Notice of initiation of an examination procedure 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 retreaded tyres
Date: 2004-01-07
Institutions: European Commission
Subjects: complaint to the Commission, import, pneumatic tyre, trade restriction

C 3/2

EN

Official Journal of the European Union

7.1.2004

Notice of initiation of an examination procedure 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 retreaded tyres

(2004/C 3/02)

On 5 November 2003, the Commission received a complaint
pursuant
to Article 4 of Council Regulation (EC) No
3286/94 (1) (hereinafter ‘the Regulation’).

Presidential Decree No 3919 of 14 September 2001 subjects
the importation, as well as the marketing,
transportation,
storage, keeping or keeping in deposit of retreaded imported
tyres to a fine of BRL 400 (around EUR 120) per unit.

1. COMPLAINANT

The complaint was lodged by BIPAVER (Bureau International
Permanent des Associations de Vendeurs et Rechapeurs de
Pneumatiques). BIPAVER is an international trade association
representing the interests of manufacturers of retreaded tyres
within the EU. It is made up of national associations from
Italy, Portugal, Spain, Sweden and the
Denmark, Finland,
United Kingdom, whose members
are manufacturers of
retreaded tyres operating in the Members States. BIPAVER
lodged the complaint on behalf of several Community retread
manufacturers who wish to export retreaded tyres to Brazil.

BIPAVER is an association acting on behalf of Community
enterprises
(retread manufacturers) within the meaning of
Articles 4(1) and 2(6) of the Regulation.

2. PRODUCT

The products concerned are retreaded tyres which are classified
in the Combined Nomenclature (CN) under the codes 4012 11,
4012 12, 4012 13 and 4012 19.

The examination which the Commission is initiating may also
cover other products which appear to be affected in a similar
way to retreaded tyres. These are in particular products in
respect of which interested parties
that make themselves
known within the time limits mentioned below (see Section
8) provide evidence that the alleged practices are applicable.

3. SUBJECT

The complaint concerns a trade barrier allegedly caused by
Brazil, which adversely affects Community exports of
the
products in question to the Brazilian market.

The challenged Brazilian practice is based on Portaria No 8 of
25 September 2000 of the Brazilian Ministry of Development,
Industry and International Commerce. According to the
complainant, this act bans the importation of retreaded tyres
by prohibiting the issuance of import licences for retreaded
tyres imported as consumer goods or raw material. Further,

(1) Council Regulation (EC) No 3286/94 of 22 December 1994 laying
common
down Community procedures
the
commercial policy in order
Community's rights under international trade rules,
in particular
those established under the auspices of the World Trade Organi-
sation (WTO)
(OJ L 349, 31.12.1994, p. 71). Regulation last
amended by Regulation (EC) No 356/95 (OJ L 41, 23.2.1995, p. 3).

in the
to ensure

field of
the

exercise of

the

4. ALLEGATION OF OBSTACLES TO TRADE

the

claims

complainant

abovementioned trade
that
The
measures maintained by Brazil discriminate between imported
and domestic like products and that they are in breach of
Brazil's obligation under
the WTO Agreement, namely
Articles III and XI of GATT 1994. The complainant considers
as unfounded the Brazilian claims that
the measures are
justified by reasons of environmental or health protection.

in fact

regulates

The complainant asserts that the abovementioned penalties do
not apply to domestically retreaded tyres, nor is the production
retreaded tyres prohibited in Brazil. Portaria No 133,
of
enacted on 27 September 2001,
the
production and marketing of retreaded tyres in Brazil, with
retreaded tyres produced domestically
an exemption for
before 1 January 2004. According to the
complainant,
Portaria No 133 is very similar to UNECE Regulations 108
and 109, two international standards for retreaded tyres. A
Mercosur panel established at the request of Uruguay found
that the Brazilian measures were incompatible with Mercosur
law. In response, Brazil eliminated the ban for retreaded tyres
imported from other Mercosur countries by means of Portaria
No 2 of 8 March 2002. Presidential Decree No 4592 of 11
February 2003 exempts retreaded tyres imported from other
Mercosur
financial
penalties.

abovementioned

from the

countries

It appears that the Brazilian trade practices could be incom-
patible with Articles I.1, III.4 and XI.1 of GATT 1994, without
being justified under Article XX, and with Articles 2.1, 2.2 and
2.4 of the TBT Agreement. There thus appears to be sufficient
prima facie evidence of an obstacle to trade within the meaning
of Article 2(1) of the Regulation.

