WORLD TRADE  
ORGANIZATION  WT/DS332/AB/R 
3 December 2007 
 (07-5290) 
 Original:   English 
  
 
     
 
    
 
     
BRAZIL – MEASURES AFFECTING IMPORTS OF RETREADED TYRES 
 
 
 
AB-2007-4 
  
 
    
 
    
Report of the Appellate Body 
 
  WT/DS332/AB/R 
 Page i 
 
 
I. Introduction................................................................................................................... ..............1  
II. Arguments of the Participants and the Third Participants ..........................................................6  
A. Claims of Error by the European Communities – Appellant .........................................6  
1. The Necessity Analysis.....................................................................................6  
2. The Chapeau of Article XX of the GATT 1994 .............................................12  
3. Conditional Appeal.........................................................................................18  
B. Arguments of Brazil – Appellee ...................................................................................21  
1. The Necessity Analysis...................................................................................21  
2. The Chapeau of Article XX of the GATT 1994 .............................................25  
3. The European Communities' Conditional Appeal ..........................................29  
C. Arguments of the Third Participants ............................................................................33  
1. Argentina ........................................................................................................33  
2. Australia..........................................................................................................34  
3. Japan ...............................................................................................................37  
4. Korea...............................................................................................................38  
5. The Separate Customs Territory of Taiwan, Penghu, Kinmen, and 
Matsu ..............................................................................................................40  
6. United States...................................................................................................43  
III. Issues Raised in This Appeal ................................................................................................... .45 
IV. Background and the Measure at Issue.......................................................................................46  
A. Factual Background ....................................................................................................46  
B. The Measure at Issue ...................................................................................................47  
C. Related Measures .........................................................................................................50  
V. The Panel's Analysis of the Necessity of the Import Ban .........................................................52  
A. The Panel's Necessity Analysis under Article XX(b) of the GATT 1994 ......................52  
1. The Panel's Analysis of the Contribution of the Import Ban to the 
Achievement of Its Objective .........................................................................52  
2. The Panel's Analysis of Possible Alternatives to the Import Ban...................63  
3. The Weighing and Balancing of Re levant Factors by the Panel.....................70  
B. The Panel's Necessity Analysis and Article 11 of the DSU ..........................................73  
1. Article 11 of the DSU and the Panel's Analysis of the Contribution of 
the Import Ban to the Achievement of Its Objective ......................................74  
2. Article 11 of the DSU and the Panel's Examination of Possible Alternatives to the Import Ban........................................................................78
 
C. General Conclusion on the Necessity Anal ysis under Article XX(b) of the GATT 
1994 .............................................................................................................................82  WT/DS332/AB/R 
Page ii  
 
VI.
 The Panel's Interpretation and Application of the Chapeau of Article XX of the GATT 
1994 ........................................................................................................................... ...............83  
A. The MERCOSUR Exemption and the Chapeau of Article XX of the GATT 1994 ........83  
1. The MERCOSUR Exemption and Arbitrary or Unjustifiable 
Discrimination ................................................................................................85  
2. The MERCOSUR Exemption and Disguised Restriction on International Trade..........................................................................................93
 
B. Imports of Used Tyres through Cour t Injunctions and the Chapeau of 
Article XX of the GATT 1994 .......................................................................................95  
1. Imports of Used Tyres through Court Injunctions and Arbitrary or 
Unjustifiable Discrimination...........................................................................95  
2. Imports of Used Tyres and Disgui sed Restriction on International 
Trade...............................................................................................................98  
VII. The European Communities' Claims that the MERCOSUR Exemption Is Inconsistent 
with Article I:1 and Article  XIII:1 of the GATT 1994 .............................................................99  
VIII. Findings and Conclusions....................................................................................................... 101 
 
 ANNEX I Notification of an Appeal by the European Communities under Article 16.4 and 
Article 17 of the Understanding on Rules and Procedures Governing the Settlement 
of Disputes  (DSU), and under Rule 20(1) of the Working Procedures for Appellate 
Review 
  WT/DS332/AB/R 
 Page iii 
 
 
CASES CITED IN THIS REPORT 
 
Short Title Full case title and citation 
Australia – Salmon  Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Brazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/R, circulated to WTO Members 12 June 2007 
Canada – Dairy  Appellate Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products , WT/DS103/AB/R, WT/DS113/AB/R 
and Corr.1, adopted 27 October 1999, DSR 1999:V, 2057 
Canada – Wheat Exports and 
Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004, 
DSR 2004:VI, 2739 
Chile – Price Band System 
(Article 21.5 – Argentina) Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU 
by Argentina , WT/DS207/AB/RW, adopted 22 May 2007 
Dominican Republic – Import 
and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R, adopted 
19 May 2005, DSR 2005:XV, 7367 
Dominican Republic – Import 
and Sale of Cigarettes Panel Report, Dominican Republic – Measures Affecting the Importation and 
Internal Sale of Cigarettes , WT/DS302/R, adopted 19 May 2005, as modified 
by Appellate Body Report, WT/DS302/AB/R, DSR 2005:XV, 7425 
EC – Asbestos  Appellate Body Report, European Communities – Measures Affecting Asbestos 
and Asbestos-Containing Products , WT/DS135/AB/R, adopted 5 April 2001, 
DSR 2001:VII, 3243 
EC – Asbestos  Panel Report, European Communities – Measur es Affecting Asbestos and 
Asbestos-Containing Products , WT/DS135/R and Add.1, adopted 5 April 2001, 
as modified by Appellate Body Report, WT/DS135/AB/R, DSR 2001:VIII, 3305 
EC – Bed Linen  
(Article 21.5 – India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from I ndia – Recourse to Article 21.5 of the 
DSU  by India , WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, 965  
EC – Export Subsidies on 
Sugar Appellate Body Report, European Communities – Export Subsidies on Sugar , 
WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, adopted 19 May 2005, DSR 2005:XIII, 6365 
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Sardines  Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
EC – Selected Customs 
Matters Appellate Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R, adopted 11 December 2006 
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R, 
adopted 18 August 2003, DSR 2003:VI, 2613 
Japan – Agricultural 
Products II  Appellate Body Report, Japan – Measures Affecting Agricultural Products , 
WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, 277 
Japan – Alcoholic 
Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, 
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, 97  WT/DS332/AB/R 
Page iv  
 
Short Title Full case title and citation 
Japan – Apples  Appellate Body Report, Japan - Measures Affecting the Importation of Apples , 
WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391 
Korea – Alcoholic Beverages  Appellate Body Report, Korea – Taxes on Alcoholic Beverages , 
WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, 3 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports  
of Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
Korea – Various Measures on 
Beef  Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 
2001, DSR 2001:I, 5 
Korea – Various Measures on Beef
  Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen 
Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by 
Appellate Body Report, WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, 59 
Mexico – Taxes on Soft 
Drinks Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other 
Beverages , WT/DS308/AB/R, adopted 24 March 2006 
Turkey – Textiles  Appellate Body Report, Turkey – Restrictions on Imports of Textile and Clothing 
Products , WT/DS34/AB/R, adopted 19 November 1999, DSR 1999:VI, 2345 
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779 
US – Corrosion-Resistant Steel Sunset Review
  Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties 
on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3  
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R and Corr.1, 
adopted 20 April 2005, DSR 2005:XII, 5663 
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of 
Gambling and Betting Services , WT/DS285/R, adopted 20 April 2005, as 
modified by Appellate Body Report, WT/DS285/AB/R, DSR 2005:XII, 5797 
US – Gasoline  Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3 
US – Line Pipe  Panel Report, United States – Definitive Safeguard Measures on Imports of 
Circular Welded Carbon Quality Line Pipe from Korea , WT/DS202/R, adopted 
8 March 2002, as modified by Appellate Body Report, WT/DS202/AB/, 
DSR 2002:IV, 1473 
US – Oil Country Tubular 
Goods Sunset Reviews Appellate Body Report, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R, 
adopted 17 December 2004, DSR 2004:VII, 3257 
US – Section 301 Trade Act  Panel Report, United States – Sections 301-310 of the Trade Act of 1974 , 
WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815 
US – Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930 , 
L/6439, adopted 7 November 1989, BISD 36S/345  WT/DS332/AB/R 
 Page v 
 
 
Short Title Full case title and citation 
US – Shrimp  Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, 
DSR 1998:VII, 2755 
US – Shrimp  
(Article 21.5 – Malaysia)  Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
 and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia , 
WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6481 
US – Shrimp  
(Article 21.5 – Malaysia)  Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp 
Products – Recourse to Article 21.5 of the DSU by Malaysia , WT/DS58/RW, 
adopted 21 November 2001, upheld by Appellate Body Report, WT/DS58/AB/RW, DSR 2001:XIII, 6529 
US – Wheat Gluten  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717 
US – Wool Shirts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 
23 May 1997, DSR 1997:I, 323 
 WT/DS332/AB/R 
Page vi  
 
ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
ABR Associação Brasileira do Segmento de Reforma de Pneus  
(Brazilian Association of the Retreading Industry) 
ABR Report Report of the ABR on tyre retreading activities in Brazil, 26 May 2006 
(Exhibit BRA-95) 
CONAMA Conselho Nacional do Meio Ambiente  
(National Council for the Environment of the Ministry of the Environment) 
CONAMA Resolution 258/1999 CONAMA Resolution No. 258 of 26 August 1999  
(Exhibits BRA-4 and EC-47) 
CRTA Committee on Regional Trade Agreements 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes 
Enabling Clause GATT 1979 Decision on Differential and More Favourable Treatment, 
Reciprocity and Fuller Participation of Developing Countries , L/4903, 
28 November 1979, BISD 26S/203  
GATS General Agreement on Trade in Services 
GATT 1994 General Agreement on Tariffs and Trade 1994 
Import Ban Prohibition imposed by Brazil on imports of retreaded tyres 
INMETRO Instituto Nacional de Metrologia,  Normalização e Qualidade Industrial 
(National Institute for Metrology,  Standardization and Industrial 
Quality) 
LAFIS LAFIS Consultoria, Análises Sectoriais e de Empresas 
MERCOSUR  or Mercosur Mercado Común del Sur (Southern  Common Market) – a regional 
trade agreement between Brazil, Ar gentina, Uruguay, and Paraguay, 
founded in 1991 by the Treaty of Asunción, amended and updated by 
the 1994 Treaty of Ouro Preto 
MERCOSUR exemption Exemption from the Import Ban afforded by Brazil to imports of 
retreaded tyres originating in MERCOSUR countries 
OECD Organisation for Economic Co-operation and Development 
Panel Report Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres  
Portaria SECEX 8/2000 Portaria SEC EX No. 8 of 25 September 2000  
(Exhibits BRA-71 and EC-26) 
Portaria SECEX 14/2004 Portaria No. 14 of  the SECEX, dated 17 November 2004  
(Exhibits BRA-84 and EC-29) 
SECEX Secretaria de Comércio Exterior  
(Secretariat of Foreign Trade of the Brazilian Ministry of Development, Industry, and Foreign Trade)  WT/DS332/AB/R 
 Page vii 
 
 
Abbreviation Description 
Understanding on Article 
XXIV of the GATT 1994 Understanding on the Interpretation of Article XXIV of the General 
Agreement on Tariffs and Trade 1994  
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/5, 4 January 
2005 
WTO World Trade Organization 
  WT/DS332/AB/R 
 Page 1 
 
 
WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 Brazil – Measures Affecting Imports of 
Retreaded Tyres 
 
European Communities, Appellant  
Brazil, Appellee  
 Argentina, Third Participant  
Australia, Third Participant 
China, Third Participant 
Cuba, Third Participant 
Guatemala, Third Participant 
Japan, Third Participant 
Korea, Third Participant 
Mexico, Third Participant 
Paraguay, Third Participant 
Separate Customs Territo ry of Taiwan, Penghu, 
Kinmen, and Matsu, Third Participant 
Thailand, Third Participant 
United States, Third Participant  AB-2007-4 
 Present:  
Abi-Saab, Presiding Member 
Baptista, Member Taniguchi, Member 
 
 
I. Introduction 
1. The European Communities appeals certain issues  of law and legal inte rpretations developed 
in the Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres  (the "Panel Report").1  
The Panel was established to consider a compla int by the European Communities concerning the 
consistency of certain measures imposed by Braz il on the importation and marketing of retreaded 
tyres 2 with the General Agreement on Tariffs and Trade 1994  (the "GATT 1994"). 
                                                      
1WT/DS332/R, 12 June 2007. 
2Retreaded tyres are used tyres that are reconditione d for further use by stripping the worn tread from 
the skeleton (casing) and replacing it with new material  in the form of a new tread, and sometimes with new 
material also covering parts or all of the sidewalls. (See  Panel Report, para. 2.1)  Retreaded tyres can be 
produced through different methods, all indistinctively referred to as "retreading".  These methods are:  (i) top-
capping, which consists of replacing only the tread;  (ii) re -capping, which entails replacing the tread and part of 
the sidewall;  and (iii) remoulding, which consists of repl acing the tread and the sidewall including all or part of 
the lower area of the tyre. (See  ibid., para. 2.2)  The retreaded tyres covere d in this dispute are classified under 
subheadings 4012.11 (motor cars), 4012.12 (buses and lorries), 4012.13 (aircraft), and 4012.19 (other types) of the International Convention on the Harmonized Commodity Description and Coding System , done at Brussels, 
14 June 1983.  In contrast, used tyres are classified under subheading 4012.20.  New tyres are classified under 
heading 4011. (See  ibid., para. 2.4)   WT/DS332/AB/R 
Page 2  
 
2. Before the Panel, the European Communities cl aimed that Brazil imposed a prohibition on the 
importation of retreaded tyres, notably by virtue of Article 40 of Portaria No. 14 of the Secretaria de 
Comércio Exterior ("SECEX") (Secretariat of Foreign Trade of the Brazilian Ministry of 
Development, Industry, and Foreign Trade), da ted 17 November 2004 ("Portaria SECEX 14/2004")
3, 
and that this prohibition was inconsiste nt with Article XI:1 of the GATT 1994.4  The European 
Communities also contended that certain Brazilian measures providing for the imposition of fines on 
the importation of retreaded tyres, and on the mark eting, transportation, storage, keeping, or 
warehousing of imported retreaded tyres5, were similarly inconsistent with Article XI:1 or, 
alternatively, Article III:4 of the GATT 1994.6  In addition, the Europ ean Communities made claims 
under Article III:4 of the GATT 1994 in respect of certain state measures prohibiting the marketing 
of, and/or imposing disposal obligations on the importers of, imported retreaded tyres.7  Finally, the 
European Communities challenged the exemption fro m the import prohibition on retreaded tyres and 
associated fines provided by Brazil to retreaded ty res originating in countries of the Mercado Común 
                                                      
3Exhibits BRA-84 and EC-29 submitted by Brazil and the European Communities, respectively, to the 
Panel.  Article 40 of Portaria SECEX 14/2004 reads as follows:  
Article 40 – An import license will not be granted for retreaded and used 
tires, whether as a consumer product or feedstock, classified under NCM 
code 4012, except for remoulded tires, classified under NCM codes 4012.11.00, 4012.12.00, 4012.13.00 and 4012.19.00, originating and 
proceeding from the MERCOSUR Me mber States under  the Economic 
Complementation Agreement No. 18.  
(See Panel Report, para. 2.7) 
4Ibid., paras. 3.1 and 7.1. 
5Article 47-A of Presidential Decree 3.179 of 21 September 1999, as amended by Article 1 of 
Presidential Decree 3.919 of 14 September 2001, provides: 
Importing used or recycled tires: 
Fine of R$ 400.00 (four hundred reais) per unit. 
Sole paragraph :  The same penalty shall apply to whosoever trades, 
transports, stores, keeps or maintains in a depot a used or recycled tire 
imported under such conditions.  
(Ibid., para. 2.10 (referring to Exhibit BRA-72 submitted by Brazil to the Panel);  see also Exhibit EC-34 
submitted by the European Communities to the Panel) 
6Panel Report, paras. 3.1 and 7.358. 
7Ibid., para. 7.391.  The measures of the State of Rio Grande do Sul are identified in paragraphs 2.11 
and 2.12 of the Panel Report.  WT/DS332/AB/R 
 Page 3 
 
 
del Sur ("MERCOSUR") (Southern Common Market).8  The European Communities contended that 
these exemptions were inconsistent with  Articles I:1 and XIII:1 of the GATT 1994.9 
3. Brazil did not contest that the prohibition on the importation of retreaded tyres and associated 
fines were  prima facie  inconsistent with Article XI:110;  or that state measures prohibiting the 
marketing of, and/or imposing disposal obligations on the importers of, imported retreaded tyres were 
prima facie inconsistent with Article III:411;  or that the exemptions from both the import prohibition 
and associated fines afforded to retreaded  tyres imported from MERCOSUR countries were prima 
facie  inconsistent with Articles I:1 and XIII:1 of the GATT 1994.12  Instead, Brazil submitted that the 
prohibition on the importation of retreaded tyres a nd associated fines, and state measures restricting 
the marketing of imported retreaded tyres, were all justified under Article XX(b) of the GATT 1994.13  
Brazil contended that the fines associated with the import prohibition on retread ed tyres were justified 
also under Article XX(d) of the GATT 1994.14  Brazil further maintained that the exemption from the 
import prohibition and associated fines afforded to imports of remoulded  tyres from MERCOSUR 
countries was justified under Articles XX(d) and XXIV of the GATT 1994.15  
                                                      
8The exemption from the import prohibition afforded to MERCOSUR countries is provided in 
Article 40 of Portaria SECEX 14/2004 (see supra , footnote 3) and applies exclusively to remoulded tyres, a 
subcategory of retreaded tyres. (See  Panel Report, footnote 1440 to para. 7.265)  The exemption from the fines 
associated with the import prohibition on retreaded tyres is  provided in Article 1 of Pr esidential Decree 4.592 of 
11 February 2003 (Exhibit BRA-79 submitted by Brazil to the Panel), and exempts imports of all categories of 
retreaded tyres originating in MERCOSUR countries from  the fines provided in Article 47-A of Presidential 
Decree 3.179, as amended, in the following terms: 
Article 1:  Article 47-A of Decree 3.179 of 21 September 1999 shall apply 
with the addition of the following paragraph, and the current sole paragraph 
shall be renumbered as (1): 
paragraph (2) – Imports of retreaded tyres classified under heading MCN 
4012.1100, 4012.1200, 4012.1300 and 4012.1900, originating in the 
MERCOSUR member countries under Economic Complementation Agreement No. 18 shall be exempt from payment of the fine referred to in 
this Article. 
(See supra , footnote 5;  see also Panel Report, para. 2.16)   
9Panel Report, para. 7.448. 
10Ibid., paras. 7.2 and 7.359.  Brazil did not acknowledge any inconsistency of the fines with 
Article III:4 of the GATT 1994. (See  ibid., para. 7.359) 
11Ibid., para. 7.392.  
12Ibid., para. 7.449.  
13Ibid., paras. 7.2, 7.217, 7.359, and 7.392. 
14Ibid., para. 7.359. 
15Ibid., para. 7.449. WT/DS332/AB/R 
Page 4  
 
4. The Panel Report was circulated to Members of the World Trade Organization (the "WTO") 
on 12 June 2007.  The Panel found that the impor t prohibition on retreaded tyres was inconsistent 
with Article XI:1 and not justif ied under Article XX of the GATT 1994.
16  In its analysis, the Panel 
found that the import prohibition on retreaded tyres was provisionally justified as "necessary to protect human, animal or plant life or health" under Article XX(b).
17  However, the Panel also found 
that the importation of used tyres under court injunctions resulted in the import prohibition on 
retreaded tyres being applied by Brazil in a manne r that constituted both "a  means of unjustifiable 
discrimination [between countries] where the same conditions prevail"18 and "a disguised restriction 
on international trade"19, within the meaning of the chapeau  of Article XX of the GATT 1994.  
5. The Panel found further that the fines associat ed with the import prohibition on retreaded 
tyres were inconsistent with Article XI:1 and not  justified under either paragraph (b) or (d) of 
Article XX of the GATT 1994.20  The Panel also determined that state law restrictions on the 
marketing of imported retreaded tyres and associated  disposal obligations we re inconsistent with 
Article III:4 and not justified under Article XX(b) of the GATT 1994.21  The Panel exercised judicial 
economy with respect to the European Communitie s' claims that the exemption from the import 
prohibition and associated fines afforded to retreaded tyres imported from MERCOSUR countries 
was inconsistent with Articles I:1 and XIII:1 of the GATT 1994, and with respect to Brazil's related 
defence under Articles XX(d) and XXIV of the GATT 1994.22  The Panel accordingly recommended 
that the Dispute Settlement Body (the "DSB") request Brazil to bring those measures found to be 
inconsistent into conformity with  its obligations under the GATT 1994.23   
6. At its meeting on 10 August 2007, the DSB agreed to a joint requ est by Brazil and the 
European Communities to extend the time period for a doption of the Panel Report until no later than 
20 September 2007.24  On 3 September 2007, the European Communities notified the DSB of its 
intention to appeal certain issues of law covered in  the Panel Report and certain legal interpretations 
developed by the Panel, purs uant to Article 16.4 of the Understanding on Rules and Procedures 
                                                      
16Panel Report, paras. 7.357 and 8.1(a)(i) and (ii). 
17Ibid., para. 7.215. 
18Ibid., para. 7.310;  see also para. 7.306. 
19Ibid., para. 7.349. 
20Ibid., para. 8.1(b).  The Panel did not rule on the European Communities' alternative claim that the 
fines associated with the prohibition on the importation of retreaded tyres were inconsis tent with Article III:4 of 
the GATT 1994. (See ibid., para. 7.364) 
21Ibid., para. 8.1(c). 
22Ibid., paras. 7.456 and 8.2. 
23Ibid., para. 8.4.   
24WT/DS332/8, 31 July 2007.  The minutes of the DSB meeting are set out in WT/DSB/M/237.    WT/DS332/AB/R 
 Page 5 
 
 
Governing the Settlement of Disputes  (the "DSU"), and filed a Notice of Appeal 25 pursuant to Rule 20 
of the Working Procedures for Appellate Review  (the " Working Procedures ").26  On 10 September 
2007, the European Communities filed an appellant's submission.27  On 28 September 2007, Brazil 
filed an appellee's submission.28  On the same day, Argentina, Au stralia, Japan, Korea, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, and the United States each filed a third 
participant's submission.29  Also on 28 September 2007, China, Cuba, Guatemala, Mexico, and 
Thailand each notified its intention to appear at the oral hearing as a third participant.30  On 5 October 
2007, Paraguay notified its intention to appear at the oral hearing as a third participant.31 
7. On 28 September 2007, the Appellate Body received an  amicus curiae  brief from the 
Humane Society International.  On 11 Octobe r 2007, the Appellate Body further received an  amicus 
curiae  brief submitted jointly by a group of nine non-governmental organizations.32  The Appellate 
Body Division hearing the appeal di d not find it necessary to take these amicus curiae  briefs into 
account in rendering its decision. 
8. The oral hearing in this appeal was held on 15 and 16 October 2007.  The participants and the 
third participants, with the exception of Argen tina, China, Guatemala, Mexico, Paraguay, and 
Thailand, made oral statements.  The participants  and the third participants responded to questions 
posed by the Members of the Division hearing the appeal. 
                                                      
25WT/DS332/9, 3 September 2007 (attached as Annex I to this Report). 
26WT/AB/WP/5, 4 January 2005. 
27Pursuant to Rule 21 of the Working Procedures .  
28Pursuant to Rule 22 of the Working Procedures .  
29Pursuant to Rule 24(1) of the Working Procedures . 
30Pursuant to Rule 24(2) of the Working Procedures . 
31Pursuant to Rule 24(4) of the Working Procedures .  
32These non-governmental organizati ons are:  Associação de Combate aos Poluentes (ACPO), Brazil;  
Associação de Proteção ao Meio Ambiente de Cianorte  (APROMAC), Brazil;  Centro de Derechos Humanos y 
Ambiente (CEDHA), Argentina;  Center for Intern ational Environmental Law (CIEL), United States and 
Switzerland;  Conectas Direitos Humanos, Brazil;  Frie nds of the Earth Europe, Belgium;  The German NGO 
Forum on Environment and Development, Germany;  Justiça Global, Brazil;  and Instituto O Direito por Um 
Planeta Verde, Brazil. WT/DS332/AB/R 
Page 6  
 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by the European Communities – Appellant 
1. The Necessity Analysis
 
9. The European Communities claims that the Pane l erred in finding that the import prohibition 
on retreaded tyres imposed by Brazil (the "Import Ban") was necessary to protect human, animal, or 
plant life or health, within the meaning of Ar ticle XX(b) of the GATT 1994.  The European 
Communities requests the Appellate Body to reverse th is finding and to find, instead, that the Import 
Ban is not "necessary" within the meaning of Article XX(b).   
10. The European Communities' claims of error are directed at three distinct aspects of the Panel's 
necessity analysis:  first, the Panel's finding that the Import Ban contributed to the realization of its stated objective;  secondly, the Panel's finding that  there were no reasonably available alternatives to 
the Import Ban;  and thirdly, the Panel's alle ged failure to conduct the process of weighing and 
balancing the relevant factors a nd the alternatives that was require d to determine whether the Import 
Ban was "necessary" under Article XX(b).  The argu ments advanced by the European Communities in 
relation to each of these claims of error are addressed in turn.  
(a) The Contribution Analysis 
11. The European Communities argu es that the Panel erred in finding that the Import Ban 
contributed to the protection of human, animal, or plant life or health.  The European Communities 
maintains that the Panel "applie d an erroneous legal standard"
33 by examining whether the Import Ban 
could make, or could have  made, a contribution to the protection of human life or health, rather than 
establishing the actual  contribution of the measure to its objective.  By applying a standard of 
potential contribution, rather than one of actual cont ribution, the Panel acted inconsistently with the 
case law of the Appellate Body34, which requires the Panel to have assessed the extent of the 
contribution made by the Import Ban to the reduction of waste tyres arising in Brazil.  The European 
Communities reasons that "no meaningful  weighing and balancing is possible"35 absent a proper 
determination of the extent of the contribution made  by the measure, and that, for necessity to be 
demonstrated, the contribution required is "more th an mere suitability", it must be "verifiable and 
significant".36  In this case, assessing the contribution of th e measure to the achievement of its stated 
                                                      
33European Communities' appellant's submission, para. 166.  
34Ibid., para. 169 (referring to Appellate Body Report, Korea – Various Measures on Beef , para. 164). 
35Ibid., para. 171. 
36Ibid., para. 172.  WT/DS332/AB/R 
 Page 7 
 
 
goals involved assessing whether the Import Ban reduced  the number of waste tyres in Brazil.  The 
European Communities does not see how this  could have been done in any way  other than  through 
quantification, and stresses that this is  not  a case involving scientific uncer tainty about the existence 
of risks.  Rather, that "[t]he very indirect nature  of the alleged risks attributed to imported retreaded 
tyres should have called for a particularly diligent ex amination of the contribu tion made by the ban to 
the reduction of the number of waste tyres arising in Brazil."37 
12. In addition, the European Communities claims that the Panel did not make an objective 
assessment of the facts of the case, as required by Article 11 of the DSU, in determining the contribution of the Import Ban to the realization of the ends pursued by it.  The European Communities asserts that the Panel ignored significant facts and arguments in its analysis, and failed 
to conduct an overall assessment of the evidence, in stead, referring to the evidence before it in a 
selective and distorted manner.   
13. According to the European Communities, in concluding that it had "no reason to believe that 
new tyres sold in Brazil are low-quality tyres"
38 that were not capable of being retreaded, the Panel 
ignored evidence that demonstrated "the exis tence ... of low-quality non-retreadable tyres"39 in Brazil.  
The Panel's finding that "at least some domestic used tyres are being retreaded in Brazil"40 is based 
exclusively on a statement contained in a report  by the Associação Brasileira do Segmento de 
Reforma de Pneus (the "ABR") (Brazilian Associ ation of the Retreading Industry) (the "ABR 
Report")41 and on  Technical Note 001/2006  of the Instituto Nacional de Metrologia, Normalização e 
Qualidade Industrial ("INMETRO") (National Institute  for Metrology, Standardization and Industrial 
Quality).42  The European Communities submits that the Pa nel failed to consider that the former is 
directly contradicted by a second report by the ABR43, or to discount the evidentiary value of the latter 
                                                      
37European Communities' appellant's submission, para. 177.  For the European Communities, the 
indirect nature of the alleged risk distinguishes this case from EC – Asbestos , as the factual context of this case 
does not concern the evaluation of risk in quantitative or qualitative terms.  Rather, it concerns the quantification of the contribution of the measure to achieving its stated objective. (See ibid., para. 175) 
38Ibid., para. 183 (quoting Panel Report, para. 7.137). 
39Ibid. (referring to Exhibits EC-15 and EC-67 to EC-71 submitted by the European Communities to 
the Panel;  European Communities' oral statement at the first Panel meeting, para. 28;  and European 
Communities' response to Question 11 posed by the Panel, Panel Report, pp. 254-255). 
40Panel Report, para. 7.136. 
41European Communities' appellant's submission, para. 186 (referring to the report of the ABR on tyre 
retreading activities in Brazil, 26 May 2006 (Exhibit BRA-95 submitted by Brazil to the Panel), para. 6)). 
42Exhibit BRA-163 submitted by Brazil to the Panel. 
43European Communities' appellant's submission, para. 187 (referring to the report of the ABR on the 
reformed tyres sector in Brazil, 23 June 2006 (Exhibit BRA-157 submitted by Brazil to the Panel), para. 6)). WT/DS332/AB/R 
Page 8  
 
given that it was issued during the course of th e Panel proceedings and contradicts the earlier 
INMETRO Technical Note 83/2000.
44     
14. Moreover, the European Communities contends  that the Panel ignored evidence that 
contradicted its findings regarding the retreadability of used tyres in Brazil, namely, a study by the consultancy LAFIS
 45, and the fact that domestic retreaders ha ve sought court injunctions to obtain the 
right to import used tyres for further retreading in  Brazil.  The European Communities also denounces 
the Panel's references to measures that Brazil mi ght adopt in the future (such as more frequent 
automotive inspections), emphasizing that the questi on of whether the Import Ban contributed to the 
achievement of its stated objective had to be determin ed at the time of the establishment of the Panel, 
and speculation about future events is not a suffici ent basis for an objective assessment of the facts. 
(b) Alternatives to the Import Ban  
15. The European Communities argues that the Pane l committed multiple errors in holding that 
there were no reasonably available alternatives to th e Import Ban that would ensure the same level of 
protection of human life and health.  The European Communities points out that it presented two categories of alternative measures:  measures to reduce the accumulation  of waste tyres;  and 
measures to improve the  management  of waste tyres.   
16. In the view of the European Communities, th e Panel improperly excluded measures to ensure 
a better implementation and enforcement of the import ban on  used  tyres from its analysis of 
possible alternatives to the Import Ban on  retreaded  tyres.  The most relevant and obvious 
alternative that would allow Brazil to prevent th e risks associated with the accumulation of waste 
tyres would be to put an end to the importation of used tyres.  Thus, the European Communities 
insists, the Panel should have analyzed this altern ative irrespective of whether it also considered the 
implementation of the import ban on used tyres as part of its analysis under the chapeau of Article XX. 
17. The European Communities adds that the Panel incorrectly defined as "alternatives" to the 
Import Ban only measures that avoid the genera tion of waste tyres specifically from imported 
retreaded tyres.  Such a narrow definition of "a lternatives" wrongly links the notion of alternative 
measures to the means  (avoidance or non-generation of waste tyres) employed by the measure at issue 
                                                     
 
44European Communities' appellant's submission, paras. 188 and 189;  Exhibit EC-45 submitted by the 
European Communities to the Panel. 
45Ibid., para. 190 (referring to the report by LAFIS, "Auto Parts and Vehicles: Tyres", 20 April 2006 
(Exhibit EC-92 submitted by the European Communities to the Panel), p. 11).  This study indicates that, in 
Brazil, the overall rate of retreading for all types of vehicles is 9.9 per cent.  WT/DS332/AB/R 
 Page 9 
 
 
to achieve its objective, rather than to the objective itself.  Available alternatives to the Import Ban are 
not, therefore, as the Panel found, limited to non- generation measures, but include any alternatives 
that would allow Brazil to attain the stated objectiv e of the Import Ban, namely, the protection of life 
and health from mosquito-borne diseases and from tyre  fire emissions.  In the European Communities' 
view, the Panel's narrow conception of "alternative"  resulted in the erroneous rejection of several 
alternatives that were capable of achieving this ob jective, such as measures to improve the domestic 
retreading and retreadability of tyres, the collec tion and disposal scheme imposed by the Conselho 
Nacional do Meio Ambiente ("CONA MA") (National Council for the Environment of the Ministry of 
the Environment), and measures relating to the manageme nt of waste tyres, such as co-incineration.   
18. The European Communities points to two additio nal errors in the Panel's conception of 
alternative measures.  First, the Panel refused to  consider as alternatives measures that could be 
"cumulative rather than substitutable"46 with the Import Ban.  For the European Communities, a 
measure that is cumulative or complementary to the Import Ban is capable of achieving the same objective as the ban and, therefore, is an alternativ e that must be taken into account.  Secondly, in 
examining the CONAMA scheme and co-incinerati on of waste tyres, the Panel did not inquire 
whether the proposed options exist and are reasonabl y available, but, instead, examined whether those 
options are actually being employed. 
19. Moreover, the European Communities argues that  the Panel erred by excluding as alternatives 
a correct and complete implementation of certain  state measures merely on the basis that these 
measures have already been implemented in Brazil.   Specifically, the European Communities submits 
that evidence before the Panel demonstrated that Brazil neither implements correctly the obligations 
under the CONAMA scheme, nor enforces properly its collection and disposal system.  Therefore, a better enforcement of the CONAMA scheme is an alte rnative that would be more effective than the 
Import Ban in reducing risks associated with tyre waste.  The Panel also erroneously ignored the 
European Communities' contention that collection a nd disposal programmes, such as Paraná Rodando 
Limpo
47 should be adopted by all states in Brazil.   
20. The European Communities also challenges the Pa nel's findings that most of the material 
recycling alternatives it proposed could not constitute  reasonably available alternatives to the Import 
Ban because they "are only capable of dispos ing [of] a small ... number of waste tyres".48  The case 
law of the Appellate Body regarding Article XX( b) does not require that one single alternative 
                                                      
