2003/421/EC: Commission Decision of 20 May 2003 on suspending the examination procedure concerning obstacles to trade, consisting of trade practices maintained by the Republic of Colombia in relation to imports of motor vehicles
Date: 2003-05-20
Institutions: European Commission
Subjects: Colombia, import, restriction on competition, trade restriction, vehicle

11.6.2003

EN

Official Journal of the European Union

L 143/33

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 20 May 2003

on suspending the examination procedure concerning obstacles to trade, consisting of trade prac-
tices maintained by the Republic of Colombia in relation to imports of motor vehicles

(2003/421/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(2) thereof,

Whereas:

(1)

(2)

(3)

(4)

On 7 July 2000 Volkswagen AG lodged a complaint
pursuant to Article 4 of Regulation (EC) No 3286/94
(hereinafter referred to as the ‘Regulation’.

Volkswagen AG alleged that Community exports of
motor vehicles to the Republic of Colombia are hindered
by an obstacle to trade within the meaning of Article
2(1) of the Regulation.

The alleged obstacle to trade was constituted by the
general Colombian tax law of 1996 (as amended) (Esta-
tuto Tributario), which 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 VAT. This law stipu-
lated that the vehicles in the category up to 1 400 cc
manufactured or assembled in Colombia are subject to a
VAT rate of 20 % compared with a VAT rate of 35 %
for imported cars.

The Commission decided, after consultation of the Advi-
sory Committee established by the Regulation, that the
complaint contained sufficient evidence to justify the
initiation of an examination procedure. Consequently, an
examination procedure was initiated on 18 August
2000 (3).

(1) OJ L 349, 31.12.1994, p. 71.
(2) OJ L 41, 23.2.1995, p. 3.
(3) OJ C 236, 18.8.2000, p. 4.

(5)

The investigation provided sufficient evidence for asses-
sing that:

— the Republic of Colombia is in breach of its obliga-
tions deriving from Article III.2 of GATT 1994.
Therefore, the practice contested by the complainant
appeared to be an obstacle to trade within the
meaning of Article 2(1) of the Trade barriers Regula-
tion,

— the above described discriminatory VAT regime
imposed by Colombia on imported cars causes
adverse trade effects within the meaning of Article
2(4) of the Trade barriers Regulation.

Accordingly, as a result of the examination procedure, it
was found that action was necessary, in the interests of
the Community, to remove the adverse trade effects
resulting
to trade maintained by
Colombia.

from obstacles

In order to ensure the exercise of
the Community's
rights under international trade rules, it appeared reason-
able to explore with the Colombian side the possibility
for an amicable solution, also in consideration of the
difficult political and economic situation of Colombia.

In December 2001,
the European Commission and
Colombia reached an understanding according to which
Colombia committed itself not to increase the present
tax differential vis-à-vis imported motor cars up to
1 400 cc and to eliminate the abovementioned VAT
differential by 1 July 2005. Under these conditions, the
Commission committed itself not
to initiate WTO
dispute settlement procedures as regards the measures
covered by the Trade barriers Regulation investigation.
The arrangement stated that it remained without preju-
dice to the legal position of the European Community
and Colombia.

(6)

(7)

(8)

L 143/34

EN

Official Journal of the European Union

11.6.2003

(9)

The arrangement provided that the Commission would
suspend the examination procedure on this matter, as
soon as legislation was adopted by the Colombian parlia-
ment to implement the agreement.

(10) A draft law providing for the above gradual elimination
of the VAT differential was presented by the Colombian
Government to the Colombian parliament on 20 May
2002 and it was adopted on 27 December 2002.

HAS ADOPTED THIS DECISION:

Sole Article

The examination procedure concerning obstacles to trade,
consisting of trade practices maintained by Colombia in rela-
tion to imports of motor vehicles initiated on 18 August 2000
is hereby suspended.

(11)

(12)

examination

The
suspended.

procedure

should

therefore

be

Done at Brussels, 20 May 2003.

The measures provided for in this Decision are in accor-
the Advisory Committee
dance with the opinion of
established by the Regulation,

For the Commission

Pascal LAMY

Member of the Commission