On 12 January 1998 Febeltex, (Fédération Belge du Textile) lodged a complaint pursuant to Article 4 of Regulation (EC) No 3286/94.

The complainant alleged that European Community sales of textile products in Brazil were hindered by a number of obstacles to trade within the meaning of Article 2(1) of Regulation (EC) No 3286/94, including a non-automatic import licensing system and the way this system is developed through, notably, compulsory import payment terms and minimum import prices.

The final report on the investigation procedure was circulated to EU Member States at the 9 November 1998 meeting of the Advisory Committee.

1. (a)

   Articles 1, 3 and 5 of the WTO Agreement on Import Licensing Procedures, as: (a) it was not neutral in application; (b) it was not administered in a fair and equitable manner; (c) it did not implement any WTO compatible restrictions and therefore was not limited in scope and duration to a measure it implemented; and (d) it had additional trade-restrictive and distortive effects on imports. In addition, the list of products submitted to non-automatic licensing was not published and the applications for licenses for imports under the minimum price were left without official reply for several months;

2. (b)

   Articles X.1 and X.3 of the General Agreement on Tariffs and Trade (GATT) 1994, as the non-automatic import licensing system was not published and was not administered in a uniform, impartial and reasonable manner;

3. (c)

   Article XI.1 of GATT (1994) as the minimum price system was a restriction other than duties, taxes or other charges made effective through import licenses on the importation of any product of the territory of any other contracting party, without any WTO compatible justification.

Following these consultations, the Brazilian import licensing and customs valuation systems underwent significant changes and the Community industry’s access to the Brazilian market for textile products improved. However there were still several aspects of the Brazilian import licensing and customs valuation systems that needed to be modified in order to ensure Brazil’s full compliance with its obligations under the relevant WTO Agreements.

During the first quarter of 2002, several contacts with the Brazilian authorities took place with the aim of finding a mutually acceptable solution. The European Community and Brazil signed a Memorandum of Understanding on arrangements in the area of market access for textiles and clothing products on 6 November 2002, under which both parties agreed to refrain from applying non-tariff barriers. In addition the Memorandum of Understanding addressed also the problem concerning customs valuation.

In the more than 7 years since the signature of the Memorandum of Understanding, the Commission has not been notified of any particular problems or new obstacles related to market access in Brazil for textile products.

In view of the above analysis, it is considered that the examination procedure has led to a satisfactory situation with regard to the obstacles identified in the complaint lodged by Febeltex. The examination procedure should therefore be terminated in accordance with Article 11(1) of Regulation (EC) No 3286/94.

The Advisory Committee has been consulted on the measures provided for in this Decision,