2001/15/EC: Commission Decision of 27 December 2000 pursuant to Council Regulation (EC) No 3286/94 to suspend the examination procedure concerning obstacles to trade in cosmetics in the Republic of Korea (notified under document number C(2000) 4128)
Date: 2000-12-27
Institutions: European Commission
Subjects: South Korea, World Trade Organisation, agreement (EU), cosmetic product, import policy, international trade

9.1.2001

EN

Official Journal of the European Communities

L 4/29

COMMISSION DECISION

of 27 December 2000

pursuant to Council Regulation (EC) No 3286/94 to suspend the examination procedure concerning
obstacles to trade in cosmetics in the Republic of Korea

(notified under document number C(2000) 4128)

(2001/15/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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)

On 2 April 1998, Colipa, the Liaison Committee of the
European Cosmetic, Toiletry and Perfumery Association,
lodged a complaint under Article 4 of Regulation (EC)
No 3286/94 (hereinafter ‘the Regulation’) on behalf of
those of its members which export to Korea or wish to
do so.

The complainant alleged that Community sales of
cosmetic products
in the Republic of Korea were
hindered by three obstacles to trade within the meaning
of Article 2(1) of the Regulation, i.e. ‘a practice adopted
or maintained by a third country and in respect of
which international
trade rules establish a right of
action’. The alleged obstacles to trade were:

(i) Conformity

testing on
assessment procedure:
imported cosmetics carried out by the Korean
administration, in Korea, often requiring a period of
three months in order to complete the different
stages of the procedure;

to keep,

(ii) Administrative tracking of products: obligation for
importers
registers
for
containing customs, commercial and quality-related
they
information on all cosmetic products that
import. In addition, importers also required to send
an annual report to the Korean Cosmetics Industry

years,

three

(3)

(4)

Association (KCIA) containing sensitive commercial
information;

(iii) Authorisation procedure for advertisements: alleg-

edly leading to discrimination.

The complainant alleged that the conformity assessment
procedure and the administrative tracking requirements
were burdensome and unnecessary and that the proced-
ures for testing imposed on imported goods differed
from those for domestic products and were therefore
discriminatory. The complainant also alleged that the
flexible interpretation of the Pharmaceutical Affairs Law
with regard to advertising led to discrimination against
imported products. The complainant therefore asserted
that the Korean practices mentioned above contravened
Articles 5.1.1 and 5.1.2 of the WTO Agreement on
Technical Barriers to Trade and Article III(4) of GATT
1994.

The complainant also claimed that its members were
suffering adverse trade effects within the meaning of
Article 2(4) of the Regulation and that they were in
danger of being more adversely affected in the near
future. The complainant claimed that additional costs
were incurred due to the rigorous conditions imposed
on imports of cosmetics in Korea, those costs being in
the order of 1,5 % of net sales of products imported into
Korea. Those additional costs arose from an excessive
workload for its administrative and technical staff, the
supplementary costs involved in the tests themselves and
the handling and warehousing of the stocks during tests.
In addition, the complainant asserted that the discrim-
ination affecting advertising for imported products made
it more difficult for them to increase their market share
to help compensate for the additional costs incurred by
the conformity assessment procedure and excessive
administrative requirements.

(5)

The Commission decided therefore, after consultation of
the Advisory Committee established by the Regulation,
that there was sufficient evidence to justify initiating an
examination procedure for the purpose of considering
the legal and factual issues involved. Consequently, an
examination procedure was
initiated on 19 May
1998 (3).

(1) OJ L 349, 31.12.1994, p. 71.
(2) OJ L 41, 23.2.1995, p. 3.

(3) OJ C 154, 19.5.1998, p. 12.

L 4/30

EN

Official Journal of the European Communities

9.1.2001

(6)

(7)

(8)

(9)

(10)

B. THE FINDINGS OF THE EXAMINATION PROCEDURE

(11)

During the examination procedure, which focused on
the Korean market, Commission officials met with
importers in Korea, the Korean association of cosmetics
manufacturers and the Korean authorities. In addition,
the Commission officials met with manufacturers in the
Community and scientific experts from Colipa to discuss
the testing of products and the legislation governing the
production and marketing of
in the
Community.

cosmetics

The examination procedure found that the conformity
assessment procedure was both discriminatory and more
burdensome than necessary and was thus a violation of
Articles 5.1.1 and 5.1.2 of the WTO Agreement on
Technical Barriers to Trade. The examination procedure
also found that the compulsory documentation require-
ment, which created an unnecessary duplication of
administrative work for
importers, was contrary to
the WTO Agreement on Technical
Article 5.1.2 of
Barriers to Trade. The examination procedure found that
the legislation governing the advertising regime for
cosmetics was not discriminatory.

C. REACTION OF THE KOREAN GOVERNMENT TO
THE INITIATION OF THE TBR EXAMINATION
PROCEDURE

The Korean authorities were cooperative and provided
the information requested by the Commission.

The Korean authorities also indicated a willingness to
join the Commission in seeking a negotiated agreement
that would lead to a solution to the problems encoun-
tered by imported cosmetics and, for this purpose, to
discuss changes in the Korean legal regime affecting
cosmetics.

(12)

granted

In accordance with the agreement Korea introduced an
amendment to its legislation which entered into force on
24 January 2000. Furthermore, Korean officials carried
the premises of various
out on-site inspections at
Community producers
required
the
and
approvals in February and July 2000. Finally, on 1 July
2000 Korea enacted a law on cosmetics regulating issues
importation and sale of
relating to the manufacture,
‘cosmetics’ and ‘cosmeceuticals’
(a special category of
cosmetics for sun and anti-wrinkle protection). The new
Cosmetics Law is to be implemented through enforce-
ment
regulations, notably, Ministry of Health and
Welfare (MHW) Notice No 163 which entered into force
on 19 July 2000.

E. RECOMMENDATION

The Commission services are of the opinion that the
agreement reached between the Commission and the
Korean authorities has been implemented in its major
elements. The Commission services wish to monitor the
enforcement guidelines,
introduced during 2000, and
their implementation in order to be satisfied that their
provisions do not contradict any aspect of the agree-
ment. The examination procedure concerning measures
imposed by the Republic of Korea affecting the import,
distribution and advertising of cosmetics, perfume and
toiletries products should be suspended for a period of
six months to enable such examination to take place. At
the end of that period the Commission services will
report
their conclusions on the
enforcement guidelines and their compatibility with the
agreement. At
interested parties are
satisfied that no concerns remain, the TBR examination
procedure will be terminated,

to Member States

if all

time,

that

D. OUTCOME OF THE EXAMINATION PROCEDURE

HAS DECIDED AS FOLLOWS:

Following a series of discussions, the Commission and
the Korean authorities reached an agreement whereby
the Korean legislation on cosmetics would be amended
in regard to the testing of cosmetic products imported
into the Republic of Korea. That agreement was
confirmed by an Exchange of Letters between the Euro-
pean Commission and the Mission of the Republic of
Korea to the European Union. The agreement stated that
cosmetics manufactured by producers whose premises
had been approved by the competent Korean authorities
as being of an equivalent or higher standard than that
specified by Korean Good Manufacturing Practice would
be exempted from testing at the moment of import. This
does not apply to the first import of a product but to all
subsequent imports.

Sole Article

The examination procedure concerning measures imposed by
the Republic of Korea affecting the import, distribution and
advertising of cosmetics, perfume and toiletries products
initiated on 19 May 1998 is hereby suspended.

Done at Brussels, 27 December 2000.

For the Commission

Pascal LAMY

Member of the Commission