WORLD TRADE  
ORGANIZATION  WT/DS332/R 
12 June 2007 
 (07-2358) 
 Original:   English 
  
 
     
 
    
 
BRAZIL – MEASURES AFFECTING IMPORTS OF 
RETREADED TYRES 
 
 
 
 
  
Report of the Panel 
  
 
    
 
    
   WT/DS332/R 
 Page i 
 
 
  TABLE OF CONTENTS 
 
Page  
  
I.
 INTRODUCTION ................................................................................................................... .1 
A. COMPLAINT OF THE EUROPEAN COMMUNITIES ..........................................................................1  
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL ..................................................................1  
C. PANEL PROCEEDINGS ..................................................................................................................1  
II. FACTUAL ASPECTS ..............................................................................................................2  
A. PRODUCTS AT ISSUE ....................................................................................................................2  
B. MEASURES AT ISSUE ...................................................................................................................3  
1. The Import prohibitio n on retreaded tyres ............................................................................4  
2. Fines on importation, marketing, transportation, storage, keeping or 
warehousing of retreaded tyres ...............................................................................................4  
3. State Law restrictions on the marketing of imported retreaded tyres.................................5  
4. Exemption of MERCOSUR countries from the import ban and the fines..........................6  
III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES................7  
IV. ARGUMENTS OF THE PARTIES ........................................................................................8  
A. THE BAN ON THE IMPORTATION OF RETREADED TYRES .............................................................8  
1. Article XI:I of GATT 1994...................................................................................................... .8 
2. Article XX of GATT 1994 ........................................................................................................ 9 
(a) Paragraph b) of  Article XX..................................................................................................... ..10 
(i) Introduction ................................................................................................................... ...........10  
(ii) To protect human, animal, or plant life or health.....................................................................11  
Introduc tion ................................................................................................................... .......................... 11  
Policy obje ctive ............................................................................................................... ................ 11  
Factual desc ription............................................................................................................ ............... 13  
Mosquito-borne  diseases ........................................................................................................ ................. 14  
The release of toxic chemicals and he avy metals into the environment.................................................. 17  
(iii) Necessity of the measure....................................................................................................... ....18  
Importance of the interests protected by the measure ........................................................................... .. 19 
Contribution of the measur e to the end pursued................................................................................. ..... 19  
Whether the ban reduces the accumula tion of waste tyre s in Brazil................................................ 21  
Data on retreading activities in  Brazil ........................................................................................ .2 2 
Suitability of Brazilian used  tyres for re treading......................................................................... 25  
Retreading rate of  Brazilian tyres............................................................................................. ... 28 
The INMETRO technical  note 83/2000 ...................................................................................... 31  WT/DS332/R 
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  Imports of used tyres as a re sult of domestic court rulings ......................................................... 33  
Whether the reduction of the accumulation of waste tyres can reduce risks to human life 
and h ealth..................................................................................................................... .................... 36  
In relation to dengue.......................................................................................................... .......... 38  
In relation to tyre fires...................................................................................................... ........... 40  
Contribution of the import ban on retreaded ty res for commercial vehicles and aircraft ................ 41  
Quantification of the contri bution............................................................................................. ....... 43  
Impact of the measure on  internatio nal trade ................................................................................... ....... 45  
(iv) Existence of reasonably av ailable alternatives.........................................................................47  
Burden of  proof ................................................................................................................ ....................... 47  
Measures presented as alternatives............................................................................................. ............. 49  
Measures to reduce the nu mber of waste tyres ................................................................................ 49  
Measures to ensure that Brazilian ty res remain retreadable after use.......................................... 50  
Measures against imports  of used tyres....................................................................................... 51  
Waste manageme nt measures ...................................................................................................... .... 52 
Controlled stockpilin g and land filling......................................................................................... 52 
Energy recovery and wa ste co-incin eration................................................................................. 55  
Activities of energy recovery and waste co-incineration ........................................................ 55  
Safety of energy recovery a nd waste co-inc ineration ............................................................. 57  
Emissions of dioxins, furans and other persistent organic pollutants (POPs) ......................... 58  
Material r ecycling............................................................................................................. ........... 61  
Other measures ................................................................................................................. ............... 64  
Resolution CONAMA 258/1999 and the Rodando Limpo programmes in various 
Brazilian states ............................................................................................................... ............. 64  
Imposition of Fines............................................................................................................ .......... 66  
Combination of various disposal measures within a waste tyre management 
programme ...................................................................................................................... ............ 67  
Alternative measures and chos en level of protection....................................................................... 68  
Other issues ................................................................................................................... .......................... 70  
The European Communities' mana gement of wa ste tyres ............................................................... 70  
Economic and environmental costs of disposal of waste tyres ........................................................ 73  
(v) Conclusion on Article XX(b).................................................................................................... .74 
(b) Paragraph g) of  Article XX..................................................................................................... ..75 
(c) Chapeau of Article XX .......................................................................................................... ...78 
(i) A means of arbitrary or unjustifiable discrimination between countries where the 
same conditions prevail ........................................................................................................ ....78  
The MERCOSUR exemption......................................................................................................... ......... 79  
Tyres retreaded domestically................................................................................................... ................ 83  
(ii) Disguised restriction on international trade.............................................................................85   WT/DS332/R 
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  Objective of the import ban.................................................................................................... ................. 85  
Effects of th e import ban...................................................................................................... ................... 87  
In relation to  new tyres ....................................................................................................... ............. 87  
In relation to used tyres...................................................................................................... .............. 89  
