Origin and brand redeployment impact after brand acquisition. The Journal of Consumer Marketing, 28(6), 412-420.
Meloni, G. & Swinnen, J. (2018). Trade and terroir. The political economy of the world's first geographical indications. Food Policy, 81, 1-20.
Raustiala, K. & Munzer, S. R. (2007). The Global Struggle over Geographic Indications. The European Journal of International Law, 18(2), 337-365. DOI: 10.1093/ejil/chm016
Pezoldt, K., Correns, A. & Zajko, M. (2020). Preannouncement of New Products: Overcoming Individual Adoption Barriers. Balkan Region Conference on Engineering and Business Education, 3(1), 169-179. DOI: 10.2478/cplbu-2020-0020
Raimondi, V., Falco, C., Curzi, D. & Olper, F. (2018). Deliverable 4.5: The Trade Effect of the European Union Geographical Indications Policy. Strength2Food. Retrieved from: https://www.strength2food.eu/wp-content/up-loads/2018/04/D4_5_Trade-Effects-of-the-EU-Geographical-Indicati.pdf
Rangnekar, D. (2004). The Socio-Economics of Geographical Indications. A Review of Empirical Evidence from Europe. Issue Paper No. 8. United Nations Conference on Trade and Development. Retrieved from: https://unctad.org/ system/files/officialdocument/ictsd2004ipd8_en.pdf
Sorgo, Z. & Larue, B. (2014). Geographical indication regulation and intra-trade in the European Union. Agricultural Economics, 45(1), 1-12. DOI: 10.1111/agec.12125
Sutyrin S. F., Trofimenko O. Y. & Gubina M. A. (2019). Impact of the WTO accession on acceding countries: analysis of key macroeconomic indicators. In: S. F. Sutyrin, O. Y. Trofimenko, A. G. Koval (Eds.), Russian Trade Policy: Achievements, Challenges and Prospects (pp. 79-102). Abington, New York, Routledge.
Thakor, M. V. & Kohli, C. S. (1996). Brand Origin: Conceptualization and review. Journal of Consumer Marketing, 13(3), 27-42.
Uroshleva A. (2019). Geograficheskie ukazaniya: chto nuzhno znat o novom vide sredstv individualizatsii tovarov i perspektivakh regionalnogo razvitiya [Geographical indications: what you need to know about a new type of means of individualization of goods and prospects for regional development]. GARANT. Retrieved from: http://www.garant.ru/ article/1288015/ (In Russ.)
Vandecandelaere, E., Teyssier, C., Barjolle, D., Fournier, S., Jeanneaux, Ph. & Beucherie, O. (2018a). Economic impacts of Geographical Indications: Worldwide evidences from 9 case studies. Conference session. 13th European IFSA Symposium, Chania, Greece. Retrieved from: http://ifsa.boku.ac.at/cms/fileadmin/Proceeding2018/Theme5_ Vandecandelaere.pdf
Vandecandelaere, E., Teyssier, C., Barjolle, D., Fournier, S., Jeanneaux, Ph. & Beucherie, O. (2018b). Strengthening sustainable food systems through geographical indications. An analysis of economic impacts. Food and Agriculture Organization of the United Nations. Retrieved from: http://www.fao.org/3/i8737en/i8737en.pdf.
About the authors
Kerstin Pezoldt — PhD in Economics, Habilitation in Economics, Professor, Department of Marketing, Ilmenau University of Technology; https://orcid.org/0000-0002-9301-1459 (22, Langewiesener St., Ilmenau, 98693, Germany; e-mail: kerstin.pezoldt@tu-ilmenau.de).
Evgeniia A. Mikheeva — MA in Economics, Consultant, ANO «Center of Expertise on the Issues of the World Trade Organization» (57/1, Trifonovskaya St., Moscow, 129272, Russian Federation; e-mail: e.a.mikheeva@gmail.com).
Alexandra G. Koval — Cand. Sci. (Econ.), Associate Professor, Department of World Economy, Saint Petersburg State University; Scopus Author ID: 57203814273; https://orcid.org/0000-0001-8648-0911 (62, Chaykovskogo St., Saint-Petersburg, 191123, Russian Federation; e-mail: a.koval@spbu.ru).
Maryana A. Gubina — Cand. Sci. (Econ.), Associate Professor, Department of World Economy, Saint Petersburg State University; Researcher ID: M-7761-2015; https://orcid.org/0000-0003-0672-8097 (62, Chaykovskogo St., Saint-Petersburg, 191123, Russian Federation; e-mail: m.gubina@spbu).
Информация об авторах
Пецольдт Керстин — PhD экономических наук, хабилитированный доктор экономических наук, профессор, кафедра маркетинга, Технический университет Ильменау; https://orcid.org/0000-0002-9301-1459 (Германия, 98693, г. Ильменау, ул. Лангевизенер, 22; e-mail: kerstin.pezoldt@tu-ilmenau.de).
Михеева Евгения Александровна — магистр экономики, консультант, АНО «Центр экспертизы по вопросам Всемирной торговой организации» (Российская Федерация, 129272, г. Москва, Трифоновская ул., 57 стр. 1; e-mail: e.a.mikheeva@gmail.com).
Коваль Александра Геннадьевна — кандидат экономических наук, доцент, кафедра мировой экономики, Санкт-Петербургский государственный университет; Scopus Author ID: 57203814273; https://orcid.org/0000-0001-8648-0911 (Российская Федерация, 191123, г. Санкт-Петербург, ул. Чайковского, 62; e-mail: a.koval@spbu.ru).
Губина Марьяна Андреевна — кандидат экономических наук, доцент, кафедра мировой экономики, Санкт-Петербургский государственный университет; Researcher ID: M-7761-2015; https://orcid.org/0000-0003-0672-8097 (Российская Федерация, 191123, г. Санкт-Петербург, ул. Чайковского, 62; e-mail: m.gubina@spbu).
Дата поступления рукописи: 23.11.2020. Received: 23 Nov 2020.
Прошла рецензирование: 19.03.2021. Reviewed: 19 Mar 2021.
Принято решение о публикации: 27.05.2022. Accepted: 27 May 2022.