46European Communities' appellant's submission, para. 225 (quoting Panel Report, para. 7.169). 
47See Exhibit EC-49 submitted by the European Communities to the Panel. 
48European Communities' appellant's submission, para . 238 (referring to Panel Report, paras. 7.201, 
7.205, and 7.206). (underlining omitted) WT/DS332/AB/R 
Page 10  
 
measure achieve the same objective as the challenged me asure.  Therefore, the Panel erred in rejecting 
several alternative measures on the grounds that, take n individually, each measur e did not fully attain 
the objective of the challenged measure.  The Euro pean Communities also considers that the Panel 
erred in its analysis by requiring alternatives to be capable of dealing with the management of  all  
waste tyres in Brazil, rather than with the number of waste tyres attributable to imported  retreaded  
tyres.  
21. Finally, the European Communities submits th at the Panel's factual findings regarding 
reasonably available alternatives were not based on an objective assessment of the facts, as required by Article 11 of the DSU.  More specifically, the Panel's rejection of landfilling of waste tyres as an alternative to the Import Ban was based on evid ence related exclusively to landfilling of  whole  tyres, 
when the only alternative proposed was the landfilling of  shredded  tyres, and the Panel did not take 
into account legislation that permits the landfilling of  shredded tyres in Brazil.  As regards controlled 
stockpiling, the Panel erred in rejecting this a lternative on the grounds that stockpiling does not 
dispose of waste tyres, and that it entails some risk to human health and the environment.  As 
recognized in the Basel Convention on the Control of Trans boundary Movements of Hazardous Waste 
and Their Disposal
 49, controlled stockpiling is a disposal operation that is used for temporary storage.  
It is a crucial element in managing waste tyres, and the mere fact that it does not avoid  all  the risks 
that the Import Ban seeks to eliminate does not mean th at it could not be an alternative.  Regarding 
co-incineration, the European Communities ar gues that the Panel relied on evidence on 
co-incineration activities in countries other than Brazil50, and failed to require Brazil to explain why 
unused capacity in its existing incineration facilities c ould not be used to burn more waste tyres as an 
available alternative to the Import Ban.  The Europ ean Communities adds that the Panel's finding that 
co-incineration "may potentially pose health risks to humans"51 is based on outdated evidence that 
does not represent the current state of the art on energy recovery.   
22. The European Communities contends further that th e Panel's rejection of material recycling as 
an alternative to the Import Ban is also not based on an objective assessment of the facts.  The Panel 
disregarded evidence presented by the European Communities and, instead, relied on a brief paper by 
an unidentified organization, which related to a single material recycling application—civil 
engineering—to conclude that "it is not clear that  these [material recycling] applications are entirely 
                                                      
49Adopted 1989;  entry into force 1992 (Exhibit EC-24 submitted by the European Communities to the 
Panel). 
50European countries and the United States.  See also Panel Report, footnote 1339 to para. 7.192. 
51European Communities' appellant's submission, pa ra. 262 (quoting Panel Report, para. 7.192).   WT/DS332/AB/R 
 Page 11 
 
 
safe".52  The European Communities adds that the Pa nel's conclusion that material recycling 
alternatives, such as civil engineering and rubber asphalt, would not be "reasonably" available due to 
their prohibitive costs was based on evidence adduced  exclusively in relation to a single material 
recycling application—devulcanization.   
23. Finally, the European Communiti es claims that the Panel failed to analyze one of the possible 
alternative measures identified by the European Communities, and whic h has already been adopted by 
Brazil—the National Dengue Control Programme53—and that this failure constitutes a violation of 
Article 11 of the DSU. 
(c) The Weighing and Balancing Process 
24. The European Communities claims that the Panel failed to condu ct the process of weighing 
and balancing the relevant factors and the alternatives that was required in order to determine whether 
the Import Ban was "necessary" under Article XX(b) of the GATT 1994.  For the European 
Communities, weighing and balancing involves, fi rst, an individual assessment of each element 
(importance of the objective pursued;  trade rest rictiveness of the measure;  contribution of the 
measure to the achievement of the objective) and,  then, a consideration of the role and relative 
importance of each element together with the othe r elements, for the purposes of deciding whether the 
challenged measure is necessary to achieve the rele vant objective.  The Panel, however, failed to 
weigh properly the trade restrictiveness of the Impor t Ban.  Because the Panel incorrectly analyzed 
the extent of the contribution of the Import Ban to the reduction in the number of waste tyres and, indirectly, to the protection of human life and h ealth, the Panel was also incapable of properly 
weighing and balancing this contribution against an y of the other elements.  The Panel failed to 
consider that the risks addressed by the Import Ban we re not directly linked to  retreaded tyres but to 
the waste they eventually turn in to, and that the level of such risks depends on how waste tyres are 
managed and disposed of.  Thus, the Panel failed to acknowledge the indirect, uncertain, and relative 
contribution of the Import Ban to its stated objective a nd, in turn, failed to limit the weight afforded to 
this element in the weighing and balancing process.   
                                                     
 
52European Communities' appellant's submission, para . 274 (referring to Panel Report, para. 7.208).  
The European Communities also criticizes the Panel for reaching its finding on high costs of rubber asphalt 
applications on the basis of a piece of evidence desc ribing this application as  a "promising outlet for  
recycled rubber because rubberised asphalt lasts longer than conventional asphalt". ( Ibid., para. 279 (quoting 
Panel Report, footnote 1367 to para. 7.205, in turn quoting the report of the Organisation for Economic 
Co-operation and Development ("OECD"), Working Group on Waste Prevention and Recycling, 
ENV/EPOC/WGWPR(2005)3/FINAL, 26  September   2005 (Exhibit EC-16 submitted by the European Communities to the Panel))) 
53Brazil's Ministry of Health National Dengue Control Programme (NDCP), adopted 24 July 2002 
(Exhibit EC-93 submitted by the European Communities to the Panel). WT/DS332/AB/R 
Page 12  
 
25. The European Communities contends that the Panel based its weighing and balancing 
exercise on its flawed analysis of reasonably availa ble alternatives.  The Panel also failed to take 
proper account of the trade restrictiveness of the Im port Ban in the weighing and balancing exercise.  
The Panel focused on non-generation measures, and overlooked the considerable  advantages of sound 
waste tyre collection and disposal schemes, incl uding the fact that the implementation of the 
CONAMA scheme is less trade rest rictive than the Import Ban.  The Panel conducted an individual 
analysis of possible alternatives, did not really carry out a global assessment, and discarded measures 
that have already been implemented without verifyin g the extent of implementation.  In sum, asserts 
the European Communities, the Panel did not conduct a proper weighing and bala ncing of the relevant 
elements and alternatives, but, rather, a superficial analysis that repeated all of the errors it had 
already made in its assessment of the necessity of the Import Ban. 
26. For all of the above reasons, the European Communities requests the Appellate Body to 
reverse the Panel's finding that the Import Ban was "necessary" to protect human, animal, or plant life or health, within the meaning of Article XX(b) of the GATT 1994.  Should the Appellate Body accept this request, the European Communities further requ ests the Appellate Body to find that the Import 
Ban is not "necessary" within the mean ing of Article XX(b) of the GATT 1994. 
2. The Chapeau of Article XX of the GATT 1994
 
(a) The MERCOSUR Exemption 
27. The European Communities claims that the Panel erred in finding that the exemption from the 
Import Ban on imports of retreaded tyres from MERCOSUR countries (the "MERCOSUR 
exemption") did not constitute arbitrary or unjustif iable discrimination or a disguised restriction on 
international trade and was not, therefore, contrary  to the chapeau of Article XX of the GATT 1994.  
These findings were based on a "confused" analys is "marred by serious errors of law".54  In particular, 
the European Communities emphasizes that the fact that Brazil introduced the MERCOSUR 
exemption in order to comply with its obligations under MERCOSUR does not preclude a finding of "arbitrary" discrimination.  The European Communities argues further that the volume of imports from MERCOSUR countries is irrelevant to the an alysis of whether that exemption constitutes 
arbitrary or unjustifiable discrimination.  The Eu ropean Communities requests the Appellate Body to 
reverse this finding and to find, instead, that th e MERCOSUR exemption results in the Import Ban 
being applied inconsistently w ith the chapeau of Article XX. 
                                                     
 
54European Communities' appellant's submission, para. 304.  WT/DS332/AB/R 
 Page 13 
 
 
28. For the European Communities, the "arbitrar y" discrimination and the "unjustifiable" 
discrimination mentioned in the chapeau of Ar ticle XX are closely related.  Both require 
discrimination to be explained through convincing,  reasonable, and rational arguments.  What is 
arbitrary and unjustifiable discrimination must, in the view of the European Communities, be established in relation to the objective of the meas ure at issue and the conditions prevailing in the 
countries concerned.  At the same time, the notions of  "arbitrary" and "unjustifiable" are not identical:  
"the term 'arbitrary' has its 'centre of gravity' in  the lack of consistency and predictability in the 
application of the measure, while the term 'unjustifia ble' refers more to the lack of motivation and 
capacity to convince."
55   
29. The European Communities submits that, in its analysis, the Panel wrongly defined  
"arbitrary" discrimination as being limited to "capricious", "unpredictable", or "random" 
discrimination.56  This definition failed to take into acc ount the object and purpose of Article XX, as 
well as the context provided by the close link betw een "arbitrary discrimina tion" and "unjustifiable 
discrimination".  The European Communities adds that this definition would deprive arbitrary discrimination of its useful value, because "few ac tions of governments are ever entirely 'random' or 
'capricious'."
57  The chapeau of Article XX expresses "requirements of good faith, and requires a 
delicate balancing of the interests of the Memb er invoking an exception ... and the rights of other 
Members".58  The European Communities contends that the Panel's approach, however, was not 
consistent with the required balanc ing of interests, because it would allow discrimination "on the basis 
of purely extraneous factors which have nothing  to do with the objectives of the measure"59, as long 
as the discrimination is not random or capricious. 
30. According to the European Communities,  whether a measure involves arbitrary 
discrimination can only be determined by taking in to account the objective of the measure in respect 
of which Article XX is invoked.  A measure will not be arbitrary if it "appears as reasonable, 
predictable and foreseeable"60 in the light of that objective.   
                                                      
55European Communities' appellant's submission, para . 310 (referring to European Communities' first 
written submission to the Panel, para. 152). 
56Panel Report, paras. 7.272, 7.280, and 7.281. 
57European Communities' appellant's submission, para. 316. 
58Ibid., para. 319 (referring to Appellate Body Report, US – Shrimp , paras. 158 and 159, where the 
Appellate Body also found that the "rigidity" and "inflexib ility" of certain certificati on requirements introduced 
by the United States constituted "arbitrary discrimination"). 
59Ibid., para. 319. 
60Ibid., para. 321.  WT/DS332/AB/R 
Page 14  
 
31. It follows, according to the European Communities,  that the Panel erred in finding that the 
MERCOSUR exemption did not constitute arbitrary discrimination because it had been introduced in 
response to a ruling of a MERCOSUR arbitral tribunal.  The MERCOSUR exemption does not 
further, and has the potential of undermining, the stated objective of the measure (the protection of life and health from risks arising from mosquito-borne diseases and tyre fires), and for this reason must be regarded as unreasonable, contradictory, a nd thus arbitrary.  For the European Communities, 
allowing a Member's obligations under other inte rnational agreements to render discrimination 
consistent with the chapeau of Article XX woul d seriously undermine the effectiveness of the 
chapeau.  The fact that the chap eau of Article XX prohibits discrimination "between countries where 
the same conditions prevail" provides further suppor t for the European Comm unities' interpretation, 
because whether the same conditions  prevail in different countries is an objective question, not a 
question of legal obligations vis-à-vis  another country.  It is thus "inconceivable that the mere 
compliance with an international agreement would suffice to render discrimination between countries 
where the same conditions prevail compa tible with the chapeau of Article XX".
61 
32. As regards the Panel's attempt to buttress its  reasoning by referring to Article XXIV of the 
GATT 1994 and the "'nature' of Mercosur as an agreement"62 within the meaning of that provision, 
the European Communities submits that agreements justified unde r Article XXIV would not entitle 
Members to discriminate in the application of Ar ticle XX measures, because Article XXIV:8(a)(i) and 
(b) explicitly excludes measures that are justified under Article XX from the requirement to eliminate 
restrictive regulations of commerce with respect to  substantially all the trade within a customs union 
or free trade area.  The European Communities furt her criticizes the Panel for not verifying whether 
MERCOSUR is a customs union that complies with the requirements of Article XXIV of the GATT 1994. 
33. The European Communities points to two additio nal flaws in the Panel's reasoning:  its 
statement that it took into account "the nature of the ruling on the basis of which Brazil has acted"
63;  
and the Panel's reliance on Brazil's statement that  the MERCOSUR exemption was "the only course 
of action available to it"64 to implement the ruling.  The nature  of the ruling on the basis of which 
Brazil has acted is irrelevant for the determina tion of whether the MERCOSUR exemption constitutes 
arbitrary discrimination.  Moreover, before the MERCOSUR tribunal, Brazil chose not to defend the 
Import Ban by invoking an exception clause related to the protection of human life and health, and 
                                                      
61European Communities' appellant's submission, para. 325. 
62Ibid., para. 329. 
63Ibid., para. 330 (referring to Panel Report, para. 7.283). 
64Ibid., para. 332 (referring to Panel Report, para. 7.280).  WT/DS332/AB/R 
 Page 15 
 
 
thus the fact that it invoked such grounds in this di spute must be regarded as arbitrary.  The European 
Communities further submits that the MERCOSUR tribunal did not oblige Brazil to discriminate 
between its MERCOSUR partners and other WTO Me mbers, because Brazil could have implemented 
the arbitral ruling by lifting the Import Ban with respect to all third countries.    
34. The European Communities argues further that th e Panel erred in finding that unjustifiable 
discrimination could arise only if imports under the MERCOSUR exemption were to take place in 
such amounts that the achievement of the objective of the Import Ban would be significantly 
undermined.  By assessing the existence of unjus tifiable discrimination on the basis of import 
volumes, the Panel applied a test that has no basis in the text of Article XX and finds no support in 
WTO case law.  The Europ ean Communities adds that, if adopted by the DSB, this finding would 
diminish its rights under the covered agreemen ts, contrary to Article 3.2 of the DSU. 
35. The European Communities submits that import volumes under the MERCOSUR exemption 
are irrelevant for determining whether this exemption constitutes arbitrary or unjustifiable 
discrimination.  The specific volume of imports from MERCOSUR countries in a given year is not related to the manner in which the Import Ban is a pplied, but rather dependent upon economic factors 
relating to supply and demand.  Moreover, this volume can fluctuate significantly from year to year, 
and may be more likely to do so if the Panel's findi ng stands, given that it creates an incentive to shift 
retreaded tyre production to MERCOSUR countries, especially to those that do not restrict the importation of used tyres.  Thus, reasons the Euro pean Communities, in addition to being incorrect, 
the Panel's findings increase the likelihood of future  litigation on whether increases in imports from 
MERCOSUR countries have rendered the exemption in consistent with the chapeau.  This is not 
consistent with Article 3.3 of the DSU, which pr ovides that the prompt settlement of disputes "is 
essential for the effective functioning of the WTO".
65 
36. According to the European Communities, the Pane l's approach is also inconsistent with the 
Appellate Body Report in US – Gambling , where "the Appellate Body did not attach importance to 
the 'volume' of services traded under [that] exempt ion, and to how that volume compared with the 
volume of online gambling services offered by Anti gua and Barbuda or, in fact, all other WTO 
Members cumulatively."66  The Panel's approach also goes agai nst Appellate Body reports confirming 
the right of Members to challenge measures, as such , and the need to protect the security and 
predictability of the multilateral trading system that underpins that right.67  Yet, under the Panel's 
                                                      
65European Communities' appellant's submission, para. 343.  
66Ibid., para. 344 (referring to Appellate Body Report, US – Gambling , para. 369). 
67Ibid., para. 345 (referring to Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , 
para. 82). WT/DS332/AB/R 
Page 16  
 
approach, the question of which volumes of imports would be regarded as "significant" for purposes 
of the chapeau of Article XX would ultimately de pend on market factors, and could be assessed only 
ex post  based on data relating to trade flows.   
37. The European Communities also contests th e Panel's conclusions that the MERCOSUR 
exemption did not constitute "a dis guised restriction on international trade" within the meaning of the 
chapeau of Article XX.  Like its finding on unjustif iable discrimination, the Panel's finding was based 
on the rationale that MERCOSUR imports have not been significant in volume.  Thus, submits the 
European Communities, the Panel's finding on a disgui sed restriction on international trade is equally 
erroneous.  The European Communities fails to understand how the Panel could characterize the 
imports under the MERCOSUR exemption, increasi ng tenfold since 2002 from 200 to 2,000 tons of 
tyres per year by 2004, as "insignificant".
68 
38. For these reasons, the European Communities re quests the Appellate Body to reverse the 
Panel's finding that the MERCOSUR exemption di d not constitute arbitrary or unjustifiable 
discrimination between countries where the same cond itions prevail, or a disguised restriction on 
international trade, within the meaning of the chap eau of Article XX, and to find, instead, that the 
MERCOSUR exemption results in the Import Ban bei ng applied inconsistently  with the requirements 
of that provision.  
(b) Imports of Used Tyres 
39. With respect to the Panel's analysis of imports of used tyres under the chapeau of Article XX, 
the European Communities supports the Panel's conc lusion that such imports constituted unjustifiable 
discrimination between countries where the same c onditions prevail, but challenges several other 
findings made by the Panel in this part of its  analysis.  Specifically, the European Communities 
contends that the Panel erred, first, in finding th at the imports of used tyres through court injunctions 
did not result in arbitrary discrimination and, secondly, in finding that such imports constituted 
unjustifiable discrimination and a disguised restricti on on international trade only to the extent that 
they occurred in such amounts as to significantly  undermine the objective of the Import Ban.   
40. For the European Communities, the Panel adopted an overly restrictive approach to the notion 
of "arbitrary discrimination", in considering that act ion is not arbitrary as long as there is some cause 
or reason to explain it.  What is arbitrary must be  decided in the light of the stated objective of the 
measure.  The European Communities reasons that, because, from the perspective of the protection of 
human life or health, there is no di fference between, on the one hand, a retreaded tyre produced in the 
                                                      
68European Communities' appellant's submission, para. 348.  WT/DS332/AB/R 
 Page 17 
 
 
European Communities and, on the other hand, a retreaded tyre produced in Brazil from a casing 
imported from the European Communities, the importation of used tyres through court injunctions 
must be regarded as constituting arbitrary discrimin ation.  The European Communities adds that the 
Panel's attempt to distinguish betw een, on the one hand, the actions of Brazilian courts in granting 
injunctions allowing imports of used tyres and, on the other hand, the compliance of administrative 
authorities with those injunctions, is ill-founded.  A WTO Member must assume responsibility for the 
acts of all the branches of its government.  The cont radiction between the actions of the branches of 
the Brazilian government that have allowed the impor tation of used tyres, and those that ban the 
importation of retreaded tyres, must be regarded  as arbitrary behaviour on the part of Brazil. 
41. The European Communities also su bmits that the Panel erred in finding that the imports of 
used tyres under court injunctions resulted in unjustif iable discrimination only to the extent that they 
significantly undermined the objective of the Import Ban.   In analyzing whether imports of used tyres 
under court injunctions were inconsis tent with the chapeau of Articl e XX, the Panel applied the same 
quantitative approach that it had incorrectly applied when assessing the MERCOSUR exemption 
under that provision.  The European Communities refe rs to the arguments it advanced in relation to 
the MERCOSUR exemption to explain why the volumes of imports are irrelevant for purposes of 
determining the consistency of a measure  with the chapeau of Article XX.   
42. The European Communities observes further that  the court injunctions effectively exempt 
Brazilian retreaders from the import ban on used tyres,  because they do not contain any temporal or 
quantitative limitations.  Thus, the Panel's quan titative approach engenders uncertainty for the 
implementation of the Panel Report and is not in accordance with the prompt settlement of the dispute 
as required by Article 3.3 of the DSU.  The Panel ch aracterized imports of 10.5 million used tyres into 
Brazil in 2005 as "significant", but failed to identify the threshold below which imports of used tyres 
would no longer be "significant".  The European  Communities adds that, for the same reasons 
adduced in relation to unjustifiable discrimination, th e Panel erred in finding that the imports of used 
tyres through court injunctions resulted in the Impor t Ban being applied in a manner that constitutes a 
disguised restriction on international trade only to  the extent that these imports occurred in such 
quantities that they significantly undermined the objective of the Import Ban.   
43. For all these reasons, the European Communities requests the Appellate Body to reverse the 
Panel's finding that imports of used tyres unde r court injunctions did not constitute arbitrary 
discrimination under the chapeau of Article XX, and constituted unjustifiable discrimination or a 
disguised restriction on international trade under the terms of this provision only to the extent that 
those imports significantly undermined the objective of the Import Ban.  The European Communities 
requests the Appellate Body to find, instead, that im ports of used tyres under court injunctions result WT/DS332/AB/R 
Page 18  
 
in the Import Ban being applied inconsistently w ith all of the requirements of the chapeau of 
Article XX of the GATT 1994. 
3. Conditional Appeal
 
44. Should the Appellate Body not find, as request ed by the European Communities, that the 
MERCOSUR exemption results in the Import Ban bei ng applied inconsistently with the chapeau of 
Article XX, then the European Communities conditi onally appeals the Panel's decision to exercise 
judicial economy with respect to its separate clai ms that the MERCOSUR exemption is inconsistent 
with Articles I:1 and XIII:1 of the GATT 1994.  In such circumstances, the European Communities 
requests the Appellate Body to reverse the Panel's decision to exercise judicial economy with respect 
to these claims and to complete the legal analysis and find that the MERCOSUR exemption is inconsistent with Articles I:1 and XIII:1, and not justified under Articles XX(d) and XXIV of the 
GATT 1994.  
(a) The Panel's Exercise of Judicial Economy 
45. The European Communities submits that, in dec lining to rule on the European Communities' 
claims under Articles I.1 and XIII:1 of the GATT 19 94, the Panel exercised "false judicial economy" 
and did not provide a positive resolution to the disput e as required by Articles 3.3, 3.4, and 3.7 of the 
DSU.
69  In the light of the Panel's finding that the Import Ban was inconsistent with the chapeau of 
Article XX only to the extent that imports of used  tyres were occurring in amounts that significantly 
undermined the objective of the Import Ban, Brazil was under no obligation to remove the 
MERCOSUR exemption per se .  Therefore, the Panel should have addressed the European 
Communities' claims that the MERCOSUR exemption  per se  is incompatible with Articles I:1  
and XIII:1. 
(b) Completing the Legal Analysis  
46. The European Communities submits that there ar e sufficient factual findings of the Panel and 
uncontested facts on record for the Appellate Body to  complete the legal analysis and find that the 
MERCOSUR exemption is incompatible with Arti cles I:1 and XIII:1, and is not justified under 
Articles  XX(d) and XXIV of the GATT 1994.  The Eu ropean Communities recalls that Brazil did not 
contest that the MERCOSUR exemption constitutes a violation of Articles I:1 and XIII:1.  Therefore, the only question to be addressed by the Appellate Body is whether this measure can be justified 
under Articles  XX(d) and XXIV.   
                                                     
 
69European Communities' appellant's submission, para. 375.  WT/DS332/AB/R 
 Page 19 
 
 
(c) The MERCOSUR Exemption and Article XXIV of the GATT 1994 
47. The European Communities argu es that the MERCOSUR exemption is not justified under 
Article XXIV of the GATT 1994, because it does not satisfy the two conditions identified by the 
Appellate Body in its Report in Turkey – Textiles .70  First, Brazil failed to demonstrate that 
MERCOSUR complies with the conditions of Article  XXIV:8(a) and 5(a) of the GATT 1994.  As 
explained extensively in the European Communitie s' submissions to the Panel, Brazil failed to 
demonstrate that MERCOSUR has achieved a liberalization of "substantially all"71 the trade within 
MERCOSUR, as required by Article XXIV:8(a)(i).  The European Communities contends that trade 
in the automotive and sugar sectors has not been  entirely liberalized within MERCOSUR, and 
highlights that "the automotive sector alone accounts for approximately 29%"72 of trade within 
MERCOSUR.  In addition, according to the Eu ropean Communities, exceptions to MERCOSUR's 
common external tariff "currently concern up to 10% of the tariff lines"73 applicable to external trade, 
and individual MERCOSUR countries "maintain export duties and 'other regulations of commerce' on 
trade with third countries that are not common to all Mercosur countries."74     
48. The European Communities adds that Braz il failed to demonstrate that MERCOSUR 
complies with the requirement in Article XXIV:5(a) of the GATT 1994 that duties and other restrictive regulations of commerce are not to be  on the whole more restrictive than the general 
incidence of these measures prior to the creation of MERCOSUR, in particular, as regards non-tariff 
measures.  Indeed, emphasizes the European Comm unities, the measure at issue in this dispute 
illustrates that MERCOSUR countries continue to adopt such non-tariff measures.    
49. Secondly, the European Communities maintains that Brazil has not shown that the 
MERCOSUR exemption was necessary for the forma tion of MERCOSUR.  Nothing in the reasoning 
of the Appellate Body Report in  Turkey – Textiles  suggests that this condition would not apply to 
cases such as this one where a restriction is first imposed on all goods, and then subsequently removed only for goods originating in the custom s union.  Moreover, the European Communities 
considers that "Article XXIV would be turned into  an almost limitless exception, which would allow 
                                                     
 
70European Communities' appellant's submission, pa ra. 381 (referring to Appellate Body Report, 
Turkey – Textiles , para. 58). 
71Ibid., para. 383.  
72Ibid. 
73Ibid., para. 384 (referring to Committee on Trade and Development, "Examination of the Southern 
Common Market (MERCOSUR) Agreement", WT/COMTD/1 /Add.17, 9 June 2006 (Exhibit EC-121 submitted 
by the European Communities to the Panel), p. 2).   
74Ibid. WT/DS332/AB/R 
Page 20  
 
parties to a customs union to take any measure derogating from WTO obligations"
75 if WTO 
Members were not required to demonstrate that th e measure was necessary for the formation of the 
customs union in question.   
50. The European Communities submits that the MERCOSUR exemption was not necessary for 
the formation of MERCOSUR.  Article XXIV:8(a)(i ) explicitly exempts measures consistent with 
Article XX from the requirement to eliminate barrier s to trade with respect to substantially all the 
trade between the constituent members of a customs uni on.  For this reason, it follows that Article XX 
cannot be invoked in order to justify the selective el imination of such trade barriers only with respect 
to trade within the customs union or free trad e area.  Nor can the MERCOSUR exemption be 
characterized as necessary for the formation of  MERCOSUR because it was adopted several years 
after the conclusion of MERCOSUR. 
(d) The MERCOSUR Exemption and Article XX(d) of the GATT 1994 
51. The European Communities submits that the MERCOSUR exemption is also not justified 
under Article XX(d) of the GATT 1994.  The Appellate Body found, in Mexico – Taxes on Soft 
Drinks , that the term "laws and regulations" in Article  XX(d) covered "rules that form part of the 
domestic legal system of a WTO Member, including rules deriving from international agreements that have been incorporated into the domestic legal system of a WTO Member".
76  However, Brazil has 
not demonstrated that the obligation to comply w ith rulings of the MERCOSUR arbitral tribunals has 
been incorporated into the Brazilian legal system .  The European Communitie s suggests further that 
the term "securing compliance" in Article XX(d)  does not mean simply "complying".  Instead, 
"securing compliance" refers to enforcement measur es where compliance is achieved by persons other 
than the entity "securing" the compliance.  Thus, Article XX(d) does not cover Brazil's adoption of 
the MERCOSUR exemption.  Furthermore, the ME RCOSUR exemption is not "necessary" within the 
meaning of Article XX(d) because Brazil could ha ve complied with the ruling of the MERCOSUR 
arbitral tribunal by lifting the Import Ban with re spect to all third countries, rather than only its 
MERCOSUR partners.  Finally, the European Co mmunities submits that the MERCOSUR exemption 
does not fulfil the requirements of the chapeau of Article XX, because it constitutes unjustifiable and 
arbitrary discrimination between countries where the sa me conditions prevail, in  particular, given that, 
by virtue of it, Brazil allows the imports of retreaded tyres from MERCOSUR countries even when 
those tyres are made from used tyres or iginating in the European Communities. 
                                                      
75European Communities' appellant's submission, para. 392. 
76Ibid., para. 402 (quoting Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 79).    WT/DS332/AB/R 
 Page 21 
 
 
B. Arguments of Brazil – Appellee 
1. The Necessity Analysis  
52. Brazil maintains that the Panel properly found that the Import Ban was "necessary" to protect 
human, animal, or plant life or health within th e meaning of Article XX(b) of the GATT 1994, and 
therefore requests the Appellate Body to uphold this finding.     
(a) The Contribution Analysis 
53. First, Brazil argues that the Panel correctly assessed the contribution made by the Import Ban 
to the achievement of its objective.  The paragraphs  set out in Article XX focus on the measure, as 
such, while the chapeau fo cuses also on the application of the measure.  Therefore, actual contribution 
is not relevant to the analysis under paragraph (b ) of Article XX, and the Panel applied the correct 
legal standard in using phrases such as "can contribute" and "capable of contributing".77  S u c h  a  
standard is also particularly appropriate give n that some measures—for example, environmental 
measures—may not have immediate effect.  The Panel's approach was in line with "virtually all" other 
cases that have examined a measure's contribution u nder paragraphs (b) and (d) of Article XX of the 
GATT 1994 or under Article XIV of the General Agreement on Trade in Services  (the "GATS").78  
This is the case whether the risk sought  to be avoided is dir ect or indirect.  Brazil adds that the need to 
undertake the weighing and balancing exercise also illustrates that the Eu ropean Communities cannot 
be correct.  If a panel were required to assess the ex tent of a measure's actua l contribution, it would 
have to do the same for alternative measures in or der to compare them.  Yet, this is impossible, 
because an alternative measure is one that has not ye t been realized.  That the Panel was not, as the 
European Communities claims, required to quantify the Import Ban's contribution to reducing waste 
tyre volumes is confirmed in the Appellate Body Report in  EC – Asbestos , where the Appellate Body 
held that "a risk may be eval uated either in quantitative or qualitative  terms".79  Brazil also expresses 
its understanding that, according to existing case law, if the measure can make a contribution to its objective, and no reasonably available alternativ es exist, then the measure is "necessary".   
54. In addition, Brazil argues that the Panel acted consistently with its duty under Article 11 of 
the DSU in finding that the Import Ban contributed to the achievement of its objective.  The Panel 
relied on numerous studies and reports, which provided it with more than a sufficient basis to find that 
                                                     
 
77Brazil's appellee's submission, para. 74 (referring to Panel Report, paras. 7.118 and 7.142). 
78Ibid., para. 77 (referring to Panel Report, US – Gambling , para. 6.494;  Panel Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 7.217;  Panel Report, Korea – Various Measures on Beef , 
para. 658;  and GATT Panel Report, US – Section 337 Tariff Act , para. 5.31).  
79Ibid., para. 81 (quoting Appellate Body Report, EC – Asbestos , para. 167). (emphasis added by 
Brazil) WT/DS332/AB/R 
Page 22  
 
tyres used in Brazil are retreadable and are bei ng retreaded.  The Panel referred to the ABR Report
80 
and INMETRO Technical Note 001/2006 81 merely as examples of such reports and studies.  In 
addition, the Panel's reliance on INMETRO Technical Note 001/2006, rather than on an earlier 
INMETRO note, was justified, because it is well established that a panel may rely on evidence that 
post-dates the panel's establishment, and because Br azil had explained why it was not appropriate for 
the Panel to rely on the earlier INMETRO note.  The mere fact that the Panel did not describe its 
conclusions on each piece of evidence—or resp ond to each of the European Communities' 
objections—does not mean that it did not consider  the evidence.  The Eu ropean Communities may 
disagree with the weight the Panel assigned to the va rious factual elements before it, but there is no 
indication that the Panel exceeded its discretion as the trier of fact. 
55. As regards numerous other arguments raised by the European Communities, Brazil identifies 
evidence that provides support for the Panel's findings that retreaded tyres have a shorter lifespan than 
new tyres and that new tyres are retreadable and ar e being retreaded in Brazil, and asserts that the 
Panel did not, as the European Communities claims, base its findi ngs on speculation about future 
events.  Brazil also emphasizes that imports of used tyres under court injunctions and imports of 
retreaded tyres under the MERCOSUR exemption ar e extraneous to the Import Ban and do not 
properly form part of the "necessity" analysis. 
(b) Alternatives to the Import Ban 
56.  Brazil contends that the Panel correctly dete rmined that none of the measures suggested by 
the European Communities constituted a reasonably av ailable alternative to the Import Ban.  As a 
preliminary matter, Brazil contends that the Europ ean Communities' appeal on this issue is premised 
on a mistaken understanding of Brazil's cho sen level of protection.  Brazil is  not  seeking to reach a 
fixed level of health and safety, or only to pr otect against mosquito-borne diseases and tyre fire 
emissions (accumulation risks).  Rather, it seeks to  reduce accumulation, transportation, and disposal 
risks associated with the generation of waste tyres in Brazil  to the maximum extent possible .  Because 
the Panel's finding of fact correctly identified th e level of protection sought by Brazil, and the 
European Communities, in its appeal, does not challe nge this finding under Article 11 of the DSU, the 
European Communities' claims of error regarding reasonably available alternatives fall outside the 
scope of appellate review.   
                                                      
80Supra , footnote 41. 
81Supra , footnote 42.  WT/DS332/AB/R 
 Page 23 
 
 
57. Taking account of the proper definition of its ch osen level of protecti on (including against 
disposal risks), Brazil asserts that the Panel properly recognized that stockpiling, landfilling, 
co-incineration, and material recycling all present risks to human health and the environment.  The 
Panel also correctly dismissed a better enforcement of  the import ban on used tyres as an alternative to 
the Import Ban, because such a measure would not allow Brazil to reduce the number of additional 
waste tyres generated by imported short-lifespan retr eaded tyres.  Brazil also rejects the European 
Communities' assertion that the Panel applied an in correct definition of "alternative", because, for 
Brazil, an alternative must allow a Member to achie ve its chosen level of pr otection, and that level 
requires a reduction to the maximum extent possible of risks arising from waste tyre accumulation, transportation, and disposal risks.  Because the Pane l correctly defined Brazil' s level of protection, it 
was also correct to consider that other compleme ntary measures to reduce the overall number of waste 
tyres were not "alternatives" to the Import Ban on re treaded tyres.  Brazil adds that, contrary to the 
European Communities' claims on appeal, the Panel did not require a single alternative measure to 
achieve fully the desired objective, did not refuse to  consider the proposed alternatives collectively, 
and did not focus on whether options were actually  being employed instead of whether they were 
reasonably available.  
58. Furthermore, Brazil argues that the Panel's findings  on the availability of alternative measures 
rested on an objective assessment of the facts, as re quired by Article 11 of the DSU.  According to 
Brazil, the Panel based its finding that disposal of waste tyres presents serious health and 
environmental risks on an extensiv e factual record.  The evidence on record fully supports the Panel's 
finding that landfilling of both whole and shredded waste tyres presents human health and 
environmental risks.  Brazil also argues that the Panel's reference to the fact that the European 
Communities prohibits landfilling w as relevant, because the health and environmental objectives 
listed in the European Communities' Council Direc tive 1999/31/EC of 26 April 1999 on the landfill of 
waste 
82 mirror Brazil's objective.  Furthermore, the Br azilian legislation that allowed landfilling, and 
which the European Communities claims the Panel should have taken into account, was a temporary 
measure adopted in a single Brazilian state to co mbat a significant increase in dengue cases.  That 
legislation does not demonstrate that landfilling is safe, but only that, in those circumstances, the 
short-term need to combat dengue was more pressing. 
                                                      