B. THE FINES ON IMPORTATION , MARKETING , TRANSPORTATION , STORAGE , KEEPING OR 
WAREHOUSING OF IMPORTED RETREADED TYRES ....................................................................90  
C. RESTRICTIONS ON THE MARKETING OF IMPORTED RETREADED TYRES AT STATE 
LEVEL ............................................................................................................................... .........91  
D. THE MERCOSUR  EXEMPTION .................................................................................................95  
1. Articles XIII:1 and I:1 of GATT 1994 ..................................................................................95  
2. Article XXIV ................................................................................................................... ........96  
(a) Whether MERCOSUR meets the requirements of Article XXIV ............................................97  
(i) The notification requirement under Article XXIV:7 .................................................................98  
(ii) The requirements of Article XXIV:8(a) and 5(a) ......................................................................99  
(b) Whether the formation of the customs union would have been prevented if brazil 
were not allowed to introduce the measure at issue................................................................102  
3. Article XX(d) .................................................................................................................. .......107  
4. The Enabling Clause............................................................................................................ .113 
V. ARGUMENTS OF THIRD PARTIES................................................................................114  
A. ARGENTINA 'S ORAL STATEMENT ............................................................................................114  
1. Conditions for the application of Article XX(b).................................................................114  
(a) Policy for the protection of human, animal or plant life or health..........................................114  
(b) The measure is "necessary" to protect human health and the environment ............................115  
2. MERCOSUR and Article XXIV..........................................................................................116  
B. AUSTRALIA 'S ORAL STATEMENT .............................................................................................116  
C. CHINA 'S WRITTEN SUBMISSION AND ORAL STATEMENT .........................................................117  
1. The product .................................................................................................................... .......117  
2. Issues under Article XX(b)...................................................................................................11 8 
3. The MERCOSUR exemption...............................................................................................118  
4. Conclusion ..................................................................................................................... ........119  
D. CUBA'S ORAL STATEMENT ......................................................................................................120  
E. JAPAN 'S WRITTEN SUBMISSION AND ORAL STATEMENT ..........................................................121  
1. Inconsistency of Brazil's import ban on retreaded tyres with Article XI:1.....................121  
2. Inconsistency of the fines on importatio n, marketing, transportation, storage, 
keeping or warehousing of imported retrea ded tyres with Article XI:1 or, in the 
alternative, Article III:4 ..................................................................................................... ..121  
3. Inconsistency of the restriction on the ma rketing for imported retreaded tyres at 
state level with Article III:4 ................................................................................................. 122 WT/DS332/R 
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  4.
 Applicability of Article XX to Brazil's measures on retreaded tyres...............................122  
(a) Applicability of Article XX(b)................................................................................................1 22 
(b) Applicability of Article XX(d)................................................................................................1 24 
(c) Applicability of the chapeau of Article XX............................................................................124  
5. Brazil's limited exemption of MERCOSUR countries ......................................................125  
(a) Inconsistency of the MERCOSUR exemp tion with Articles XIII:1 and I:1...........................125  
(b) Brazil's limited exemption of MERCOSUR count ries is not justified by Article XXIV........125  
(c) Brazil's limited exemption for MERCOSUR countries is not justified by 
Article XX(d).................................................................................................................. ........127  
6. Conclusion ..................................................................................................................... ........128  
F. KOREA 'S WRITTEN SUBMISSION AND ORAL STATEMENT ........................................................128  
1. Brazil's import ban on retreaded tyres cannot be justified under Article XX(b) ...........128  
2. Brazil's fines on importation, marketing, transportation, storage, keeping or 
warehousing of imported retreaded ty res cannot be justified under Articles 
XX(b) or XX(d) ................................................................................................................. ....129  
3. The State of Rio Grande do Sul's prohibition on marketing of imported 
retreaded tyres cannot be justified under Article XX(b) ..................................................130  
4. The MERCOSUR exemption from the import  ban and fines cannot be justified 
under Articles XXIV:5 or XX(d) .........................................................................................130  
5. Necessity requirement under Article XX(b).......................................................................131  
6. Chapeau of Article XX .........................................................................................................1 31 
7. Conclusion ..................................................................................................................... ........132  
G. MEXICO 'S ORAL STATEMENT ..................................................................................................132  
H. WRITTEN SUBMISSION AND ORAL STATEMENT OF THE SEPARATE CUSTOMS 
TERRITORY OF TAIWAN , PENGHU , KINMEN AND MATSU .......................................................132  
1. Article XXIV ................................................................................................................... ......132  
2. Article XX chapeau............................................................................................................. ..135  
3. Relationship between Article XXIV and Article XX Chapeau.........................................136  
I. THAILAND 'S ORAL STATEMENT ...............................................................................................137  
J. UNITED STATES ' WRITTEN SUBMISSION AND ORAL STATEMENT ............................................137  
1. Legal analysis of Article XX(b)............................................................................................137  
2. Brazil's reliance on Arti cle XXIV is misplaced ..................................................................139  
3. The Amicus Curiae submission of Humane Society International....................................140  
VI. INTERIM REVIEW.............................................................................................................140  
A. BRAZIL 'S COMMENTS ON SECTION VII.A.2( A) OF THE INTERIM REPORT ...............................141  
1. Risks from the dispos al of waste tyres ................................................................................141  
2. Contribution of the measu re to the objective .....................................................................141  
3. Preliminary issue:  retreaded tyres .....................................................................................142   WT/DS332/R 
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  4. Mosquito-borne diseases ......................................................................................................14 2 
5. Alternative measures ........................................................................................................... .142 
B. BRAZIL 'S COMMENTS ON SECTION VII.A.2( B) OF THE INTERIM REPORT ...............................142  
VII. FINDINGS....................................................................................................................... ......143  
A. THE BAN ON THE IMPORTATI ON OF RETREADED TYRES ..........................................................143  
1. Does Brazil impose an import prohibitio n on retreaded tyres inconsistent with 
Article XI:1 of GATT 1994? ................................................................................................144  
(a) Portaria SECEX 14/2004 ........................................................................................................1 44 
(b) Other measures ................................................................................................................. ......146  
(i) Portaria DECEX 8/1991.........................................................................................................1 48 
(ii) Resolution CONAMA 23/1996................................................................................................149  
(c) Conclusion ..................................................................................................................... .........150  
2. Is Brazil's import prohibition justified under Article XX of GATT 1994? .....................150  
(a) Is Brazil's import prohibition justified under paragraph (b) of Article XX?...........................151  
(i) "To protect human, animal or plant life or health" ................................................................151  
