- The Washington Times - Sunday, January 20, 2002

Congress is learning the high cost of bowing to special interests in crafting trade legislation. Running afoul of WTO rules invariably translates into high litigation bills and potentially stiff retaliatory tariffs, of which U.S. taxpayers and exporters ultimately bear the brunt.

In 1998, then-Senate Majority Leader Trent Lott, at the request of Florida Republican Sen. Connie Mack, tacked a trade bill, called Section 211, onto a massive appropriations bill. It was designed specifically to help out rum-maker Bacardi, which has U.S. subsidiaries but is not even a U.S. company, in a lawsuit against the French company Pernod Ricard over a rum trademark dispute. Section 211 slipped through at the last minute in conference and was never voted on independently by the House or the Senate.

At the heart of this dispute is quite a convoluted cocktail of special interests. Pernod Ricard, in a joint-venture with the Cuban government, has registered the "Havana Club" brand of rum in 180 countries. But Pernod Ricard has been prevented from registering the brand in the United States by Bermuda-based Bacardi, which brought a trademark lawsuit against Pernod Ricard after it purchased the same brand name in 1997 from the Arechabala family, the original producer of the rum in Cuba before the family's assets were confiscated by Fidel Castro. Pernod Ricard claims that the Arechabala family had let the trademark lapse by failing to renew it the United States, but found its ability to defend its case in U.S. courts blocked in 1998, through Section 211.

Section 211 established that no U.S. court should "recognize, enforce or otherwise validate any assertion of rights" of a trademark that was used in connection with a business that was confiscated, unless the original owner of the mark has "expressly consented" to the use of that trademark. In and of itself, this law seems reasonable, but it goes on to say that this standard only applies to a designated national, which was defined, essentially, as Cuba or a Cuban national. And this is where the United States got in trouble with the WTO.

While the WTO found, in its ruling earlier this month, that the United States could prevent the registration of a trademark linked to confiscated assets, it had to, according to WTO rules, apply this law universally, not only to Cubans and foreigners, but to its own citizens as well. This WTO ruling clearly upholds the 1967 Paris Convention, which was made part of WTO rules during the 1994 Uruguay Round. The convention states: "Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property …"

The Bush White House wrongly litigated in favor of Section 211 at the WTO, when it should have distanced itself from this ill-conceived "Bacardi lawsuit law." And Congress was just plain sloppy, and perhaps intoxicated by visions of campaign dollars, when it passed Section 211, which was virtually scrawled on a napkin, in 1998. Special-interests, mixed with political ambitions, make for a noxious cocktail.

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