82Exhibit BRA-42 submitted by Brazil to the Panel. WT/DS332/AB/R 
Page 24  
 
59. In relation to stockpiling, Brazil submits that the evidence on record, in cluding a study by the 
California Environmental Protection Agency
 83, supports the Panel's findi ng that stockpiling presents 
human health and environmental risks.  Furthe rmore, the European Communities itself acknowledges 
that "'controlled stockpiling is  not a final disposal operation ' but merely 'temporary storage.'"84  As 
regards co-incineration, the eviden ce on record fully supports the Panel's finding that incineration of 
waste tyres presents risks to human health, that toxic emissions from the incineration of tyres cannot 
be eliminated, and that these emissions are higher th an those generated by th e burning of conventional 
fuels.  In the light of these acknowledged risks, it would not have made sense, as the European 
Communities now argues, for the Panel to have requi red Brazil to provide evidence on co-incineration 
in Brazil rather than in other countries, or to u se increased co-incineration as an alternative.  The 
Panel acted within its discretion in determining th e weight attributed to several reports that the 
European Communities considers outdated and, in an y event, the evidence relied upon by the Panel is 
not as "outdated", nor is the evidence cited by th e European Communities as "recent", as the European 
Communities claims on appeal.  The Appellate Bo dy, therefore, should reject the European 
Communities' attempts to have it second-guess th e Panel's appreciation of the evidence.  
60. In relation to material recycling, Brazil subm its that the Panel did not consider only civil 
engineering in reaching its findings on alternativ e measures.  The Panel also considered evidence 
related to rubber asphalt, use of rubber granulates,  and devulcanization.  Nor did the Panel base its 
finding that material recycling applications could not dispose of existing volumes of waste tyres on 
evidence of devulcanization alone.  Instead, conte nds Brazil, the Panel c ited documents suggesting 
that material recycling applications  collectively  lacked adequate disposal capacity.     
(c) The Weighing and Balancing Process 
61. Brazil asserts that the Panel properly weighed an d balanced the relevant factors and proposed 
alternatives in determining that the Import Ban w as "necessary" within the meaning of Article XX(b) 
of the GATT 1994, and that the European Commun ities' appeal on this point amounts to mere 
disagreement with the Panel's exerci se of its discretion in determining which evidence to rely upon in 
support of its findings.  The Panel expressly recognized that the Import Ban is highly trade restrictive, 
but rejected the European Communities' argument that  this fact alone precluded a finding that the ban 
was "necessary".  Instead, the Panel properly recogni zed that there may be circumstances in which a 
highly restrictive measure is nonetheless necessary a nd, in the process of weighing and balancing, 
                                                      
83California Environmental Protection Agency (US), Integrated Waste Management Board, "Increasing 
the Recycled Content in New Tyres" (May 2004) (Exhibit BRA-59 submitted by Brazil to the Panel). 
84Brazil's appellee's submission, para. 154 (quoting European Communities' appellant's submission, 
para. 255). (emphasis added by Brazil)  WT/DS332/AB/R 
 Page 25 
 
 
identified the specific circumstances of this case that led it to such a conclusion.  With respect to the 
question of contribution, Brazil re calls its position that Article XX(b) does not require a party to 
quantify the measure's contribution to the objective pursued.  In any event, the Import Ban's 
contribution is substantial "because it reduced imports  of retreaded tyres from 18,455 tons in 1999 to 
1,727 tons in 2005 (over 90 percent)."85  Brazil also argues that, because imports of retreaded tyres, by 
definition, increase the amount of waste tyres in Brazil, the relationship between the Import Ban and 
Brazil's goal of reducing waste tyre risks to the maximum extent possible is both direct and certain. 
2. The Chapeau of Article XX of the GATT 1994  
(a) The MERCOSUR Exemption 
62. Brazil argues that the Panel correctly held th at the MERCOSUR exemption did not result in 
the Import Ban being applied in a manner that cons tituted "arbitrary or unjustifiable" discrimination 
or "a disguised restriction on international trade" within the meaning of the chapeau of Article XX of 
the GATT 1994.  Accordingly, Brazil requests th e Appellate Body to reject the European 
Communities' claims of error and to uphold the Panel's findings in this respect.  
63. Brazil asserts that the Panel properly interprete d the meaning of the word "arbitrary" in the 
chapeau of Article XX, in accordance with the customary rules of interpretation of public 
international law.  The Panel took into account th e ordinary meaning of the word, along with both the 
context and the object and purpose of the chapeau of Article XX, as well as previous panel and Appellate Body reports.  On this basis, the Pane l interpreted the word "arbitrary" "as lacking a 
reasonable basis and requiring the need to convinc ingly explain the rationale of the measure".
86   
64. Brazil disputes the European Communities' as sertion that what constitutes arbitrary 
discrimination must be determined in relation to th e objective of the measure.  The specific contents 
of the measure at issue, including its policy objective,  must be examined under the exceptions listed in 
the paragraphs of Article XX.  The chapeau of Article XX, in turn, requires panels to examine 
whether the measure at issue is applied reasonably,  in a manner that does not result in an abusive 
exercise of a Member's right to pursue its polic y objective.  Brazil emphasizes that the European 
Communities' interpretation would impermissibly narr ow the scope of the chapeau of Article XX and 
limit the flexibility that Members have to protect legitimate values under that provision.  Brazil adds 
that, in any event, in this case the Panel did consider imports under th e MERCOSUR exemption in 
relation to the objective of the measure at issue when it determined that, at the time of its examination, 
                                                      
85Brazil's appellee's submission, para. 177 (referring to Panel Report, para. 4.54;  and Brazil's response 
to Question 40 posed by the Panel, Panel Report, p. 270).  
86Ibid., para. 191 (referring to Panel Report, paras. 7.260, 7.273, and 7.283).  WT/DS332/AB/R 
Page 26  
 
volumes of retreaded tyres imported under the MERCOSUR exemption did not significantly 
undermine the objective of the Import Ban.  Furthermore, reasons Brazil, it would  not  have been 
reasonable or rational, in the light of the objective of the Import Ban, for Brazil to have implemented 
the MERCOSUR ruling by abolishing the ban alt ogether, as the European Communities suggests.  
65. Brazil considers that the Panel correctly fo und that the discrimination resulting from the 
MERCOSUR exemption was not arbitrary.  In Braz il's view, even under the European Communities' 
definition of "arbitrary", the following considerati ons identified by the Panel demonstrate that the 
MERCOSUR exemption did not amount to arbitrary discrimination:  (i) Brazil introduced the exemption only after a dispute settlement tribuna l established under MERCOSUR ruled that the ban 
violated Brazil's obligations under MERCOSUR;  (ii) the MERCOSUR ruling was adopted in the 
context of an agreement intended to liberalize trad e that is expressly recognized in Article XXIV of 
the GATT 1994;  (iii) agreements of the type r ecognized by Article XXIV inherently provide for 
discrimination;  (iv) Brazil had an obligation unde r international law to implement the ruling by the 
MERCOSUR tribunal;  (v)  Brazil applied the MERCO SUR ruling in the most narrow way possible, 
that is, by exempting imports of a particular kind of retreaded tyres (remoulded) from the application 
of the ban;  and (vi) it was not reasonable for Brazil to implement the MERCOSUR ruling with 
respect to imports from all sources, because doing so  would have forced Brazil to abandon its policy 
objective and its chosen level of protection.  The Panel appropriately determined that these 
circumstances provided a rational basis for enacting the MERCOSUR exemption.  Brazil rejects as a 
"blatant misrepresentation"
87 the European Communities' argument that the Panel's finding necessarily 
implies that mere compliance with any interna tional agreement would exclude the existence of 
arbitrary discrimination, particularly given that the Panel expressly stated that its finding was limited 
to the "specific circumstances of the case".88  Furthermore, the European Communities' systemic 
concerns in this respect are contrary to the we ll-established precept under ge neral international law 
that "bad faith on the part of States is not to be presumed"89, and it is "absurd"90 to suggest that a 
WTO Member would conclude an agreement under Article XXIV for purposes of circumventing the 
requirements of the chapeau of Article XX. 
66. Brazil also submits that the Panel correctly concluded that the legal standard under the 
chapeau of Article XX is different from the lega l standard under Article XX IV.  As Brazil argued 
                                                      
87Brazil's appellee's submission, para. 209. 
88Ibid., para. 210 (quoting Panel Report, para. 7.283). 
89Ibid., para. 213. (footnote omitted) 
90Ibid., para. 214.  WT/DS332/AB/R 
 Page 27 
 
 
before the Panel, a measure that does not meet th e requirements of Article XXIV can nevertheless 
meet the requirements of the chapeau of Article XX. 
67. Brazil considers that the Panel correctly found that the operation of the MERCOSUR 
exemption has not resulted in the Import Ban be ing applied in a manner that would constitute 
unjustifiable discrimination.  Brazil has difficu lty understanding the European Communities' 
objections to the Panel's analysis since the Euro pean Communities itself argu es that what constitutes 
arbitrary or unjustifiable discrimination must be es tablished in relation to the objective of the measure 
at issue, and the Panel did precisely that.  The Panel determined how Brazil's policy objective of 
reducing unnecessary generation of tyre waste to the maximum extent possible was being affected by imports of retreaded tyres under the MERCOSUR exemp tion.  The level of imports and their effect on 
the objective of the Import Ban were relevant, in particular, because the chapeau of Article XX 
focuses on the application of the measure at issue.  Br azil also explains that the level of imports could 
not rise to a level that would undermine the obj ective of the Import Ban in the future, because 
Resolution No. 38 of the Câmara de Comércio Exte rior (Chamber of Foreign Trade) of 22 August 
2007
 91 established annual limits on the number of retr eaded tyres that can be imported into Brazil 
from MERCOSUR countries.  According to Brazil, these import volumes "correspond roughly" to the 
import volumes that the Panel found "were not significant".92   
68. Brazil considers that the European Communitie s' reference to the right of Members to 
challenge measures, as such, is misplaced.  The chap eau of Article XX requires an examination of the 
manner in which a measure is being applied, and th is will "rarely" be based on "immutable, static 
situations".93  The European Communities' challenge to the Panel's finding that 2,000 tons of 
retreaded tyres is "insignificant" is similarly wit hout merit.  According to Brazil, it is worth noting 
that the level of 2,000 tons is only one seventh of the 14,000 tons previously imported from the 
European Communities and, in any event, the Panel's finding that 2,000 tons is not a significant 
amount is a factual finding that cannot be revisited on appeal.   
69. In addition, Brazil submits that the Panel's finding that the MERCOSUR exemption did not 
result in the Import Ban being applied in a manne r that constitutes "a disguised restriction on 
international trade" under the chapeau of Article XX  is legally sound, and refers to its arguments 
before the Panel in support of this position. 
                                                      
91Exhibit BRA-175 submitted by Brazil to the Appellate Body. 
92Brazil's appellee's submission, para. 225 (referring to Panel Report, para. 7.288). 
93Ibid., para. 229. WT/DS332/AB/R 
Page 28  
 
(b) Imports of Used Tyres 
70. Brazil submits that the Panel committed no erro r in the analytical approach it adopted in 
determining whether imports of used tyres under court injunctions resulted in the Import Ban being 
applied in a manner that constituted "arbitrary discr imination", "unjustifiable discrimination", or "a 
disguised restriction on international trade" within the meaning of the chapeau of Article XX of the 
GATT 1994.  Brazil requests the Appellate Body to re ject the European Commun ities' claims of error 
and to uphold the Panel's findings that the imports  of used tyres did not constitute "arbitrary 
discrimination" and constituted "unjustifiable discrimination" or "a disguised restriction on 
international trade" within the meaning of that provision only to the extent that import volumes of 
used tyres "significantly undermined"  the objective of the Import Ban. 
71. Brazil argues that the Panel correctly found that the imports of used tyres under court 
injunctions did not result in the Import Ban bein g applied in a manner that constituted "arbitrary 
discrimination".  The Panel was satisfied, on the b asis of the evidence before it, that there was a 
rational basis for the importation of used tyres.  Furthermore, as it did in the context of the MERCOSUR exemption, the Panel did analyze whether the imports of used tyres significantly undermined the objective of the Import Ban—that is , it took the very approach advocated by the 
European Communities.  The Panel did  not, as the European Communities now claims, draw a 
distinction between the actions of certain Brazilian courts granting injunctions and the compliance by 
Brazilian administrative authorities with those court injunctions.  Brazil also rejects the European 
Communities' allegation that there is a contradicti on between the actions of different branches of the 
Brazilian government.  Rather, insists Brazil, th e Import Ban, the court injunctions, and the 
enforcement of the injunctions by the customs aut horities were the result of the operation of the Rule 
of Law.  "There is nothing unpredictable, irrati onal, abnormal, unreasonable, or even illegal in the 
conduct of Brazil's legislative, executive, or judiciary branches."
94 
72. With respect to the Panel's analysis of "unjustifiable discrimination", Brazil submits that it 
was appropriate for the Panel to cons ider the level of imports of used tyres.  For the same reasons that 
Brazil articulated with respect to the MERCOSUR exem ption, the effect that the volume of imports of 
used tyres had on Brazil's ability to achieve its policy objective was relevant to the Panel's analysis of 
unjustifiable discrimination.  Brazil points out th e inconsistencies in the European Communities' 
arguments, which, on the one hand, criticize the Pane l for taking into account the effects of import 
volumes on Brazil's ability to achieve its policy objectiv e, and, on the other hand, insist that arbitrary 
and unjustifiable discrimination can be established only when analyzed in relati on to the objective of 
                                                      
94Brazil's appellee's submission, para. 245.  WT/DS332/AB/R 
 Page 29 
 
 
the measure at issue.  Brazil disputes the European Communities' assertion that the Panel's analysis of 
the volume of imports involves uncertainty for impl ementation of its report.  According to Brazil, 
monitoring of a WTO Member's compliance is an inte gral part of the dispute settlement mechanism, 
and there are various examples of cases where panels made findings that were based on facts and circumstances that were potentially subject to change.
95   
73. Finally, Brazil argues that the Panel correctly considered the volume of imports of used tyres 
as part of its determination that the Import Ban was being applied in a manner that constituted "a 
disguised restriction on international trade", and refe rs to the arguments it made before the Panel in 
support of this position.   
3. The European Communiti es' Conditional Appeal  
(a) The Panel's Exercise of Judicial Economy 
74. Brazil considers that the Panel was justified in deciding to exercise judicial economy with 
respect to the European Communities' separa te claims that the MERCOSUR exemption was 
inconsistent with Articles I:1 and XIII:1 and not jus tified under Articles XX(d) and XXIV of the 
GATT 1994.  In the light of the Panel's finding that the Import Ban was inconsistent with Article XI:1 
of the GATT 1994, a separate finding in relation to an exemption to the Import Ban was not necessary 
to secure a positive resolution of the dispute.  The MERCOSUR exemption could not exist in the 
absence of the Import Ban, which had previously b een found to be inconsistent with the GATT 1994.  
The allegedly limited basis for the Panel's finding of incons istency under Article XI :1 is not relevant, 
because Article 3.7 of the DSU "does not distinguish between different  degrees  of solutions".96  
Brazil also distinguishes the fact s of this case from those in  EC – Export Subsidies on Sugar , on the 
basis that "the remedies under the GATT and the DSU for a violation of Article XI (found by the Panel) are no different from the remedies for a violation of Article XIII or I."
97  Furthermore, the very 
condition on which the European Communities appeals the Panel's ex ercise of judicial economy 
contradicts its contention that separate rulings unde r Article I:1 and Article XIII:1 were necessary.  
According to Brazil, by conditioning its appeal  on a finding by the Appellate Body that the 
MERCOSUR exemption does not result in the Impor t Ban being applied in consistently with 
Article XX, the European Communities is implicitly r ecognizing that a finding that the Import Ban is 
                                                      
95See Brazil's appellee's submission, para. 253 (referring to Panel Report, US – Section 301 Trade Act , 
paras. 7.131-7.136, 7.170, 7.179,  and 7.185;  and Panel Report, US – Shrimp (Article 21.5 – Malaysia) , 
para. 6.1).  
96Ibid., para. 268. (original emphasis) 
97Ibid., para. 269.  WT/DS332/AB/R 
Page 30  
 
not justified under Article XX renders unnecessary fi ndings on its separate claims under Articles I:1 
and XIII:1. 
(b) Completing the Legal Analysis  
75. In the event the Appellate Body were to reve rse the Panel's decision to exercise judicial 
economy, Brazil submits that the Appellate Body does not have a sufficient basis on which to complete the analysis of the European Commun ities' claims that the MERCOSUR exemption is 
inconsistent with Articles I:1 and XIII:1, and with respect to  Brazil's relate d defences under 
Articles XXIV and XX(d) of the GATT 1994.  There are neither undisputed facts nor factual findings 
by the Panel concerning the consistency of MERCO SUR with Article XXIV:5(a) and 8(a) of the 
GATT 1994 or the justification of the MERCOSU R exemption under Article XX(d).  Brazil 
specifically contests, as it did before the Pane l, assertions made by the European Communities 
regarding intra-MERCOSUR liberalization of the automotive and sugar sectors, as well as with 
respect to alleged exceptions to the common external  tariff.  In addition, the European Communities' 
claims under Articles XIII:1 and  I:1, and Brazi l's related defence under Article XXIV, are not 
suitable for completion of the analysis, because th ey are not closely related to the provisions 
examined by the Panel, and because they involve nove l legal issues that have not been explored in 
depth by the parties.  Brazil cites as examples of  such unexplored issues the questions of what 
constitutes "substantially all the trade" under Article  XXIV:8(a)(i) and what constitutes "substantially 
the same duties and other regulations of  commerce" under Article XXIV:8(a)(ii). 
(c) The MERCOSUR Exemption and Article XXIV of the GATT 1994 
76. In the event the Appellate Body considers it ca n complete the analysis with respect to the 
separate claims made by the European Communities in relation to the MERCOSUR exemption, Brazil 
submits that this measure is justifie d under Article XXIV of the GATT 1994.  
77. Brazil argues that it submitted sufficient evidence before the Panel to make a  prima facie  
case that MERCOSUR meets the requirements of Article XXIV:5(a) and 8(a).  In particular, Brazil submitted the results of calculations made by the Secretariat for MERCOSUR and the WTO Secretariat showing that the duties and other re gulations of commerce applied at the time of 
MERCOSUR's formation (1995), and in 2006, were not "on the whole" higher or more restrictive than 
those applied prior to its formation.  Brazil furthe r suggests there is evidence on record demonstrating 
that "substantially all the trade" between cons tituent members of MERCOSU R has been liberalized, 
and that MERCOSUR countries maintain substantia lly the same duties and other regulations of 
commerce on trade vis-à-vis  third countries, thus complying with the requirements of 
Article XXIV:8(a).  Brazil notes in this regard that, before the Panel, it incorporated by reference all  WT/DS332/AB/R 
 Page 31 
 
 
of the documents submitted by MERCOSUR members to the Committee on Regional Trade 
Agreements (the "CRTA"). 
78. Brazil contends that the European Comm unities has failed to rebut Brazil's  prima facie 
demonstration that MERCOSUR is consistent with the requirements of Article XXIV:5 and 8.  The 
fact that the CRTA and the Committee on Trade and Development did not reach the conclusion that 
MERCOSUR is in compliance with Article XXIV does not suggest that MERCOSUR is inconsistent 
with Article XXIV, in particular, because Members' measures are presumed WTO-consistent until 
sufficient evidence is presented to prove the contrary, and because the CRTA has only once 
concluded that a regional trade agreem ent was compatible with the GATT 1994. 
79. In addition, Brazil maintains th at the European Communities faile d to substantiate its claims 
that MERCOSUR was inconsistent with Article XXIV.  Although the European Communities asserts 
that the automotive and sugar sectors within MERCO SUR have not been fully liberalized, this is 
contradicted by the evidence it subm itted to the Panel.  According to Brazil, evidence before the Panel 
demonstrated that "the automotive sector has been the subject of continuing and progressive 
liberalization [and that] bilateral agreements be tween Mercosur members have already led, in 
practice, to duty-free trade in almost 100 pe rcent of the commerce in the auto sector."98  Brazil 
suggests further that the sugar sector alone cannot  prevent compliance with the requirement under 
Article XXIV:8(a)(i) that "substantially all the trad e" between the constituent territories be liberalized, 
because it "accounts for less than 0. 001 percent of the total [trade]".99  As regards the European 
Communities' assertion that there are exceptions to MERCOSUR's common external tariff, Brazil 
submits that the evidence on record demonstrates that MERCOSUR "applies a common external tariff 
to products in over 90 percent of the tariff lines and has a specific timetable in place to cover the 
remaining categories of products by 2008."100  Brazil also rejects the European Communities' 
assertion that MERCOSUR does not meet the requirement under Article XXIV:5(a) that non-tariff 
barriers on trade with third countries not be " on the whole  ...  more restrictive"101, noting that the only 
example provided by the European Communities is the Import Ban itself.  According to Brazil, a single measure cannot constitute sufficient eviden ce to show that MERCOSUR does not meet the 
requirements of Article XXIV:5(a). 
                                                     
 
98Brazil's appellee's submission, para. 295 (referring to Panel Report, para. 4.391; and 
WT/COMTD/1/Add.17, supra , footnote 73, p. 3). 
99Ibid. (referring to Committee on Trade and Developm ent, "Examination of the Southern Common 
Market (MERCOSUR) Agreement", WT/COMTD/1/Add.16, 16 May 2006 (Exhibit BRA-170 submitted by 
Brazil to the Panel), para. 14;  and WT/COMTD/1/Add.17, supra , footnote 73, p. 3). 
100Ibid., para. 296 (referring to Brazil's response to Question 132 posed by the Panel, Panel Report, 
pp. 360-361, in turn citing WT/COMTD/1/Add.17, supra , footnote 73, p. 2). 
101Ibid., para. 297. (emphasis added by Brazil) WT/DS332/AB/R 
Page 32  
 
80. Moreover, Brazil contends that th e Appellate Body's decision in Turkey – Textiles cannot be 
read as requiring Brazil to demonstrate that  the MERCOSUR exemption was introduced upon the 
formation of a customs union, and th at its formation would have been prevented if it were not allowed 
to introduce such a measure.  The analytical approach adopted by the Appellate Body in  Turkey – 
Textiles should not be applied in the present disput e, because the MERCOSUR exemption does not 
impose new restrictions against third countries but, rather, eliminates restrictive regulations between 
the parties to the customs union.
102  Furthermore, Brazil contends that a Member should not be 
allowed to demonstrate the necessity of its measure  only  as of the time a customs union is formed, 
because such customs unions and the integration of their members evolve and deepen over time.   
81. Brazil also rejects the European Communities' argument that the fact that the text of 
Article XXIV:8(a)(i) exempts Article XX measures fr om the requirement to eliminate duties and other 
restrictive regulations of commerce demonstrates that the MERCOSUR exemption was not necessary 
for the formation of MERCOSUR.  Such an interp retation would require the members of the customs 
union to exempt Article XX measures from internal lib eralization, "lest they are later challenged by 
third countries for discrimination and not permit ted to invoke Article XXIV to justify those 
measures."103  Moreover, the Appellate Body has explained that "the terms of [Article XXIV:8(a)(i)] 
offer 'some flexibility' to the constituent members of  a customs union when liberalizing their internal 
trade".104  This flexibility in Article XXIV permits Brazil to eliminate the Import Ban in respect of 
MERCOSUR countries while maintaining it in r espect of non-MERCOSUR countries.  Brazil also 
emphasizes that the MERCOSUR exemption was not introduced pursuant to its obligations under 
Article XXIV:8(a)(i), but was rather the result of  its unsuccessful attempt to defend the Import Ban 
before a MERCOSUR arbitral tribunal. 
(d) The MERCOSUR Exemption and Article XX(d) of the GATT 1994 
82. Should the Appellate Body decide to complete the analysis of the European Communities' 
claims under Articles I:1 and XIII:1 of the GA TT 1994, Brazil submits that it should find the 
MERCOSUR exemption to be justified under Article XX(d) of the GATT 1994. 
                                                      
102For Brazil, US – Line Pipe  is a more apposite case in the factua l context of this dispute. (See Brazil 
appellee's submission, para. 301 (referring to Panel Report, US – Line Pipe , paras. 7.147 and 7.148)) 
103Ibid., para. 307. 
104Ibid., para. 308 (quoting Appellate Body Report, Turkey – Textiles , para. 48).  WT/DS332/AB/R 
 Page 33 
 
 
83. Brazil submits that the Panel correctly interpreted and applied the term "to secure 
compliance" in Article XX(d), in contrast to th e European Communities' interpretation that a state 
"secures compliance" within the meaning of Article XX(d) only when it enforces rules or regulations 
as regards other actors, and not when it secures its ow n compliance with the laws or regulations of its 
domestic legal system.  Moreover, the Appellate Body's interpretation of Article XX(d) in  Mexico – 
Taxes on Soft Drinks made no such distinction.  Rather, the Appellate Body's interpretation of the text 
of Article XX(d) makes clear that domestic laws or regulations that ensure compliance by a state with 
its obligations are within the scope of that provision .  Brazil also contends that it has incorporated the 
obligation to comply with rulings of MERCOSUR tr ibunals into its domestic law, and that evidence 
to that effect exists in the record.  
84. Lastly, Brazil contends that the MERCOSUR exem ption is "necessary" within the meaning of 
Article XX(d).  Brazil argues that it could not have complied with the ruling of the MERCOSUR 
tribunal by simply exempting all third countries from the Import Ban, as the European Communities 
suggests it should have done, because  this would have forced Brazil to abandon its policy objective of 
reducing unnecessary generation of tyre waste to the maximum extent possible. 
C. Arguments of the Third Participants 
85. Pursuant to Rule 24(2) and (4) of the Working Procedures , China, Cuba, Guatemala, Mexico, 
Paraguay, and Thailand chose not to file a third par ticipant's submission but attended the oral hearing.  
Cuba, in its statement at the oral hearing, expressed  its agreement with the Panel's findings that the 
Import Ban was necessary to reduce the exposure of human, animal, or plant life or health to risks 
arising from waste tyres.  Cuba also emphasized the importance of the principle of sustainable 
development and environment pr eservation policies, and recalled that waste tyre management 
presents a challenge in particular for developing countries, given the significant environmental and 
economic costs it involves. 
1. Argentina  
86. Argentina agrees with the Panel's finding that the Import Ban contributed to the protection of 
human life and health within the meaning of Article XX(b) of the GATT 1994.  Argentina submits that the Panel's necessity analysis was consistent with the case law of the Appellate Body, and that 
"the Panel's reasoning relie[d] on facts broug ht to its attention by the parties."
105  The Panel correctly 
rejected the European Communities' contention that  the Import Ban did not contribute to reducing the 
number of waste tyres, based on its conclusion that "the direct effect of [the Import Ban] is to compel 
                                                      
105Argentina's third participant's submission, para. 14.  WT/DS332/AB/R 
Page 34  
 
consumers of imported retreaded tyres to switch either  to retreaded tyres produced domestically or to 
new tyres."
106  If the direct effect of the Import Ban were  to impede additional imports of retreaded 
tyres with a shorter lifespan than new tyres, then it would fulfil Brazil's objective of avoiding 
generation and accumulation of waste tyres.  Arge ntina underscores further that the Panel was not 
required to quantify the contribution of the Import Ban to the realization of the objective pursued.107  
87. Argentina submits that the Panel was correct in  concluding that the objective of protecting 
human health and life against life-threatening diseases "is both vital and important in the highest 
degree".108  The Panel correctly found that the alte rnative measures identified by the European 
Communities aimed at reducing the number of waste tyres and at improving the management of waste 
tyres in Brazil, but not at preventing the generation of waste tyres to the maximum extent possible.  
Argentina also agrees with the Panel's finding th at "the promotion of domestic retreading and 
enhanced retreadability of locally used tyres in Braz il would not lead to the reduction in the number of 
waste tyres additionally generated by 'i mported short-lifespan retreaded tyres'."109  For Argentina, the 
measures identified by the European Communities did not constitute alternatives that could be applied 
as a substitute for the Import Ban in preventing the generation of waste tyres to the maximum extent 
possible.  Lastly, Argentina concludes that the Panel did not err in finding that there were no 
reasonably available alternatives to the Import Ban th at would ensure the same level of protection to 
human life and health sought by Brazil.   
2. Australia  
88. Australia submits that the Panel erred in findi ng that the Import Ban was "necessary" within 
the meaning of Article XX(b) of the GATT 1994.  Article XX(b) should be interpreted so as to 
maintain the careful balance between the rights and obligations of WTO Members to secure their 
trade interests and the rights of Members to impose measures necessary to protect human, animal, or plant life or health.  In Australia's view, the Pane l incorrectly balanced these factors in making its 
findings on necessity.    
                                                     
 
106Argentina's third participant's submission, pa ra. 16 (quoting Panel Report, para. 7.134).  
107Ibid., para. 18 (referring to Appellate Body Report, EC – Asbestos , para. 167). 
108Ibid., para. 26 (referring to Panel Report, para. 7.111). 
109Ibid., para. 24 (quoting Panel Report, para. 7.168).  WT/DS332/AB/R 
 Page 35 
 
 
89. Australia notes that the Panel, in identifying the measure at issue, should have considered the 
MERCOSUR exemption in relation to a breach of Article XI:1 of the GATT 1994.  Australia 
encourages the Appellate Body to treat the Import Ban and the MERCOSUR exemption "as an 
'integrated whole'"110 under Article XX(b).   
90. Moreover, although the Appellate Body stated  that a "necessary" m easure is significantly 
closer to the pole of "indispensable" than to the opposite pole of simply "making a contribution", the 
Panel applied a definition of "necessary" that is closer to "making a contribution" than to 
"indispensable".111  The Panel correctly considered the rela tive importance of the interests or values 
pursued by the Import Ban, but did not correctly examine the contribution of the measure to the realization of the ends pursued by it.  The Panel also failed to consider adequately the restrictive 
impact of the Import Ban when conducting the wei ghing and balancing process.  If the measure is 
properly identified as including both the Import Ban a nd exemptions to that ban, it is then more 
appropriate to determine first whether such a measur e, in its totality, is necessary in the context of 
Article XX(b), taking into account the potential rest rictive impact on international commerce, among 
other factors.   
91. In relation to the Panel's assessment of alterna tive measures, Australia submits that the Panel 
did not properly weigh and balance possible alterna tives, because it incorrectly identified the ends 
pursued by the measure, incorrectly limited its cons ideration of alternatives to those available "in 
reality"
112, and failed to consider potential alternatives cu mulatively rather than only on an individual 
basis.  Australia also argues that  the Panel incorrectly excluded a better enforcement of the import ban 
on used tyres as an alternative measure to the Im port Ban.  For Australia, there is no basis in 
Appellate Body case law for excluding from the necessity  analysis alternatives that relate to the 
manner in which the relevant measur e is implemented in practice.  The Panel also applied an incorrect 
definition of "alternatives" when limiting its an alysis to those measures seeking to avoid the 
accumulation of waste tyres generated from imported re treaded tyres.  Finally, Australia disagrees 
with the Panel's reasoning that "complementary" me asures were not "alternative" measures, because 
they could not be directly substituted for the Im port Ban.  Although the Panel recognized that a 
combination of measures may be appropriate where different alternatives are complementary in 
addressing the risk, in practice, the Panel evaluated ea ch individual alternative m easure in isolation.   
                                                      
110Australia's third participant's submission, pa ra. 5 (referring to Appellate Body Report, EC – 
Asbestos , para. 64).   
111Ibid., para. 6 (referring to Appellate Body Report, Korea – Various Measures on Beef , para. 161). 
112Ibid., para. 20. WT/DS332/AB/R 
Page 36  
 
92. Australia argues further that the Panel erre d in finding that the MERCOSUR exemption did 
not constitute arbitrary or unjustifiable discrimin ation within the meaning of the chapeau of 
Article XX of the GATT 1994.  In defining "arbitrar y" as "motivated by capricious or unpredictable 
reasons", the Panel placed too much emphasis on di ctionary definitions and reduced the term to 
"inutility".
113  Consistent with the Appellate Body's statement in US – Shrimp  that "the precise 
meaning of the terms in the chapeau [of Article XX] may shift 'as the kind and the shape of the 
measures at stake vary and as the facts making up specific cases differ'"114, the Panel should have 
considered the specific fact ual situation that was before it.  Aust ralia adds that, alt hough it accepts that 
compliance with an international agreement "could be  considered as a factor by a panel in deciding 
whether discrimination was 'arbitrary'"115, this approach requires panels to "make a judgement on the 
status and validity of action under the agreement".116  
93. With respect to the Panel's finding that unjustif iable discrimination occurs only to the extent 
that the objective of the Import Ban has been significantly undermined by a significant amount of imports, Australia submits that the Panel may have  created a new test for the consideration of 
unjustifiable discrimination under the chapeau of Ar ticle XX.  Australia recognizes that a measure 
with no real impact in practice may not constitute  arbitrary or unjustifiable discrimination, but 
maintains that the import into Brazil of 2,000 tons of  retreaded tyres per year would not appear to be 
insignificant or without practical impact.  If the Appellate Body upholds the Panel's approach, the 
European Communities potentially would be for ced to commence a new dispute under the DSU, 
either under Article 21.5 or under a newly constituted panel, in the ev ent that imports of retreaded 
tyres from MERCOSUR countries increase to a level th at would undermine the achievement of the 
objective of the Import Ban.  Such re-litigation of  essentially the same dispute would not ensure the 
prompt settlement of the dispute, as provid ed for in Article 3.3 of the DSU.   
94. Finally, Australia considers that, for the same  reasons as those presented in relation to the 
MERCOSUR exemption, the Panel erred in finding th at the Brazilian court injunctions that permitted 
the importation of used tyres were not arbitrary. 
                                                     