Preliminar y issu es ............................................................................................................. .................... 152  
Risks posed to human life or health by  the accumulation of  waste tyres .............................................. 154  
Mosquito-borne  diseases ........................................................................................................ ... 155  
Toxic emissions fr om tyre fires................................................................................................ .1 6 0 
Risks posed to animal or plant life or health arisin g from the accumulation of waste tyres ................. 163  
To protect human, animal or plant life or health ............................................................................... .... 166  
(ii) Is the measure "necessary" within the meaning of paragraph (b) Article XX? ......................168  
Importance of the objective pursued ............................................................................................ ......... 169  
Trade-restrictiveness of the measure........................................................................................... .......... 171  
Contribution of the meas ure to the objective................................................................................... ...... 171  
Contribution of the import ban to the reduc tion of the number of waste tyres .............................. 173  
Substitution of new tyres for im ported retreade d tyres ......................................................... 174  
Substitution of retreaded tyres made from domestic used tyres for imported 
retreaded tyres................................................................................................................ ....... 175  
Contribution of the import ban to the reduction of the risks to human, animal and plant 
life and health ................................................................................................................ ................ 180  
Conclusion ..................................................................................................................... ................ 181  
Availability of alte rnative measures........................................................................................... ........... 181  
Approach by the Panel.......................................................................................................... ......... 181  
Alternative measures identified by  the European Communities.................................................... 184  
Reasonable availability of altern ative measures to Brazil ............................................................. 184  
Measures to reduce the numb er of waste tyres.......................................................................... 184  
Measures to improve the mana gement of wast e tyres ............................................................... 186  WT/DS332/R 
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  Resolution CONAMA 258/1999 and "Paraná Rodando Limpo".......................................... 186  
Disposal methods............................................................................................................... ... 188  
Conclusion on the nece ssity of the measure..................................................................................... ..... 199  
(b) Is the measure applied consistently w ith the requirements of the chapeau of 
Article XX?.................................................................................................................... .........201  
(i) General considerations......................................................................................................... ..201  
(ii) Arbitrary or unjustifiable discrimination................................................................................203  
Is the import ban on retreaded tyres applied in  a manner that results in discrimination?...................... 203  
Does discrimination arise from the exemption of imports of remoulded tyres originating 
in MERCOSUR countries from the import ban on retreaded tyres (the "MERCOSUR 
exemption")?................................................................................................................... ............... 204  
Does discrimination arise from the importation of  used tyres through c ourt injunctions? ............ 205  
Does discrimination arise from the absence of  comparable measures in relation to new 
tyres?......................................................................................................................... ..................... 206  
Retreading of new tyres co nsumed in Brazil............................................................................. 206  
Retreadability of new tyre s sold in Brazil ................................................................................. 207  
Conclusion ..................................................................................................................... ................ 207  
Is the discrimination in the application of the measure "arbitrary" and/or  "unjustifiable"? .................. 207  
Approach of the Panel.......................................................................................................... .......... 207  
Is the discrimination arising from th e MERCOSUR exemptio n "arbitrary" or 
"unjustifia ble"? ............................................................................................................... ............... 209  
Is the discrimination arising from the importa tion of used tyres through court injunctions 
"arbitrary" or "u njustifia ble"? ................................................................................................ ........ 214  
Does the discrimination occur between countri es where the same conditions prevail? ........................ 218  
(iii) Is the measure applied in a manner that  constitutes a disguised restriction on 
international trade? ........................................................................................................... .....219  
Approach by the Panel .......................................................................................................... ................ 219  
Assessment by the Panel ........................................................................................................ ............... 221  
Imports of used tyres thro ugh court inju nctions ............................................................................ 226  
The MERCOSUR exemption ........................................................................................................ 2 27 
(c) Overall conclusion ............................................................................................................. .....228  
B. FINES ON IMPORTATION , MARKETING , TRANSPORTATION , STORAGE , KEEPING OR 
WAREHOUSING OF RETREADED TYRES ....................................................................................228  
1. Preliminary issue:  fines as  an enforcement measure........................................................228  
2. Are the fines inconsistent with  Article XI of GATT 1994? ...............................................230  
3. Are the fines justified under Article XX of GATT 1994?..................................................231  
(a) Article XX(b).................................................................................................................. ........231  
(b) Article XX(d).................................................................................................................. ........231  
4. Conclusion ..................................................................................................................... ........233  
C. STATE LAW RESTRICTIONS ON THE MARKETING OF IMPORTED RETREADED TYRES ...............233   WT/DS332/R 
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  1. Preliminar y issues ............................................................................................................. ....233  
(a) Measures within the scope of the Panel's terms of reference..................................................233  
(b) State measures as a "measure"................................................................................................23 5 
(c) Relationship between the state measu res and the federal measures .......................................235  
2. Are the state measures inconsistent with Article III:4 of GATT 1994?...........................237  
(a) Marketing prohibition .......................................................................................................... ...237  
(i) Like products.................................................................................................................. .........238  
(ii) A law, regulation or requirement affecting the internal sale..................................................238  
(iii) Less favourable treatment...................................................................................................... .239 
(b) Disposal obligations........................................................................................................... .....239  
(i) Like products.................................................................................................................. .........241  
(ii) A law, regulation or requirement affecting the internal sale..................................................241  
(iii) Less favourable treatment...................................................................................................... .241 
(c) Conclusion ..................................................................................................................... .........241  
3. Are the state measures justified unde r Article XX(b) of GATT 1994?............................242  
4. Conclusion ..................................................................................................................... ........243  
D. EXEMPTION OF MERCOSUR  COUNTRIES FROM THE IMPORT BAN AND THE FINES ...............243  
VIII.  CONCLUSIONS AND RECOMMENDATIONS..............................................................245  
 
