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1 Council of the European Union Brussels, 7 June 2017 (OR. sl, en) 10086/17 AGRI 318 AGRIORG 55 DELACT 97 NOTE From: To: General Secretariat of the Council Delegations No. Cion doc.: 9533/17 Subject: COMMISSION DELEGATED REGULATION (EU) /... of amending Regulation (EC) No 607/2009 as regards the wine grape varieties and their synonyms that may appear on wine labels - Request from the Slovenian delegation With a view to the discussion to be held at the Council meeting on 17 July 2017, delegations will find in the Annex a note from the Slovenian delegation /17 dbb*/sg/mm 1 DGB 1 A EN

2 ANNEX Meeting of the Agriculture and Fisheries Council, July 2017 Commission Delegated Regulation (EU) / of amending Regulation (EC) No 607/2009 as regards the wine grape varieties and their synonyms The European Commission has adopted the Commission Delegated Regulation (EU) /... of amending Regulation (EC) No 607/2009 as regards the wine grape varieties and their synonyms that may appear on wine labels (C(2017) 3398 final). Due to reservations, both substantive and procedural, the Republic of Slovenia has requested that this item be discussed at the Agriculture and Fisheries Council, so that Slovenia may set out its detailed views or reasons for raising objections to this delegated regulation. 'Teran' is an EU protected name for a type of wine with a protected designation of origin which has been traditionally produced from the 'Refošk' wine grape variety in the Karst wine region. In line with EU legislation, 'Teran' has been protected and registered as a protected designation of origin (PDO) of a Slovenian quality wine from the Karst wine region since 17 February Regulation (EU) No 1308/2013 provides that, where the name of a wine grape variety contains or consists of a protected designation of origin, that name shall not be used for the purposes of labelling agricultural products. However, the legislation also allows for exemptions from this provision, but only where such labelling practice already exists, where the legitimate interests of the producers and consumers involved are taken into account, and where such exemptions are granted by Community rules, applicable on 11 May 2002 or on the day of a Member State's accession. Any Member State or third country wishing to label its wine within the EU with a designation of the grape variety containing a protected designation of origin is required to seek an exemption under the abovementioned rules, and may do so: - as part of the procedure to protect the designation of origin in question, for new cases of protection (negotiations on granting an exemption for labelling a wine grape variety), or 10086/17 dbb*/sg/mm 2

3 - as part of accession negotiations or when concluding an agreement with a third country, for cases of designations of origin already subject to protection within the EU. Before Croatia acceded to the EU (i.e. before 1 July 2013), it had not requested the inclusion of the so-called 'Teran' wine grape variety on a list of exemptions, as it had done for some other varieties (e.g. 'Alicante Bouschet', 'Borgonja' and 'Frankovka', for which it was granted exemptions to use these names, as well as 'Montepulciano' and 'Portugizac', for which it was not), nor was this issue addressed by the Accession Treaty. When the Commission adopted the delegated regulation under the abovementioned provisions of Regulation (EU) No 1308/2013, it unilaterally and retroactively granted the use of a wine grape variety name which is a homonym of a protected designation of origin for a type of wine, doing so outside the decision-making procedure to protect the designation of origin for wine and despite the opposition of a Member State entitled to protection. In so doing, it has significantly interfered with the existing protected designation of origin for wine and, in Article 2 of this delegated regulation, even legalised the existing illegal labelling of products and breaches of the EU acquis. Once the delegated regulation is implemented, producers in Croatian Istria will be allowed to use the 'Teran' name on labels for the wine grape variety. This will undoubtedly mislead consumers, since, due to the nearly identical name, geographical proximity and tradition of the 'Teran' PDO wine production in Slovenia, they will not be able to make a distinction between this Croatian wine and the 'Teran' PDO wine. The delegated regulation provision that 'Hrvatska Istra' and 'Teran' should appear in the same visual field and that the font size of the name 'Teran' should be smaller does not make it any less likely that consumers will be misled. Croatian national law provides that Croatian winemakers can label the so-called 'Teran' wine grape variety using a synonym 'Istrijanac', which is an option not taken into account in the Commission delegated regulation /17 dbb*/sg/mm 3

4 Furthermore, the whole procedure leading up to the adoption of the delegated regulation has been conducted in an opaque manner. When adopting this delegated act, the Commission was in breach of the Common Understanding between the European Parliament, the Council and the Commission on Delegated Acts, annexed to the Interinstitutional Agreement on Better Law-Making (OJ L 123, ), as the content of the adopted delegated regulation significantly differs from the version of the draft delegated regulation, discussed at the expert group meeting on 24 January The Commission has thereby deprived experts from the Member States of the opportunity to respond to the modified version of the delegated regulation. The Commission also failed to notify Slovenia that Croatia had allegedly introduced a request to use the name of a wine grape variety, despite the fact that this request directly interferes with the duly acquired rights and legitimate expectations of the 'Teran' PDO wine producers in Slovenia. In 2013 the Commission presented its clear position on this matter, namely that 'Teran' is a protected designation of origin to be used solely for Slovenian wine and that, prior to its EU accession, Croatia had not requested the inclusion of the 'Teran' wine grape variety on the list of exemptions. Following the accession of Croatia to the EU on 1 July 2013, the Commission adopted Implementing Regulation (EU) No 753/2013 in August 2013, granting Croatia, at its request, the use of 15 wine grape variety names which wholly or partly consist of a protected designation of origin, or which contain such designation, on Croatian wine labels with a protected designation of origin or geographical indication, but the 'Teran' wine grape variety was not amongst them. For all other wines not in compliance with EU law, the abovementioned implementing regulation provided only for a transitional period to exhaust stocks, which ended on 30 June Slovenian producers therefore had a legitimate expectation that their designation of origin would be absolutely protected under the existing EU acquis and that no subsequent exemptions regarding labelling of products using the so-called 'Teran' wine grape variety name would be introduced. This legitimate expectation was strengthened by the fact that it took the Commission four years to adopt the delegated regulation /17 dbb*/sg/mm 4

