Source: EURLEX
Language: en
Format: md

2 . 4 . 97 LENJ Official Journal of the European Communities No C 103 / 3

Notice of initiation of an examination procedure concerning an obstacle to trade, within the
meaning of Council Regulation ( EC ) No 3286 / 94, consisting of trade obstacles maintained by

Brazil concerning trade in Cognac

( 97 / C 103 / 02 )

On 17 February 1997, the Commission received a
complaint, pursuant to Article 4 of Council Regulation
( EC ) No 3286 / 94 ( ® ) ( hereinafter ' the Regulation ').

1 . Complainant

The complaint was lodged by the Bureau National Inter ­
professionnel du Cognac ( hereinafter BNIC ), on behalf
of the enterprises which virtually constitute the whole of
the Cognac industry ( vine growers, distillers and
merchants ).

2 . Subject

The complaint concerns the trade obstacles allegedly
caused by Brazilian practices and which adversely affect
Cognac exports to the Brazilian and other third country
markets . The alleged trade practices are the following :

— the lack of protection of the Cognac Appellation of

Origin ( AO ) and the discrimination vis-a-vis other
foreign and local geographical indications,

— the excessive administrative requirements for the
marketing of Cognac,

— discriminatory taxation .

3 . Products

The product concerned by the complaint is Cognac ( CN

codes 2208 20 12 and 2208 20 62 ). However, the exam ­
ination which the Commission is initiating may also
cover other products, particularly those in respect of
which interested parties, which make themselves known
within the time limits mentioned below ( see section 8 ),
provide evidence that the alleged practices are applicable
in relation to such products .

(') 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 Organization ( OJ No L 349, 31 . 12 . 1994, p. 71 ), as
last amended by Council Regulation ( EC ) No 356 / 95 ( OJ
No L 41, 23 . 2 . 1995, p. 3 ).

4 . Allegation of obstacles to trade

The BNIC contends that the abovementioned Brazilian
practices constitute obstacles to trade within the meaning
of Article 2 ( 1 ) of the Regulation .

According to the complainant, the Cognac AO is
violated by Brazilian legislation allowing Brazilian
brandy and other types of spirits to be called conhaque .
This term is officially and commercially used as a generic
name to describe such spirits, regardless of their
geographical origin and characteristics . It is furthermore
alleged that holders of the AO Cognac are discriminated

vis-a-vis holders of other foreign and local geographical
indications which are protected in this country .

The complainant alleges that by providing legal coverage

and protection to the use of the term conhaque by
Brazilian producers of spirits, Brazil is in breach of
several provisions of the Agreement on Trade Related
Aspects of Intellectual Property Rights ( TRIPs ), which is

annexed to the Agreement establishing the World Trade
Organization ; the Paris Convention for the Protection of
Industrial Property ; the Madrid Agreement for the
Repression of False or Deceptive Indications of Source
on Goods as well as the bilateral Agreements between
the Community, on the one side, and Brazil and
Mercosur, respectively, on the other side .

The complaint also claims that the technical and admin ­

istrative requirements for the marketing of Cognac in
Brazil set notably in the Brazilian Act 255 of 23 April

1996 ( such as the cumbersome registration procedure
and the compulsory visit of a Brazilian agronomist to the
production site in France at the exporter 's expense ) are
largely excessive and unique so as to constitute in
practice a disguised restriction to trade . In this respect, it
is pointed out that these are contrary to GATT 1994,
notably Articles III and VIII, and to the Agreement on
the Application of Sanitary and Phytosanitary Measures,
which is annexed to the Agreement establishing the
World Trade Organization, notably Articles 1 and 2
therein .

In addition, the BNIC complains that the rate of the tax
on industrial products discriminates Cognac vis-a-vis
local spirits . It is alleged that Cognac is ex officio
classified in the most heavily taxed category, whilst
locally produced spirits are never classified in that
category . As a result Cognac would be taxed from 150 to
600 % more than local conhaque . The complaint cites
Article III ( 1 ) and Article III ( 2 ) of GATT 1994 to attack

the Brazilian tax .

No C 103 / 4 riNl Official Journal of the European Communities 2 . 4 . 97

5 . Allegation of adverse trade effects

The BNIC claims that the Cognac industry is suffering
and is threatened to suffer adverse trade effects within
the meaning of Article 2 ( 4 ) of the Regulation .

Exports and access to third-country markets are essential
for Cognac . Around 75 % of Cognac 's total production
is exported to non-Community countries . Nevertheless,
Cognac sales in Brazil are currently de minimis ( 81 786
bottles in 1996 ). In comparison, Brazilian conhaque sells
around 100 million bottles per year in Brazil . The
complaint alleges that this situation is due to the above ­
mentioned Brazilian practices which amount in practice
to the closing of this country 's market to Cognac . The
BNIC estimates its loss in this market between FF 50 and

100 million per year . Furthermore, as regards other
third-country markets ( for example Russia ), the BNIC
stresses the serious threat posed by exports of conhaque
to such markets, particularly in view of the large volume
of this product being produced .

The alleged Brazilian trade practices directly concern
exports of a product which are of great economic
importance for the Community and for the whole
economic sector of Cognac . Furthermore, the economy
of a Community region, Cognac, is highly dependent on
exports of this product . Therefore, there appears to be
prima facie evidence of a material impact as set out in

7 . Procedure

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

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

Furthermore, the Commission will hear parties who so
request in writing when making themselves known,
provided that they are a party primarily 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 requests
for hearings should be sent in writing to :

., appears European Commission,
prima facie evidence of a material impact as set out in Directorate-General I ( External relations : commercial

Article 2 ( 4 ) of the Regulation . policy and relations with North America, the Far East,

Australia and New Zealand ),
6 . Community interest Mr MDB Alistair 06 / 18 Stewart,, DG I / E / 3,
Rue de la Loi / Wetstraat 200,

In addition the adverse trade effects the B-1049 Bruxelles / Brussel .

Article 2 ( 4 ) of the Regulation .

In addition to the adverse trade effects on Cognac, the
different complained practices may also adversely affect
other Community products and regions which, for
example, depend on the protection of a geographical
indication or which suffer from the other alleged
practices . Under such circumstances, it is considered to
be in the Community 's interest to initiate an examination
procedure .

Telex : COMEU B 21 877,
Fax : ( 32-2 ) 295 65 05 .

Any such information or request for a hearing should

reach the Commission not later than 37 days following
the publication of this notice .