ANNEX 1 RESPONSES OF PARTIES TO QUESTIONS FROM THE PANEL .......................247  
I. FOLLOWING THE FIRST SUBSTANTIV E MEETING OF THE PANEL.................247  
A. THE PRODUCTS AT ISSUE ........................................................................................................247  
B. RETREADING ACTIVITIES IN BRAZIL .......................................................................................256  
C. THE IMPORT PROHIBITION .......................................................................................................263  
D. ARTICLE XX( B) DEFENCE AND THE EXISTENCE OF ALTERNATIVE MEASURES .......................265  
E. MEASURES AT STATE LEVEL ...................................................................................................278  
F. FINES ............................................................................................................................... ........281  
G. MERCOSUR  EXEMPTIONS .....................................................................................................282  
H. REQUEST FOR SPECIFIC INFORMATION ....................................................................................291  
II. FOLLOWING THE SECOND SUBSTANT IVE MEETING OF THE PANEL ............291  
A. GENERAL ............................................................................................................................... ..291  
B. TRADE DATA ...........................................................................................................................306  
C. IMPORT BAN ............................................................................................................................324  
D. STATE MEASURES ....................................................................................................................358  
E. EXEMPTIONS ...........................................................................................................................358  WT/DS332/R 
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  ANNEX 2 RESPONSES OF BRAZIL TO QUESTIONS FROM THE EUROPEAN 
COMMUNITIES FOLLOWING THE FI RST SUBSTANTIVE MEETING ................365
 
