The EU has formally appealed a WTO ruling against Brazil’s import restrictions on retreaded tyres, despite having nominally won the dispute.
The EU had argued before the panel that Brazil’s measures were motivated by a desire to protect the local retreading industry from import competition rather than by the pursuit of genuine public health objectives as claimed by Brasilia. The panel ultimately concluded that although the limitations could be justified under GATT Article XX(b) to protect human health and the environment, Brazil applied them in a way that amounted to an unjustified and discriminatory restriction of trade (Bridges Year 11 No.4 page 7).
While announcing the appeal on 3 September, the EU welcomed the panel’s recognition that the restrictions were inconsistent with WTO rules. However, it disagreed with the “extremely narrow condemnation of Brazil, which makes it possible for Brazil to implement the ruling merely by stopping the importation of used tyres and without removing the import ban on retreaded tyres” (Bridges Year 11 No.5 page 8).
The EU appeal (WT/DS332/9) asserts, inter alia, that the panel merely assessed whether the import ban was capable of making a potential contribution to the protection of human, animal and plant life and health within the meaning of Article XX(b), rather than demonstrating that the measure was necessary to achieve those objectives. In assessing reasonable available alternative measures, the panel had “referred to the evidence submitted by the parties in a selective and distorted manner.” It had, for instance, ‘wrongly excluded’ some of the alternatives proposed by the EU, such as improving waste tyre disposal. The appeal also charges that the panel’s approach to the Article XX(b) defence shifted the burden of proof to the EU.
The European Commission insisted in a press release that the appeal did not only seek to defend the EU’s own trade interests, “but also the general interest that WTO rules be applied so as to ensure real and effective protection of public health and the environment, rather than allowing protectionism.” The panel was wrong to conclude that Brazil’s import ban “reduces public health risks when the EU had clearly shown that banning the import of retreads does not reduce waste,” particularly “in a country such as Brazil where domestic used car tyres cannot be retreaded,” the Commission said.
The statement also called the panel’s decision to refrain from addressing Brazil’s exclusion of tyres from fellow Mercosur members from the import ban ‘clearly discriminatory’, adding that it made ‘no sense’ from the perspective of protection of public health. Brazil had argued that the exception was necessary due to binding regional obligations; the panel had noted that the volume of tyres imported from those countries was currently not significant.
Green Groups Slam EU Decision
The case represents the first-ever dispute against trade restrictions imposed by a developing country for health and environmental reasons. Although the Commission emphasised that the EU was “strongly in favour of environmental and public health protection,” environmental groups have urged it to withdraw the challenge. In a joint letter addressed to Trade Commissioner Peter Mandelson, the World Wide Fund for Nature and the Center for International Environmental Law called the panel ruling “an important contribution to the progressive development of WTO’s jurisprudence on environment and trade.” They added that it would be in the EU’s interest that the panel’s interpretation of WTO law stands given that “the EU has in the past and is currently defending European environmental and health policies at the WTO and will likely have to defend others in the future.” The German NGO Forum on Environment and Development used similar arguments in its condemnation of the appeal. The Commission, however, holds that the Brazilian measures “were not intended to protect the environment at all, and […] had no such effect.”
The appeal process, which started on 3 September, should last for 90 days.