1999/44/EC: Commission Decision of 6 January 1999 pursuant to Council Regulation (EC) No 3286/94 concerning the Brazilian import licensing regime for steel plates (notified under document number C(1998) 4468)
Date: 1999-01-06
Institutions: European Commission
Subjects: Brazil, complaint to the Commission, import, international trade, market protection, sheet

L 14/32

EN

Official Journal of the European Communities

19. 1. 1999

COMMISSION DECISION

of 6 January 1999

pursuant to Council Regulation (EC) No 3286/94 concerning the Brazilian import
licensing regime for steel plates

(notified under document number C(1998) 4468)

(1999/44/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty establishing the European
Community,

Having regard to 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 (1), as
last amended by Regulation (EC) No 356/95 (2), and in
particular Articles 11 and 14 thereof,

After consulting the Advisory Committee,

Whereas:

A. Procedural background

(1)

(2)

Industries)

Iron and Steel

On 30 April 1997 Eurofer (European Confedera-
tion of
lodged a
complaint under Article 4 of Regulation (EC) No
3286/94 (hereinafter, the Regulation) on behalf of
its members, which are both national federations
and individual companies located in 12 out of 15
European Union Member States and represent
more than 90 % of European Coal and Steel
Community crude steel production.

The complainant alleged that the importation of
flat stainless steel products into Brazil was subject
to non-automatic import licensing. In the view of
Eurofer, in May 1996 the practice of the Brazilian
authorities responsible for issuing import licences
was changed, to the effect that licences began to be
granted only if a payment term of maximum 30
days was
the merchandise to be
imported. The complainant pointed out that no
announcement of this change or explanation of the
licence
legal basis authorising the dismissal of
applications
of
experienced
Community products was provided by Brazilian
authorities, and that the change appeared to result
from internal guidelines of the Brazilian adminis-
tration.

foreseen for

importers

by

(1) OJ L 349, 31. 12. 1994, p. 71.
(2) OJ L 41, 23. 2. 1995, p. 3.

(4)

(5)

(6)

(7)

Acccording to the complainant, enforcement of the
new financing deadline was progressively tightened
in November 1996, when a written commitment to
respect it began to be required of importers of steel
products, and again in January 1997, when a new
computerised monitoring system for the issuance
of import licences (Siscomex) entered into force.

Finally, the complainant pointed out that a general
regime on exchange rate contracts for payment of
imports (requiring advance settlement of exchange
rate contracts for payment of imports for which
payment terms are below 360 days) was adopted on
25 March 1997 through Brazilian President’s
Medida Provis(cid:155)ria No 1569, which in turn was
implemented by the Bank of Brazil by means of
Circular No 2747, also adopted on 25 March 1997.
Eurofer contended that
this legislation did not
replace the special rules applicable to the granting
of import licences to steel products, but allowed
Brazilian authorities
to enforce the measures
specific to steel products more strictly and ef-
fectively.

The complainant alleged that the abovementioned
Brazilian practices constituted obstacles to trade
within the meaning of Article 2(1) of the Regula-
tion as they were in violation of Brazil’s inter-
national commitments under the WTO and that
such obstacles were producing adverse trade effects
for the complainant.

the complainant alleged that

the
In particular,
Brazilian import
licensing regime applicable to
stainless steel products was in violation of Articles
XI, III:4 and X of GATT 1994 as well as Articles
1(4), 3(3), 5 and 1(9) of the WTO Agreement on
import licensing procedures.

As far as adverse trade effects are concerned, the
complainant alleged that Community producers’
severely disrupted.
and exporters’ business was
With the introduction of
licensing
regime in question, a number of imports were held
incurring substantial
up at
supplementary costs. In addition, the elimination
of the customary payment terms of 180 days meant

the port of entry,

the import

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that importers were no longer in a position to buy
goods unless the producer or exporter was willing
to bear the cost of a longer payment terms period
which placed further financial burdens on the
producer or exporter, rendering their sales unprofit-
able. The uncertainty generated by this import
regime meant that orders were delayed and poten-
tial new orders
the
lost
Community industry.

to the detriment of

(11) Under these circumstances, it can be considered
that the removal of the products mentioned in the
complaint from the list of products subject to non-
automatic import licensing equates to the removal
of the obstacle to trade challenged in the complaint
in relation to the specific payment term require-
ment.