ANNEX 3 RESPONSES OF THIRD PARTIES TO QUESTIONS FROM THE PANEL 
FOLLOWING THE FIRST SU BTANTIVE MEETING..................................................372  
  WT/DS332/R 
 Page ix 
 
 
  TABLE OF CASES CITED IN THIS REPORT  
 
 
Short Title Full Case Title and Citation 
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Me asures on Imports of 
Footwear ("Argentina – Footwear (EC) "), WT/DS121/AB/R, adopted 
12 January 2000, DSR 2000:I, 515. 
Argentina – Hides and Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides 
and Import of Finished Leather , WT/DS155/R and Corr.1, adopted 
16 February 2001, DSR 2001:V, 1779 
Australia – Salmon  Appellate Body Report, Australia – Measures Af fecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 
3327 
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the 
Automotive Industry ("Canada – Autos "), WT/DS139/AB/R, 
WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, 2985. 
Canada – Dairy Appellate Body Report, Canada – Measures Affecting the Importation of 
Milk and the Exportation of Dairy Products ("Canada – Dairy "), 
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 Panel Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/R, adopted 27 September 2004, 
upheld by Appellate Body Repo rt, WT/DS276/AB/R, DSR 2004:VI, 2817 
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard 
Measures Relating to Certain Agricultural Products ("Chile – Price Band 
System "), WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, 
3045. 
Dominican Republic – Import and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Sale of Cigarettes , WT/DS302/AB/R , adopted 
19 May 2005. 
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, modified by Appell ate Body Report, WT/DS135/AB/R, 
DSR 2001:VIII, 3305 
EC – Bananas III Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 
25 September 1997, DSR 1997:II, 591 
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 WT/DS332/R 
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  Short Title Full Case Title and Citation 
EC – Hormones (US)  
(Article 22.6 – EC)  Decision by the Arbitrators, European Communities – Measures 
Concerning Meat and Meat Products (H ormones), Original Complaint by 
the United States – Recourse to Ar bitration by the European Communities 
under Article 22.6 of the DSU , WT/DS26/ARB, 12 July 1999, 
DSR 1999:III, 1105 
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of 
Tariff Preferences to  Developing Countries , WT/DS246/R, adopted 
20 April 2004, modified by Appell ate Body Report, WT/DS/246/AB/R, 
DSR 2004:III, 1009 
EEC – Parts and Components GATT Panel Report, European Economic Community – Regulation on 
Imports of Parts and Components , L/6657, adopted 16 May 1990, 
BISD 37S/132 
India – Autos Panel Report, India – Measures Affecting the Automotive Sector , 
WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 1827 
Korea – Various Measures on Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, 
Chilled and Frozen Beef , WT/DS161/AB/R, WT/D S169/AB/R, adopted 
10 January 2001, DSR 2001:I, 5 
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 
Mexico – Telecoms Panel Report, Mexico – Measures Affecting Telecommunications Services , 
WT/DS204/R, adopted 1 June 2004, DSR 2004:IV, 1537 
Thailand – Cigarettes GATT Panel Report, Thailand – Restrictions on Im portation of and Internal 
Taxes on Cigarettes , DS10/R, adopted 7 November 1990, BISD 37S/200 
Turkey – Textiles Appellate Body Report, Turkey – Restrictions on Imports of Textile and 
Clothing Products ("Turkey – Textiles "), WT/DS34/AB/R, adopted 
19 November 1999, DSR 1999:VI, 2345. 
Turkey – Textiles Panel Report, Turkey – Restrictions on Impor ts of Textile and Clothing 
Products , WT/DS34/R, adopted 19 November  1999, modified by Appellate 
Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363 
US – Carbon Steel Appellate Body Report, United States – Counterva iling Duties on Certain 
Corrosion-Resistant Carbon Stee l Flat Products from Germany ("US – 
Carbon Steel "), 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  
("US – Corrosion-Resistant Steel Sunset Review "), 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, 
adopted 20 April 2005  WT/DS332/R 
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  Short Title Full Case Title and Citation 
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 – Gasoline  Panel Report, United States – Standards for Reformulated and Conventional 
Gasoline , WT/DS2/R, adopted 20 May 1996, modified by Appellate Body 
Report, WT/DS2/AB/R, DSR 1996:I, 29 
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Circular Welded Car bon Quality Line Pipe from Korea , 
WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, 1403 
US – Line Pipe Panel Report, United States – Definitive Safe guard Measures on Imports of 
Circular Welded Carbon Qual ity Line Pipe from Korea , WT/DS202/R, 
adopted 8 March 2002, modified by Appellate Body Report, 
WT/DS202/AB/R, DSR 2002:IV, 1473. 
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 
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 – Taxes on Automobiles  GATT Panel Report, United States – Taxes on Automobiles , DS31/R,  
11 October 1994, unadopted 
US – Tuna (EEC)  GATT Panel Report, United States – Restrictions on Imports of Tuna , 
DS29/R, 16 June 1994, unadopted 
US – Tuna (Mexico)  GATT Panel Report, United States – Restrictions on Imports of Tuna , 
DS21/R, 3 September 1991, unadopted, BISD 39S/155 
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton  ("US – 
Upland Cotton "), WT/DS267/AB/R, adopted 21 March 2005. 
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/R 
Page xii  
 
