Notice of initiation of an examination procedure concerning an obstacle to trade, within the meaning of Council Regulation (EC) No 3286/94, consisting of trade practices maintained by Colombia in relation to the imports of motor vehicles

(2000/C 236/05)

On 7 July 2000 the Commission received a complaint, pursuant to Article 4 of Council Regulation (EC) No 3286/94(1) (hereinafter "the Regulation").

1. Complainant

The complaint is lodged by Volkswagen AG, departments Südamerika/Afrika Region (K-SR) and Corporate Government Relations (K-SL), in the interest and on behalf of Volkswagen AG, Seat SA, Spain and Audi AG, Germany.

Volkswagen AG, Seat SA and Audi AG are Community enterprises in the sense of Articles 2(6) and 4(1) of the Regulation.

2. Product

The products in question are motor vehicles designed for the transport of persons of cubic capacity up to 1400 cc, covered by the codes of the Combined Nomenclature (CN) 8703 21 10, 8703 21 19, 8703 22 00 and 8703 31 10.

The examination which the Commission is initiating may also cover other products in respect of which interested parties, which make themselves known within the time limits mentioned below (see section 8), provide evidence that the alleged practices are applicable in relation to such products.

3. Subject

The complaint concerns a trade barrier allegedly caused by the Colombian tax law, notably its VAT regime, which adversely affects the Community exports of the products in question to the Colombian market. More specifically, according to the complainant, the Colombian tax law discriminates against imported motor vehicles of cubic capacity up to 1400 cc.

4. Allegation of obstacles to trade

The complainant claims that, since 1996, the General Colombian Tax Law (Estatuto Tributario) provides for a distinction between vehicles assembled or manufactured in Colombia and those manufactured or assembled outside Colombia for the purposes of the application of the VAT. Currently, the Colombian law stipulates that the vehicles in the category up to 1400 cc manufactured or assembled in Colombia are subject to VAT rate of 20 % compared with VAT rate of 35 % for imported cars.

Volkswagen AG contends that the abovementioned Colombian practices constitute an obstacle to trade since the Colombian VAT regime contravenes Article III.2 of the GATT 1994.

In conclusion, it appears that Colombia could be in breach of its obligations under the abovementioned provision of the GATT 1994. Under such circumstances, there appears to be prima facie evidence of an obstacle to trade within the meaning of Article 2.1 of the Regulation.

5. Allegation of adverse trade effects

The complainant contends that it is suffering, and is threatened with further, adverse trade effects within the meaning of Article 2(4) of the Regulation.

The complainant assedrts that the measure at issue forces the dealers of imported vehicles to sell their products at a price on average 15 % higher than the one they could pratise if they could enjoy the same VAT rate as the dealers of domestically produced or assembled cars. As a result of the discriminatory VAT regime, imports in Colombia of cars produced by the complainant have decreased considerably.

Volkswagen AG argues that the category of motor vehicles affected by the discrimination in questionis the most important one in Colombia and represents approximately two-thirds of the private cars market. Moreover, the adverse effects of the challenged measure are not limited to the category directly concerned, but they affect the whole Colombian car market. In fact, exclusion from the most widespread and important sector makes difficult the penetration of the market in its entirety.

Under such circumstances, there appears to be prima facie evidence of adverse trade effects as defined in Article 2(4) of the Regulation.

6. Community interest

The principle of national treatment provided for by Article III of the GATT 1994 is one of the most important and basic WTO obligations. If practices like the Colombian one went unchallenged they would constitute an extremely negative precedent for the respect of WTO provisions.

Thereupon, also in view of the significant adverse trade effect the challenged measure appears to have on the Community, it is considered to be in the Community's interest to initiate an examination procedure.

7. Procedure

Having decided, after consultation of the Advisory Committee established by the Regulation, that there is sufficient evidence to justify initiating an examination procedure for the purpose of considering the legal and factual issues involved, and that this is in the interest of the Community, the Commission has commenced an examination in accordance with Article 8 of the Regulation.

Interested parties may make themselves known and make known their views in writing, in particular by addressing the specific issues raised by the complaint, and by providing supporting evidence.

Furthermore, the Commission will hear parties who so request in writing when making themselves known, provided that they are a party primarily concerned by the result of the procedure.

This notice is published in accordance with Article 8(1)(a) of the Regulation.

8. Time limit

Any information relating to the matter and any requests for hearings should be sent in writing to: European Commission Directorate-General for Trade Mr Alistair Stewart , DG Trade E/3

DM 24 - 05/77

Rue de la Loi/Wetstraat 200 B - 1049 Brussels Fax (32-2) 295 65 05.

Any such information or request for a hearing should reach the Commission not later than 30 days following the publication of this notice.

(1) Council Regulation (EC) No 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organisation (OJ L 349, 31.12.1994, p. 71), as last amended by Council Regulation (EC) No 356/95 (OJ L 41, 23.2.1995, p. 3).