 
113Australia's third participant's submission, para. 38 (referring to Appellate Body Report, US – 
Gasoline , p. 23, DSR 1996:I, 3, at 21;  and Appellate Body Report, Canada – Dairy , para. 133).  
114Ibid., para. 39 (referring to Appellate Body Report, US – Shrimp , para. 159).  
115Ibid., para. 42.  
116Ibid.   WT/DS332/AB/R 
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3. Japan  
95. Japan argues that what constitutes "arbitrary or unjustifiable discrimination" under the 
chapeau of Article XX of the GATT 1994 relates to  the manner in which a challenged measure is 
applied and should not be defined in relation to the objective of that measure.  The objective of a 
measure is relevant only to the determination of whether it falls under one of the paragraphs of 
Article XX, and not as an element to justify the measure's compatibility with the chapeau of that 
provision.  The ordinary meaning of the term "arbitr ary" indicates that an arbitrary discrimination test 
should focus primarily on  subjective  elements (such as motivations) in assessing the manner in which 
the measure is applied.  As for the term "unjustif iable", the Panel correctly concluded that it suggests 
the "need to be able to 'defend' or convincingly explain the rationale for any discrimination in the 
application of the measure."117  According to Japan, Members can reasonably provide such 
convincing explanation of the rationale based on  objective  elements, since they are considered to be 
easier to validate. 
96. In addition, Japan agrees with the Panel th at the importation of used tyres under court 
injunctions did not constitute arbitrary discrimina tion under the chapeau of Article XX, because the 
Panel focused on  subjective  elements in evaluating the manner of application of the Import Ban.  For 
Japan, the administrative authority is obliged to  follow a court order (where the authority has 
challenged it before the courts without success), a nd has no discretion not to obey it.  Therefore, 
whether acts of all branches of a government are "arb itrary" usually needs to be examined in relation 
to the pertinent decision-making processes.  In this case, the Panel correctly found that the actions of 
the Brazilian courts and those of Brazilian administra tive authorities were not arbitrary.  Japan adds 
that it does not necessarily follow that the government  as a whole acted in an arbitrary manner just 
because acts of its difference branches contradict each other. 
97. Japan next submits that the Panel was incorrect in assessing whether "unjustifiable 
discrimination" arose from the MERCOSUR exemp tion and from imports of used tyres under court 
injunctions on the basis of import volumes.  Alt hough import volumes may be a relevant factor in 
determining whether the application of a measur e constitutes unjustifiable discrimination, import 
volumes are subject to strong fluctuation due to economic factors, and are therefore an inadequate benchmark for purposes of determini ng the consistency of a measure with the chapeau of Article XX.  
According to Japan, import volumes  constitute a "vague threshold"
118 that would lead to 
disagreements between the parties as to the consiste ncy of the measure in the implementation stage.  
                                                      
117Japan's third participant's submission, para. 11 (quoting Panel Report, para. 7.260).  
118Ibid., para. 25.  WT/DS332/AB/R 
Page 38  
 
Japan suggests that Brazil's dispo sal capacity is a more reasonable threshold, because it is directly 
related to the reduction in the amount of waste tyre  accumulation in Brazil.  Japan adds that Brazil's 
disposal capacity is more easily quantifiable and l ess prone to fluctuation due to supply and demand 
than to import volumes.  
98. Finally, Japan submits that the Panel erroneously  exercised judicial economy with respect to 
the European Communities' claims that the MERCOSUR exemption was inconsistent with 
Articles I:1 and XIII:1 of the GATT 1994.  The Pa nel should have examined these claims, because the 
European Communities had set out, in its panel re quest, claims that the MERCOSUR exemption as a 
specific measure was inconsistent with these GATT provisions.  Japan considers that a panel's 
discretion in exercising judicial economy must not  adversely affect the appropriateness of the 
recommendations and rulings of the DSB, which are key to the full and satisfactory settlement of a 
dispute.
119  In this case, the Panel's exercise of judicial economy prevented the satisfactory settlement 
of the matter, because the Panel's findings required Br azil to rectify the Import Ban only in relation to 
imports of used tyres under court injunctions, but did not necessarily require Brazil to address the measure's inconsistency in relation to the MERCOSUR exemption.     
4. Korea
 
99. Korea submits that the Panel erred in concluding that the Import Ban was capable of 
contributing to the achievement of its objective.  Korea agrees with the Panel that "there is no 
requirement that there be a precise measu rement of the health risk involved".120  However, Korea 
distinguishes the facts in  EC – Asbestos  from the facts in this dispute, because the measure at issue in  
EC – Asbestos "was a ban on the use of the product and th e qualitative linkage was of the product to 
cancer"121, while in the present dispute there is no inhere nt danger in the product itself.  In particular, 
when unlimited domestic production and importation from MERCOSUR countries are permitted, the 
statement that "numerical precision" is not required can be abused as "an excuse for any lack of effort 
in assessing degrees of risk".122  In Korea's view, Brazil failed to demonstrate what amount of waste 
tyre reduction is optimal for achieving Brazil's objec tive and its chosen level of protection and how 
the limitations introduced by the Import Ban relate to any such level.   
                                                      
119Japan's third participant's submission, paras. 31-32 (referring to Appellate Body Report, Canada –  
Wheat Exports and Grain Imports , para. 133;  and Appellate Body Report, EC – Export Subsidies on Sugar , 
paras. 330-335). 
120Korea's third participant's submission, para. 8 (referring to Panel Report, paras. 7.118 and 7.119).  
121Ibid., para. 9.  
122Ibid.  WT/DS332/AB/R 
 Page 39 
 
 
100. For Korea, the Panel's finding that the Import Ba n was "capable of contributing to the overall 
reduction of the amount of waste tyres"123 amounts to a violation of Article 11 of the DSU.  It is 
unclear what the Panel understood as "capable of co ntributing", and the Panel should have quantified 
the extent of the actual contribution of the Import Ba n to the achievement of its objective, particularly 
in the light of its subsequent finding that a quantit y of 2,000 tons of retreaded tyres imported under the 
MERCOSUR exemption did not "significantly" undermine the objective of the measure.  
101. Korea agrees with the Panel that Members can choose the level of protection they consider 
appropriate.  However, the measure in question does not relate directly to the reduction of mosquito-
borne diseases and tyre fire emissions.  Rather, it is  "derivative" and relates to the reduction in the 
number of waste tyres, which may have a "knock-on effect"124 on the reduction of mosquito-borne 
diseases and tyre fire emissions.  However, in Korea's view, the Panel failed to assess properly the 
relationship of the Import Ban to its stated goal of  safeguarding human health through the reduction of 
waste tyres.  For Korea, without a better assessment of whether or not the Import Ban actually results 
in a reduction of the accumulation of waste tyres, one cannot establish a measurable link (or, indeed, 
any link) to the stated health goal.  Therefore, Korea reasons, "some sort of metric, even if not a 
precise one"125, would have been necessary for the Panel to  determine the contribution of the Import 
Ban to the achievement of its objective.  Korea considers that the European Communities provided a 
number of alternatives to the Import Ban, any of wh ich individually or in combination would provide 
less trade-restrictive measures in achieving the stated goal. 
102. Korea argues further that the Panel erred in finding that the MERCOSUR exemption did not 
result in the Import Ban being applied in a manner inc onsistent with the chapeau of Article XX of the 
GATT 1994.  First, Korea agrees with the Panel that  the ordinary meaning of the word "arbitrary" 
includes the "elements of capricious , unpredictable and inconsistent".126  However, the Panel assessed 
the MERCOSUR exemption only in the light of the meaning of the terms "capricious" and 
"unpredictable".  According to Korea, the term  "inconsistent" informs the whole meaning of 
"arbitrary".127  This is significant, because the ME RCOSUR exemption is not capricious, or 
unpredictable.  However, the Import Ban a nd the MERCOSUR exemption certainly were 
"inconsistent" in the light of the underlying jus tification, that is, the protection of humans from 
mosquito-borne diseases and tyre fire emissions.  Fo r Korea, there is no logical way of distinguishing 
                                                      
123Korea's third participant' s submission, para. 10.  
124Ibid., para. 11. 
125Ibid., para. 12.  
126Ibid., para. 19.  
127Ibid., para. 20.  WT/DS332/AB/R 
Page 40  
 
between retreaded tyres from a MERCOSUR country and retreaded tyres from another WTO Member 
in relation to the protection of human life and health objective pursued by Brazil. 
103. Secondly, Korea submits that the Panel erred in finding that 2,000 tons of retreaded tyres 
imported from MERCOSUR countries did not significantly undermine the objective of the Import Ban.  Korea asserts that the initial burden was on  Brazil to establish adequately the factual link 
between the health goal and the measure in ques tion, and to do so "with some certainty and 
demonstrability".
128  Thus, in the absence of such a benchmark provided by Brazil, the Import Ban is 
by definition "arbitrary", because it "may be applie d or not applied in inc onsistent manners without 
any factual or logical basis."129  Korea argues that the Panel misint erpreted the nature of the exception 
provided under Article XXIV of the GATT 1994 and how it interacts with the exception under 
Article XX. 
104. Finally, Korea argues that there was no legal b asis for the Panel to find that the open-ended 
MERCOSUR exemption was consistent with Brazi l's defence under Article  XX based on the novel 
standard of significantly undermining th e objective that the Panel had construed.130  This reasoning 
implied that MERCOSUR imports could increase to some unknown level that might then significantly 
undermine the protection of human life and health objec tive stated by Brazil.  Korea contends that the 
Panel's approach virtually invited future disputes.  Th is is not consistent with Article 3.3 of the DSU, 
which provides that prompt settlement of disputes is  a key element of the dispute settlement system.  
According to Korea, the Panel erred by attempting to  make an "as applied" ruling based on transient 
facts, when the structure of the measure and the open-ended MERCOSUR exemption required an "as 
such" finding.  
5. The Separate Customs Territory of  Taiwan, Penghu, Kinmen, and Matsu  
105. The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu submits that the 
Panel erred in its interpretation of the chapeau of  Article XX of the GATT 1994, and in finding that 
the MERCOSUR exemption did not result in the Import Ban being applied in a manner that constituted either "arbitrary discrimination" or "a di sguised restriction on international trade" within 
the meaning of the chapeau. 
                                                     
 
128Korea's third participant' s submission, para. 29.  
129Ibid. 
130Ibid., para. 33.   WT/DS332/AB/R 
 Page 41 
 
 
106. The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu submits that the 
Panel's finding that the MERCOSUR exemption did not constitute "arbitrary discrimination between 
countries where the same conditions prevail" was in error, because the MERCOSUR exemption "was 
done unpredictably".131  In support of this argument, the Se parate Customs Territory of Taiwan, 
Penghu, Kinmen, and Matsu recalls that Brazil main tained a general ban on the importation of used 
tyres even after the formation of MERCOSUR, when Brazil should have eliminated most of the trade 
barriers with other MERCOSUR countries, and that Br azil even enacted new restrictions on imports  
when it enacted the Import Ban.  Moreover, Brazil did not invoke the protection of human life and 
health in its defence before the MERCOSUR arbitral tribunal, and that tribunal did not specify how 
Brazil should implement its ruling.  Brazil itself decided to adopt the MERCOSUR exemption.  For 
these reasons, the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu contends that 
"it is quite clear that no 'predictability' could be fo und in Brazil's trade policy, which would justify the 
effect of discrimination on retreaded tyres."132  This lack of predictability results in the discrimination 
introduced by the MERCOSUR exemption being "arbitr ary" within the meaning of the chapeau of 
Article XX.  
107. In addition, the Separate Customs Territory  of Taiwan, Penghu, Kinmen, and Matsu argues 
that the MERCOSUR exemption should be considered  arbitrary in the light of the objective of the 
Import Ban.  It is uncontested that retreaded tyres exported from MERCOSUR countries into Brazil 
had the same potential to damage human life or health as retreaded tyres exported from non-
MERCOSUR countries.  For this reason, the Separa te Customs Territory of Taiwan, Penghu, Kinmen, 
and Matsu submits that, "if the protection of hum an life or health necessitates Brazil adopting an 
import ban on retreaded tyres, a loophole in th e ban would undermine Brazil's asserted objective."133  
The MERCOSUR exemption is just such a loophole , and the discrimination that it engenders is, 
therefore, arbitrary. 
108. The Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu argues further that 
the Panel erred in finding that the discrimina tion engendered by the MERCOSUR exemption was 
permissible pursuant to Article XXIV of the GATT 1994.  Even assuming that MERCOSUR is 
consistent with Article XXIV,  Ar ticle XXIV:8(a) specifically excl udes measures adopted consistently 
with Article XX from the obligation to liberalize "sub stantially all the trade" within a customs union.  
                                                      
131Third participant's submission of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and 
Matsu, para. 7. 
132Ibid., para. 13. 
133Ibid., para. 15. WT/DS332/AB/R 
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The Separate Customs Territory of Taiwan, Penghu,  Kinmen, and Matsu also highlights that the 
objectives of Articles XX and XXIV "are diametrically opposed".
134  
109. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen, and Matsu also argues that the 
Panel erred in finding that the MERCOSUR exempti on did not constitute "a disguised restriction on 
international trade" under the chapeau of Article XX, "because the amount of imported retreaded tyres 
did not increase 'significantly' following [its] introduction".135  The chapeau of Article XX does not 
require evidence of a disruption in trade flows fo r a complainant to make a case that a disguised 
restriction exists.  The "logic"136 of the Appellate Body's rulings in US – Shrimp  and in US – 
Gambling  was "to discourage a [WTO] Member from adop ting a measure having an adverse effect on 
international trade."137  Therefore, a disguised restriction on international trade should be found to 
exist when there is a  possibility  that it does exist.  The Panel's test of "significance", in contrast, 
clearly lacked a legal basis.   
110. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen, and Matsu adds that, as a result 
of the MERCOSUR exemption, "the trade flow of retreaded tyres to Brazil has been changed in a 
manner benefiting other MERCOSUR countries"138, because these countries are now "able to import 
used tyres from non-MERCOSUR countries in the firs t place, retread them locally, and finally 
re-export retreaded tyres to Brazil."139  The Separate Customs Territory of Taiwan, Penghu, Kinmen, 
and Matsu concludes that internationa l trade in retreaded tyres will be distorted, and that a disguised 
restriction results from such trade distortion.   
111. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen, and Matsu further suggests that 
the Panel's findings in this dispute might cause confusion for WTO Members when assessing whether 
a specific measure is WTO-consistent, create a te ndency for WTO Members to initiate a multiplicity 
of WTO disputes, and undermine the security and pr edictability needed to conduct future trade.  
These problems stem from the Panel's failure to provid e clear criteria for determining what volume of 
imports or increase in import volumes would be c onsidered "significant".  Moreover, since import 
volumes are generally determined by supply and de mand, the Panel's significance test, if adopted, 
would make it difficult for WTO Members, who do not have the power to control trade flows into 
                                                      
134Third participant's submission of the Separate Customs Territory of Taiwan, Penghu, Kinmen, and 
Matsu, para. 21. 
135Ibid., para. 23 (referring to Panel Report, para. 7.354).  
136Ibid., para. 26.  
137Ibid. (referring to Appellate Body Report, US – Shrimp , paras. 166-184;  and Appellate Body Report, 
US – Gambling , para. 369).   
138Ibid., para. 27.  
139Ibid. (referring to Panel Report, para. 7.352).  WT/DS332/AB/R 
 Page 43 
 
 
their domestic markets, to adopt WTO-consistent  measures or to eliminate WTO-inconsistent 
measures.   
6. United States  
112. The United States agrees with the European Co mmunities that the manner in which the Panel 
considered the MERCOSUR exemption in its Artic le XX analysis was erroneous in a number of 
respects.  First, the Panel erred in disreg arding the MERCOSUR exemption when determining 
whether the Import Ban was "necessary" within th e meaning of Article XX(b) of the GATT 1994.  
The MERCOSUR exemption is contained in Portaria SECEX 14/2004140, and this was the measure 
found by the Panel to be inconsistent with Article XI:1 of the GATT 1994.  For this reason, the Panel 
was obliged to determine whether Brazil had est ablished that the same measure—Portaria SECEX 
14/2004—was justified under Article XX, includi ng by considering the aspect of the MERCOSUR 
exemption in its necessity analysis.  The United St ates highlights that a single sentence of Portaria 
SECEX 14/2004 contains both the Import Ban and the MERCOSUR exemption.  According to the 
United States, the Panel should have considered, in determining the contribution of the measure to the 
ends pursued by it, the fact that retreaded tyr es continue to be imported due to the MERCOSUR 
exemption, and its failure to  do so constituted a breach of  Article 11 of the DSU.   
113. However, the United States disagrees with the European Communities' apparent position that 
the contribution of the measure to the ends pursu ed must be evaluated quantitatively, or that 
demonstrating a contribution requires "verifiable" evidence of whether the measure "actually" contributed to the ends pursued.
141  Article XX(b) does not contain a requirement to quantify 
"necessity", and both quantitative and qualitative evidence may be releva nt to the necessity analysis, 
including the analysis of the contribution of the measure to the ends pursued.   
114. The United States also argues that the Panel erred in finding that the MERCOSUR exemption 
did not result in the Import Ban being applied in a manner that constitutes "arbitrary or unjustifiable 
discrimination" or "a disguised restriction on in ternational trade", contrary to the chapeau of 
Article XX.  First, the Panel erred in basing its finding that the MERCOSUR exemption did not 
constitute arbitrary discrimination on the fact that the exemption was adopted to comply with a ruling 
issued by a MERCOSUR tribunal.  The ruling did not prescribe any specific implementation action and, more fundamentally, the United States objects to  the Panel's reference to Article XXIV in the 
context of the MERCOSUR ruling.  The United States explains that "Article XXIV does not 
                                                     
 
140See supra , footnote 3. 
141United States' third participant's submission, para. 6 (referring to European Communities' appellant's 
submission, paras. 172-174).  WT/DS332/AB/R 
Page 44  
 
'expressly recognize'  any and all  frameworks for [WTO] Members to discriminate in favor of 
partners in customs unions or free trade areas, but rather recognizes particular agreements that meet 
the conditions specified therein."
142  The Panel could not have properly concluded that MERCOSUR 
is a type of agreement expressly recognized in  Article XXIV, because it made no findings as to 
whether MERCOSUR meets the terms of Article XXIV.   
115. Secondly, the United States maintains that the Panel erred in relying on the number of 
retreaded tyres imported into Brazil from MERCOSU R countries as a basis for its finding that the 
MERCOSUR exemption did not constitute  "unjustifiable discrimination" or "a disguised restriction on 
international trade" under the chapeau of Article XX.  The Panel found that the volume of imports 
from MERCOSUR countries appears not to have been "significant", but failed to offer any 
meaningful analysis of what volume would be "si gnificant".  The United States points out that import 
volumes may change, and that simple reliance on a figure "appears a dubious basis for the Panel's 
conclusion that the permitted imports will not  'undermine' the objective of the measure."143  According 
to the United States, the chapeau of Article XX requires panels  to evaluate whether unjustifiable 
discrimination or a disguised restriction on intern ational trade exists, and not simply whether the 
discrimination that exists undermines the objective of the measure.   
116. Finally, should the Appellate Body reach the European Communities' conditional appeal and 
decide to rule on the European Communities' sepa rate claims that the MERCOSUR exemption is 
inconsistent with Articles I:1 and XIII:1 of the GATT 1994, the United States submits that Brazil may 
not rely on Article XXIV of the GATT 1994 as a defence.  MERCOSUR has not been notified under 
Article XXIV as a customs union, as required by Ar ticle XXIV:7 of the GATT 1994.  According to 
the United States, failure to notify a customs union under Article XXIV:7 does not merely render a 
customs union inconsistent with that paragra ph;  rather, pursuant to paragraph 1 of the Understanding 
on the Interpretation of Article XXIV of th e General Agreement on Tariffs and Trade 1994 (the 
"Understanding on Article XXIV of the GATT 1994 "), such a customs union is not consistent with 
Article XXIV as a whole.  Members that opt not to  subject their customs union to the procedures set 
out in Article XXIV and the  Understanding on Article XXIV of the GATT 1994  or its interpretation 
are not entitled to invoke that provision as a defe nce.  Moreover, the Un ited States notes that 
MERCOSUR countries notified MERCOSUR pursuant to paragraph 4(a) of the GATT 1979 Decision 
on Differential and More Favourable Treatment, Reci procity and Fuller Participation of Developing 
Countries  (the "Enabling Clause")144 rather than under Article XXIV:7(a) of the GATT 1994.  The 
                                                      
142United States' third participant's submission, para. 9. (original emphasis) 
143Ibid., para. 11.  
144L/4903, 28 November 1979, BISD 26S/203.   WT/DS332/AB/R 
 Page 45 
 
 
United States argues that regional arrangements as defined under Articles 1, 2, and 3 of the Enabling 
Clause have different characteristics and are subject to different obligations than customs unions and 
free trade areas covered by Article XXIV. 
 
III. Issues Raised in This Appeal 
117. The following issues are ra ised in this appeal: 
(a) with respect to the Panel's analysis  of "necessity" within the meaning of 
Article XX(b) of the GATT 1994: 
(i) whether the Panel erred in finding th at the Import Ban is "necessary" to 
protect human or animal life or health145;  and 
(ii) whether the Panel breached its duty under Article 11 of the DSU to make an 
objective assessment of the facts;   
(b) with respect to the Panel's interpretation a nd application of the chapeau of Article XX 
of the GATT 1994: 
(i) whether the Panel erred in finding that the MERCOSUR exemption has not 
resulted in the Import Ban being applied in  a manner that is inconsistent with 
the chapeau146;  and 
(ii) whether the Panel erred in its analysis of whether imports of used tyres under 
court injunctions have resulted in th e Import Ban being applied in a manner 
that is inconsistent with the chapeau;  and 
(c) if the Appellate Body does  not  find that the MERCOSUR exemption results in the 
Import Ban being applied in a manner that is inconsistent with the chapeau of 
Article XX of the GATT 1994, then: 
(i) whether the Panel erred in exercising judicial economy in relation to the 
European Communities' separate claim that the MERCOSUR exemption is inconsistent with Articles I:1 and X III:1 of the GATT 1994;  and, if so 
                                                     
 
145Panel Report, para. 7.215. 
146Ibid., paras. 7.289 and 7.354. WT/DS332/AB/R 
Page 46  
 
(ii) whether the MERCOSUR exemption is inconsistent with Articles I:1  
and XIII:1 and is not justified under Ar ticle XXIV or Article XX(d) of the 
GATT 1994. 
 
IV. Background and the Measure at Issue 
A. Factual Background 
118. Tyres are an integral component in passenger car s, lorries, and airplanes and, as such, their 
use is widespread in modern soci ety.  New passenger cars are typica lly sold with new tyres.  When 
tyres need to be replaced, consumers in some countries
147 may have a choice between new tyres or 
"retreaded" tyres.  This dispute concerns the latter category of tyres.148  Retreaded tyres are used tyres 
that have been reconditioned for further use by stri pping the worn tread from the skeleton (casing) and 
replacing it with new material in the form of a new tread, and sometimes with new material also 
covering parts or all of the sidewalls.149  Retreaded tyres can be produced through different methods, 
one of which is called "remoulding".150  
119. At the end of their useful life151, tyres become waste, the accumulation of which is associated 
with risks to human, animal, and plant life and health.152  Specific risks to human life and health 
include: 
                                                      
147We note that Brazil is not the only WTO Member that has adopted a ban on imports of retreaded 
tyres.  According to Brazil, countries that have restricted imports of used and retreaded tyres include Argentina, 
Bangladesh, Bahrain, Nigeria, Pakistan, Thailand, and Venezuela. (Brazil's first submission to the Panel, 
para. 67)  At the oral hearing, Brazil identified the following as countries that ban imports of retreaded tyres:  Argentina, Morocco, Nigeria, Pakistan, Thailand, Tunisia, and Venezuela.  
148Retreaded tyres are classified in the International Convention on the Harmonized Commodity 
Description and Coding System , done at Brussels, 14 June 1983, under subheadings 4012.11 (motor cars), 
4012.12 (buses and lorries), 4012.13 (aircraft), and 4012.19 (other types). (Panel Report, para. 2.4)  
149Panel Report, para. 2.1. 
150"Remoulding" consists of replacing the tread and the sidewall including all or part of the lower area 
of the tyre.  The other two methods of retreading are "top-capping", which consists of replacing only the tread, 
and "re-capping", which entails replacing the tread and part of the sidewall. ( Ibid., para. 2.2) 
151The Panel assumed that, on average, a tyre—wheth er new or retreaded—can be used on a passenger 
car for five years before it becomes a used tyre. ( Ibid., para. 7.128) 
152Ibid., para. 7.109.  WT/DS332/AB/R 
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(i) the transmission of dengue, yellow fever and malaria through mosquitoes which use tyres as breeding grounds;  and (ii) the exposure of human beings to toxic emissions caused by tyre fires which may cause loss of short-term memory, learning disabilities, immune system suppression, cardiovascular problems, but also 
cancer, premature mortality, reduced lung function, suppression of 
the immune system, respiratory effects, heart and chest problems.
 153 
Risks to animal and plant life and health include:  "(i) the exposure of animals and plants to toxic 
emissions caused by tyre fires;  and (ii) the transmission of a mosquito-borne disease (dengue) to 
animals."154   
120. Governments take actions to minimize the adverse effects of waste tyres.  Policies to address 
"waste" include preventive measures aiming at reducing the generation of additional waste tyres 155, as 
well as remedial measures aimed at managing and di sposing of tyres that can no longer be used or 
retreaded, such as landfilling, stockpiling, the incinera tion of waste tyres, and material recycling.   
121. The Panel observed that the parties to this disput e have not suggested that retreaded tyres used 
on vehicles pose any particular risks compared to  new tyres, provided that they comply with 
appropriate safety standards.  Various internationa l standards exist in relation to retreaded tyres, 
including, for example, the norm stipulating that  passenger car tyres may be retreaded only once.156  
One important difference between new and retreaded ty res is that the latter have a shorter lifespan and 
therefore reach the stage of being waste earlier.157   
B. The Measure at Issue 
122. Article 40 of Portaria No. 14 of the Secretaria de Comércio Exterior ("SECEX") (Secretariat 
of Foreign Trade of the Brazilian Ministry of De velopment, Industry, and Foreign Trade), dated 
17 November 2004 ("Portaria SECEX 14/2004")158 reads as follows: 
                                                      
153Panel Report, para. 7.109.  See also ibid., paras. 7.53-7.83. 
154Ibid., para. 7.112. 
155See the Panel's finding, in paragraph 7.100 of its Report, that "policies to address 'waste' by non-
generation of additional waste are a generally recognized  means of addressing waste management issues", as 
well as footnote 1170 thereto, deta iling the evidence on which the Panel relied in reaching this conclusion. 
156Ibid., para. 2.3. 
157Ibid., paras. 7.129 and 7.130. 
158Exhibits BRA-84 and EC-29 submitted by Brazil a nd the European Communities, respectively, to 
the Panel.  We note that, in Novemb er 2006, Article 40 of Portaria SECEX 14/2004 was replaced by Article 41 
of Portaria SECEX No. 35 dated 24 November 2006, the te xt of which is identical to that of Article 40 of 
Portaria SECEX 14/2004. (European Communities' appellant 's submission, para. 145 and footnote 18 thereto) WT/DS332/AB/R 
Page 48  
 
Article 40 – An import license will not  be granted for retreaded tyres 
and used tyres, whether as a consumer product or feedstock, classified under NCM code 4012, except for remoulded tyres, classified under NCM codes 4012.11 .00, 4012.12.00, 4012.13.00 and 
4012.19.00, originating and proceed ing from the Mercosur Member 
States under the Economic Complementation Agreement No. 18.
159 
Article 40 of Portaria SECEX 14/2004 contains three main elements:  (i) an import ban on retreaded  
tyres (the "Import Ban")160;  (ii) an import ban on  used  tyres;  and (iii) an exemption from the Import 
Ban of imports of certain retreaded tyres fro m other countries of the Mercado Común del Sur 
("MERCOSUR") (Southern Common Market), which h as been referred to in this dispute as the 
"MERCOSUR exemption".161  The MERCOSUR exemption did not fo rm part of previous regulations 
prohibiting the importation of retreaded tyres, not ably Portaria SECEX No. 8 of 25 September 2000 
("Portaria SECEX 8/2000")162, but was introduced as a result of a ruling issued by a MERCOSUR 
arbitral tribunal.163   
123. This dispute concerns the Import Ban and the MERCOSUR exemption in Article 40 of 
Portaria SECEX 14/2004, but not the import ban on used tyres.164  In its request for the establishment 
of a panel165, the European Communities identified the Import Ban and the MERCOSUR exemption 
as distinct measures, and made separate claims  against each of these measures.  The European 
Communities claimed that the Import Ban was inconsis tent with Article XI:1 of the GATT 1994, and 
                                                      
159See Panel Report, para. 2.7.  
160Throughout this Report, reference to the "Import Ban" shall be understood as referring only to the 
import ban on retreaded tyres.  It therefore does not include the MERCOSUR exemption, despite the fact that 
this exemption is contained in the same legal instrument as the Import Ban, that is, Article 40 of Portaria 
SECEX 14/2004. 
161The MERCOSUR exemption applies exclusively to remoulded tyres, a subcategory of retreaded 
tyres, which result from the process of replacing the tread and the sidewall, including all or part of the lower 
area of the tyre. (See Panel Report, para. 2.74 and footnote 1440 to para. 7.265) 
162Exhibits BRA-71 and EC-26 submitted by Brazil a nd the European Communities, respectively, to 
the Panel.  See also  Panel Report, para. 2.8. 
163Following the adoption of Portaria SECEX 8/2000, Uruguay requested, on 27 August 2001, the 
initiation of arbitral proceedings with in MERCOSUR.  Uruguay alleged that  Portaria SECEX 8/2000 constituted 
a new restriction of commerce between MERCOSUR co untries, which was incompatible with Brazil's 
obligations under MERCOSUR.  In its ruling of 9 Januar y 2002, the arbitral tribunal found that the Brazilian 
measure was incompatible with MERCOSUR Decision CMC No. 22 of 29 June 2000, which obliges MERCOSUR countries not to introduce new  inter se   restrictions of commerce. (See Panel Report, para. 2.13;  
see also Exhibits BRA-103 and EC-40 submitted by Brazil and the European Communities, respectively, to the 
Panel)  Following the arbitral awar d, Brazil enacted Portaria SECEX No. 2 of 8 March 2002, which eliminated 
the import ban for remoulded tyres originating in other MERCOSUR countries. (See Panel Report, para. 2.14;  
see also Exhibit BRA-78 submitted by Brazil to the Panel;  see also Exhibit EC-41 submitted by the European 
Communities to the Panel)  This exemption was incorporat ed into Article 40 of Portaria SECEX 14/2004.   
164The European Communities confirmed, in response to questioning at the oral hearing, that it has not 
challenged the ban on the import of  used  tyres contained in Article 40 of Portaria SECEX 14/2004. 
165WT/DS332/4, 18 November 2005.  See also European Communities' first written submission to the 
Panel, para. 47.  WT/DS332/AB/R 
 Page 49 
 
 
could not be justified under Article XX of the GATT 1994.166  The European Communities also made 
distinct claims that the MERCOSUR exemption was inconsistent with Article  I:1 and Article XIII:1 
of the GATT 1994, and could not be justified unde r either Article XXIV:5 of the GATT 1994 or the 
Enabling Clause.167  In comments made during the interim review, Brazil stated that it had treated the 
Import Ban and the MERCOSUR exemption as two separate measures contained in the same legal instrument.
168   
124. Following the approach of the parties, the Pa nel analyzed the claim made against the Import 
Ban separately from the claims made against the MERCOSUR exemption.  The Panel found the 
Import Ban to be inconsistent w ith Article XI:1 of the GATT 1994.169  It then turned to Brazil's 
related defence under Article XX(b) of the GATT 1994, stating that its analysis of Brazil's 
justification of the violation should focus also on the Import Ban, because this was the "specific 
measure" that had been found to be  inconsistent with Article XI:1.170  Thus, according to the Panel, its 
analysis of the necessity of  that  specific measure should not have  taken account of "elements 
extraneous to the measure itself" or of situations in which the Import Ban "does  not  apply (i.e. the 
exemption of MERCOSUR imports)".171  The Panel recognized, nonetheless, that "the MERCOSUR 
exemption is foreseen in the very legal instrument containing the import ban".172  It then included the 
MERCOSUR exemption in its analysis of the chap eau of Article XX, because the chapeau involves 
consideration of the manner in which the specific measure to be justified (in this case, the Import Ban) is applied. 
125. On appeal, the European Communities indicated , in response to questioning at the oral 
hearing, that the Import Ban and the MERCOSUR exemption are two aspects of a single measure—that is, Article 40 of Portaria SECEX 14/2004—and that this provision is the measure at issue.  
Notwithstanding this position, the European Comm unities does not appeal the Panel's analytical 
approach.  More specifically, the European Comm unities does not contend that the Panel erred in 
                                                     
 
166See, for instance, European Communities' first written submission to the Panel, paras. 89-168. 
167Supra , footnote 144.  See also European Communities' first written submission to the Panel,  
paras. 193-222. 
168Panel Report, para. 6.17. 
169The Panel found that the prohibition of the issuan ce of import licences for retreaded tyres has the 
effect of prohibiting the importation of retreaded tyres, an d is thus inconsistent with Article XI:1 of the GATT 
1994. ( Ibid., paras. 7.14, 7.15, and 7.34)  In making the finding that Portaria SECEX 14/2004 is inconsistent 
with Article XI:1, the Panel focused on the import pr ohibition;  its reasoning reflects the notion that an 
exemption from an import ban by its nature does not constitute a prohibition or restriction. 
170Ibid., para. 7.106. 
171Ibid., para. 7.107. (footnote omitted) 
172Ibid., para. 7.237;  see also para. 6.19. WT/DS332/AB/R 
Page 50  
 
identifying and separately treating as two distinct matters before it:  a claim relating to the Import 
Ban;  and a claim concerning the discrimina tion introduced by the MERCOSUR exemption.  
126. We observe, nonetheless, that the Panel might have  opted for a more holistic approach to the 
measure at issue by examining the two elements of  Article 40 of Portaria SECEX 14/2004 that relate 
to retreaded tyres  together .  The Panel could, under such an approach, have analyzed whether the 
Import Ban in combination with the MERCOSUR exem ption violated Article XI:1, and whether that 
combined  measure, or the resulting partial import ban, could be considered "necessary" within the 
meaning of Article XX(b).
173    
127. Yet, the Panel's approach reflects the manner in which the European Communities formulated 
its claims to the Panel, and the fact that the ME RCOSUR exemption was not part of the original ban 
on the importation of retreaded tyres adopted by Brazil (Portaria SECEX 8/2000), but was only 
introduced following a ruling in 2002 by a MERCOSU R arbitral tribunal.  These considerations 
prompt us to examine the issues appealed on the b asis of the conceptual approach adopted by the 
Panel in defining the scope of the measure at issu e, which, as indicated above, has not specifically 
been appealed by the Eu ropean Communities.   
C. Related Measures 
128. In addition to the Import Ban, Brazil has adopted  a variety of other measures which were also 
challenged or discussed before the Panel.  Althoug h none of these measures are directly at issue in 
this appeal, we consider it useful to identify them briefly.   
129. Presidential Decree 3.179, as amended 174, provides sanctions applicable to conduct and 
activities harmful to the environment, and othe r provisions, and its Article 47-A subjects the 
importation, as well as the marketing, transportation,  storage, keeping or warehousing, of imported 
used and retreaded tyres to a fine of R$400/unit. 
130. Resolution No. 258 of 26 August 1999 of the Conselho Nacional do Meio Ambiente 
("CONAMA") (National Council for the Environment of the Ministry of the Environment) ("CONAMA Resolution 258/1999")
175, as amended by CONAMA Resolution No. 301 of 21 March 
                                                      
