2001/429/EC: Commission Decision of 21 May 2001 suspending the examination procedures concerning obstacles to trade, within the meaning of Council Regulation (EC) No 3286/94, consisting of trade practices maintained by Brazil in relation to imports of textile products and sorbitol (notified under document number C(2001) 1449)
Date: 2001-05-21
Institutions: European Commission
Subjects: Brazil, import, international trade, sugar product, textile product, trade regulations

L 153/30

EN

Official Journal of the European Communities

8.6.2001

COMMISSION

COMMISSION DECISION

of 21 May 2001

suspending the examination procedures concerning obstacles to trade, within the meaning of
Council Regulation (EC) No 3286/94, consisting of trade practices maintained by Brazil in relation
to imports of textile products and sorbitol

(notified under document number C(2001) 1449)

(2001/429/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

did not implement any commercial policy measure
compatible with the WTO,

Having regard to the Treaty establishing the European
Community,

Having regard to 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
in
particular those established under the auspices of the World
Trade Organisation (1), as amended by Regulation (EC) No 356/
95 (2), and in particular Article 11(2)(a) thereof,

trade rules,

After consulting the Advisory Committee,

Whereas:

A. PROCEDURAL BACKGROUND

1. Examination on imports of textile products

(1)

(2)

(Fédération Belge du
On 12 January 1998 Febeltex,
Textile)
lodged a complaint pursuant to Article 4 of
Regulation (EC) No 3286/94 (hereinafter ‘the Regula-
tion’).

Febeltex alleged that Community sales of textile products
in Brazil are hindered by a number of 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:

— Brazil's non-automatic licensing system for imports
of textile products into this country, The complai-
nant alleged that this system was not justified since it

— Brazilian requirements on import payment

terms
operated through an ‘horizontal
(which
Brazil applies to all imports), as well as a ‘specific
regime’ (which it applies to imports of textile prod-
ucts),

regime’

— a minimum import pricing scheme. According to
Febeltex, several
to
discretionary minimum import prices operated via
both the import licensing and the custom valuation
systems.

textile products were subject

The Commission decided that the complaint contained
sufficient evidence to justify the initiation of an exam-
ination
notice was
published in the Official Journal of the European Communi-
ties (3).

procedure. A corresponding

The Brazilian authorities were informed of the initiation
of the investigation and were requested to respond to a
questionnaire on the alleged barriers to trade. The
Brazilian government replied and provided the Commis-
sion with the information requested.

The final report on the examination procedure was
circulated to the Member States on 9 November 1998,
at the meeting of the Advisory Committee.

(3)

(4)

(5)

2. Examination on imports of sorbitol

(6)

On 2 October 1998 Cerestar Holding BV lodged a
complaint under Article 4 of the Regulation.

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

(3) OJ C 63, 27.2.1998, p. 2.

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L 153/31

(7)

The complainant alleged that Community sales of
sorbitol in Brazil are hindered by a number of obstacles
to trade within the meaning of Article 2(1) of the Regu-
lation. The alleged obstacles to trade were:

(Departamento

— the introduction in December 1997 by the Brazilian
Government
de
Comércio Exterior) in accordance with Comunicado
DECEX No 20 of 8.7.1997 of a non-automatic
licensing procedure for sorbitol in violation of the
relevant provisions of
the WTO Agreement on
Import Licensing Procedures,

de Operaçoes

— Article 4.2 of the WTO Agreement on Agriculture,
for the same reason as above (in relation with trade
in sorbitol),

— Article 2 and 5 of the WTO Agreement on Sanitary
and Phytosanitary measures, as it imposes sanitary
controls more trade-restrictive than necessary, which
are not applied only to the extent necessary to
protect human life or health (in relation with trade in
sorbitol and CMC).

— the alleged arbitrary and/or non justified refusal (or
otherwise non-granting) by the Brazilian authorities
of import licences in relation with all sorbitol grades
entering Brazil below a minimum fob price,

— the implementation of minimum prices via de facto
reference prices included in the customs valuation
system.

The complainant also claimed a general lack of transpar-
ency of the Brazilian import licensing system, which was
not duly notified to the WTO.

The Commission decided that the complaint contained
sufficient evidence to justify the initiation of an exam-
notice was
ination
published in the Official Journal of the European Communi-
ties (1).

procedure. A corresponding

Following an intervention by the Italian chemical
producer Lamberti,
the examination procedure was
extended to cover also carboxymethylcellulose (CMC), a
product affected by the same trade barrier.

The Brazilian authorities were informed of the initiation
of the investigation and were requested to respond to a
questionnaire on the alleged barriers to trade. The
Brazilian government replied and provided the Commis-
sion with the information requested.

