3.6.98 Official Journal of the European Communities L 159/65 COMMISSION DECISION of 19 May 1998 adopted pursuant to Council Regulation (EC) No 3286/94 concerning obstacles to trade represented by Japanese practices in respect of imports of leather (notified under document number C (1998) 1373) (98/354/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to 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 Organisation (WTO) ('), as amended by Regulation (EC) No 356/95 (%), and in particular Articles 13 and 14 thereof, After consulting the Advisory Committee, Whereas: A. PROCEDURE (1) On 24 February 1997 the Commission received a complaint pursuant to Article 4 of Council Regula- tion (EC) No 3286/94, regarding Japanese practices in relation to trade in leather. The complaint was lodged by Cotance, the Confederation of National Associations of Tanners and Dressers of the Euro- pean Union. The products concerned were leather in the piece of bovine or equine animals tanned and ready to finish and/or dyed, coloured, stamped or embossed, whether or not split and leather in the piece of ovine or caprine animals, tanned and dyed, coloured or embossed. (2)  Cotance contended that it was almost impossible to export any such leather from the European Community to Japan on account of the combined effect of the following obstacles to trade: the way in which the tariff quotas for such leather was managed which, it was alleged, prevented their exhaustion, subsidisation of the Japanese leather industry and the restrictive business practices of Japanese importers and traders. (3 The complaint adduced sufficient evidence to justify initiating a procedure pursuant to Regula- tion (EC) No 3286/94. On 9 April 1997 the Commission therefore initiated an examination () OJ L 349, 31. 12. 1994, p. 71. () OJ L 41, 23. 2. 1995, p. 3. procedure (}) which resulted in its conducting an in-depth investigation, from the legal and factual standpoints, of the conditions under which leather is imported into Japan. On completion of that investigation, the Commission finds as follows: B. OBSTACLES TO TRADE (a) Management of the tariff quotas “) In 1986 Japan established three tariff quotas for imports of finished leather in the piece of bovine or equine animals (first and second quotas) and of ovine or caprine animals (third quota), under which imports of the said products are subject to a reduced rate of duty. In 1997 this reduced rate stood at between 13,9 % and 18,5 % while the rate for non-quota imports was 48,8 %, i.e. clearly a deterrent level. Although the level of the three quotas, fixed each year by the Diet, is low, they are regularly under-utilised despite the very consider- able interest of Community tanners in the Jap- anese market. (5) The Commission has established that management of the licensing system, under which goods may be imported under the tariff quotas, is extremely complex. The quantities allocated to traditional importers are calculated on the basis of their previous import operations and a flat-rate ceiling is fixed for new importers. This system would appear open to criticism in a number of respects. (6)  In the first place, the quantity allocated to tradi- tional importers is not increased — or is increased only to a very limited extent — from one year to the next and new importers are allocated only a very small quantity even though the quotas are not exhausted at the end of the year. (7)  Secondly, licences are sometimes issued for quant- ities that are of no real economic interest and the very short period of validity of certain licences, issued at the end of the year, is not such as would enable them to be used to their optimum extent. The validity of unused licences may not be extended from one year to the next. () OJ C 110, 9. 4. 1997, p. 2.