173Indeed, two of the third participants in this a ppeal—Australia and the United States—suggest that 
the Panel should have adopted such an approach. (Australia's third participant's submission, paras. 4 and 5;  
United States' third participant's submission, para. 5) 
174See supra , footnote 5. 
175Exhibits BRA-4 and EC-47 submitted by Brazil and by the European Communities, respectively, to 
the Panel.  WT/DS332/AB/R 
 Page 51 
 
 
2002176, created a collection and disposal scheme that  makes it mandatory for domestic manufacturers 
of new tyres and tyre importers to provide for the safe disposal of waste tyres in specified 
proportions.177  CONAMA Resolution 258/1999, as amended in 2002, aims to ensure the 
environmentally appropriate final disposal of unusab le tyres.  Also, by exempting domestic retreaders 
from disposal obligations as long as they  process tyres consumed within Brazil178, CONAMA 
Resolution 258/1999, as amended in  2002, seeks to encourage Brazilia n retreaders to retread more 
domestically used tyres.   
131. Brazilian states have also enacted measures aiming at reducing risks arising from the 
accumulation of waste tyres.  Law 12.114 of the State of Rio Grande do Sul prohibits the commercialization of imported used tyres within its territory, which includes imported retreaded tyres, 
as well as retreaded tyres made in Brazil from imported casings.
179  A 2005 amendment to that law 
allows the importation and marketing of imported retreaded tyres provided that the importer proves 
that it has destroyed ten used tyres in Brazil for ev ery retreaded tyre imported.  In the case of imports 
of used tyre casings, however, the destruction of on ly one used tyre per imported tyre is required.180  
The State of Paraná has adopted Paraná Rodando Limpo, a voluntary programme to collect, inter alia , 
all existing unusable tyres currently discar ded throughout the territory of Paraná.181 
132. Finally, we note that, notwithstanding the impor t ban on used tyres contained in Article 40 of 
Portaria SECEX 14/2004, a number of Brazilian re treaders have sought, and obtained, injunctions 
allowing them to import used tyre casings in or der to manufacture retreaded tyres from those used 
tyres.182  Although the Brazilian government has, with in the Brazilian domestic legal system, opposed 
these injunctions, it has had mixed results in its effort s to prevent the grant, or obtaining the reversal, 
of court injunctions for the importation of used tyres.183 
                                                      
176Exhibit BRA-68 submitted by Brazil to the Panel. 
177See para. 154 and footnote 253 thereto of this Report. 
178Panel Report, para. 7.137. 
179Ibid., para. 2.11. 
180Ibid., para. 2.12. 
181Ibid., paras. 7.66, 7.174, 7.175, and 7.178. 
182Ibid., paras. 7.241 and 7.92-7.305. 
183Ibid., para. 7.304. WT/DS332/AB/R 
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V. The Panel's Analysis of the Necessity of the Import Ban 
A. The Panel's Necessity Analysis under Article XX(b) of the GATT 1994 
133. The first legal issue raised by the European Communities' appeal relates to the Panel's finding 
that the Import Ban is "necessary" within the meaning of Article XX(b) of the GATT 1994.
184  The 
European Communities challenges thre e specific aspects of the Panel's analysis under Article XX(b).  
First, the European Communities contends that the Panel applied an "erroneous legal standard"185 in 
assessing the contribution of the Import Ban to the reali zation of the ends pursued by it, and that it did 
not properly weigh this contribution in its analysis of the necessity of the Import Ban.  Secondly, the European Communities submits that the Panel did not  define correctly the alternatives to the Import 
Ban and erred in excluding possible altern atives proposed by the European Communities.
186  Thirdly, 
the European Communities argues that, in its analys is under Article XX(b), the Panel did not carry out 
a proper, if any, weighing and balancing of the relevant factors.187  We will examine these contentions 
of the European Communities in turn. 
1. The Panel's Analysis of the Contribution of the Import Ban to the 
Achievement of Its Objective  
134. In the analysis of the contribution of the Impor t Ban to the achievement of its objective, the 
Panel first recalled its previous findings that, th rough the Import Ban, Brazil pursued the objective of 
reducing exposure to the risks to human, anim al, and plant life and health arising from the 
accumulation of waste tyres, and that such polic y fell within the range of policies covered by 
paragraph (b) of Article XX of the GATT 1994.188  The Panel also found that Brazil's chosen level of 
protection is the "reduction of the risks of waste tyre accumulation to the maximum extent possible".
189  In analyzing whether the Import Ban "contributes to the realization of the policy 
pursued, i.e. the protection of human, animal and plant life and health from the risks posed by the 
accumulation of waste tyres"190, the Panel examined two questions.  First, the Panel sought to assess 
whether the Import Ban can contribute to the reduction in the number of waste tyres generated in Brazil.  Secondly, the Panel sought to evaluate wh ether a reduction in the nu mber of waste tyres can 
                                                     
 
184Panel Report, para. 7.215. 
185European Communities' appellant's submission, para. 166. 
186Ibid., para. 209. 
187Ibid., para. 285. 
188Panel Report, para. 7.115. 
189Ibid., para. 7.108. (footnote omitted) 
190Ibid., para. 7.115.  WT/DS332/AB/R 
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contribute to the reduction of the risks to human, an imal, and plant life and health arising from waste 
tyres.191 
135. Regarding the first question, the Panel noted Br azil's explanation that the Import Ban would 
contribute to the achievement of the objective of  reducing the number of waste tyres if imported 
retreaded tyres would be replaced either with domes tically retreaded tyres made from tyres used in 
Brazil, or with new tyres capable of future retread ing.  The Panel began by examining the replacement 
of imported retreaded tyres with new tyres on Brazil's market.192  The Panel determined that "all types 
of retreaded tyres (i.e. for passenger car, bus, truck and aircraft) have by definition a shorter lifespan 
than new tyres."193  Accordingly, the Panel reasoned that "an import ban on retreaded tyres may lead 
to a reduction in the total number of waste tyres because imported retreaded tyres may be substituted 
for by new tyres which have a longer lifespan."194  The Panel verified next whether there is a link 
between the replacement of imported retreaded tyres with domestically retreaded tyres and a reduction 
in the number of waste tyres in Brazil.195  If retreaded tyres are manufactured in Brazil from tyres used 
in Brazil, the retreading of these used tyres cont ributes to the reduction of the accumulation of waste 
tyres in Brazil by "giving a second life to some used  tyres, which otherwise would have become waste 
immediately after their first and only life."196  The Panel added that "an import ban on retreaded tyres 
can encourage domestic retreaders to retread more  domestic used tyres than they might have done 
otherwise"197, because it "compel[s] consumers of imported retreaded tyres to switch either to 
retreaded tyres produced domestically or to new tyres."198  The Panel then assessed whether domestic 
used tyres can be retreaded in Brazil.  On the basi s of the evidence provided by the parties, the Panel 
found that "at least some domestic used tyres are being retreaded in Brazil"199, that Brazil "has the 
production capacity to retread domestic used tyres"200, and that new tyres sold in Brazil have the 
potential to be retreaded.201  The Panel also observed that "A rticle 40 of Portaria SECEX 14/2004 
bans the importation of both used and retreaded tyres to Brazil" and that "the import ban on used tyres 
supports the effectiveness of the import ban on re treaded tyres regarding the reduction of waste 
                                                      
191Panel Report, para. 7.122. 
192Ibid., paras. 7.126-7.130.  
193Ibid., para. 7.130. 
194Ibid. 
195Ibid., para. 7.132. 
196Ibid., para. 7.133. 
197Ibid., para. 7.134. (footnote omitted) 
198Ibid. 
199Ibid., para. 7.136. 
200Ibid., para. 7.142. 
201Ibid., para. 7.137. WT/DS332/AB/R 
Page 54  
 
tyres."
202  The Panel concluded that the Import Ban "is capable of contributing to the reduction of the 
overall amount of waste tyres generated in Brazil."203   
136. The Panel then turned to the question of whether the reduction in the number of waste tyres 
would contribute to a reduction of the risks to human , animal, and plant life and health arising from 
waste tyres.  For the Panel, "the very essence of the problem is the actual accumulation of waste in and of itself."
204  The Panel added that "[t]o the extent th at this accumulation has been demonstrated 
to be associated with the occurren ce of the risks at issue, including  the providi ng of fertile breeding 
grounds for the vectors of these diseases, a reduc tion in this accumulation, even if it does not 
eliminate it, can reasonably be expected to constitute  a step towards the reduc tion of the occurrence of 
the diseases and the tyre fires."205  The Panel concluded that: 
... the prohibition on the importation of retreaded tyres is capable of 
making a contribution to the objective pursued by Brazil, in that it can lead to a reduction in the overall number of waste tyres generated in Brazil, which in turn can redu ce the potential for exposure to the 
specific risks to human, animal, plan t life and health that Brazil seeks 
to address.
206 
137. According to the European Communities, the Pane l, in its assessment of the contribution of 
the Import Ban to the realization of the ends pursu ed by it, referred only to the potential contribution 
this measure might make.207  The European Communities argues th at the Panel applied an "erroneous 
legal standard"208 in so doing, and that the Panel s hould have sought "to establish the actual 
contribution of the measure to its stated goa ls, and the importance of this contribution".209  For the 
European Communities, the Panel was required to determine the extent to which the Import Ban 
makes a contribution to the achievement of its stated objective because, otherwise, it is not possible to 
weigh and balance properly this contribution against other relevant factors.210  Accordingly, the 
European Communities contends, the Panel erred by not quantifying the reduction of waste tyres 
resulting from the Import Ban.211  For the European Communities, "[t]he very indirect nature of the 
                                                      
202Panel Report, para. 7.139. 
203Ibid., para. 7.142. 
204Ibid., para. 7.146. 
205Ibid. 
206Ibid., para. 7.148. 
207European Communities' appellant's submission, para. 168. 
208Ibid., para. 166. 
209Ibid., para. 167. 
210Ibid., para. 171. 
211Ibid., para. 174.  WT/DS332/AB/R 
 Page 55 
 
 
alleged risks attributed to imported retreaded ty res should have called for a particularly diligent 
examination of the contribution made by the ban to the reduction of the number of the waste tyres 
arising in Brazil."212 
138. Brazil counters that the Panel correctly assessed the contribution of the Import Ban to the 
achievement of its objective.  Brazil argues that  actual contribution is properly assessed under the 
chapeau of Article XX of the GATT 1994, which fo cuses on the application of the measure.  Brazil 
asserts further that the Appellate Body expressly recognized, in  EC – Asbestos , that "a risk may be 
evaluated either in quantitative or  qualitative  terms"213 and, therefore, the Panel was under no 
obligation to quantify the Import Ban's contribution to the reduction in waste tyre volumes. 
139. We begin by recalling that the analysis of a measure under Article XX of the GATT 1994 is 
two-tiered.214  First, a panel must examine whether the measure falls under at least one of the ten 
exceptions listed under Article XX.215  Secondly, the question of whether the measure at issue 
satisfies the requirements of the chapeau of Article XX must be considered. 
140. We note at the outset that the participants do not dispute that it is within the authority of a 
WTO Member to set the public health or environmental objectives it seeks to achieve216, as well as the 
level of protection that it wants to obtain, thro ugh the measure or the policy it chooses to adopt.217  
141. Article XX(b) of the GATT 1994 refers to me asures "necessary to protect human, animal or 
plant life or health".  The term "necessary" is me ntioned not only in Article XX(b) of the GATT 1994, 
but also in Articles XX(a) and XX(d) of the GATT 1994, as well as in Article XIV(a), (b), and (c) of 
the GATS.  In Korea – Various Measures on Beef , the Appellate Body underscored that "the word 
'necessary' is not limited to that which is 'indispensable'".218  The Appellate Body added: 
                                                      
212European Communities' appellant's submission, para. 177. 
213Brazil's appellee's submission, para. 81 (quoting Appellate Body Report, EC – Asbestos , para. 167). 
(emphasis added by Brazil) 
214Appellate Body Report, US – Gasoline , p. 22, DSR 1996:I, 3, at 20.  See also Appellate Body 
Report, Dominican  Republic – Import and Sale of Cigarettes , para. 64. 
215In other words, the policy objective of the measure at issue must fall under the range of policies 
covered by the paragraphs of Article XX of the GATT 1994. (See, for instance, Appellate Body Report, US – 
Shrimp , para. 149) 
216Appellate Body Report, US – Gasoline , p. 30, DSR 1996:I, 3, at 28. 
217Appellate Body Report, EC – Asbestos , para. 168. 
218Appellate Body Report, Korea – Various Measures on Beef , para. 161. WT/DS332/AB/R 
Page 56  
 
Measures which are indispensable or of absolute necessity or 
inevitable to secure compliance certainly fulfil the requirements of Article XX(d).  But other measures, too, may fall within the ambit of this exception.  As used in Ar ticle XX(d), the term "necessary" 
refers, in our view, to a range of degrees of necessity.  At one end of 
this continuum lies "necessary" understood as "indispensable";  at the 
other end, is "necessary" taken to mean as "making a contribution to."  We consider that a "necessary"  measure is, in this continuum, 
located significantly closer to the pole of "indispensable" than to the 
opposite pole of simply "making a contribution to".
219 (footnote 
omitted) 
142. In Korea – Various Measures on Beef , the Appellate Body explained that determining 
whether a measure is "necessary" with in the meaning of Article XX(d): 
... involves in every case a process of weighing and balancing a series 
of factors which prominently include the contribution made by the 
compliance measure to the enforcement of the law or regulation at issue, the importance of the common interests or values protected by that law or regulation, and the accompanying impact of the law or regulation on imports or exports.
220 
143. In  US – Gambling , the Appellate Body addressed the "necessity" test in the context of 
Article XIV of the GATS.  The Appellate Body stated that the weighing and balancing process inherent in the necessity analysis "begins with an  assessment of the 'relative importance' of the 
interests or values furthered by the challenged measure"
221, and also involves an assessment of other 
factors, which will usually include "the contributio n of the measure to the realization of the ends 
pursued by it" and "the restrictive impact of the measure on international commerce".222   
144. It is against this background that we must determine whether the Panel erred in assessing the 
contribution of the Import Ban to the realization of  the objective pursued by it, and in the manner in 
which it weighed this contribution in its analysis of  the necessity of the Import Ban.  We begin by 
identifying the objective pursued by the Import Ban.  The Panel found that the objective of the Import 
Ban is the reduction of the "exposure to the risks to human, animal or plant life or health arising from 
the accumulation of waste tyres"223, and noted that "few interests are more 'vital' and 'important' than 
                                                      
219Appellate Body Report, Korea – Various Measures on Beef , para. 161. 
220Ibid., para. 164.  
221Appellate Body Report, US – Gambling , para. 306. (footnote omitted) 
222Ibid.  In Korea – Various Measures on Beef , the Appellate Body observed that "[a] measure with a 
relatively slight impact upon imported products might more  easily be considered as 'necessary' than a measure 
with intense or broader restrictive effects." (Appellate Body Report, Korea – Various Measures on Beef , 
para. 163) 
223Panel Report, para. 7.102.  WT/DS332/AB/R 
 Page 57 
 
 
protecting human beings from health risks, a nd that protecting the environment is no less 
important."224  The Panel also observed that "Brazil's cho sen level of protection is the reduction of the 
risks of waste tyre accumulation to the maximum extent possible."225  Regarding the trade 
restrictiveness of the measure, the Panel noted th at it is "as trade-restrictive as can be, as far as 
retreaded tyres from non-MERCOSUR countries are concer ned, since it aims to halt completely their 
entry into Brazil."226     
145. We turn to the methodology used by the Panel in analyzing the contribution of the Import Ban 
to the achievement of its objective.  Such a contri bution exists when there is a genuine relationship of 
ends and means between the objective pursued and the measure at issue.  The selection of a methodology to assess a measure's contribution is a f unction of the nature of the risk, the objective 
pursued, and the level of protection sought.  It u ltimately also depends on the nature, quantity, and 
quality of evidence existing at the time the analysis  is made.  Because the Panel, as the trier of the 
facts, is in a position to evaluate these circumstan ces, it should enjoy a certain latitude in designing 
the appropriate methodology to use and deciding how to structure or organize the analysis of the contribution of the measure at issue to the realizati on of the ends pursued by it.  This latitude is not, 
however, boundless.  Indeed, a panel must analyze th e contribution of the measure at issue to the 
realization of the ends pursued by it in accordance with the requirements of Article XX of the GATT 
1994 and Article 11 of the DSU.  
146. We note that the Panel chose to conduct a qua litative analysis of the contribution of the 
Import Ban to the achievement of its objective.
227  In previous cases, the Appellate Body has not 
established a requirement that su ch a contribution be quantified.228  To the contrary, in  EC – 
Asbestos , the Appellate Body emphasized that there is  "no requirement under Article XX(b) of the 
GATT 1994 to  quantify , as such, the risk to human life or health".229  In other words, "[a] risk may be 
evaluated either in quantitative or qualitative terms."230  Although the reference by the Appellate Body 
                                                      
224Panel Report, para. 7. 108 (referring to Brazil's firs t written submission, para. 101). 
225Ibid. (footnote omitted) 
226Ibid., para. 7.114. 
227Ibid., para. 7.118. 
228Appellate Body Report, Korea – Various Measures on Beef , paras. 163 and 164;  Appellate Body 
Report, EC – Asbestos , para. 172;  Appellate Body Report, US – Gambling , para. 306;  Appellate Body Report, 
Dominican Republic – Import and Sale of Cigarettes , para. 70. 
229Appellate Body Report, EC – Asbestos , para. 167. (original emphasis;  footnote omitted) 
230Ibid. WT/DS332/AB/R 
Page 58  
 
to the quantification of a risk is not the same as the quantification of the contribution of a measure to 
the realization of the objective pursued by it (which  could be, as it is in this case, the reduction of a 
risk), it appears to us that the same line of reasoni ng applies to the analysis of the contribution, which 
can be done either in quantitative or in qualitative terms.   
147. Accordingly, we do not accept the European Communities' contention that the Panel was 
under an obligation to quantify the contribution of the Import Ban to the reduction in the number of 
waste tyres and to determine the number of waste tyres that would be reduced as a result of the Import 
Ban.
231  In our view, the Panel's choice of a qualitativ e analysis was within the bounds of the latitude 
it enjoys in choosing a methodology for the analysis of the contribution.   
148. The Panel analyzed the contribution of the Impor t Ban to the achievement of its objective in a 
coherent sequence.  It examined first the impact of  the replacement of imported retreaded tyres with  
new tyres   on the reduction of waste.  Secondly, th e Panel sought to determine whether imported 
retreaded tyres would be replaced with  domestically retreaded tyres , which led it to examine whether 
domestic used tyres can be and are being retreaded in Brazil.  Thirdly, it considered whether the 
reduction in the number of waste tyres would contri bute to a reduction of the risks to human, animal, 
and plant life and health.   
149. The Panel's analysis was not only directed at an  assessment of the current situation and the  
immediate  effects of the Import Ban on the reduction of the exposure to the targeted risks.  The 
Panel's approach also focused on evaluating the extent  to which the Import Ban is likely to result in a 
reduction of the exposure to these risks.232  In the course of its reasoning, the Panel made and tested 
some key hypotheses, including:  that imported retreaded tyres are being replaced with new tyres233 
and domestically retreaded tyres234;  that some proportion of domestic used tyres are retreadable and 
are being retreaded 235;  that Brazil introduced a number of measures to facilitate the access of 
                                                      
231European Communities, appellant's submission, para. 174. 
232In the Panel's view, "it cannot be reasonably expect ed that the specific meas ure under consideration 
would entirely eliminate the ri sk ... or even that its impact on the actual reduction of the incidence of the 
diseases at issue would manifest itself very rapidly after the enactment of the measure." (Panel Report, 
para. 7.145) 
233Ibid., para. 7.130. 
234Ibid., paras. 7.133-7.135. 
235Ibid., para. 7.136.  WT/DS332/AB/R 
 Page 59 
 
 
domestic retreaders to good-quality used tyres236;  that more automotive inspections in Brazil lead to 
an increase in the number of retreadable used tyres237;  and that Brazil has the production capacity to 
retread such tyres.238  The Panel sought to verify these hypotheses on the basis of the evidence 
adduced by the parties and found them to be logically sound and supported by sufficient evidence.  In the next Section, we will examine the European Co mmunities' claim that the Panel failed to make an 
objective assessment of the facts with respect to  the verification of some of these hypotheses.  
Assuming, for the time being, that the Panel asses sed the facts in accordance with Article 11 of the 
DSU, it appears to us that the Panel's analysis s upports its conclusion that the Import Ban is capable 
of making a contribution and can result in a reduction of exposure to the targeted risks.
239  We have 
now to determine whether this was sufficient to c onclude that the Import Ban is "necessary" within 
the meaning of Article XX(b) of the GATT 1994. 
150. As the Panel recognized, an import ban is "by design as trade-restrictive as can be".240  We 
agree with the Panel that there may be circum stances where such a measure can nevertheless be 
necessary, within the meaning of Article XX(b).  We also recall that, in Korea – Various Measures on 
Beef, the Appellate Body indicated that "the word 'necessary' is not limited to that which is 
'indispensable'".241  Having said that, when a measure produ ces restrictive effects on international 
trade as severe as those resulting from an import ban, it appears to us that it would be difficult for a panel to find that measure necessary unless it is satisfied that the measure is apt to make a material contribution to the achievement of its objective.  Thus, we disagree with Brazil's suggestion that, 
because it aims to reduce risk exposure to the maximu m extent possible, an import ban that brings a 
marginal or insignificant contribution ca n nevertheless be considered necessary.
242   
151. This does not mean that an import ban, or anot her trade-restrictive measure, the contribution 
of which is not immediately observable, cannot be justified under Article XX(b).  We recognize that 
certain complex public health or environmental pr oblems may be tackled only with a comprehensive 
policy comprising a multiplicity of interacting measures.  In the short-term, it may prove difficult to 
                                                      
236Panel Report, para. 7.137. 
237Ibid., para. 7.138. 
238Ibid., para. 7.141. 
239Ibid., para. 7.148. 
240Ibid., para. 7.211. 
241Appellate Body Report, Korea – Various Measures on Beef , para. 161. 
242Brazil's appellee's submission, paras. 80 and 83.  According to Brazil, given its chosen level of 
protection to reduce the risk of waste tyre accumulation to the maximum extent possible, "[i]f the Panel finds that there are no reasonable alternativ es to the measure, the measure is necessary—no matter how small its 
contribution—because the WTO does not second-guess  the Member’s chosen level of protection." ( Ibid., 
para. 80) WT/DS332/AB/R 
Page 60  
 
isolate the contribution to public health or e nvironmental objectives of one specific measure from 
those attributable to the other measures that are part of the same comprehensive policy.  Moreover, 
the results obtained from certain actions—for instan ce, measures adopted in order to attenuate global 
warming and climate change, or certain preventive actions to reduce the incidence of diseases that 
may manifest themselves only after a certain period of time—can only be evaluated with the benefit 
of time.
243  In order to justify an import ban under Artic le XX(b), a panel must be satisfied that it 
brings about a material contribution to the achieveme nt of its objective.  Such a demonstration can of 
course be made by resorting to evidence or data, pertaining to the past or the present, that establish 
that the import ban at issue makes a material contribution to the protection of public health or environmental objectives pursued.  This is not, howev er, the only type of demonstration that could 
establish such a contribution.  Thus, a panel might conclude that an import ban is necessary on the 
basis of a demonstration that the import ban at issu e is apt to produce a material contribution to the 
achievement of its objective.  This demonstrati on could consist of quantitative projections in the 
future, or qualitative reasoning based on a set of hy potheses that are tested a nd supported by sufficient 
evidence. 
152. We have now to assess whether the qualitative anal ysis provided by the Panel establishes that 
the Import Ban is apt to produce a material cont ribution to the achievement of the objective of 
reducing exposure to the risks arising fro m the accumulation of waste tyres.   
153. We observe, first, that the Panel analyzed the contribution of the Import Ban as initially 
designed, without taking into account the im ports of remoulded tyres under the MERCOSUR 
exemption.  As we indicated above, this is not th e only possible approach.  Nevertheless, we proceed 
with our examination of the Panel's reasoning on that basis for the reasons we explained earlier.  In 
the light of the evidence adduced by  the parties, the Panel was of the view that the Import Ban would 
lead to imported retreaded tyres being replaced  with retreaded tyres made from local casings
244, or 
with new tyres that are retreadable.245  As concerns new tyres, the Panel observed, and we agree, that 
retreaded tyres "have by definition a shorter lifespan than new tyres"246 and that, accordingly, the 
                                                      
243In this respect, we note that, in US – Gasoline , the Appellate Body stated, in the context of 
Article XX(g) of the GATT 1994, that, "in the field of conservation of exhaustible natural resources, a substantial 
period of time, perhaps years, may have to elapse before  the effects attributable to implementation of a given 
measure may be observable." (Appellate Body Report, US – Gasoline , p. 21, DSR 1996:I, 3, at 20) 
244Panel Report, paras. 7.126-7.130. 
245Ibid., paras. 7.131-7.142. 
246Ibid., para. 7.130.  WT/DS332/AB/R 
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Import Ban "may lead to a reduction in the total number of waste tyres because imported retreaded 
tyres may be substituted for by new tyres which have a longer lifespan."247  As concerns tyres 
retreaded in Brazil from local casings, the Panel was satisfied that Brazil had the production capacity 
to retread domestic used tyres248 and that "at least some domestic used tyres are being retreaded in 
Brazil."249  The Panel also agreed that Brazil has taken a series of measures to facilitate the access of 
domestic retreaders to good-quality used tyres250, and that new tyres sold in Brazil are high-quality 
tyres that comply with international standa rds and have the potential to be retreaded.251  The Panel's 
conclusion with which we agree was that, "if the domestic retreading industry retreads more domestic 
used tyres, the overall number of waste tyres w ill be reduced by giving a second life to some used 
tyres, which otherwise would have become wast e immediately after their first and only life."252  For 
these reasons, the Panel found that a reduction of waste tyres would result from the Import Ban and 
that, therefore, the Import Ban would contribute to reducing exposure to the risks associated with the 
accumulation of waste tyres.  As the Panel's an alysis was qualitative, the Panel did not seek to 
estimate, in quantitative terms, the reduction of wast e tyres that would result from the Import Ban, or 
the time horizon of such a reduction.  Such estimates  would have been very useful and, undoubtedly, 
would have strengthened the founda tion of the Panel's findings.  Having said that, it does not appear 
to us erroneous to conclude, on the basis of th e hypotheses made, tested, and accepted by the Panel, 
that fewer waste tyres will be generated with the Import Ban than otherwise. 
154. Moreover, we wish to underscore that the Impor t Ban must be viewed in the broader context 
of the comprehensive strategy designed and implemen ted by Brazil to deal with waste tyres.  This 
comprehensive strategy includes not only the Import Ban but also the import ban on used tyres, as well as the collection and disposal scheme adopted by CONAMA Resolution 258/1999, as amended in 2002, which makes it mandatory for domestic manuf acturers and importers of new tyres to provide 
                                                     
 
247Panel Report, para. 7.130. 
248Ibid., para. 7.141.  The Panel noted that, in 2005, 33.4 million new tyres (all types included) were 
sold in Brazil (either domestically produced or imported) and 18.6 million retreaded tyres were produced 
domestically. 
249Ibid., para. 7.136. 
250Ibid., para. 7.137. 
251Ibid. 
252Ibid., para. 7.133. WT/DS332/AB/R 
Page 62  
 
for the safe disposal of waste tyres in specified proportions.
253  For its part, CONAMA Resolution 
258/1999, as amended in 2002, aims to reduce the exposure to risks arising from the accumulation of 
waste tyres by forcing manufacturers and importers of new tyres to collect and dispose of waste tyres 
at a ratio of five waste tyres for every four ne w tyres.  This measure also encourages Brazilian 
retreaders to retread more domestic used tyres by exempting domestic retreaders from disposal 
obligations as long as they process tyres consumed within Brazil.254  Thus, the CONAMA scheme 
provides additional support for and is consistent with  the design of Brazil's strategy for reducing the 
number of waste tyres.  The two mutually enforc ing pillars of Brazil's ove rall strategy—the Import 
Ban and the import ban on used tyres—imply that the demand for retreaded tyres in Brazil must be met by the domestic retreaders, and that these retr eaders, in principle, can use only domestic used 
tyres for raw material.
255  Over time, this comprehensive regulatory scheme is apt to induce 
sustainable changes in the practices and behaviour of the domestic retreaders, as well as other actors, 
and result in an increase in the number of retreadable tyres in Brazil and a higher rate of retreading of domestic casings in Brazil.  Thus, the Import Ban appears to us as one of the key elements of the comprehensive strategy designed by Brazil to deal with waste tyres, along with the import ban on 
                                                     
 
253Article 3 of CONAMA Resolution 258/1999, as amended in 2002, provides: 
The time periods and quantities for collection and environmentally 
appropriate final disposal of unusable tyres resulting from use on automotive vehicles and bicycles cove red by this Regulation are as follows: 
I – as of 1 January 2002: for every four new tyres produced in Brazil or 
imported new or reconditioned tyres, including those on imported vehicles, 
manufacturers and importers must ensure final disposal of one unusable 
tyre; 
II – as of 1 January 2003: for every two new tyres produced in Brazil or 
imported new or reconditioned tyres, including those on imported vehicles, 
manufacturers and importers must ensure final disposal of one unusable tyre; 
III – as of 1 January 2004: 
a) for every one new tyre produced in Brazil or imported new tyre, including 
those on imported vehicles, manufacturers and importers must ensure final 
disposal of one unusable tyre; 
b) for every four imported reconditioned tyres, of any type, importers must 
ensure final disposal of five unusable tyres; 
IV – as of 1 January 2005: 
a) for every four new tyres produced in Brazil or imported tyres, including 
those on imported vehicles, manufacturers and importers must ensure final 
disposal of five unusable tyres; 
b) for every three imported reconditioned tyres, of any type, importers must 
ensure final disposal of four unusable tyres. 
254Panel Report, para. 7.137. 
255Leaving aside, as explained above, the imports under the MERCOSUR exemption and under court 
injunctions.   WT/DS332/AB/R 
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used tyres and the collection and disposal schem e established by CONAMA Resolution 258/1999, as 
amended in 2002. 
155. As we explained above, we agree with the Pane l's reasoning suggesting that fewer waste tyres 
will be generated with the Import Ban in place.  In  addition, Brazil has deve loped and implemented a 
comprehensive strategy to deal with waste tyres.  As a  key element  of this strategy, the Import Ban is 
likely to bring a material contribution to the achievement of its objective of reducing the exposure to 
risks arising from the accumulation of waste tyres.  On  the basis of these considerations, we are of the 
view that the Panel did not err in finding that th e Import Ban contributes to the achievement of its 
objective.   
2. The Panel's Analysis of Possible Alternatives to the Import Ban  
156. In order to determine whether a measure is "n ecessary" within the meaning of Article XX(b) 
of the GATT 1994, a panel must assess all the relevant factors, particularly the extent of the 
contribution to the achievement of a measure's object ive and its trade restrictiveness, in the light of 
the importance of the interests or values at stake.  If this analysis yields a preliminary conclusion that 
the measure is necessary, this result must be conf irmed by comparing the measure with its possible 
alternatives, which may be less trade restrictive wh ile providing an equivale nt contribution to the 
achievement of the objective pursued.  It rests upon the complaining Member to identify possible 
alternatives to the measure at issue that  the responding Member could have taken.256  As the Appellate 
Body indicated in US – Gambling , while the responding Member must show that a measure is 
necessary, it does not have to "show, in the first instance, that there are  no reasonably available 
alternatives to achieve its objectives."257  We recall that, in order to qualify as an alternative, a 
measure proposed by the complaining Member must  be not only less trade restrictive than the 
measure at issue, but should also "preserve for the responding Member its right to achieve its desired 
level of protection with resp ect to the objective pursued".258  If the complaining Member has put 
forward a possible alternative measure, the res ponding Member may seek to show that the proposed 
measure does not allow it to achieve the level of protection it has chosen and, therefore, is not a 
genuine alternative.  The responding Member ma y also seek to demonstrate that the proposed 
alternative is not, in fact, "reasonably available".259  As the Appellate Body indicated in US – 
Gambling,  "[a]n alternative measure may be found not to be 'reasonably available' ... where it is 
merely theoretical in nature, for instance, where the responding Member is not capable of taking it, or 
                                                      
256Appellate Body Report, US – Gambling, para. 311. 
257Ibid., para. 309. (original emphasis) 
258Ibid., para. 308. 
259Ibid., para. 311. WT/DS332/AB/R 
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where the measure imposes an undue burden on that Member, such as prohibitive costs or substantial 
technical difficulties."
260  If the responding Member demonstrates that the measure proposed by the 
complaining Member is not a genuine alternative or  is not "reasonably available", taking into account 
the interests or values being pursued and the resp onding Member's desired level of protection, it 
follows that the measure at issue is necessary.261 
157. Before the Panel, the European Communities put  forward two types of possible alternative 
measures or practices:  (i) measures to reduce the number of waste tyres accumulating in Brazil;  and 
(ii) measures or practices to improve the management of waste tyres in Brazil.262  The Panel examined 
the alternative measures proposed by the European Communities in some detail, and in each case 
found that the proposed measure did not constitute a reasonably available alternative to the Import 
Ban.  Among the reasons that the Panel gave for its rejections were that the proposed alternatives 
were already in place, would not allow Brazil to achie ve its chosen level of protection, or would carry 
their own risks and hazards. 
158. Regarding the measures to reduce the accumulatio n of waste tyres, the Panel first discussed 
measures to encourage domestic retreading or improve  the retreadability of domestic used tyres.  The 
Panel observed that these measures had already been  implemented or were in the process of being 
implemented 263 so that the impact of these measures a nd the Import Ban "could be cumulative rather 
than substitutable".264  Therefore, the Panel disagreed with  the European Communities that "the 
institution of domestic measures to encourage timely domestic retreading and to improve the 
retreadability of domestic used tyres would ach ieve the same outcome as the import ban".265  
159. The Panel went on to discuss the European Communities' contention that Brazil should 
prevent imports of used  tyres into Brazil through court injuncti ons.  The Panel noted that imports of 
used tyres were already prohibited by law in Brazil,  "so that if the 'alternative measure' proposed by 
the European Communities is the prohibition of used tyres, it could be said that Brazil actually already 
imposes that measure."266  Accordingly, the Panel concluded that the possible alternative measures 
identified by the European  Communities to avoid the generation  of waste tyres could not "apply  as a 
                                                      