(8)

(9)

(10)

(13)

the Brazilian non-automatic

In addition,
import
licensing system, as applied with a minimum price
requirement, appeared to be also in breach of:

— Article 1, 3 and 5 of the WTO Agreement on Import
Licensing Procedures, as it is not neutral in applica-
tion, it is not administered in a fair and equitable
manner, it has additional trade-restrictive and -distor-
tive effects on imports without applying any WTO
compatible restriction. Moreover, as the system does
not implement any measure, so it can not be limited
in scope and duration to the measure it implements.
In addition, the list of products submitted to non-
automatic licensing is not published and the applica-
tions for licenses for imports under the minimum
several
price are left without official
months,

reply for

— Article X.1 and X.3 of GATT (1994), as it is not
published and it is not administered in a uniform,
impartial and reasonable manner.

(14) As regards the Brazilian legislation on customs valua-
it appeared that the scale of implementation of
tion,
reference prices on a systematic basis rendered the way
this system was implemented incompatible with Article
1 to 7 of the Agreement on Implementation of Article
VII of the General Agreement on Tariffs and Trade —
GATT (1994) (the Customs Valuation Agreement).

(11)

The final report on the examination procedure was
circulated to the Member States on 13 July 1999, at the
meeting of the Advisory Committee.

(15)

B. FINDINGS OF THE INVESTIGATIONS

(12) According to the final

investigation reports, the two
examination procedures led to the conclusion that the
Brazilian minimum price system appeared to be in
breach of:

(16)

— Article XI.1 of the General Agreement on Tariffs and
Trade (GATT (1994), as it is a restriction other than
duties, taxes or other charges, made effective through
import licences on the importation of any product of
the territory of any other contracting party, without
any WTO compatible justification,

The examination procedures also confirmed that the
Brazilian contested practices caused adverse trade effects
within the meaning of Article 2(4) and 10(4) of the
Trade Barriers Regulation (TBR), as impeded exports of
textile products, sorbitol and CMC from the Community
to the Brazilian market.

Following the Febeltex investigation, the Commission,
by its Decision of 17 March 1999 (2), had decided to
initiate a WTO Dispute Settlement Procedure. Once the
Cerestar investigation was concluded, it was considered
appropriate to join the two cases in a single request for
consultations on all aspects of
the Brazilian import
regime found to be WTO incompatible. This request was
lodged with a view also to ask Brazil for a radical review
of the operation of its laws and regulations on imports
according to Article VIII.2 of GATT.

(1) OJ C 361, 24.11.1998, p. 13.

(2) OJ L 86 of 30.3.1999.

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(17)

These consultations were held on 19 November 1999.
On this occasion, while declining all allegations relative
to minimum pricing practices both at import licensing
or customs valuation levels, Brazil admitted that it did
its WTO obligations
not comply with several of
import
concerning notification in relation with its
licensing system. Moreover,
following these consulta-
tions, de facto minimum prices were not applied any
longer on CMC and sorbitol imports and certain textile
products were
excluded from the non-automatic
licensing requirement.

(18)

that

The Commission acknowledges
the Brazilian
systems concerned have undergone significant changes
since the lodging of the complaint under the Regulation
and that these substantial modifications have improved
the possibility for the Community industry to enter the
Brazilian market.

(19) However, there are still several aspects of the Brazilian
import licensing and customs valuation systems that
need to be modified in order to fully comply with
Brazil's obligations under the relevant WTO Agreements.
the whole import
the transparency of
In addition,
system still needs improvements.

(20)

The Commission considers therefore that it would be
appropriate to monitor the effect of the changes in the
Brazilian system for a period of not less than six months
from the date of entry into force of this Decision. Such
the
monitoring would give an indication whether

changes have lastingly improved the situation with
regard to the barriers to trade in Brazil.

(21)

The examinations procedure concerning obstacles to
trade related to import licensing, customs valuation and
minimum import prices on the market of the Republic
of Brazil
should therefore be suspended and the
Commission should supervise the situation in accord-
ance with Article 11 (2)(b) of the Regulation.

(22) A report on the enforcement of relevant Brazilian laws
and regulations will be issued covering a period of six
months from the date of the suspension. Any further
action which might appear necessary will be proposed
on the basis of that report,

HAS ADOPTED THIS DECISION:

Sole Article

The examination procedures concerning obstacles to trade,
within the meaning of Regulation (EC) No 3286/94, consisting
of trade practices maintained by Brazil in relation to imports of
textile products and sorbitol are hereby suspended.

Done at Brussels, 21 May 2001.

For the Commission

Pascal LAMY

Member of the Commission