5. ALLEGATION OF ADVERSE TRADE EFFECTS

The complainant claims that
the challenged Brazilian trade
measures have resulted in a significant drop of Community
exports. The complainant asserts that, until the introduction
of the ban, Community exports amounted to roughly two
million units per year and were expected to increase to three
million. Community exporters had an estimated share of 25 %
of the Brazilian car replacement market prior to the intro-
duction of the ban. The loss of this market share and of the
two million sales as a result of
the ban accounts for a
the reduction in overall Community
significant portion of
production. Most
in the United
Kingdom,
Italy and Spain, who held the largest shares of
exports to Brazil.

affected are producers

7.1.2004

EN

Official Journal of the European Union

C 3/3

the

that

illustration,

the complainant claims

the Brazilian
In particular,
measures have resulted in company closures and job losses.
By way of
to three
companies which collapsed financially when their exports to
Brazil came to a halt, with hundreds of jobs being lost. The
complainant also alleges that the Brazilian ban resulted in the
reduction of production, profit margins and profits as well as
the surge of unit costs for those producers which managed to
survive the loss of their exports to Brazil.

complaint

refers

The complainant
finally stresses the protection which the
import ban accords to Brazilian producers of retreaded and
new tyres and the threat of
further job losses within the
Community industry of retreaded tyres.

In view of the above, it is considered to be in the Community's
interest to initiate an examination procedure,
in accordance
with Article 8(1) of the Regulation.

7. PROCEDURE

evidence

consultation of
established by the Regulation,

the Advisory
Having decided, after due
is
there
that
Committee
an examination
initiating
sufficient
procedure for
the purpose of considering the legal and
factual issues involved, and that this is in the interest of the
Community, the Commission has commenced an examination
in accordance with Article 8 of the Regulation.

to justify

Under such circumstances,
there appears to be prima facie
evidence of adverse trade effects as defined in Article 2(4) of
the Regulation.

Interested parties may make themselves known and make
known their views in writing on specific issues raised by the
complaint, providing supporting evidence.

6. COMMUNITY INTEREST

interest

international

in maintaining the
The Community has a general
observance of
trade rules among its trading
partners. This is particularly true of the obligations contained
in the WTO Agreement, given the amount of trade governed
by and the number of countries subject to these rules. This
interest applies especially in relation to a large economy and
important trading partner such as Brazil. Also, the WTO obli-
gations at issue in the present case are among the core prin-
ciples of the WTO. The Community would send a wrong signal
if it did not investigate into the kind of discrimination alleged
in this case, which seems to benefit domestic and Mercosur
products.

the alleged adverse trade effects seem to have a
Further,
considerable
impact on those Community producers of
retreaded tyres who used to export to Brazil. The economic
consequences include the loss of production and employment.
The Brazilian export market was very important
the
Community industry and would have a considerable growth
potential
in the absence of the alleged obstacle to trade. It
therefore appears essential to safeguard the equal treatment
of retreaded tyres from the Community on the Brazilian
market by addressing the alleged obstacles to trade.

for

Furthermore, the Commission will hear the parties who so
request
in writing when they make themselves known,
provided that they are fundamentally concerned by the result
of the procedure.

This notice is published in accordance with Article 8(1)(a) of
the Regulation.

8. TIME LIMIT

Any information relating to the matter and any request for a
hearing should reach the Commission not later than 30 days
following the date of publication of this notice and should be
sent in writing to:

European Commission
Directorate-General for Trade
Mr Ignacio Garcia Bercero, DG Trade D/3
CHAR 9/74
Rue de la Loi/Wetstraat 200
B-1049 Brussels
Fax (32-2) 299 32 64.