5 Until recently, the Commission had prevented the Republic of Slovenia and Slovenian 'Teran' PDO wine producers from accessing relevant Croatian documents, used by Croatia to allegedly request an exemption and by the Commission as a basis for the relevant delegated regulation. In this regard, the European Ombudsman issued a recommendation on 15 February 2017 which concluded that the Commission should guarantee full access to data included in these Croatian documents, with the exception of personal data, and that by refusing the producers' request to access these data the Commission had committed an irregularity. At the Republic of Slovenia's insistence that these Croatian documents be made available, the Croatian Ministry of Agriculture published them on its website on 4 April The documents available to the public include the note of 13 May 2013, containing Croatia's request to the Commission for the inclusion of 17 wine grape varieties on the list of exemptions. This note did not contain any request for an exemption for the 'Teran' wine grape variety. Croatia only requested that exemption in the note of 16 April 2014, therefore after its accession to the EU. With Implementing Regulation (EU) No 753/2013, the Commission accepted most of Croatia's requests for exemptions, while exemptions for the option of labelling Croatian wines as the 'Montepulciano' and 'Portugizac' wine grape varieties were not granted. Therefore it is even less acceptable that, by adopting the delegated regulation, the Commission has now granted the exemption for the labelling of the 'Teran' wine grape variety which was not requested in the 2013 Croatian note. The possibility of misleading consumers is even more likely, since the 'Teran' PDO wine is marketed almost exclusively on the Slovenian market, where most of the Croatian wine, produced in Croatian Istria under the 'Teran' wine grape variety name, would be marketed as well. Such labelling will confuse consumers and mislead the market about the origin and quality of the goods, which constitutes a breach of the EU acquis. This is also a serious problem with regard to Article 2 of the delegated regulation, which allows for the marketing of wine stocks produced between 2013 and 2016 on the EU market, even if they are labelled in a manner not compliant with the legislation at the time of labelling and not compliant with the adopted delegated regulation, while this kind of labelling exploits the reputation of the Slovenian 'Teran' PDO wine /17 dbb*/sg/mm 5

6 Under existing legislation, the labelling of Croatian wines using the 'Teran' name on EU territory is clearly forbidden and illegal. The Croatian authorities should therefore take all necessary steps to prevent it. Croatia has not complied with this obligation and has taken no action against the illegal use of the 'Teran' PDO name on its territory. It has also failed to inform Slovenia about the measures taken against the breaches, as it is obliged to do under EU rules. Slovenia has repeatedly reported the Croatian breaches to the Commission. In December 2016, it also sent an official complaint to the Commission regarding Croatia's failure to comply with EU law. Only following the official complaint did the Commission contact the Croatian authorities and draw their attention to the need to respect the rights of the Slovenian 'Teran' PDO wine producers. If the Commission had requested Croatia's full compliance with the existing legislation at the time of their accession to the EU in July 2013, there would no longer be Croatian wines labelled using the 'Teran' name. While drafting the delegated regulation, the Commission submitted no assessment of any adverse economic impact of the abovementioned exemption on the 'Teran' PDO wine producers in Slovenia as a consequence of misled consumers, lower costs of wine production in Croatian Istria and the loss of market share. The Commission has also failed to prepare an estimate of Croatian wine producers' adjustment costs, if they were no longer allowed to label their wines using the 'Teran' name and were required to use the existing synonym 'Istrijanac' instead. Taking an impartial decision on the justification of granting such an exemption would clearly require taking into account the impact on both Slovenian and Croatian wine producers. Furthermore, the Republic of Slovenia considers that it should also be taken into account that the 'Teran' protected designation of origin is an intellectual property right benefiting from a high degree of legal protection, while the labelling of wines using a wine grape variety name is not a legally protected right, but an optional indication when labelling and presenting wines /17 dbb*/sg/mm 6

7 When issuing the delegated regulation, the Commission also failed to take into account the fact that under Croatian national legislation, Croatian wine producers wishing to use the 'Teran' wine grape variety name, which includes the 'Teran' protected designation of origin, have the option to use the synonym 'Istrijanac'. This is clear from the abovementioned Croatian note, sent to the Commission on 13 May The Commission has also received several notes from Slovenia, alerting it to the existence of this synonym. Despite the existing ban on labelling wines using the 'Teran' grape variety name, containing the Slovenian 'Teran' protected designation of origin, Croatian wine producers could therefore continue to produce wines from the 'Teran' grape variety and market it under the 'Istrijanac' synonym. In the 'Tokaj' case (ERSA, C-347/03 ), the Court of Justice of the EU ruled that the existence of a synonym for a wine grape variety name which is a homonym of a protected designation of origin is an important element allowing for a legally permissible ban on labelling wines using this wine grape variety name. The Commission has therefore adopted the regulation in question on the basis of an excessively broad interpretation of Article 100(3) of Regulation (EU) No 1308/2013 and thus overstepped the limits of the power delegated upon it by the legislator, as well as limits arising from the fundamental principles of legal certainty, protection of legitimate expectations and proportionality. All the reasons set out above and detailed explanations on this subject have been submitted to the Commission by the Republic of Slovenia on various occasions and at various levels, including recently in a detailed explanation of its opposition statement as part of the public deliberation procedure relating to the delegated regulation on the Commission's Better Regulation public portal /17 dbb*/sg/mm 7