(8)

(9)

The complaint contained sufficient prima facie
evidence to justify the initiation of a Community
examination procedure pursuant to Article 8 of the
Regulation.
Commission
initiated an examination procedure (1), on 27 June
1997.

Consequently,

the

B. Response of the Brazilian Government to
the 30-day payment term requirement for
the granting of non-automatic licences

Following the initiation of the investigation the
Brazilian Government, responding to a question-
naire, informed the Commission services that the
list of products subject to non-automatic import
licensing would be modified soon to exclude those
falling within CN codes 7219 and 7220 as
mentioned in the complaint under Regulation (EC)
No 3286/94. This was confirmed on 25 August
1997 by the Brazilian authorities through the trans-
mission of a copy of a measure (Comunicado No
23 by the Departamento de Opera(cid:135)(cid:210)es de Com(cid:130)rcio
Exterior (DECEX) of 11 August 1997, published
on 13 August and taking effect on publication) by
which this change had been achieved. The con-
firmation was detailed on 11 December 1997 when
the Brazilian authorities explained that the prod-
ucts in question are now subject to the automatic
import
licensing system and that no special
payment term requirement is associated with the
granting of such automatic licences.

(10)

licensing was

This removal from the list of products subject to
non-automatic licensing was essential since the
the only
non-automatic import
tangible administrative means of enforcing the
requirement related to the specific 30-day payment
term. Written evidence of the obligation to respect
such a payment term was collected by the com-
plainant only by means of individual decisions that
refused to grant non-automatic import licenses.

C. Brazilian legislation on a general regime
on exchange rate contracts for payment of
imports

(12)

The Brazilian legislation on a general regime on
exchange rate contracts for payment of imports,
adopted on 25 March 1997, provides that importers
are obliged to contract exchange operations at a
local bank within certain deadlines according to
the payment terms for the goods concerned, where
these payment terms are less than 360 days. This
means that importers must make a deposit in the
bank concerned until such time as the invoice is
paid, or pay a premium for the exchange rate
contract to a local bank.

(13) According to the Brazilian authorities, neither the
granting of the import licence nor the clearance of
goods at customs is dependent on compliance with
this regime. The consequence of non-compliance
would be the imposition of fines by the Brazilian
Central Bank. With a view to clarifying its scope
and effects and to determining its compatibility
with international trade rules, the Commission has
been closely monitoring the
abovementioned
Brazilian legislation since its adoption. In this
context, the European Community has acted at the
multilateral level by initiating consultations under
the relevant WTO provisions in January 1998.

(14)

(15)

D. Recent developments

Since 1996 there appears to be a trend by the
Brazilian authorities both to enforce trade measures
having restrictive effects on specific sensitive
sectors,
in a non-transparent way, and to adopt
horizontal legislation which has at the least the
potential of affecting imports in a negative manner.
The growing number of examination procedures
initiated or envisaged under Regulation (EC) No
3286/94, further to complaints by European ex-
porters, is a clear indication of such a trend.

In particular, further to a complaint by Febeltex,
the Belgian textiles
the
Commission initiated an examination procedure
under the Regulation on 27 February 1998 (2). This

association,

industry

(1) OJ C 197, 27. 6. 1997, p. 2.

(2) OJ C 63, 27. 2. 1998, p. 2.

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procedure is related to the non-automatic import
licensing system and the way the system is devel-
oped
import
payment terms and the imposition of minimum
prices on imports.

compulsory

through,

notably,

(16) Although the abovementioned procedure focuses
on the system’s effects on certain textile products,
it is however covering a practice which is similar to
the practice which is the subject of the present
the
Decision. Thus, despite the termination of
procedure, the Commission will be in a position to
continue monitoring the import licensing regime
for steel plates actually applied in Brazil.

E. Recommendation

(17)

examination

The
the
procedure
Brazilian import licensing regime for steel plates
should therefore be terminated,

concerning

HAS DECIDED:

Article 1

The examination procedure concerning the Brazilian
import licensing regime for steel plates initiated on 27
June 1997 is hereby terminated.

Article 2

This Decision shall apply from the day of its publication
in the Official Journal of the European Communities.

Done at Brussels, 6 January 1999.

For the Commission

Leon BRITTAN

Vice-President