260Appellate Body Report, US – Gambling, para. 308. 
261Ibid., para. 311. 
262Panel Report, para. 7.159. 
263Ibid., para. 7.169. 
264Ibid. 
265Ibid. 
266Ibid., para. 7.171.  WT/DS332/AB/R 
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substitute " for  the Import Ban but are, rather, complementary measures that Brazil already applies, at 
least in part.267 
160. Turning to alternatives aiming to improve mana gement of waste tyres, the Panel examined, 
first, collection and disposal schemes and, secondly, disposal methods.   
161. The European Communities referred mainly  to two collection and disposal schemes.268  In the 
analysis of these schemes, the Panel recalled that "B razil's chosen level of protection is the reduction 
of the risks associated with waste tyre accumulation to the maximum extent possible".269  According 
to the Panel, "insofar as the level of protection pursued by Brazil involves the 'non-generation' of 
waste tyres in the first place", collection and disp osal schemes, such as that adopted by CONAMA 
Resolution 258/1999 or the Paraná Rodando Limpo270 programme, "would not seem able to achieve 
the same level of protection as the import ban".271  The Panel also noted Brazil's concern that these 
collection and disposal schemes do not address or eliminate disposal risks.272  The Panel concluded 
that these schemes cannot be considered as alternat ives to the Import Ban at the level of protection 
sought by Brazil, because they were already im plemented in Brazil and do not address the risks 
associated with the disposal of waste tyres.273  
162. The Panel then examined the following disp osal methods identified by the European 
Communities:  (i) landfilling;  (ii) stockpiling;  (iii) incineration of waste tyres in cement kilns and similar facilities;  and (iv) material recycling.  
163. Concerning  landfilling , the Panel found that the landfilling of waste tyres may pose the very 
risks Brazil seeks to reduce through the Import Ban,  and for this reason cannot constitute a reasonably 
available alternative.
274  For the Panel, landfilling of waste tyres poses problems, including the 
"instability of sites that will affect future land r eclamation, long-term leaching of toxic substances, 
and the risk of tyre fires and mosquito-borne diseases."275  The Panel also obser ved that the evidence 
                                                      
267Panel Report, para. 7.172. (original emphasis) 
268The scheme adopted by CONAMA Resolution 258/1999, as amended in 2002, which makes it 
mandatory for domestic producers and importers of new tyres to provide for the safe disposal of waste tyres (or 
unusable tyres) in specified proportions;  and a voluntary multi-sector programme called Paraná Rodando 
Limpo, which has been put in pl ace in the State of Paraná. (See supra , footnote 253;  see also supra , paras. 130 
and 131) 
269Panel Report, para. 7.177. 
270See Exhibit EC-49 submitted by the European Communities to the Panel. 
271Panel Report, para. 7.177. 
272Ibid. 
273Ibid., para. 7.178.  
274Ibid., para. 7.186.  
275Ibid., para. 7.183. (footnote omitted) WT/DS332/AB/R 
Page 66  
 
it examined showing the existence of such risks did not make a clear distinc tion between landfilling of 
shredded tyres (also referred to as "controlle d landfilling") and landfi lling of whole tyres 
("uncontrolled landfilling").  Thus, fo r the Panel, it was not possible to conclude that landfilling of 
shredded tyres does not pose risks similar to tho se linked to other types of waste tyre landfills.
276   
164. Regarding stockpiling 277, the Panel observed that this method does not "dispose of" waste 
tyres278, and added that "the evidence shows that even the so-called 'controlled stockpiling' that is to 
say stockpiles designed to prevent the risk of fi res and pests may still pose considerable risks to 
human health and the environment."279  The Panel concluded that st ockpiling did not constitute an 
alternative to the Import Ban.280  
165. With respect to the incineration  of waste tyres, the Panel found that sufficient evidence 
demonstrated that health risks exist in relation to the incineration of waste tyres, even if such risks 
could be significantly reduced through strict emission standards.281  For the Panel, the evidence 
suggested that "the question still remains whethe r toxic chemicals emitted by incineration of waste 
tyres, regardless of the level of emission, may potentially pose health risks to humans."282  The Panel 
added that, although emission levels can vary la rgely depending on the emission control technology, 
"the most up-to-date technology that can control toxic emissions to minimum levels is not necessarily 
readily available, mostly for financial reasons."283   
166. Finally, the Panel examined material recycling  applications.  Regarding civil engineering 
applications using waste tyres, the Panel found th at demand for these applications was fairly limited 
partly due to their high costs, that they are capable  of disposing of only a small number of waste tyres, 
and that the evidence casts doubt on the safety of some of these engineering applications.284  With 
respect to rubber asphalt, the Panel found that the in formation showed that "the use of rubber asphalt 
results in higher costs."285  Consequently, "the demand for this  technology is limited and its waste 
                                                      
276Panel Report, para. 7.184.   
277Stockpiling consists of storing waste tyres in designated installations. (See European Communities' 
second written submission to the Panel, para. 104) 
278Panel Report, para. 7.188. 
279Ibid. (footnote omitted) 
280Ibid., para. 7.189. 
281Ibid., para. 7.194. 
282Ibid., para. 7.192. (footnote omitted) 
283Ibid., para. 7.193. (footnotes omitted) 
284Ibid., paras. 7.201 and 7.202. 
285Ibid., para. 7.205.   WT/DS332/AB/R 
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disposal capacity is reduced."286  The Panel also noted that the use of rubber granulates in the 
production of certain products may dispose of only a limited amount of waste tyres.287  Finally, as 
regards devulcanization and other forms of chemical  or thermal transformation, the Panel observed 
that, "under current market conditions, the econom ic viability of these options has yet to be 
demonstrated."288  In the light of these considerations, the Panel concluded that " it is not clear that 
material recycling applications are entirely safe"289, and that even if they were completely harmless, 
"they would not be able to dispose of a quantity of  waste tyres sufficient to achieve Brazil's desired 
level of protection due to their prohibitive costs and thus cannot constitute a reasonably available 
alternative".290 
167. On appeal, the European Communities contends th at the Panel erred in its analysis of the 
measures or practices that were presented as possible alternatives to the Import Ban.  In particular, the 
European Communities submits that the Panel used  in its analysis an incorrect concept of 
"alternative".  In addition, the European Communitie s argues that the Panel should have considered as 
alternatives to the Import Ban a better enforcement of  the ban on imports of used tyres and of existing 
collection and disposal schemes. 
168. Brazil asserts that the Panel was correct in fi nding that none of the alternative measures 
suggested by the European Communities constituted "reasonably available" alternatives to the Import 
Ban.  For Brazil, the Panel correctly took account of  Brazil's chosen level of protection—that is, the 
reduction of risks associated with the generation of  waste tyres in Brazil to the maximum extent 
possible—in concluding that none of the alte rnatives suggested by the European Communities 
avoided the generation of additional waste tyres in the first place. 
169. The Panel examined each of the measures or  practices put forward by the European 
Communities in order to determine whether they were  reasonably available alternatives in the light of 
the objective of the Import Ban and Brazil's chosen level of protection.291   
                                                      
286Panel Report, para. 7.205. (footnote omitted) 
287Ibid., para. 7.206. (emphasis and footnote omitted) 
288Ibid., para. 7.207. (footnote omitted) 
289Ibid., para. 7.208. 
290Ibid. (footnote omitted) 
291Ibid., para. 7.152. WT/DS332/AB/R 
Page 68  
 
170. We note that the objective of the Import Ban is the reduction of the "exposure to the risks to 
human, animal or plant life or health arising from the accumulation of waste tyres"
292 and that 
"Brazil's chosen level of protec tion is the reduction of [these] risks ... to the maximum extent 
possible"293, and that a measure or practice will not be viewed as an alternative unless it "preserve[s] 
for the responding Member its right to achieve its  desired level of protection with respect to the 
objective pursued".294 
171. We recall that tyres—new or retreaded—are essen tial for modern transportation.  However, at 
the end of their useful life, they turn into w aste that carries risks for public health and the 
environment.295  Governments, legitimately, take actions to minimize the adverse effects of waste 
tyres.  They may adopt preventive measures aimi ng to reduce the accumulation of waste tyres, a 
category into which the Import Ban falls.  Governme nts may also contemplate remedial measures for 
the management and disposal of waste tyres, su ch as landfilling, stockpiling, incineration of waste 
tyres, and material recycling.  Many of these measures or practices carry, however, their own risks or require the commitment of substantial resources, or  advanced technologies or know-how.  Thus, the 
capacity of a country to implement remedial measur es that would be particularly costly, or would 
require advanced technologies, may be relevant to  the assessment of wh ether such measures or 
practices are reasonably available alternatives to a preventive measure, such as the Import Ban, which 
does not involve "prohibitive costs or substantial technical difficulties".
296 
172. Among the possible alternatives, the Europ ean Communities referred to measures to 
encourage domestic retreading or improve the retreadability of used tyres, as well as a better 
enforcement of the import ban on used tyres and of existing collection and disposal schemes.  In fact, 
like the Import Ban, these measures already figure as elements of a comprehensive strategy designed by Brazil to deal with waste tyres.
297  Substituting one element of this comprehensive policy for 
another would weaken the policy by reducing the synergies between its components, as well as its 
total effect.  We are therefore of the view that the Panel did not err in rejecting as alternatives to the 
                                                      
292Panel Report, para. 7.102. 
293Ibid., para. 7.108. (footnote omitted) 
294Appellate Body Report, US – Gambling, para. 308. (footnote omitted) 
295See supra , para. 119. 
296Appellate Body Report, US – Gambling , para. 308. 
297The Panel noted that Brazil has already implemented or is in the process of implementing measures 
to encourage domestic retreading or improve the retreada bility of tyres. (Panel Report, para. 7.169)  The Panel 
observed that "imports of used tyres are already prohibited". ( Ibid., para. 7.171 (original emphasis))  The Panel 
agreed with Brazil that "collection and disposal schemes such as Resolution CONAMA 258/1999 as amended 
[in 2002] and Paraná Rodando Limpo have already been implemented in Brazil". ( Ibid., para. 7.178)  WT/DS332/AB/R 
 Page 69 
 
 
Import Ban components of Brazil's policy regarding w aste tyres that are complementary to the Import 
Ban.  
173. We move now to the other measures or prac tices proposed by the European Communities as 
alternatives to the Import Ban.298  The European Communities contends that the Panel committed an 
error of law by applying a "narrow definition of alternative"299, according to which an alternative to 
the Import Ban is "a measure that must avoid the waste tyres arising specifically from imported 
retreaded tyres"300, or one "equal to a waste non-generation measure".301  For the European 
Communities, this narrow definition differs from "t he objective allegedly pursued by the challenged 
measure"302, and resulted in the rejection of several disposal and waste management measures 
presented by the European Communities that should ha ve been accepted as a lternatives to the Import 
Ban.   
174. In evaluating whether the measures or practices  proposed by the European Communities were 
"alternatives", the Panel sought to determine whether they would achieve Brazil 's policy objective and 
chosen level of protection303, that is to say, reducing the "exposure to the risks to human, animal or 
plant life or health arising from the accumulation of waste tyres"304 to the maximum extent 
possible.305  In this respect, we believe, like the Pane l, that non-generation measures are more apt to 
achieve this objective because they  prevent the accumulation of waste tyres, while waste management 
measures dispose of waste tyres only once they have accumulated.  Furthermore, we note that, in comparing a proposed alternative to the Import Ban, the Panel took into account specific risks 
attached to the proposed alterna tive, such as the risk of leaching of toxic substances that might be 
associated to landfilling
306, or the risk of toxic emissions that might arise from the incineration of 
waste tyres.307  In our view, the Panel did not err in so doing.  Indeed, we do not see how a panel 
                                                      
298These measures or practices are the following disposal methods: land filling; stockpiling;  
incineration of waste tyres;  and material recycling. 
299European Communities' appellant's submission, para. 227. 
300Ibid., para. 219. (underlining omitted) 
301Ibid., para. 222. 
302Ibid., para. 221. 
303Panel Report, para. 7.157. 
304Ibid., para. 7.102. 
305Ibid., para. 7.108. (footnote omitted)  See also  ibid., para. 7.152: 
We must therefore now consider wh ether any alternative measure, less 
inconsistent with GATT 1994, that is, less trade-restrictive than a complete 
import ban, would have been reasonably available to Brazil to achieve the same objective, taking into account Br azil's chosen level of protection. 
(footnote omitted)  
306Ibid., para. 7.183. 
307Ibid., para. 7.194. WT/DS332/AB/R 
Page 70  
 
could undertake a meaningful comparison of the measure at issue with a possible alternative while 
disregarding the risks arising out of the implementation of the possible alternative.
308  In this case, the 
Panel examined as proposed alternatives landfilling,  stockpiling, and waste tyre incineration, and 
considered that, even if these disposal methods were performed under controlled conditions, they 
nevertheless pose risks to human health similar or additional to those Brazil seeks to reduce through 
the Import Ban.309  Because these practices carry their own risks, and these risks do not arise from 
non-generation measures such as the Import Ban, we believe, like the Panel, that these practices are 
not reasonably available alternatives.   
175. With respect to material recycling, we share the Panel's view that this practice is not as 
effective as the Import Ban in reducing the exposur e to the risks arising from the accumulation of 
waste tyres.  Material recycling applications ar e costly, and hence capable of disposing of only a 
limited number of waste tyres.310  We also note that some of them might require advanced 
technologies and know-how that are not readily availabl e on a large scale.  Accordingly, we are of the 
view that the Panel did not err in concluding that  material recycling is not a reasonably available 
alternative to the Import Ban. 
3. The Weighing and Balancing of Relevant Factors by the Panel  
176. The European Communities argues th at, in its analysis of the necessity of the Import Ban, the 
Panel stated that it had weighed a nd balanced the relevant factors, but it "has not actually done it".311  
According to the European Communities, although the Appellate Body has not defined the term 
"weighing and balancing", "this lan guage refers clearly to a process where, in the first place, the 
importance of each element is assessed individually a nd, then, its role and rela tive importance is taken 
into consideration together with the other el ements for the purposes of deciding whether the 
challenged measure is necessary to attain the objective pursued."312  The European Communities 
reasons that, "since the Panel failed to establish ... the extent of the actual contribution the [Import 
Ban] makes to the reduction of the number of wast e tyres arising in Brazil, ... it was incapable of 
'weighing and balancing' this contribution ag ainst any of the other relevant factors."313  In addition, the 
                                                      
308This was recognized by the Appellate Body in  EC – Asbestos , where it stated that  the risks attached 
to a proposed measure should be includ ed in the exercise of comparison aiming to determine whether it is a 
reasonably available alternative to the measure at issue. (Appellate Body Report, EC – Asbestos , para. 174) 
309Panel Report, para. 7.195; see also para. 7.186 (landfilling); para. 7.189 (stockpiling); and 
para. 7.194 (waste tyre incineration). 
310Ibid., paras. 7.201 and 7.205-7.208. 
311European Communities' appellant's submission, para. 285. 
312Ibid., para. 284. 
313Ibid., para. 288.  WT/DS332/AB/R 
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European Communities contends that "the Panel b ase[d] ... its 'weighing and balancing' exercise on 
the wrong analysis it ... made of the alternatives".314  In sum, the European Communities argues that 
the Panel conducted a "superficial analysis"315 that is not a real weighing and balancing of the 
different factors and alternatives, because it did not balance "its arguments about the measure and the 
alternatives with the absolute trad e-restrictiveness of the import ban and with a real evaluation of the 
contribution of the import ban to the objective pursued."316 
177. Brazil counters that the Panel correctly wei ghed and balanced the relevant factors and 
proposed alternatives in its necess ity analysis.  Brazil argues that the Panel expressly recognized that 
the Import Ban is highly trade restrictive, but prop erly weighed and balanced this factor against the 
other relevant factors.  In relation to contributi on, Brazil considers that Article XX(b) of the GATT 
1994 does not require quantification, and that, in any event, the Import Ban's contribution to the 
reduction of imports of retread ed tyres is "substantial".317  Brazil adds that, because imports of 
retreaded tyres by definition increase the amount of waste tyres in Brazil, the contribution of the Import Ban to the reduction of risks arising from wast e tyres to the maximum extent possible is "both 
direct and certain".
318 
178. We begin our analysis by recalling that, in order to determine whether a measure is 
"necessary" within the meaning of Article XX(b ) of the GATT 1994, a panel must consider the 
relevant factors, particularly the importance of th e interests or values at stake, the extent of the 
contribution to the achievement of the measure's ob jective, and its trade restrictiveness.  If this 
analysis yields a preliminary conclusion that the me asure is necessary, this result must be confirmed 
by comparing the measure with possible alternativ es, which may be less trade restrictive while 
providing an equivalent contribution to the achieveme nt of the objective.  This comparison should be 
carried out in the light of the importan ce of the interests or values at stake.319  It is through this 
process that a panel determines whether a measure is necessary.320  
                                                      
314European Communities' appellant's submission, para. 290. (underlining omitted) 
315Ibid., para. 295. 
316Ibid., para. 294. 
317Brazil's appellee's submission, para. 177. 
318Ibid., para. 178. 
319Appellate Body Report, US – Gambling , para. 307. 
320Ibid. WT/DS332/AB/R 
Page 72  
 
179. In this case, the Panel identified the objective of the Import Ban as being the reduction of the 
exposure to risks arising from the accumulation of waste tyres.  It assessed the importance of the 
interests underlying this objective.  It found that  risks of dengue fever a nd malaria arise from the 
accumulation of waste tyres and that the objective of  protecting human life and health against such 
diseases "is both vital and important in the highest degree".
321  The Panel noted that the objective of 
the Import Ban also relates to the protection of the environment, a value that it considered—correctly, 
in our view—important.322  Then, the Panel analyzed the trad e restrictiveness of the Import Ban and 
its contribution to the achievement of its objectiv e.  It appears from the Panel's reasoning that it 
considered that, in the light of the importance of th e interests protected by the objective of the Import 
Ban, the contribution of the Import Ban to the achievement of its objective outweighs its trade 
restrictiveness.  This finding of the Panel does not appear erroneous to us.323   
180. The Panel then proceeded to examine the alternatives to th e Import Ban proposed by the 
European Communities.  The Panel explained that so me of them could not be viewed as alternatives 
to the Import Ban because they were complement ary to it and were already included in Brazil's 
comprehensive policy.324  Next, the Panel compared the other alternatives proposed by the European 
Communities—landfilling, stockpiling, incineration, a nd material recycling—with the Import Ban, 
taking into consideration the specific risks associ ated with these proposed alternatives.  The Panel 
concluded from this comparative assessment that none of the proposed options was a reasonably 
available alternative to the Import Ban. 
181. The European Communities argues that the Panel failed to make a proper collective 
assessment of all the proposed alternatives, a conten tion that does not stand for the following reasons.  
First, the Panel did refer to its collective examina tion of these alternatives in concluding that "none of 
these, either individually or collectively , would be such that the risks arising from waste tyres in 
Brazil would be safely eliminated, as is  intended by the current import ban."325  Secondly, as noted by 
                                                      
321Panel Report, para. 7.210. (footnote omitted) 
322Ibid., para. 7.112. 
323Supra , paras. 150-155. 
324For example, measures to encourage domestic re treading and improve the retreadability of domestic 
used tyres, a better implementation of the import ban on used tyres, and a better implementation of existing 
collection and disposal schemes.  See also Panel Report, paras. 7.169, 7.171, and 7.178. 
325Ibid., para. 7.214. (emphasis added)  WT/DS332/AB/R 
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the Panel and discussed above, some of the proposed  alternatives are not real substitutes for the 
Import Ban since they complement each other as part of Brazil's comprehensive policy.326  Finally, 
having found that other proposed alternatives were not  reasonably available or carried their own risks, 
these alternatives would not have weighed different ly in a collective assessment of alternatives. 
182. In sum, the Panel's conclusion that the Import Ban is necessary was the result of a process 
involving, first, the examination of the contribu tion of the Import Ban to the achievement of its 
objective against its trade restrictiveness in the lig ht of the interests at stake, and, secondly, the 
comparison of the possible alternatives, including  associated risks, with the Import Ban.  The 
analytical process followed by the Panel is consiste nt with the approach previously defined by the 
Appellate Body.327  The weighing and balancing is a holis tic operation that involves putting all the 
variables of the equation together and evaluating th em in relation to each other after having examined 
them individually, in order to reach an overall j udgement.  We therefore do not share the European 
Communities' view that the Panel did not "act ually" weigh and balance the relevant factors328, or that 
the Panel made a methodological error in comparing th e alternative options proposed by the European 
Communities with the Import Ban. 
183. In the light of all these considerations, we are of the view that the Panel did not err in the 
manner it conducted its analysis under Article XX(b)  of the GATT 1994 as to whether the Import Ban 
was "necessary to protect human, animal or plant life or health". 
B. The Panel's Necessity Analysis and Article 11 of the DSU 
184. The European Communities claims that the Pa nel breached its duties under Article 11 of the 
DSU in its analysis of the "necessity" of the Im port Ban under Article XX(b) of the GATT 1994.  In 
particular, the European Communities submits that  the Panel failed to make an objective assessment 
of the facts in its assessment of the contribution of  the Import Ban to the achievement of its objective, 
and in its examination of the proposed alternatives.   
                                                      
326Panel Report, para. 7.213. 
327Appellate Body Report, Korea – Various Measures on Beef , para. 164;  Appellate Body Report, EC 
– Asbestos , para. 172;  Appellate Body Report, US – Gambling , para. 306;  Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 70.  
328European Communities' appellant's submission, para. 285. WT/DS332/AB/R 
Page 74  
 
1. Article 11 of the DSU and the Panel's Analysis of the Contribution of the 
Import Ban to the Achievement of Its Objective  
185. We recall that Article 11 requires a panel to conduct "an objective assessment of the matter 
before it, including an objective assessment of th e facts of the case".  This assessment implies, among 
other things, that a panel must consider all the evidence presented to it, assess its credibility, 
determine its weight, and ensure that its factua l findings have a proper basis in that evidence.329   
186. Within these parameters, it is generally "within the discretion of the panel to decide which 
evidence it chooses to utilize in making findings"330, and panels are "not required to accord to factual 
evidence of the parties the same meaning and weight as do the parties".331  A panel is entitled "to 
determine that certain elements of evidence shoul d be accorded more weight than other elements—
that is the essence of the task  of appreciating the evidence"332—and the Appellate Body "will not 
interfere lightly with the panel's exercise of its discretion".333  Thus, a participant challenging a panel's 
findings of fact under Article 11 of the DSU is required to demonstrate that the panel has exceeded the bounds of its discretion as the trier of facts.   
187. Against this background, we turn to the contentions of the European Communities.  First, the 
European Communities argues that there was an insufficient fact ual foundation for the Panel's 
conclusion that it had "no reason to believe that new tyres sold in Brazil are low-quality tyres" that 
were not capable of being retreaded
 334, and that the Panel ignored "substantial evidence" produced by 
the European Communities demonstrating the exis tence of "low-quality non-retreadable tyres"335 in 
the Brazilian market.   
                                                      
329Appellate Body Report, EC – Hormones , paras. 132 and 133.  See also Appellate Body Report, 
Japan – Apples , para. 221;  Appellate Body Report, EC – Asbestos , para. 161;  Appellate Body Report, 
Australia – Salmon , para. 266;  Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , paras. 170, 177, 
and 181;  Appellate Body Report, EC – Sardines,  para. 299;  Appellate Body Report, EC – Tube or Pipe 
Fittings , para. 125;  Appellate Body Report, Japan – Agricultural Products II , paras. 141 and 142;  Appellate 
Body Report, Korea – Dairy , para. 138;  Appellate Body Report, Korea – Alcoholic Beverages , paras. 161 and 
162;  Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 313;  Appellate Body 
Report, US – Gambling , para. 363;  Appellate Body Report, EC – Selected Customs Matters , para. 258;  and 
Appellate Body Report, US – Carbon Steel , para. 142. 
330Appellate Body Report, US – Carbon Steel , para. 142 (quoting Appellate Body Report, EC – 
Hormones , para. 135). 
331Appellate Body Report, Australia – Salmon , para. 267. 
332Appellate Body Report, EC – Asbestos , para. 161. 
333Appellate Body Report, US – Wheat Gluten , para. 151. (footnote omitted) 
334Panel Report, para. 7.137;  European Communities' appellant's submission, paras. 183 and 184. 
335European Communities' appellant's submission, para. 183. (footnote omitted)  WT/DS332/AB/R 
 Page 75 
 
 
188. Brazil submits that the Panel's conclusion is supported by the evidence on record and adds 
that high rates of retreadability in the country dem onstrate that new tyres sold in Brazil "generally 
have [the] potential for future retreading".336 
189. We observe that, in support of its position that it  had "no reason to believe that new tyres sold 
in Brazil are low-quality tyres" that are not suitabl e for retreading, the Panel referred to standards 
applied to new tyres sold in Brazil that are "stric t technical and performance standards that are based 
on international standards".337  The European Communities argues that potential retreadability is not 
an element of these standards and that, therefore, the Panel's position on the retreadability of new tyres sold in Brazil had no factual basis.
338  We are not persuaded by this argument.  The Panel's 
position was not that these standards include retreadabilit y but, rather, that they result in a level of 
quality for new tyres that increases the potential for them to be retreaded.339  Thus, the Panel's finding 
did not lack a factual basis since there was a relationship between the standards to which the Panel 
referred and its conclusion that it had "no reason to believe that new tyres sold in Brazil are low-
quality tyres"340 that are not retreadable.   
190. Nor did the Panel disregard the evidence presen ted by the European Communities in reaching 
its conclusion on retreadability.  To the contrary, the Panel expressly referred to various studies 
submitted by the European Communities in Exhibits  EC-15 and EC-67 through EC-71, which related 
to the existence of "cheap low-quality new tyres in Brazil".341  The Panel simply attached more weight 
to other pieces of evidence that were before it 342, as Article 11 of the DSU entitles it to do.343 
191. The European Communities asserts further that the Panel relied on "arbitrarily chosen pieces 
of evidence" and failed to c onsider contradictory evidence344 in basing its finding that "at least some 
domestic used tyres are being retreaded in Brazil"345 exclusively on a statement contained in a report 
by the Associação Brasileira do Segmento de Refo rma de Pneus (the "ABR") (Brazilian Association 
                                                      
336Brazil's appellee's submission, para. 116. 
337Panel Report, para. 7.137. 
338European Communities' appellant's submission, para. 184. 
339Panel Report, para. 7.137. 
340Ibid. 
341Ibid., footnote 1252 to para. 7.137 (referring to European Communities' oral statement at the first 
Panel meeting, para. 28;  and European Communities' response to Question 11 posed by the Panel, Panel 
Report, pp. 254 and 255, in turn referring to Exhibits EC-15 and EC-67 through EC-71 submitted by the 
European Communities to the Panel).  
342Ibid., para. 7.137. 
343Appellate Body Report, EC – Asbestos, para. 161. 
344European Communities' appellant's submission, para. 185. 
345Panel Report, para. 7.136. WT/DS332/AB/R 
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of the Retreading Industry) (the "ABR Report").
346  According to the European Communities, the 
Panel neglected to consider evidence co ntained in a second report by the ABR347 that contradicted this 
statement.348  We do not find merit in this argument.  The Panel relied on various studies and reports 
other than the ABR Report.349  Moreover, the Panel took into account the evidence in the second 
report by the ABR350 as the express reference it made to that report confirms.351   
192. The European Communities next charges the Pa nel with failing to discount the evidentiary 
value of Technical Note 001/2006 of the Instituto Nacional de Metrologia, No rmalização e Qualidade 
Industrial ("INMETRO") (National Institute for Me trology, Standardizati on and Industrial Quality)352, 
on the grounds that it was issued during the course of the Panel proceedings, and with neglecting to 
consider contradictory evidence contained in  an earlier INMETRO Technical Note 83/2000.353   
193. It is well settled that a panel may consider a piece of evidence that post-dates its 
establishment.354  Thus, INMETRO Technical Note 001/2006 was clearly an admissible piece of 
evidence.  The European Commun ities, however, seems to suggest that the fact that INMETRO 
Technical Note 001/2006 post-dates the establishm ent of the Panel undermines its "evidentiary 
value", because Brazil was well aware of the si gnificance of INMETRO Technical Note 001/2006 at 
that time.  In our view, this amounts to an argumen t that the Panel should have attached more weight 
to one piece of evidence than to another, and does not suffice to demonstrate that the Panel exceeded 
the bounds of its discretion by attaching more  weight to INMETRO Technical Note 001/2006—a 
                                                      
346Supra , footnote 41. 
347Supra , footnote 43. 
348European Communities' appellant's submission, paras. 186 and 187. 
349For example, the Panel relied on, inter alia , retreadability figures for the Brazilian company Mazola 
Comércio (Panel Report, para. 7.135 and footnote 1236 thereto (referring to Exhibit BRA-93 submitted by 
Brazil to the Panel));  studies by the consultancy LAFIS and the Institute of Technological Research of the State of São Paulo ( ibid., footnote 1237 (referring to Exhibits EC-92 and BRA-159 submitted by the European 
Communities and Brazil, respectively, to the Panel));  a video by BS Colway ( ibid., footnote 1239 (referring to 
Exhibit EC-72 submitted by the European Communities to the Panel));  and retreadability figures in Brazil (ibid., footnote 1241 (referring to Brazil's oral statement at the second Panel meeting, paras. 57-61;  Brazil's 
comments on Question 107 posed by the Panel to the European Communities, Panel Report, pp. 317-323;  
Brazil's response to Question 117 posed by the Panel, Panel Report, pp. 332-334;  and Exhibit BRA-162 submitted by Brazil to the Panel)) and in other countries ( ibid., footnote 1242 (referring to Brazil's first written 
submission to the Panel, para. 79, where Brazil provided some examples of retreadability figures for the United 
Kingdom, the United States, Australia, and France)).  See also Brazil's response to Question 17 posed by the 
Panel, ibid., p. 257. 
350Exhibit BRA-157, supra , footnote 43. 
351See Panel Report, footnote 1238 to para. 7.135 (referring to Exhibit BRA-157, supra , footnote 43). 
352Exhibit BRA-163 submitted by Brazil to the Panel. 
353European Communities' appellant's submission,  paras. 188 and 189 (referring to INMETRO 
Technical Note 83/2000 (Exhibit EC-45 submitted by the European Communities to the Panel)).  
354This was confirmed by the Appellate Body in its Report, EC – Selected Customs Matters , at 
para. 188.  WT/DS332/AB/R 
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more recent document—than to INMETRO Technical Note 83/2000.  Furthermore, the Panel did not 
neglect INMETRO Technical Note 83/2000.  As the European Communities acknowledges 355, the 
Panel expressly referred to this partic ular piece of evidence in its analysis.356 
194. The European Communities furthe r maintains that the Panel ignored evidence contained in a 
study by the consultancy LAFIS357 indicating that the rate of retreading of passenger car tyres in 
Brazil is below 9.99 per cent.358  The Panel, however, specifically considered the LAFIS study in its 
analysis as to whether domestic used tyres are retreadable and are being retreaded in Brazil.359  It also 
discussed the arguments presented by Brazil and the Eu ropean Communities in relation to this figure. 
195. The European Communities charges the Pane l with "bolster[ing] its conclusions"360 on the 
retreadability of domestic casings with speculation on future measures that Brazil may take and, in 
particular, in stating that "mandatory inspections  are taking place in Brazil and that more frequent 
inspections are to be expected  once Bill 5979/2001 is approved".361  However, the Panel's finding that 
"mandatory inspections are taking place"362 was based on inspection requirements imposed by Brazil's 
National Code of Traffic and applicable technical sta ndards, which were in force at the time the Panel 
conducted its review363, and is not vitiated by the Panel' s additional reference to possible 
consequences of the approval of Bill 5979/2001.   
196. In addition, the European Communities contends  that, in analyzing the contribution of the 
Import Ban to the realization of the ends pursued  by it, the Panel erred in failing to accord any 
evidentiary weight to the fact that Brazilian retr eaders have sought court injunctions that permit the 
importation of used tyres for further retreading.364  The European Communiti es claims that the Panel 
engaged in a "wilful exclusion"365 of evidence relating to the importation of used tyres through court 
injunctions, even though this evidence was relevant  because it demonstrates that Brazilian retreaded 
                                                      
355European Communities' appellant's submission, para. 189 and footnote 56 thereto. 
356Panel Report, footnote 1240 to para. 7.135. 
357European Communities' appellant's submission, para. 190 (referring to LAFIS report, supra , 
footnote 45, p. 11).   
358Ibid., para. 190. 
359Panel Report, para. 7.135 and footnote 1237 thereto. 
360European Communities' appellant's submission, para. 195. 
361Panel Report, para. 7.138. 
362Ibid. 
363See ibid., para. 7.138 (referring to Law No. 9.503 of 23 September 1997 (National Code of Traffic) 
(Exhibit BRA-102 submitted by Brazil to the Panel);  and Brazil's response to Question 8 posed by the European Communities). 
364European Communities' appellant's submission, para. 191.  
365Ibid., para. 192.  WT/DS332/AB/R 
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tyres are produced with imported casings, and casts doubt on Brazil's position that domestic casings 
suitable for retreading are readily available in Brazil.
366   
197. We are not persuaded that the Panel ignored ev idence relating to the importation of used tyres 
through court injunctions in its analysis of the cont ribution of the Import Ban to the realization of the 
ends pursued by it.  The Panel acknowledged these injunctions and the arguments put forth by the 
European Communities in its analysis of the conf licting arguments and evidence regarding the level 
of retreadability of tyres in Brazil.367  In the end, the Panel ascribed more weight to evidence adduced 
by Brazil suggesting that "at least some domes tic used tyres are being retreaded in Brazil"368 and that 
"domestic used tyres are suitable for retreading".369  It appears to us that, in proceeding in that 
manner, the Panel did not exceed the bounds of its discretion as the trier of facts. 
198. In the light of the above considerations, we find that the Panel did not fail to conduct an 
objective assessment of the facts of the case, as requ ired by Article 11 of the DSU, when evaluating 
the contribution of the Import Ban to the achievement of its objective. 
2. Article 11 of the DSU and the Panel's Examination of Possible Alternatives 
to the Import Ban  
199. The European Communities contends that, in its an alysis of possible alternatives to the Import 
Ban, the Panel did not make an objective assessment of the facts as required by Article 11 of the DSU.  The European Communities' claim of error under Artic le 11 is directed at the Panel's appreciation of 
the evidence concerning a number of disposal meth ods for waste tyres suggested by the European 
Communities as alternatives to the Import Ban, na mely, landfilling, controlled stockpiling, co-
incineration, and material recycling.   
200. According to the European Communities, the Pa nel's factual findings in relation to each of 
these alternatives were not based on an objective assessment, because the Panel ignored important 
facts and arguments submitted by the European Co mmunities and referred to the evidence before it 
"in a selective and distorted manner".
370  The European Communities also charges the Panel with 
failing to consider one specific alternative to the Import Ban suggested by the European Communities, 
namely, the National Dengue Control Programme.371  
                                                      
