RESTRICTED
WORLD TRADE G/SG/3
25July1996
ORGANIZATION(96-2958)
Original: English Committee onSafeguards
BRAZIL -PROVISIONAL SAFEGUARD MEASURES CONCERNING
IMPORTS OFTOYS
Request forConsultations withBrazil
under Article 12.4oftheAgreement
Communication from theEuropean Communities
Thefollowing communication, dated 19July1996, hasbeenreceived from thePermanent
Delegation oftheEuropean Communities.
_______________
ThePermanent Delegation hasbeeninstructed torequest consultations under Article 12.4of
theWTO Safeguards Agreement, inrespect oftheadoption byBrazil ofprovisional safeguard measures
onimports oftoys. Inthisrespect, please findbelow arequest forconsultations.
Wewould askyoutoholdthose consultations atadatetobemutually agreed, taking into
consideration thatArticle 12.4provides forimmediate consultations, onceprovisional measures have
beentaken.
REQUEST FOR CONSULTATIONS
On18June1996, Brazil initiated asafeguard investigation onimports oftoysoriginating in
allthirdcountries.1On4July1996, Brazil imposed aprovisional safeguard measure onimports of
toys, under theform ofatariff increase from 20percentto70percent.2
TheEuropean Commission hasserious concerns about theconformity ofBrazil 'saction with
theWTO Agreement onSafeguards.
Inparticular, thescope oftheinvestigation andofthemeasure doesnotseem tocorrespond
totherequirement thatonly"likeordirectly competitive products" becovered (Article XIX(1) ofthe
1Secex Circular No.33of17June 1996, notified totheWTO on18June1996 (document
G/SG/N/6/BRA/1).
2Interministerial Order No.9of21June1996, notified totheWTO on4July1996 (document
G/SG/N/7/BRA/1).
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Page2
GATT 1994andArticle 2(1)oftheWTO Agreement onSafeguards). Indeed, theproducts concerned
bytheinvestigation andthemeasure gofromwheeled toysdesigned toberidden bychildren todolls,
electric trains, construction sets,stuffed toys,toysrepresenting animals, puzzles, toyweapons, die-cast
miniature models orvideo games. Theposition thatallthose types oftoysareindirect competition
witheachother cannot besupported bymarket analysis. Infact,thenotification bytheBrazilian
authorities totheWTO expressly recognizes thatdistinctions areeffectively made onthebasisofprices,
agelevels andapplications.
Inaddition, notasingle information ontheprices ofthetoyimports hasbeensubmitted by
theBrazilian authorities, whereas theWTO Agreement onSafeguards refers tothe"conditions" at
which products areimported.
Doubts canalsobeexpressed concerning thecausal linkbetween theincreased imports from
Members oftheWTO andtheserious injury, andtheimpact ofother factors.
Thetoobroad coverage oftheinvestigation andoftheprovisional measure, linked totheabsence
ofanyinformation onimport prices, makes itimpossible tojudge whether thestrict conditions for
applying emergency safeguard measures, whose exceptional nature isrecognized inArticle 6ofthe
WTO Agreement onSafeguards, arefulfilled.
TheEuropean Commission expects theBrazilian authorities toholdconsultations immediately
onthisissue, asrequired byArticle 12(4) oftheWTO Agreement onSafeguards.
Inthemeantime, theEuropean Commission requests theBrazilian authorities tosuspend
immediatelytheprovisionalsafeguardmeasureonimportsoftoys,andtobringtheiractioninconformity
withthedisciplines oftheWTO Agreement onSafeguards.