2005/388/EC: Commission Decision of 2 May 2005 concerning the measures necessary as regards an obstacle to trade constituted by trade practices maintained by Brazil affecting trade in retreaded tyres (notified under document number C(2005) 1302)
Date: 2005-05-02
Institutions: European Commission
Subjects: Brazil, Dispute Settlement Body, World Trade Organisation, export (EU), export restriction, pneumatic tyre, trade agreement, trade dispute

21.5.2005

EN

Official Journal of the European Union

L 128/71

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 2 May 2005

concerning the measures necessary as regards an obstacle to trade constituted by trade practices
maintained by Brazil affecting trade in retreaded tyres

(notified under document number C(2005) 1302)

(2005/388/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 3286/94 of
22 December 1994 (1) 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 (WTO), and in particular Articles
12(1) and 13(2) thereof,

Whereas:

(1)

(2)

the Commission received a
On 5 November 2003,
complaint pursuant
to Article 4 of Regulation (EC)
No 3286/94 (the Trade Barriers Regulation). The
lodged by the Bureau international
complaint was
permanent des associations de vendeurs et rechapeurs
de pneumatiques (Bipaver).

The complaint concerned certain alleged Brazilian trade
practices that prevented the importation into Brazil of
retreaded tyres (2).
In particular, the complaint alleged
that these practices were inconsistent with Articles III
and XI of the General Agreement on Tariffs and Trade
1994 (GATT 1994). On that basis,
the complainant
asked the Commission to take the necessary action.

(1) OJ L 349, 31.12.1994, p. 71. Regulation as amended by Regulation

(EC) No 356/95 (OJ L 41, 23.2.1995, p. 3).

(2) The proceeding concerns retreaded tyres falling under the codes
4012 11, 4012 12, 4012 13 and 4012 19 of
the Combined
Nomenclature. Retreaded tyres (also referred to as retreads) are
tyres that are produced by removing the worn part of a used tyre
and reconditioning it with a new tread.

a Community

The complaint contained sufficient evidence to justify the
initiation of
examination procedure
pursuant to Article 8(1) of the Trade Barriers Regulation.
Consequently, the Commission initiated the procedure
in the
after
framework of the Advisory Committee, on 7 January
2004 (3).

consulting with the Member States

Following the initiation of the examination procedure,
the Commission carried out an investigation. The inves-
tigation concerned an alleged import ban and financial
penalties relating to imported retreaded tyres.

The investigation considered the relevant Brazilian legis-
lation relating to the import ban and the imposition of
financial penalties, and equally took into account the
views expressed by the various Brazilian Government
Ministries, as well as Brazilian trade associations.

are

investigation

inconsistent with

The investigation concluded that the Brazilian measures
under
several
provisions of GATT 1994, specifically Articles I:1, III:4,
XI:1 and XIII:1, and are not justified under Article XX of
the Enabling Clause or other applicable
GATT 1994,
the WTO
international
instruments of
Agreement prohibits the challenged practices,
there is
evidence of an obstacle to trade in the sense of Article
2(1) of the Trade Barriers Regulation.

law. Since

The investigation showed that Brazil was an important
market
for European manufactures of retreaded tyres
prior to the introduction of the ban on 25 September
2000. In the period 1995 to 2000 exports of retreaded
tyres to Brazil for passenger cars rose at an average of
58 % and for the first time in the six-year period dropped
i.e. after the imposition of the ban.
by 32 % in 2001,

(4)

(5)

(6)

(7)

(3) OJ C 3, 7.1.2004, p. 2.

L 128/72

EN

Official Journal of the European Union

21.5.2005

(8) Whilst exports continued after

the market was gradually being closed off

the ban’s imposition,
in
either on account of import licenses that were still
legal challenge by some
circulation, or as result of
is evident
it
importers through the Brazilian courts,
to
that
European exporters. Whilst many of
the Community
exporters were eventually able to find new markets,
they were still unable to compensate for what had
been a large proportion of their export revenue. Not all
in finding new markets, or in creating
were successful
new lines of retreaded tyre for specialist vehicles (4×4,
sports, etc.) and therefore the ban, combined with other
the Brazilian importer,
factors
exchange-rate
some Community
producers into receivership.

(late payment by

fluctuations) drove

trading system that this incompatibility with WTO rules
should be addressed in that forum.

(13) Attempts

to resolve this dispute through numerous
meetings with the Brazilian authorities since the impo-
sition of the ban, and throughout the course of this
investigation, have failed to identify a willingness on
the part of the Brazilian authorities to reach a mutually
agreed solution. In the absence of any likelihood that the
Brazilian position will
a
procedure within the framework of the WTO Under-
standing on Rules
and Procedures Governing the
Settlement of Disputes is therefore deemed necessary.

initiation of

change,

the

(9)

(10)

The evidence clearly shows that Community industry has
suffered and continues to suffer adverse effects within the
meaning of Article 2(4) of the Trade Barriers Regulation.

the ban and that

Export data and the replies to the questionnaires sent by
the Commission to European producers and exporters of
retreaded tyres support Community industry’s claim that
Brazil had been an important export market prior to the
imposition of
they had anticipated
annual sales reaching 3 million units by the end of
2002. The evidence also corroborates their claim that
they have been suffering for the past three years as a
result of the Brazilian import ban. In some instances,
companies which were unable to find new export
markets went into liquidation.

(11) On the basis of the above, it can be concluded that it is
in the Community’s interest in the sense of Article 12(1)
of the Trade Barriers Regulation to take action, within
the WTO framework, to seek a rapid removal of the
Brazilian import ban on retreaded tyres, which represents
a breach of fundamental WTO rules and an obstacle to
trade in the sense of Article 2(1) of the Trade Barriers
Regulation.

(12)

It is of utmost importance for the Community to ensure
that WTO partners fully comply with their obligations,
just as the Community is required to do. It is therefore
fundamental for the good functioning of the multilateral

(14)

The measures provided for
accordance with the opinion of the TBR Committee,

in this Decision are in

HAS DECIDED AS FOLLOWS:

Article 1

The Brazilian Government’s imposition of an import ban on
retreaded tyres and the related financial penalties appear to be
inconsistent with Brazil’s obligations under
the Marrakech
Agreement Establishing the World Trade Organisation and, in
particular, provisions of the General Agreement on Tariffs and
Trade 1994, and constitutes an obstacle to trade within the
meaning of Article 2(1) of Regulation (EC) No 3286/94.

Article 2

The Community will
initiate dispute settlement proceedings
against Brazil under the Understanding on Rules and Procedures
Governing the Settlement of Disputes and other relevant WTO
provisions with a view to securing removal of the obstacle to
trade.

Done at Brussels, 2 May 2005.

For the Commission

Peter MANDELSON
Member of the Commission