2002/440/EC: Commission Decision of 27 May 2002 terminating the examination procedure concerning obstacles to trade, consisting of trade practices maintained by Brazil in relation to imports of sorbitol
Date: 2002-05-27
Institutions: European Commission
Subjects: Brazil, EU Member State, food substitute, import licence, import restriction, sugar, trading operation

L 151/14

EN

Official Journal of the European Communities

11.6.2002

COMMISSION

COMMISSION DECISION

of 27 May 2002

terminating the examination procedure concerning obstacles to trade, consisting of trade practices
maintained by Brazil in relation to imports of sorbitol

(2002/440/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 amended by Regulation (EC)
No 356/95 (2), and in particular Article 11(1) thereof,

After consulting the Advisory Committee,

Whereas:

of import licences in relation to all grades of sorbitol
entering Brazil below a minimum fob price;

(c) 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 had
not been duly notified to the WTO.

(3)

The Commission decided that the complaint contained
sufficient evidence to justify the initiation of an examina-
tion procedure pursuant to Article 8(1) of Regulation
(EC) No 3286/94. A corresponding notice was published
in the Official Journal of the European Communities (3).

A. PROCEDURAL BACKGROUND

(4)

(1)

(2)

On 2 October 1998 a Netherlands company, Cerestar
Holding BV, lodged a complaint pursuant to Article 4 of
Regulation (EC) No 3286/94.

The complainant alleged that Community sales of
sorbitol in Brazil were hindered by a number of obstacles
to trade within the meaning of Article 2(1) of Regulation
(EC) No 3286/94. The alleged obstacles to trade were:

(Departamento

(a) the introduction in December 1997 by the Brazilian
Government
de
Comércio Exterior) in accordance with Comunicado
DECEX No 20 of 8 July 1997 of a non-automatic
licensing procedure for sorbitol, in contravention of
the relevant provisions of the WTO Agreement on
Import Licensing Procedures;

de Operaçoes

B. FINDINGS OF THE INVESTIGATIONS

According to the final investigation report, the examina-
tion procedure led to the conclusion that the Brazilian
minimum price system appeared to be in breach of:

(a) Article XI(1) of the GATT (1994), as it is a restriction
other than duties, taxes or other charges, made effec-
tive through import licences on the importation of
any product of the territory of any other contracting
party, without any WTO compatible justification;

(b) Article 4(2) of the WTO Agreement on Agriculture,

for the same reason as above;

(c) Article 2 and 5 of the WTO Agreement on Sanitary
and Phyto-sanitary 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.

(b) the alleged arbitrary and/or non-justified refusal (or
otherwise withholding) by the Brazilian authorities

(5)

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

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

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

11.6.2002

EN

Official Journal of the European Communities

L 151/15

(a) Articles 1, 3 and 5 of the WTO Agreement on
Import Licensing Procedures, as it is not neutral in
application, it is not administered in a fair and equi-
table manner, it has additional trade-restrictive and -
distortive 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
list of products
implements.
not
licensing
submitted
published and the applications
for
for
imports under the minimum price are left without
official reply for several months;

the
non-automatic

is
licenses

In addition,

to

(6)

(7)

(8)

(9)

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

As regards the Brazilian legislation on customs valuation,
it appeared that the scale and scope of implementation
of reference prices on a systematic basis rendered the
manner in which this system was implemented incompa-
tible with Articles 1 to 7 of the Agreement on Imple-
mentation of Article VII of the General Agreement on
Tariffs and Trade — GATT 1994 (the Customs Valuation
Agreement).

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

C. DEVELOPMENTS AFTER THE

END OF

THE

INVESTIGATION

On the basis of the findings of the investigation, the
Commission, by its Decision of 17 March 1999 (1), had
decided to initiate a WTO Dispute Settlement procedure
on several aspects of the Brazilian import regime found
to be WTO incompatible.

Accordingly official WTO consultations,
regarding
sorbitol and other products, were held on 19 November
1999. Following these consultations, de facto minimum
prices were not applied any longer on sorbitol and
certain other imports.

(10) As a result, the Community industry has improved its

ability to enter the Brazilian market.

(11) However, there were still several aspects of the Brazilian
import
licensing and customs valuation systems that
needed to be modified in order to comply fully with
Brazil’s obligations under the relevant WTO Agreements.

(12)

By decision of 21 May 2001 (2) the Commission there-
fore suspended the Cerestar examination procedure,
while monitoring the effect of the changes in the Brazi-
lian system for a period of six months from the date of
entry into force of the Decision.

(13) During the period of monitoring,

the Commission
services pursued contacts and exchanged letters with the
Community industry affected. On the basis of the infor-
mation provided by the affected industry, the Commis-
sion concluded that the disputed barriers to trade in the
importation of sorbitol had been eliminated.

D. CONCLUSIONS

(14)

In view of the above analysis, it is considered that the
Cerestar examination procedure has led to a satisfactory
situation with regard to the obstacles that faced the trade
of sorbitol in Brazil. The examination procedure should
therefore be terminated,

HAS DECIDED AS FOLLOWS:

Article 1

The examination procedure 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
sorbitol, is hereby terminated.

Article 2

Article 1 shall be without prejudice to any decision which the
Commission may adopt with regard to imports into Brazil of
textile products.

Done at Brussels, 27 May 2002.

For the Commission

Pascal LAMY

Member of the Commission

(1) OJ L 86, 30.3.1999, p. 22.

(2) OJ L 153, 8.6.2001, p. 30.