366European Communities' appellant's submission, paras. 192 and 193.  
367Panel Report, para. 7.140. 
368Ibid., para. 7.136. 
369Ibid., para. 7.142. 
370European Communities' appellant's submission, para. 247. 
371Supra , footnote 53.  WT/DS332/AB/R 
 Page 79 
 
 
201. Regarding the landfilling of waste tyres, the Pane l reviewed the extensive evidentiary record 
on the risks posed by landfills of waste tyres.372  In the course of its analysis of this evidence, the 
Panel noted the distinction made by the European Communities between "uncontrolled" and 
"controlled" landfills373, but observed that "the evidence on th e health and environmental risks posed 
by landfills of waste tyres does not make a clear distinction between 'uncontrolled' and the so-called 'controlled' landfills"
374, and that its assessment of that evidence indicated that "it [was] not possible to 
conclude that controlled landfills do not pose risks sim ilar to those linked to other types of waste tyre 
landfills."375  Therefore, contrary to the European Co mmunities' assertion that the Panel erred in 
basing its findings exclusively on evidence relati ng to uncontrolled landfilling, the Panel's conclusion 
that landfilling "may pose the very risks Brazil seeks to avoid through the import ban"376 was based on 
evidence that demonstrates that ri sks arise indistinctively from cont rolled and uncontrolled landfills.  
202. The European Communities also suggests that the Panel erred under Article  11 in its rejection 
of landfilling as an alternative to the Import Ban because it did not take into account legislation 
allowing some landfilling of shredded tyres in Brazil.  It  is true that the Panel did not refer specifically 
to this legislation in its analysis.  We note, how ever, that Brazil had argued that the legislation in 
question was exceptional, temporary, and in no way contradicted the existence or risks generally 
associated with landfilling.377  A panel enjoys discretion in  assessing whether a given piece of 
evidence is relevant for its reasoning378, and is not required to discuss, in its report, each and every 
piece of evidence.379    
203. We turn to the European Communities' argum ent that the Panel did not objectively assess the 
facts in observing that "stockpiling as such does not  'dispose of' waste tyres" and that controlled 
stockpiling "may still pose considerable risk s to human health and the environment".380  The Panel did 
not, as the European Communities contends, errone ously treat stockpiling as a "final disposal 
                                                      
372Panel Report, para. 7.183 and footnotes 1318 and 1319 thereto (referring to Exhibits BRA-1, BRA-8, 
BRA-38, BRA-41, BRA-45, and BRA-58 submitted by Brazil to the Panel). 
373Ibid., para. 7.184. 
374Ibid. 
375Ibid.  In particular, we observe that the evidence relating to the risk of tyre fires and to the long-term 
leaching of toxic chemicals referred to  in paragraph 7.183 and footnote 13 18 thereto of the Panel Report does 
not appear to distinguish betw een landfilling of whole tyres and landfilling of shredded tyres. 
376Ibid., para. 7.186. 
377Brazil's appellee's submission, para. 152. 
378See Appellate Body Report, EC – Hormones , para. 132.   
379See Appellate Body Report, Chile – Price Band System (Article 21.5 – Argentina) , para. 240;  see 
also Appellate Body Report, EC – Hormones , para. 138. 
380Panel Report, para. 7.188. (footnote omitted) WT/DS332/AB/R 
Page 80  
 
operation".
381  To the contrary, the Panel recognized that stockpiling is used only for temporary 
storage.382  Moreover, the Panel's finding that stockpiling, even as an intermediate operation, carries 
risks of its own rested on various pieces of evid ence, including a California Environmental Protection 
Agency study that concludes, in relation to contro lled stockpiling, that "[a]ll tire and rubber storage 
facilities should be considered high-risk storage facilities."383   
204. Regarding co-incineration, the Panel found that  "Brazil has provided sufficient evidence to 
demonstrate that health risks exist in relation to the incineration of waste tyres, even if such risks can 
be significantly reduced through strict emission standards."384  In reaching this conclusion, the Panel 
relied on evidence consisting of technical studies and reports of regulator y agencies relating to 
activities in countries other than Brazil.385  The Panel acted within its margin of discretion as the trier 
of facts in considering that evidence relating to co -incineration activities in countries other than Brazil 
was relevant to the question of whether co-incinera tion poses health risks if used in Brazil, and in 
relying on that evidence.   
205. With respect to material recycling applicati ons such as civil engineering, rubber asphalt, 
rubber products, and devulcanization, the Panel f ound that it is not clear that they "are entirely 
safe"386, and that even if they were, material recycling applications "would not be able to dispose of a 
quantity of waste tyres sufficient to achieve Brazil's desired level of protection due to their prohibitive 
costs".387  The European Communities contends that bo th of these findings lacked a proper factual 
foundation. 
                                                      
381European Communities' appellant's submission, para. 255. 
382Panel Report, footnote 1330 to para. 7.188.  The Panel referred to the Basel Convention Technical 
Guidelines on the Identification and Management of Used Tyres  (1999) (Exhibit BRA-40 submitted by Brazil to 
the Panel), p. 12, which states, inter alia , that "[s]tockpiling with proper cont rol can be used only for temporary 
storage before an end-of-life tyre is forwarded to a recovery operation."  
383Panel Report, para. 7.189 and footnote 1331 thereto (referring to California Environmental 
Protection Agency (US), In tegrated Waste Management Board, "Tire Pile Fires: Prevention, Response, 
Remediation" (2002) (Exhibit BRA-29 submitted by Brazil to the Panel)).  
384Ibid., para. 7.194. 
385Ibid., para. 7.192 and footnotes 1339-1342 thereto.  In particular, the Panel referred to a report which 
concluded that "emissions of toxic organics ... [as a re sult of co-incineration of waste tyres] cannot be 
effectively controlled." ( Ibid., footnote 1339 (quoting Okopol Institut für Ökologie und Politik GmbH, 
"Expertise on the Environmental Risk Associated with the Co-Incineration of Wastes in the Cement Kiln 'Four 
E' of CBR Usine de Lixhe, Belgium" (circa 1998) (Exhibit BRA-46 submitted by Brazil to the Panel))  The 
Panel also pointed to evidence that demonstrated that "there is no scientific basis for [concluding] that burning waste tires in cement kilns is safe" ( ibid. (quoting letter from Seymour I. Schwartz to the California Integrated 
Waste Management Board, dated 21 January 1998 (Exhibit BRA-49 submitted by Brazil to the Panel)), and that 
"[u]se [of waste tyres] in wet cement kilns is not an optimal environmental solution" ( ibid. (quoting European 
Environment Agency, "Waste from road vehicles" (2001) (Exhibit BRA-108 submitted by Brazil to the Panel)). 
386Ibid., para. 7.208. 
387Ibid.  WT/DS332/AB/R 
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206. The Panel stated that " it is not clear  whether some of these engineering applications are 
sufficiently safe."388  It also expressed the view that "the evidence is inconclusive  on whether rubber 
asphalt exposures are more hazardous than conventional asphalt exposures."389  Furthermore, the 
Panel did "not find evidence showing that devulcani zation or other forms of chemical or thermal 
transformation such as pyrolisis pose substa ntial health or environmental risks."390  It is on the basis of 
these findings that the Panel concluded that " it is not clear  that material recycling applications are 
entirely safe."391  The Panel relied on numerous pieces of evidence to make these findings 392, and the 
European Communities has not demonstrated that this evidence cannot support the Panel's finding.  
Moreover, in finding that material recycling was not  a reasonably available alternative to the Import 
Ban, the Panel relied mainly on the limited disposal capacity of these applications;  safety considerations were not ce ntral to its reasoning.  
207. Indeed, the Panel determined that evidence adduced in relation to civil engineering
393, rubber 
asphalt394, rubber products395, and devulcanization396 suggested that each of these applications involve 
high costs that would significantly limit their ability "to dispose of a quantity of waste tyres sufficient to achieve Brazil's desired level of protection".
397  The European Communiti es argues that the Panel 
erred in rejecting material recycling a pplications on the basis of their costs398, suggesting that the 
Panel erroneously equated  high  costs with  prohibitive  costs, when only the latter would justify a 
finding that a given alternative is not "reasonably av ailable".  This argument is based on an artificial 
                                                      
388Panel Report, para. 7.202. (emphasis added) 
389Ibid., para. 7.205. (footnote omitted;  emphasis added) 
390Ibid., para. 7.207. 
391Ibid., para. 7.208. (emphasis added) 
392Ibid., para. 7.202 and footnote 1359 thereto.  
393Ibid., para. 7.201 and footnote 1358 thereto (referring to 2006 report by the European Tyre and 
Rubber Manufacturers' Association (Exhibit EC-84 submitted by the European Communities to the Panel);  
California Environmental Protection Agency (US), Integr ated Waste Management Boar d, "Five-Year Plan for 
the Waste Tire Recycling Management Program" (2003) (Exhibit BRA-36 submitted by Brazil to the Panel);  
and K. Cannon, "Environment; Wher e Mosquitoes And Tires Breed", The New York Times , 8 July 2001 (Exhibit 
BRA-130 submitted by Brazil to the Panel)).  
394Ibid., para. 7.205 and footnote 1367 thereto (referring to OECD Report, supra , footnote 52). 
395Ibid., para. 7.206 and footnote 1368 thereto (referring to J. Serumgard, "Internalization of Scrap Tire 
Management Costs: A Review of the North American Experience", in Proceedings of the Second Joint 
Workshop of the Secretariat of the United Nations Co nference on Trade and Deve lopment (UNCTAD) and the 
International Rubber Study Group on Rubber and the Environment (1998) (Exhibit BRA-125 submitted by Brazil to the Panel);  and Human Re sources and Social Development Canada, Rubber Industry (circa 1999) 
(Exhibit BRA-131 submitted by Brazil to the Panel)). 
396Ibid., para. 7.207 and footnote 1371 thereto (referring to Exhibits EC-15 and EC-18 submitted by the 
European Communities to the Panel;  and Exhibit BRA-125 submitted by Brazil to the Panel). 
397Ibid., para. 7.208.   
398European Communities' appellant's submission, para. 278.  WT/DS332/AB/R 
Page 82  
 
distinction between high and prohibitive costs.  Further,  in our view, this is not an issue relating to the 
Panel's appreciation of the evidence, but rather to its legal characterization of the facts.  In any event, 
what disqualifies these alternatives, according to th e Panel, is not their high costs as such, but the 
effect of these high costs in limiting the disposal capacity of these methods. 
208. Finally, the European Communities claims th at the Panel failed to analyze as a possible 
alternative measure the National Dengue Control Programme, and that this failure constitutes a 
violation of Article 11 of the DSU.
399  We observe that the Europ ean Communities referred to the 
National Dengue Control Programme in its second wr itten submission to the Panel in support of its 
contention that "authorities in Brazil seem to en courage material recycling as an alternative."400  We 
note further that the alternative measure identified th ere was material recycling, and that the National 
Dengue Control Programme was discussed under th e subheading "Material recycling" in the 
European Communities' written submission mere ly as one example of material recycling.401  Thus, the 
National Dengue Control Programme was not submitte d by the European Communities as a distinct 
alternative measure but, rather, was presented as an illustration of material recycling, which the Panel 
discussed extensively. 
209. Accordingly, we find that the Panel did not fail to conduct an objective assessment of the 
facts, as required by Article 11 of the DSU, in finding that the disposal methods for waste tyres suggested by the European Communities were not reas onably available alternatives to the Import Ban.  
C. General Conclusion on the Necessity Analysi s under Article XX(b) of the GATT 1994 
210. At this stage, it may be useful to recapitulate our views on the issue of whether the Import 
Ban is necessary within the meaning of Article XX(b) of the GATT 1994.  This issue illustrates the 
tensions that may exist between, on the one hand, in ternational trade and, on the other hand, public 
health and environmental concerns arising from the handling of waste generated by a product at the 
end of its useful life.  In this respect, the funda mental principle is the right that WTO Members have 
to determine the level of protection that they cons ider appropriate in a given context.  Another key 
element of the analysis of the necessity of a measu re under Article XX(b) is the contribution it brings 
to the achievement of its objective.  A contribution ex ists when there is a genuine relationship of ends 
and means between the objective pursu ed and the measure at issue.  To be characterized as necessary, 
a measure does not have to be indispensable.  Howe ver, its contribution to the achievement of the 
objective must be material, not merely marginal or insignificant, especially if the measure at issue is 
                                                     
 
399European Communities' appellant's submission, para. 280.  
400European Communities' second written submission to the Panel, para. 137.  
401See Ibid., para. 138 under subheading II.A.4 (c) iv) "Material recycling", p. 41.  WT/DS332/AB/R 
 Page 83 
 
 
as trade restrictive as an import ban.  Thus, the c ontribution of the measure has to be weighed against 
its trade restrictiveness, taking into account the im portance of the interests or the values underlying 
the objective pursued by it.  As a key component of  a comprehensive policy aiming to reduce the risks 
arising from the accumulation of waste tyres, the Im port Ban produces such a material contribution to 
the realization of its objective.  Like the Panel, we  consider that this contribution is sufficient to 
conclude that the Import Ban is necessary, in th e absence of reasonably available alternatives.   
211. The European Communities proposed a series of a lternatives to the Import Ban.  Whereas the 
Import Ban is a preventive non-generation measure, most of the proposed alternatives are waste 
management and disposal measures that are remedial in character.  We consider that measures to encourage domestic retreading or to improve the re treadability of tyres, a better enforcement of the 
import ban on used tyres, and a better implementati on of existing collection and disposal schemes, are 
complementary to the Import Ban;  indeed, they  constitute mutually supportive elements of a 
comprehensive policy to deal with waste tyres.  Th erefore, these measures cannot be considered real 
alternatives to the Import Ban.  As regards landfilling,  stockpiling, co-incineration of waste tyres, and 
material recycling, these remedial methods carry th eir own risks or, because of the costs involved, are 
capable of disposing of only a limited number of wast e tyres.  The Panel did not err in concluding that 
the proposed measures or practices are not reasonably available alternatives. 
212. Accordingly, having already found that the Pa nel did not breach its duty under Article 11 of 
the DSU, and in the light of the above considerations, we  uphold  the Panel's finding, in paragraph 
7.215 of the Panel Report, that the Import Ban can  be considered "necessary to protect human, animal 
or plant life or health." 
 
VI. The Panel's Interpretation and Application of the Chapeau of Article XX of the GATT 
1994 
A. The MERCOSUR Exemption and the Chapeau of Article XX of the GATT 1994 
213. After finding that the Import Ban was provisi onally justified under Article XX(b) of the 
GATT 1994
 402, the Panel examined whether the applicati on of the Import Ban by Brazil satisfied the 
requirements of the chapeau of Article XX. 
                                                      
402Panel Report, para. 7.215. WT/DS332/AB/R 
Page 84  
 
214. The chapeau of Article XX of the GATT 1994 reads: 
Subject to the requirement that such measures are not applied in a 
manner which would constitute a mean s of arbitrary or unjustifiable 
discrimination between countries wher e the same conditions prevail, 
or a disguised restriction on international trade, nothing in this Agreement shall be construed to pr event the adoption or enforcement 
... of measures [of the type specified in the subsequent paragraphs of 
Article XX]. 
215. The focus of the chapeau , by its express terms, is on th e application of a measure already 
found to be inconsistent with an obligation of the GATT 1994 but falling within one of  the paragraphs 
of Article XX.
403  The chapeau's requirements are two-fold.  First, a measure provisionally justified 
under one of the paragraphs of Article XX must not  be applied in a manner that would constitute 
"arbitrary or unjustifiable discrimination" between  countries where the same conditions prevail.  
Secondly, this measure must not be applied in a ma nner that would constitute "a disguised restriction 
on international trade".  Through these requirement s, the chapeau serves to ensure that Members' 
rights to avail themselves of exceptions are exercise d in good faith to protect interests considered 
legitimate under Article XX, not as a means to circ umvent one Member's obligations towards other 
WTO Members.404 
216. Having determined that the exemption from the Import Ban of remoulded tyres originating in 
MERCOSUR countries resulted in discrimination in the application of the Import Ban, the Panel 
examined whether this discrimination was arbitrary or unjustifiable.  The Panel concluded that, as of 
the time of its examination, the operation of the MERCOSUR exemption had not resulted in the 
Import Ban being applied in a manner that would c onstitute "arbitrary or unjustifiable discrimination", 
within the meaning of the chapeau of Article XX.405  The Panel also found that the MERCOSUR 
exemption had not been shown "to date" to result in the Import Ban being applied in a manner that 
would constitute "a disguised restriction on internatio nal trade", within the meaning of the chapeau of 
Article XX.406  The European Communities appeal s these findings of the Panel. 
                                                      
403Appellate Body Report, US – Gasoline , p. 22, DSR 1996:I, 3, at 20;  Appellate Body Report, US – 
Gambling , para. 339. 
404Appellate Body Report, US – Gasoline , p. 22, DSR 1996:I, 3, at 20-21;  Appellate Body Report, US 
– Gambling , para. 339. 
405Panel Report, para. 7.289. 
406Ibid., paras. 7.354 and 7.355.  WT/DS332/AB/R 
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1. The MERCOSUR Exemption and Arbitrary or Unjustifiable Discrimination  
217. Regarding the issue of whether the MERCOSUR exemption has resulted in the Import Ban 
being applied in a manner that would constitute "a rbitrary or unjustifiable discrimination" between 
countries where the same conditions prevail, the Pa nel noted, first, that the health impact of 
remoulded tyres imported from MERCOSUR countri es and their European counterparts can be 
expected to be comparable.407  The Panel also observed that it was only after a MERCOSUR tribunal 
found Brazil's ban on the importation of remoulded tyres to constitute a new restriction on trade 
prohibited under MERCOSUR that Brazil exempted  remoulded tyres originating in MERCOSUR 
countries from the application of the Import Ban.408  For the Panel, the MERCOSUR exemption "does 
not seem to be motivated by capricious or unpredictabl e reasons [as it] was adopted further to a ruling 
within the framework of MERCOSUR, which has bi nding legal effects for Brazil, as a party to 
MERCOSUR."409  The Panel added that the discrimination arising from the MERCOSUR exemption 
was not " a priori  unreasonable", because this discrimination ar ose in the context of an agreement of a 
type expressly recognized under Article XXIV of the GATT 1994 that "inherently provides for preferential treatment in favour of its members, thus leading to di scrimination between those members 
and other countries."
410 
218. The European Communities argued before the Panel that Brazil was at least partially 
responsible for the ruling that resulted in the MERCOSUR exemption because it did not defend itself 
in the MERCOSUR proceedings on grounds  related to human health and safety.411  The Panel was not 
persuaded by this submission.  I ndeed, the Panel considered it would not be appropriate for it "to 
assess in detail the choice of arguments by Brazil in the MERCOSUR proceedings or to second-guess 
the outcome of the case in light of Brazil's litigation strategy in those proceedings."412 
219. For the Panel, the MERCOSUR ruling provided a reasonable basis to enact the MERCOSUR 
exemption, with the implication that th e resulting discrimination is not arbitrary.413  The Panel 
indicated, however, that it was not suggesting that  "the invocation of any international agreement 
would be sufficient under any circumstances, in order to justify the existence of discrimination in the 
                                                      
407Panel Report, para. 7.270. 
408Ibid., para. 7.271. 
409Ibid., para. 7.272. 
410Ibid., para. 7.273. 
411Article 50(d) of the Treaty of Montevideo provides  for an exception similar to Article XX(b) of the 
GATT 1994. (See infra , footnote 443) 
412Panel Report, para. 7.276 and footnote 1451 thereto. 
413Ibid., para. 7.281. WT/DS332/AB/R 
Page 86  
 
application of a measure under the chapeau of Article XX."
414  The Panel acknowledged that "casings 
from non-MERCOSUR countries, as well as casings originally used in MERCOSUR, may be 
retreaded in a MERCOSUR country and export ed to Brazil as originating in MERCOSUR."415  The 
Panel underscored that, "[i]f such im ports were to take place in such  amounts that the achievement of 
the objective of the measure at issue would be signi ficantly undermined, the application of the import 
ban in conjunction with the MERCOSUR exempt ion would constitute a means of unjustifiable 
discrimination."416  However, as of the time of the Panel' s examination, "volumes of imports of 
retreaded tyres under the exemption appear not to have been significant."417  The Panel concluded that 
the MERCOSUR exemption has not resulted in the Import Ban being applied in a manner that would constitute arbitrary or unjustifiable discrimination.
418   
220. The European Communities claims that the Panel erred in its interpreta tion and application of 
the term "arbitrary or unjustifiable discrimination"  in the chapeau of Article XX of the GATT 1994, 
and in finding that the MERCOSUR exemption does not  constitute such discrimination.  According to 
the European Communities, whether a measure invo lves arbitrary or unjustifiable discrimination can 
only be determined by taking into account the objectiv e of the measure at issue, in this case, the 
protection of life and health from risks arising from mosquito-borne diseases and tyre fires.  A 
measure will not be arbitrary if it "appears as reasonable, predictable and foreseeable"419 in the light of 
this objective.  It follows, according to the European  Communities, that the Panel erred in finding that 
the MERCOSUR exemption did not constitute arbitr ary discrimination because it was introduced in 
response to a ruling of a MERCOSUR arbitral tri bunal.  The MERCOSUR exemption does not further 
but may undermine the stated objective of the measure.  For this reason, it must be regarded as "unreasonable, contradictory, and thus arbitrary".
420  For the European Communities, allowing a 
Member's obligations under other international agre ements to render discrimination consistent with 
the chapeau of Article XX would seriously underm ine the effectiveness of  the chapeau.  The 
                                                      
414Panel Report, para. 7.283.  The Panel also considered that it was not contrary to the terms of 
Article XXIV:8(a) of the GATT 1994—which specifically excludes measures taken under Article XX from the 
requirement to liberalize "substantially all the trade" within a customs union—to take into account, as it did, "the 
fact that the MERCOSUR exemption was adopted as a result of Brazil's obligations under MERCOSUR." ( Ibid., 
para. 7.284) 
415Ibid., para. 7.286. 
416Ibid., para. 7.287. 
417Ibid., para. 7.288.  The Panel noted that imports of retreaded tyres under the MERCOSUR 
exemption had increased tenfold since 2002, from 200 to 2,000 tons per year by 2004.  For the Panel, "[t]hat 
figure remains much lower than the 14,000 tons per year imported from the European Communities alone prior 
to the imposition of the import ban." ( Ibid. (referring to European Communities' first written submission to the 
Panel, para. 80)) 
418Ibid., para. 7.289. 
419European Communities' appellant's submission, para. 321. 
420Ibid., para. 323.  WT/DS332/AB/R 
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European Communities adds that, in any event,  the MERCOSUR tribunal did not oblige Brazil to 
discriminate between its MERCOSUR partners and other WTO Members,  and that Brazil could have 
implemented the ruling by lifting the Import Ban for all third countries.421 
221. With respect to the Panel's finding that unjus tifiable discrimination could arise if imports 
under the MERCOSUR exemption were to take place in such amounts that the achievement of the 
objective of the Import Ban would be significantly undermined 422, the European Communities argues 
that the Panel applied a test that has no basis in  the text of Article XX and no support in the case law 
of the Appellate Body or of previous panels.  The European Communities also notes that "the level of 
imports in a given year may be subject to str ong fluctuations, and for this reason ... is entirely 
inadequate for the purposes of assessing the co mpatibility of a measure with Article XX".423  
222. Brazil, for its part, supports the Panel's finding that the MERCOSUR exemption does not 
result in the Import Ban being applied in a manner th at constitutes "arbitrary discrimination", contrary 
to the chapeau of Article XX.  In addition, Braz il disputes the European Communities' argument that 
what constitutes "arbitrary discrimination" must be determined only in relation to the objective of the 
Import Ban.  According to Brazil, the specific cont ents of the measure, including its policy objectives, 
must be examined under the exceptions listed in th e paragraphs of Article XX.  The chapeau of 
Article XX requires panels to examine whether th e measure at issue is applied reasonably, in a 
manner that does not result in an abusive exercise of a Member's right to pursue its policy objectives.  
Brazil adds, for the sake of argument, that the Pa nel in any event considered the objective of the 
Import Ban when it determined that, at the time of its examination, volumes of imports of retreaded 
tyres under the MERCOSUR exemption did not sign ificantly undermine the objective of the Import 
Ban.  Furthermore, according to Brazil, the Panel was correct in finding th at the ruling of the 
MERCOSUR tribunal provided a rational basis for the adoption of the MERCOSUR exemption. 
223. For Brazil, the operation of the MERCOSUR exemption has not resulted in the Import Ban 
being applied in a manner that would constitute "unj ustifiable discrimination".  The Panel determined 
how Brazil's policy objective of reducing to the ma ximum extent possible unnecessary generation of 
tyre waste was being affected by imports of re treaded tyres under the MERCOSUR exemption.  The 
level of imports and their effect on the objective of the Import Ban were re levant, in particular, 
because the chapeau of Article XX focuses on the application of the measure at issue.   
                                                      
421European Communities' appellant's submission, para. 332. 
422Panel Report, para. 7.287. 
423European Communities' appellant's submission, para. 340. WT/DS332/AB/R 
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224. We begin our analysis by recalling that the func tion of the chapeau is the prevention of abuse 
of the exceptions specified in the paragraphs of Article XX.
424  In US – Shrimp , the Appellate Body 
stated that "[t]he chapeau of Article XX is, in fact, but one expression of the principle of good 
faith."425  The Appellate Body added that "[o]ne applica tion of this general principle, the application 
widely known as the doctrine of  abus de droit , prohibits the abusive exercise of a state's rights and 
enjoins that whenever the assertion of  a right 'impinges on the field covered by [a] treaty obligation, it 
must be exercised bona fide, that is to say, reasonably.'"426  Accordingly, the task of interpreting and 
applying the chapeau is "the delicate one of loca ting and marking out a line of equilibrium between 
the right of a Member to invoke an exception unde r Article XX and the rights of the other Members 
under varying substantive provisions (e.g., Article XI) of the GATT 1994, so that neither of the 
competing rights will cancel out the other and thereby distort and nullify or impair the balance of 
rights and obligations constructed by the Members themselves in that Agreement."427  The location of 
this line of equilibrium may move "as the kind and the shape of the measures at stake vary and as the 
facts making up specific cases differ."428 
225. Analyzing whether discrimination is arbitrary or  unjustifiable usually involves an analysis 
that relates primarily to the cause or the rationale of  the discrimination.  Thus, we observe that, in  
US – Gasoline , the Appellate Body assessed the two explana tions provided by the United States for 
the discrimination resulting from the application of the baseline establis hment rules at issue.429  As it 
found them unsatisfactory, the Appellate Body c oncluded that the application of the baseline 
establishment rules resulted in arbitr ary or unjustifiable discrimination.430  I n  US – Shrimp , the 
Appellate Body relied on a number of factors in findi ng that the measure at issue resulted in arbitrary 
or unjustifiable discrimination.  The assessment of these factors by the Appellate Body was part  
                                                      
424Appellate Body Report, US – Gasoline , p. 22, DSR 1996:I, 3, at 21. 
425Appellate Body Report, US – Shrimp , para. 158. 
426Ibid. (quoting B. Cheng, General Principles of Law as applied by International Courts and Tribunals  
(Stevens and Sons, Ltd., 1953), chap. 4, at 125).  
427Ibid., para. 159. 
428Ibid. 
429The US – Gasoline  case involved a programme aiming to ensure that pollution from gasoline 
combustion did not exceed 1990 levels.  Baselines for the year 1990 were set as  a means for determining 
compliance with the programme requirements.  These baselines could be either individual or statutory, 
depending on the nature of the entity concerned.  Whereas individual baselines were available to domestic 
refiners, they were not to foreign refiners.  
The first explanation provided by the United States for such discrimination was the impracticability of 
verification and enforcement of individual baselines for foreign refiners. (Appellate Body Report, US – 
Gasoline , pp. 25-26, DSR 1996:I, 3, at 23-24)  Secondly, the United States explained that imposing the statutory 
baseline requirement on domestic refiners as well was no t an option, because it was not feasible to require 
domestic refiners to incur the physical and financial co sts and burdens entailed by immediate compliance with a 
statutory baseline. ( Ibid., p. 28, DSR 1996:I, 3, at 26-27) 
430Ibid., p. 29, DSR 1996:I, 3, at 27.    WT/DS332/AB/R 
 Page 89 
 
 
of an analysis that was directed at the cause, or the rationale, of the discrimination. 431  US – Shrimp 
(Article 21.5 – Malaysia)  concerned measures taken by the United States to implement 
recommendations and rulings of the DSB in US – Shrimp .  The Appellate Body's analysis of these 
measures under the chapeau of Article XX focused on whether discrimination that might result from 
the application of those measures had a legitimate cause or rationale in the light of the objectives 
listed in the paragraphs of Article XX.432   
226. The Appellate Body Reports in US – Gasoline , US – Shrimp , and US – Shrimp (Article 21.5 – 
Malaysia)  show that the analysis of whether the app lication of a measure results in arbitrary or 
unjustifiable discrimination should focus on the cau se of the discrimination, or the rationale put 
forward to explain its existence.  In this case,  Brazil explained that it introduced the MERCOSUR 
exemption to comply with a ruling issued by a MERCOSUR arbitral tribunal.  This ruling arose in the 
context of a challenge initiated by Uruguay agains t Brazil's import ban on remoulded tyres, on the 
grounds that it constituted a new restricti on on trade prohibited under MERCOSUR.  The 
MERCOSUR arbitral tribunal found Brazil's restrictio ns on the importation of remoulded tyres to be a 
violation of its obligations under MERCOSUR.  These facts are undisputed. 
227. We have to assess whether this explanation prov ided by Brazil is acceptable as a justification 
for discrimination between MERCOSUR countries  and non-MERCOSUR countries in relation to 
retreaded tyres.  In doing so, we are mindful of the function of the chapeau of Article XX, which is to 
prevent abuse of the exceptions specified  in the paragraphs of that provision.433  In our view, there is 
                                                      
431These factors were:  (i) the discrimination that resulted from a "rigid and unbending requirement" 
(Appellate Body Report, US – Shrimp , para. 177;  see also para. 163) that countries exporting shrimp into the 
United States adopt a regulatory programme that is essentially the same as the United States' programme;  (ii) the discrimination that resulted from the failure to take into account different conditions that may occur in 
the territories of other WTO Members, in particular, specific policies and m easures other than those applied by 
the United States that might have been adopted by an exporting country for the protection and conservation of sea turtles ( ibid., paras. 163 and 164);  (iii) the discrimination that resulted from the application of the measure 
was "difficult to reconcile with the declared policy ob jective of protecting and conserving sea turtles" ( ibid., 
para. 165), because, in some circumstances, shrimp caught abroad using methods identical to those employed in the United States would be excluded from the United States market;  and (iv) the discrimination that resulted 
from the fact that, while the United States negotiated se riously with some WTO Members exporting shrimp into 
the United States for the purpose of concluding international agreements for the protection and conservation of sea turtles, it did not do so with other WTO Members ( ibid., paras. 166 and 172). 
432Thus, the Appellate Body endorsed the panel's conclusion that conditioning market access on the 
adoption of a regulatory programme for the protectio n and conservation of sea turtles comparable in 
effectiveness—as opposed to the adoption of "essent ially the same" regulatory programme—"allows for 
sufficient flexibility in the application of the measure so as to avoid 'arbitrary or unjustifiable discrimination'". 
(Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , para. 144)  The Appellate Body also 
considered that the measures adopted by the United States permitted a degree of flexibility that would enable the 
United States to consider the particular conditions prev ailing in Malaysia, notably because it provides that, in 
making certification determinations, the United States authorities "shall also take fully into account other 
measures the harvesting nation undert akes to protect sea turtles". ( Ibid., para. 147)   
433Appellate Body Report, US – Gasoline , p. 22, DSR 1996:I, 3, at 21. WT/DS332/AB/R 
Page 90  
 
such an abuse, and, therefore, there is arbitr ary or unjustifiable discrimination when a measure 
provisionally justified under a paragraph of Ar ticle XX is applied in a discriminatory manner 
"between countries where the same conditions pr evail", and when the reasons given for this 
discrimination bear no rational connection to the ob jective falling within the purview of a paragraph 
of Article XX, or would go against that objective.   The assessment of whether discrimination is 
arbitrary or unjustifiable should be made in the li ght of the objective of the measure.  We note, for 
example, that one of the bases on which the Appellate Body relied in  US – Shrimp  for concluding 
that the operation of the measure at issue result ed in unjustifiable discrimination was that one 
particular aspect of the application of the measure (t he measure implied that, in certain circumstances, 
shrimp caught abroad using methods identical to  those employed in the United States would be 
excluded from the United States market
 434) was "difficult to reconcile with the declared objective of 
protecting and conserving sea turtles".435  Accordingly, we have difficulty understanding how 
discrimination might be viewed as complying with the chapeau of Article XX when the alleged rationale for discriminating does not relate to the pur suit of or would go against the objective that was 
provisionally found to justify a measure under a paragraph of Article XX. 
228. In this case, the discrimination between ME RCOSUR countries and other WTO Members in 
the application of the Import Ban was introduced  as a consequence of a ruling by a MERCOSUR 
tribunal.  The tribunal found against Brazil because the restriction on imports of remoulded tyres was 
inconsistent with the prohibition of new trade r estrictions under MERCOSUR law.  In our view, the 
ruling issued by the MERCOSUR arbitral tribunal is not an acceptable rationale for the 
discrimination, because it bears no relationship to th e legitimate objective pursued by the Import Ban 
that falls within the purview of Article XX(b), and even goes against this objective, to however small 
a degree.  Accordingly, we are of the view that  the MERCOSUR exemption has resulted in the Import 
Ban being applied in a manner that constitut es arbitrary or unjustifiable discrimination. 
229. The Panel considered that the MERCOSUR ex emption resulted in discrimination between 
MERCOSUR countries and other WTO Members, but that this discrimination would be 
"unjustifiable" only if imports of retreaded tyres entering into Brazil "were to take place in such 
amounts that the achievement of the objective of the measure at issue would be significantly 
undermined".
436  The Panel's interpretation implies that the determination of whether discrimination is 
unjustifiable depends on the quantitative impact of this discrimination on the achievement of the 
objective of the measure at issue.  As we indicated above, analyzing whether discrimination is 
                                                      
434Appellate Body Report, US – Shrimp , para. 165. 
435Ibid. 
436Panel Report, para. 7.287.  WT/DS332/AB/R 
 Page 91 
 
 
"unjustifiable" will usually involve an analysis that  relates primarily to the cause or the rationale of 
the discrimination.  By contrast, the Panel's interp retation of the term "unjustifiable" does not depend 
on the cause or rationale of the discrimination but, ra ther, is focused exclusively on the assessment of 
the  effects   of the discrimination.  The Panel's approach has no support in the text of Article XX and 
appears to us inconsistent with the manner the Appe llate Body has interpreted and applied the concept 
of "arbitrary or unjustifiable di scrimination" in previous cases.437 
230. Having said that, we recognize that in certain cases the effects of the discrimination may be a 
relevant factor, among others, for determining whethe r the cause or rationale of the discrimination is 
acceptable or defensible and, ultimately, whether th e discrimination is justifiable.  The effects of 
discrimination might be relevant, depending on the circumstances of the case, because, as we indicated above
 438, the chapeau of Article XX deals with the manner of application of the measure at 
issue.  Taking into account as a relevant factor, among others, the effects of the discrimination for 
determining whether the rationale of the discrimin ation is acceptable is, however, fundamentally 
different from the Panel's approach, which focused ex clusively on the relationship between the effects 
of the discrimination and its justifiable or unjustifiable character. 
231. We also note that the Panel found that the discrimination resulting from the MERCOSUR 
exemption is not arbitrary.  The Panel explaine d that this discrimination cannot be said to be 
"capricious" or "random"439 because it was adopted further to a ruling within the framework of 
MERCOSUR.440 
232. Like the Panel, we believe that Brazil's d ecision to act in order to comply with the 
MERCOSUR ruling cannot be viewed as "capricious" or "random".  Acts implementing a decision of 
a judicial or quasi-judicial body—such as the MERCOSUR arbitral tribunal—can hardly be characterized as a decision that is "capricious" or "random".  However, discrimination can result from 
a rational decision or behaviour, and still be "arbitrary or unjustifiable", because it is explained by a 
                                                     
 
437See supra , paras. 225 and 226.  We also observe that the Panel's approach was based on a logic that 
is different in nature from that followed by the Ap pellate Body when it addressed the national treatment 
principle under Article III:4 of the GATT 1994 in Japan – Alcoholic Beverages II .  In that case, the Appellate 
Body stated that Article III aims to ensure "equality of competitive c onditions for imported products in relation to 
domestic products". (Appellate Body Report, Japan – Alcoholic Beverages II , p. 16, DSR 1996:I, 97, at 109)  
The Appellate Body added that "it is irrelevant that 'the tr ade effects' of the [measure at issue], as reflected in the 
volumes of imports, are insignificant or even non-existent". ( Ibid., at 110)  For the Appellate Body, "Article III 
protects expectations not of any particular trade volume but rather of the equal competitive relationship between 
imported and domestic products." ( Ibid. (footnote omitted)) 
438Supra , para. 215. 
439Panel Report, para. 7.281. 
440Ibid., para. 7.272. WT/DS332/AB/R 
Page 92  
 
rationale that bears no relationship to the objectiv e of a measure provisionally justified under one of 
the paragraphs of Article XX, or goes against that objective.
441   
233. Accordingly, we  find  that the MERCOSUR exemption h as resulted in the Import Ban being 
applied in a manner that constitutes arbitrary or unjustifiable discrimination.  Furthermore, we  
reverse  the Panel's finding, in paragraph 7.287 of the Panel Report, that, under the chapeau of 
Article XX of the GATT 1994, discrimination would be unjustifiable only if imports of retreaded 
tyres entering into Brazil "were to take place in su ch amounts that the achievement of the objective of 
the measure at issue would be significantly undermined".  We therefore  reverse  the Panel's findings, 
in paragraphs 7.288 and 7.289 of the Panel Report, that the MERCOSUR exemption has not resulted 
in unjustifiable discrimination.  We also  reverse  the Panel's findings, in pa ragraphs 7.281 and 7.289 
of the Panel Report, that, to the extent that  the MERCOSUR exemption is not the result of 
"capricious" or "random" action, the Import Ban is  not applied in a manner that would constitute 
arbitrary discrimination.   
234. This being said, we observe, like the Panel442, that, before the arbitral tribunal established 
under MERCOSUR, Brazil could have sought to just ify the challenged Import Ban on the grounds of 
human, animal, and plant health under Article 50(d) of the Treaty of Montevideo.443  Brazil, however, 
decided not to do so.  It is not appropriate for us to second-guess Brazil's decision not to invoke Article 50(d), which serves a function similar to th at of Article XX(b) of the GATT 1994.  However, 
Article 50(d) of the Treaty of Montevideo, as well as the fact that Brazil might have raised this 
defence in the MERCOSUR arbitral proceedings
444, show, in our view, that the discrimination 
associated with the MERCOSUR exemption does not necessarily result from a conflict between 
provisions under MERCOSUR and the GATT 1994.445 
                                                      
441See supra , paras. 227 and 228. 
442Panel Report, paras. 7.275 and 7.276. 
443Treaty of Montevideo, Instrument Establishing the Latin American Integration Association 
(ALADI), done at Montevideo, August 1980 (Exhibit EC-39 submitted by the European Communities to the Panel).  Article 50(d) reads as follows: 
No provision under the present Treaty shall be interpreted as precluding the 
adoption and observance of measures regarding: 
... 
d. Protection of human, animal and plant life and health; 
444See Panel Report, para. 7.275. 
445In addition, we note that Artic le XXIV:8(a) of the GATT 1994 ex empts, where necessary, measures 
permitted under Article XX from the obligation to elim inate "duties and other restrictive regulations of 
commerce" with respect to "substantially all the trade" w ithin a customs union.  Therefore, if we assume, for the 
sake of argument, that MERCOSUR is consistent w ith Article XXIV and that the Import Ban meets the 
requirements of Article XX, this meas ure, where necessary, could be exempted by virtue of Article XXIV:8(a) 
from the obligation to eliminate other restrictive regulations of commerce within a customs union.   WT/DS332/AB/R 
 Page 93 
 
 
2. The MERCOSUR Exemption and Disgui sed Restriction on International 
Trade  
235. The European Communities also  challenges the Panel's conclusion that the MERCOSUR 
exemption had not been shown to date to result in the Import Ban being applied in a manner that 
would constitute "a disguised restriction on international trade".446 
236. When examining whether the Import Ban was applied in a manner that constitutes a disguised 
restriction on international trade, the Panel w as not persuaded by the European Communities' 
contention that Brazil adopted the prohibition on the importation of retreaded tyres as "a disguise to 
conceal the pursuit of trade-restrictive objectives".447  The Panel recalled that Brazil bans both used 
and retreaded tyre imports;  for the Panel, such an  approach "is consistent with Brazil's declared 
objective of reducing to the greatest extent possi ble the unnecessary accumulation of short-lifespan 
tyres"448, and "in principle deprives Brazilian retreader s of the opportunity to source casings from 
abroad".449 
237. The Panel went on to examine more specifica lly the European Communities' argument that 
"the MERCOSUR exemption results in the applicatio n of the measure in a manner that constitutes a 
disguised restriction on international trade, as it al ters trade flows in a manner that benefits, in 
addition to Brazilian retreaders, retreaders from other MERCOSUR countries."450  The Panel recalled 
that, under this exemption, "it is quite possibl e for retreaders from MERCOSUR countries benefiting 
from the exemption to source casings from abroad  (for example from the European Communities), 
retread them locally, and then export the retreaded tyres to Brazil under the MERCOSUR 
exemption."451  The Panel referred to the reasoning that it had developed with respect to arbitrary or 
unjustifiable discrimination and considered that, if imports from MERCOSUR countries were to occur 
in significant amounts, the Import Ban would be a pplied in a manner that constitutes a disguised 
restriction on international trade.452  The Panel was however of the view that, as of the time of its 
examination, "the volume of imports of remoul ded tyres that has actually taken place under the 
MERCOSUR exemption has not been significant."453 
                                                      
446Panel Report, para. 7.355. 
447Ibid., para. 7.330 (quoting Panel Report, EC – Asbestos,  para. 8.236). 
448Ibid., para. 7.343. 
449Ibid. 
450Ibid., para. 7.350. 
451Ibid., para. 7.352. (footnote omitted) 
452Ibid., para. 7.353. 
453Ibid., para. 7.354. (footnote omitted)  See also supra , footnote 417. WT/DS332/AB/R 
Page 94  
 
238. On appeal, the European Communities does not challenge the Panel's conclusion that the 
Import Ban was adopted with the intention of protectin g public health and the environment.  Its appeal 
is, instead, limited to the specific findings ma de by the Panel in relation to the MERCOSUR 
exemption
454 and the imports of used tyres through court injunctions.455  For the European 
Communities, the Panel addressed this question with  a reasoning almost identical to that it had 
developed in respect of the existence of  arbitrary or unjustifiable discrimination.456  Therefore, the 
European Communities reasons, if the Panel's a pproach concerning arbitrary or unjustifiable 
discrimination is not endorsed by the Appellate  Body, the Panel's finding that the MERCOSUR 
exemption has not been shown to date to result in a disguised restriction on international trade should 
also be reversed.457  In response to questioning at the oral hearing, the European Communities 
confirmed that its claim in this regard is based on the same arguments it put forward in relation to 
arbitrary or unjustifiable discrimination. 
239. We agree with the European Communities' observation that the reasoning developed by the 
Panel to reach the challenged conclusion was the sa me as that made in respect of arbitrary or 
unjustifiable discrimination.  Indeed, the Panel conditioned a finding of a disguised restriction on 
international trade on the existence of significant im ports of retreaded tyres that would undermine the 
achievement of the objective of the Import Ban.  We explained above why we  believe that the Panel 
erred in finding that the MERCOSUR exemption would result in arbitrary or unjustifiable 
discrimination only if the imports of retreaded tyres from MERCOSUR countries were to take place 
in such amounts that the achievement of the obj ective of the Import Ban would be significantly 
undermined.458  As the Panel's conclusion that the MERCOSUR exemption has not resulted in a 
disguised restriction on international trade was based on an interpretation that we have reversed, this 
finding cannot stand.  Therefore, we also reverse  the Panel's findings, in paragraphs 7.354 and 7.355 
of the Panel Report, that "the MERCOSUR exemption ... has not been shown to date to result in the 
[Import Ban] being applied in a manner that would constitute ... a disguised restriction on 
international trade." 
                                                      
454Panel Report, paras. 7.350-7.355. 
455Ibid., paras. 7.347-7.349 and 7.355.  We examine this aspect of the European Communities' appeal 
in Section VI.B.2 of this Report.   
456European Communities' appellant's submission, para. 366. 
457Ibid., paras. 367 and 368. 
458Supra , Section VI.A.1.  WT/DS332/AB/R 
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B. Imports of Used Tyres through Court Injunc tions and the Chapeau of Article XX of 
the GATT 1994 
1. Imports of Used Tyres through Court Injunctions and Arbitrary or 
Unjustifiable Discrimination  
240. The European Communities submits that the Panel e rred in its analysis of the imports of used 
tyres through court injunctions under the chapeau of Article XX of the GATT 1994.  We begin our 
analysis with the requirement in the chapeau of Artic le XX that the measure at issue not be applied in 
a manner that would result in "arbitrary or unjustifiable discrimination". 
241. The Panel determined that the imports of used  tyres through court injunctions resulted in 
discrimination in favour of domestic retreaders.  Th is is because these imports enabled retreaded tyres 
to be produced in Brazil from imported casings, while  retreaded tyres produced abroad using the same 
casings could not be imported.459  Having done so, the Panel went on to examine whether this 
discrimination is arbitrary or unjustifiable. 
242. The Panel noted that the importation of used ty res into Brazil is prohibited, and that "used 
tyres have been imported into Brazil in recent years only as a result of injunctions granted by 
Brazilian courts in specific cases."460  The Panel found that the discrimination resulting from the 
imports of used tyres through court injunctions was not the consequence of a "capricious" or "random" action, and that, to this extent, the Im port Ban was not applied in a manner that would 
constitute arbitrary discrimination.
461 
243. The Panel recalled, however, that the contributio n of the Import Ban to the achievement of its 
objective "is premised on imports of used tyres being prohibited".462  For the Panel, the granting of 
injunctions allowing used tyres to be imported "runs di rectly counter to this premise, as it effectively 
allows the very used tyres that ar e prevented from entering into Brazil  after  retreading to be 
imported  before  retreading."463  The Panel examined the volumes of imports of used tyres that have 
taken place under the court injunctions.  For the Panel,  the amounts of imports of used tyres that have 
                                                      
459Panel Report, para. 7.243. 
460Ibid., para. 7.292. (footnote omitted)  The Panel also observed that Brazil has challenged these 
injunctions "with a certain degree of success". ( Ibid.)  For the Panel, the imports of used tyres were "the result of 
successful court challenges", and found their basis "in the customs author ities' need to give effect to judicial 
orders". ( Ibid.)  The Panel added that nothing in the evidence suggested that the decisions of the Brazilian courts 
granting those injunctions were capricious or unpr edictable, nor does "the decision of the Brazilian 
administrative authorities to comply with the preliminar y injunctions ... seem irrational or unpredictable". ( Ibid., 
para. 7.293)   
461Ibid., para. 7.294. 
462Ibid., para. 7.295. 
463Ibid. (original emphasis) WT/DS332/AB/R 
Page 96  
 
actually taken place under the court injunctions were significant.
464  Accordingly, the Panel found 
that, "since used tyre imports have been taking pl ace under the court injunctions in such amounts that 
the achievement of Brazil's declared objective is be ing significantly undermined, the measure at issue 
is being applied in a manner that constitut es a means of unjustifiable discrimination."465 
244. For the European Communities, the Panel erred in finding that the imports of used tyres 
through court injunctions do not result in arbitrary di scrimination, given that "[w]hat is arbitrary must 
be decided in the light of the stated objectives of the measure".466  Because, from the point of view of 
the protection of human life or health, there is  no difference between, on the one hand, a retreaded 
tyre produced in the European Communities and, on the other hand, a retreaded tyre produced in 
Brazil from a casing imported from the European Co mmunities, prohibiting imported retreaded tyres 
while allowing the importation of used tyres thr ough court injunctions must be regarded as 
constituting arbitrary discrimination.467  Furthermore, the European Communities maintains that, as 
regards the issue of whether court injunctions constitute unjustifiable discrimination, the Panel 
adopted the same erroneous quantitative appr oach as it did when discussing the MERCOSUR 
exemption.468  The European Communities adds that the Panel's approach engenders uncertainty for 
the implementation of the Panel Report, because the Panel did not identify "the threshold below which 
the imports of used tyres would no longer be significant".469   
245. Brazil submits that the Panel did not err in th e analytical approach it adopted to determine 
whether imports of used tyres under court injunctio ns resulted in the Import Ban being applied in a 
manner that constituted "arbitrary or unjustifiable discrimination" under the chapeau of Article XX.  
For Brazil, it was appropriate for the Panel to cons ider the level of imports of used tyres in its 
determination.  Brazil thus dismisses the European  Communities' argument that the Panel's approach 
engenders uncertainty for the implementation of the Panel Report, and stresses that the monitoring of 
a WTO Member's compliance is an integral  part of the dispute settlement system. 
                                                      
464Panel Report, paras. 7.297 and 7.303.  In partic ular, the Panel noted that, in 2005, Brazil imported 
approximately 10.5 million used tyres, compared to 1.4 million in 2000, the year in which the ban on imports of 
used and retreaded tyres was first enacted (Portaria SECE X 8/2000).  The Panel also observed that the total 
number of retreaded tyres imported annually to Brazil, fro m all sources, was 2-3 million prior to the Import Ban.  
Thus, according to the Panel, in 2005, the imports of used tyres were approximately three times the amount of 
retreaded and used tyres combined that were imported annually prior to the Import Ban. ( Ibid., paras. 7.301 and 
7.302) 
465Ibid., para. 7.306. 
466European Communities' appellant's submission, para. 357. 
467Ibid.  
468Ibid., para. 360. 
469Ibid., para. 363.  WT/DS332/AB/R 
 Page 97 
 
 
246. As we explained above, the analysis of whet her the application of a measure results in 
arbitrary or unjustifiable discrimination should focus on the cause or rationale given for the 
discrimination.470  For Brazil, the fact that Brazilian retreaders are able to use imported casings is the 
result of the decisions of the Brazilian administra tive authorities to comply with court injunctions.471  
We observe that this explanation bears no relati onship to the objective of the Import Ban—reducing 
exposure to the risks arising from the accumulation of  waste tyres to the maximum extent possible.  
The imports of used tyres through court injunctio ns even go against the objective pursued by the 
Import Ban.  As we indicated above, there is arb itrary or unjustifiable discrimination, within the 
meaning of the chapeau of Article XX, when a Me mber seeks to justify the discrimination resulting 
from the application of its measure by a rationale that bears no relationship to the accomplishment of 
the objective that falls within the purview of one of the paragraphs of Article XX, or goes against this 
objective.  Accordingly, we  find  that the imports of used tyres through court injunctions have 
resulted in the Import Ban being applied in a ma nner that constitutes arbitrary or unjustifiable 
discrimination. 
247. The Panel approached the question of whether the imports of used tyres through court 
injunctions result in unjustifiable discriminati on in the same manner as it did with the MERCOSUR 
exemption.  We explained above why we are of the view that this quantitative approach—according 
to which discrimination would be characteri zed as unjustifiable only if imports under the 
MERCOSUR exemption take place in such amounts that the achievement of the objective of the 
measure at issue would be "significantly undermined"472—is flawed.473  Accordingly, we  reverse  the 
Panel's findings, in paragraphs 7. 296 and 7.306 of the Panel Report, that the imports of used tyres 
through court injunctions have resulted in the Import Ban being applied in a manner that constitutes 
unjustifiable discrimination only to the extent that  such imports have taken place in volumes that 
significantly undermine the achievement of the objec tive of the Import Ban.  Furthermore, for the 
same reasons as those explained in paragraph 232, we  reverse  the Panel's finding, in paragraph 7.294 
of the Panel Report, that the imports of used tyres under court injunctions have not resulted in 
arbitrary discrimination to the extent that such im ports are not the result of "capricious" or "random" 
action.  
                                                      
470Supra , Section VI.A.1. 
471See Panel Report, paras. 7.292 and 7.293;  see also Brazil's appellee's submission, para. 245. 
472Panel Report, para. 7.287 (as regards the MERCOSUR exemption);  see also para. 7.296 (with 
respect to the imports of used tyres through court injunctions). 
473Supra , Section VI.A.1. WT/DS332/AB/R 
Page 98  
 
2. Imports of Used Tyres and Disguised  Restriction on International Trade
 
248. The Panel found that, "since imports of used tyres take place in significant amounts under 
court injunctions to the benefit of the domestic re treading industry, the [Impor t Ban] is being applied 
in a manner that constitutes a disguised restriction on international trade."474  The Panel reasoned that 
the restriction on international trade inherent in th e Import Ban has operated to  the benefit of domestic 
retreaders, because "[t]he granting of court injunc tions for the importation of used tyres has ... in 
effect meant that ... domestic retreaders have been ab le to continue to bene fit from the importation of 
used tyres as material for their own activity in significant amounts, while their competitors from non-
MERCOSUR countries have been kept out of the Brazilian market."475 
249. The European Communities submits that the Pane l erred in finding that the imports of used 
tyres through court injunctions would have resulted in the Import Ban being applied in a manner that 
constitutes a disguised restriction on international trad e only to the extent that these imports are taking 
place in such quantities that they significan tly undermine the objective of the Import Ban.476  T h e  
European Communities refers to the arguments it made regarding the existence of arbitrary or 
unjustifiable discrimination, and reiterates its view  that the Panel's reliance on import volumes for the 
purpose of determining compatibility with the chapeau of Article XX of the GATT 1994 is 
erroneous.477 
250. Brazil argues that the Panel correctly considered the volume of imports of used tyres as part 
of its determination that the Im port Ban was being applied in a ma nner that constituted a disguised 
restriction on international trade, and refers to th e arguments that it made before the Panel in support 
of this position. 
251. The reasoning elaborated by the Panel to reach the challenged finding was the same as that it 
developed in respect of "arbitrary or unjustifiabl e discrimination".  Indeed, the Panel conditioned a 
finding of a disguised restriction on international trade on the existence of imports of used tyres in amounts that would significantly undermine the achievement of the objective of the Import Ban.  We explained above why we consider this reasoning of  the Panel erroneous.  As the challenged finding 
results from the same reasoning that we have found to  be erroneous and have rejected, this finding of 
the Panel cannot stand.  Accordingly, we  reverse  the Panel's finding, in paragraph 7.349 of the Panel 
Report, that the imports of used tyres through cour t injunctions have resulte d in the Import Ban being 
                                                     
 
474Panel Report, para. 7.349. 
475Ibid., para. 7.348. (footnote omitted) 
476Ibid., para. 7.349. 
477European Communities' appellant's submission, para. 367.  WT/DS332/AB/R 
 Page 99 
 
 
applied in a manner that constitutes a disguised restri ction on international trade only to the extent that 
these imports are taking place in such quantities that they significantly undermine the objective of the 
Import Ban. 
252. We found that the MERCOSUR exemption and the imports of used tyres under court 
injunctions have resulted in the Im port Ban being applied in a manner that is inconsistent with the 
chapeau of Article XX of the GATT 1994.  In the light of these findings, we uphold , albeit for 
different reasons, the Panel's findings, in paragraphs 7.357 and 8.1(a)(i) and (ii) of the Panel Report, 
that the Import Ban, found by the Panel to be incons istent with Article XI:1 of the GATT 1994, is not 
justified under Article XX of the GATT 1994.  
 
VII. The European Communities' Claims that th e MERCOSUR Exemption Is Inconsistent 
with Article I:1 and Article XIII:1 of the GATT 1994 
253. Before the Panel, the European Communiti es made separate claims regarding the 
MERCOSUR exemption, namely, that the MERCOSUR exemption was inconsistent with Article I:1 
and Article XIII:1 of the GATT 1994.  Brazil did not contest that the MERCOSUR exemption was 
 prima facie  inconsistent with Articles I:1 and XIII:1,  but claimed that it was justified under 
Articles XX(d) and XXIV of the GATT 1994. 
254. After noting that the MERCOSUR exemption and the Import Ban have the same legal basis, 
namely, Article 40 of Portaria SECEX 14/2004 478, the Panel emphasized that, under Article 11 of the 
DSU, "it was required to address only those issues th at are necessary for the resolution of the matter 
between the parties."479  The Panel recalled its earlier findings that the Import Ban was inconsistent 
with Article XI:1 and not justifie d under Article XX(b).  It then de cided to exercise judicial economy 
in respect of the European Communities' separ ate claims that the MERCOSUR exemption was 
inconsistent with Article I:1 and Article X III:1, and not justified under Articles XX(d) or 
Article XXIV of the GATT 1994.  According to the Panel, the MERCOSUR exemption derives from 
and exists only in relation to the Import Ban.  The Panel reasoned that, as it had already found that the 
Import Ban was inconsistent with the requireme nts of the GATT 1994, it was unnecessary to examine 
the European Communities' separate clai ms regarding the MERCOSUR exemption.480 
                                                      
478See Panel Report, para. 7.453. 
479Ibid., para. 7.454 (referring to Appellate Body Report, US – Wool Shirts and Blouses , p. 18, DSR 
1996:I, 323, at 339). 
480Ibid., para. 7.455. WT/DS332/AB/R 
Page 100  
 
255. On appeal, the European Comm unities requests that we reverse the Panel's decision to 
exercise judicial economy in relation to its separ ate claims regarding the MERCOSUR exemption.  
The European Communities also re quests us to complete the legal analysis and find that the 
MERCOSUR exemption is inconsistent with Ar ticles I:1 and XIII:1, and not justified under 
Article XX(d) or Article XXIV of the GATT 1994.  This request, however , is conditioned upon our 
upholding the Panel's finding that the MERCOSUR exemption does not result in the Import Ban 
being applied inconsistently with the requir ements of the chapeau of Article XX.   
256. As we have found that the MERCOSUR exemp tion results in the Import Ban being applied 
inconsistently with the chapeau of Article XX,  the condition on which the European Communities' 
request is predicated has not been fulfilled.  It is therefore not necessary for us to rule on the European 
Communities' conditional appeal.  Accordingly, we do not examine the European Communities' 
conditional appeal and make no fi nding in relation to its separate claims that the MERCOSUR 
exemption is inconsistent with Article I:1 and Article XIII:1 of  the GATT 1994, and not justified 
under Article XX(d) or Article XXIV of the GATT 1994. 
257. Having said that, we observe that it might have  been appropriate for the Panel to address the 
European Communities' separate claims that the MERCOSUR exemption was inconsistent with 
Article I:1 and Article XIII:1.  We have previously  indicated that the principle of judicial economy 
"allows a panel to refrain from making multiple findi ngs that the same measure is inconsistent with 
various provisions when a single, or a certain numbe r of findings of inconsistency, would suffice to 
resolve the dispute"
481, and it seems that the Panel assumed this  to be the case in the present dispute.  
However, the Panel found that the MERCOSUR exemp tion resulted in the Import Ban being applied  
consistently  with the requirements of the chapeau of Artic le XX.  In view of this finding, we must 
acknowledge that we have difficulty seeing how the Pa nel could have been justified in not addressing 
the separate claims of inconsistency under Article I:1 and Article XIII:1 directed at the MERCOSUR 
exemption.  We emphasize that panels must be mindful, when applying the principle of judicial 
economy, that the aim of the dispute settlement m echanism under Article 3.7 of the DSU is to secure 
a positive solution to the dispute.  Therefore, a panel' s discretion to decline to rule on different claims 
of inconsistency adduced in relation to the same me asure is limited by its duty to make findings that 
will allow the DSB to make sufficiently precise re commendations and rulings 'in order to ensure 
effective resolution of disputes to the benefit of all Members.'"482  
                                                      
481Appellate Body Report, Canada – Wheat Exports and Grain Imports , para. 133. 
482Appellate Body Report, Australia – Salmon , para. 223.  WT/DS332/AB/R 
 Page 101 
 
 
VIII.  Findings and Conclusions 
258. For the reasons set out in this Report, the Appellate Body: 
(a) with respect to the analysis of the necess ity of the Import Ban under Article XX(b) of 
the GATT 1994: 
(i) upholds  the Panel's finding, in paragraph 7.215 of the Panel Report, that the 
Import Ban can be considered "necessary" within the meaning of Article XX(b) and is thus provisionall y justified under that provision;  and 
(ii) finds
 that the Panel did not breach its duty under Article 11 of the DSU to 
make an objective assessment of the facts; 
(b) with respect to the analysis under the chapeau of Article XX of the GATT 1994: 
(i) reverses  the Panel's findings, in paragraphs  7.287, 7.354, and 7.355 of the 
Panel Report, that the MERCOSUR exemption would result in the Import 
Ban being applied in a manner that constitutes unjustifiable discrimination 
and a disguised restriction on international trade only to the extent that it results in volumes of imports of re treaded tyres that would significantly 
undermine the achievement of the objective of the Import Ban; 
(ii) reverses
 the Panel's findings, in paragr aphs 7.281 and 7.289 of the Panel 
Report, that the MERCOSUR exemp tion has not resulted in arbitrary 
discrimination;  also reverses  the Panel's findings, in paragraphs 7.288 and 
7.289 of the Panel Report, that the MERCOSUR exemption has not resulted in unjustifiable discrimination;  and finds
, instead, that the MERCOSUR 
exemption has resulted in the Import Ban being applied in a manner that 
constitutes arbitrary or unjustifiable discr imination within the meaning of the 
chapeau of Article XX; 
(iii) reverses  the Panel's findings, in paragraphs  7.296, 7.306, 7.349, and 7.355 of 
the Panel Report, that the imports of used tyres under court injunctions have 
resulted in the Import Ban being a pplied in a manner that constitutes 
unjustifiable discrimination and a disgui sed restriction on international trade 
only to the extent that such imports  have taken place in volumes that 
significantly undermine the achievement of the objective of the Import Ban; WT/DS332/AB/R 
Page 102  
 
(iv) reverses
 the Panel's finding, in paragraph 7.294 of the Panel Report, that the 
imports of used tyres under court inj unctions have not resulted in arbitrary 
discrimination;  and finds , instead, that the imports of used tyres under court 
injunctions have resulted in the Import Ban being applied in a manner that constitutes arbitrary or unjustifiable discr imination within the meaning of the 
chapeau of Article XX;  and 
(c) with respect to Article XX of the GATT 1994, upholds
, albeit for different reasons, 
the Panel's findings, in paragraphs 7.357 a nd 8.1(a)(i) and (ii) of the Panel Report, 
that the Import Ban is not justified under Article XX of the GATT 1994;  and 
(d) with respect to the European Communities ' claims that the MERCOSUR exemption is 
inconsistent with Article I:1 and Article XIII:1 of the GATT 1994, finds  that the 
condition on which the European Communities' appeal is predicated is not satisfied, 
and therefore does not consider it. 
259. The Appellate Body recommends that the DSB request Brazil to bring its measure,  
found in this Report, and in the Panel Report as modifi ed by this Report, to be inconsistent with the  
GATT 1994, into conformity with its obligations under that Agreement.  WT/DS332/AB/R 
 Page 103 
 
 
 
Signed in the original in Geneva this 16th day of November 2007 by:  
 
    
_________________________ 
Georges Abi-Saab 
Presiding Member 
 
 
 
  
 _________________________ _________________________ 
 Luiz Olavo Baptista  Yasuhei Taniguchi 
 Member Member 
 
 WT/DS332/AB/R 
Page 104  
 
ANNEX I 
 
 
WORLD TRADE  
ORGANIZATION  WT/DS332/9 
3 September 2007 
 (07-3724) 
 Original:   English 
  
BRAZIL – MEASURES AFFECTING IMPORTS OF RETREADED TYRES 
 
Notification of an Appeal by the European Communities
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 3 September 2007, from the Delegation of the European Commission, is being circulated to Members.  
_______________ 
 
 1. Pursuant to Article 16.4 and Article 17 of the DSU and to Rule 20.1 of the Working 
Procedures for Appellate Review, the European Co mmunities submits its Notice of Appeal on certain 
issues of law covered in the Report of the Panel on Brazil – Measures Affecti ng Imports of Retreaded 
Tyres
1 and certain legal interpretati ons developed by the Panel. 
 
2. The European Communities seeks review by the Appellate Body of the following aspects of 
the Report of the Panel: 
(a) The Panel's finding that the import ban on retreaded tyres was necessary within the 
meaning of Article XX(b) of the GATT.  The Panel's finding and corresponding 
reasoning are contained in paragraphs 7.103 to 7.216 of the Panel Report.  The EC 
appeals this finding notably because: 
- in assessing the contribution of the measure to the protection of human, 
animal and plant life and health, the Panel merely assesses whether the ban is capable of making a potential contribution to its stated objectives.  This 
reasoning is inconsistent with Article  XX(b) of the GATT.  Moreover, in 
reaching its conclusion regarding the pot ential contribution of the ban, the 
Panel also fails to make an objective assessment of the matter before it, including of the facts of the case, as re quired by Article 11 of the DSU, and 
effectively shifts the burden of proof to the EC;  
                                                     
 
1 WT/DS332/R, circulated on 12 June 2007.  WT/DS332/AB/R 
 Page 105 
 
 
- in assessing the reasonably available a lternative measures, the Panel wrongly 
excludes some of the alternatives propo sed by the European Communities, on 
the basis that those alternatives are re lated to the manner in which the import 
ban is implemented in practice , that they are not necessarily readily available, 
that they do not avoid the waste tyres arising specifically from imported 
retreaded tyres, that they already exist in  Brazil, or that they are individually 
capable of disposing only of a small number of waste tyres. Moreover, the Panel has ignored important facts and arguments presented by the European Communities, has referred to the evid ence submitted by the parties in a 
selective and distorted manner, and has e ffectively shifted the burden of proof 
to the EC.  These findings are inconsistent with Article XX(b) of the GATT 
and with the Panel’s duty to make an objective assessment of the matter before it, including of the facts of the case, as required by Article 11 of the DSU; 
- contrary to Article XX (b) of the GATT, the Panel has erred by not carrying 
out a process of weighing and balancing the relevant factors and elements 
(objective pursued, trade-restrictiven ess of the measure, contribution and 
alternatives); 
(b) the Panel’s finding that the exemption, from the import ban and other challenged 
measures, of imports of retreaded tyres from other Mercosur countries does not constitute arbitrary or unjustifiable discrim ination (paragraphs 7.270 to 7.289 of the 
Panel Report).  This finding is inconsistent  with the chapeau of Article XX of the 
GATT; 
(c) the Panel’s finding that the imports of  used tyres do not constitute arbitrary 
discrimination and that they constitute unj ustified discrimination only to the extent 
that they significantly undermine the obj ectives of the ban (paragraphs 7.292 to 
7.294, 7.296 and 7.306 of the Panel Report).  This finding is inconsistent with the 
chapeau of Article XX of the GATT; 
(d) the Panel’s finding that the Mercosur exemption does not constitute a disguised 
restriction on international trade, and that  imports of used tyres would constitute a 
disguised restriction only to the extent that they significantly undermine the objectives of the ban (paragraphs 7.347 to 7.35 5 of the Panel Report).  This finding is 
inconsistent with the chapeau of Article XX of the GATT; 
(e) the Panel's decision to exercise judicial economy with respect to the European 
Communities' claims under Articles XIII:1 a nd I:1 of the GATT (paragraphs 7.453 to 
7.456 and 8.2 of the Panel Report).  Si nce the Panel found that the Mercosur 
exemption is not incompatible with the chapeau of Article XX GATT, a separate 
finding on the compatibility of this exemption with Articles XIII:1 and I:1 GATT 
would have been necessary to secure a positiv e resolution of the dispute, as required 
by Articles 3.3, 3.4, 3.7 and 11 of the DSU.  The European Communities therefore 
asks the Appellate Body to find that the Me rcosur exemption is incompatible with 
Articles XIII:1 and I:1 of the GATT, and is no t justified either by Article XXIV or by 
Article XX(d) of the GATT. 
 
__________