  ABBREVIATIONS USED IN THIS REPORT  
 
 
ABR Associação Brasileira do Segmento de Reforma 
de Pneus (Brazilian Association of the Retreading Industry)
 
CONAMA Conselho Nacional do Meio Ambiente (National 
Council of the Environment, presided by the Ministry of the Environment) 
DECEX Departamento de Operações de Comércio Exterior 
(Department of Foreign Trade Operations, part of the Ministry of Development, Industry and Foreign Trade) 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing 
the Settlement of Disputes 
EC European Communities GATT 1994 General Agreement on Tariffs and Trade 1994 IBAMA Instituto Brasileiro do Meio Ambiente e dos 
Recursos Naturais Renováveis  (Brazilian Institute of 
the Environment and of Renewable Natural Resources) 
INMETRO Instituto Nacional de Metrologia, Normalização e 
Qualidade Industrial (National Institute for Metrology, Standardisation and Industrial Quality) 
MERCOSUR Mercado Común del Sur (Southern Common 
Market) 
MICT Ministry of Industry, Commerce and Tourism POPs Persistent Organic Pollutants SECEX Secretaria de Comércio Exterior (Secretariat of 
Foreign Trade, part of the Ministry of Development, 
Industry and Foreign Trade) 
TBR Trade Barriers Regulation, Council Regulation (EC) 
No. 3286/94 
UNECE United Nations Economic Commission for Europe  
EPA Environmental Protection Agency (United States) 
WHO World Health Organization 
WTO World Trade Organization  WT/DS332/R 
 Page 1 
 
 
   
I. INTRODUCTION 
A. COMPLAINT OF THE EUROPEAN COMMUNITIES  
1.1 On 20 June 2005, the European Communities requested consultations with Brazil under 
Article XXII:1 of the General Agreement on Tariffs  and Trade 1994 (the "GATT 1994") and Article 4 
of the Understanding on Rules and Procedures Gove rning the Settlement of Disputes (the "DSU") 
regarding Brazil's imposition of me asures that adversely affect exports of retreaded tyres from the 
European Communities to the Brazilian market.1 
1.2 Consultations were held on 20 July 2005.  These consultations have allowed a better 
understanding of the measures at issue and the resp ective positions but have not led to a satisfactory 
resolution of the matter.   
1.3 On 17 November 2005, the European Communities requested the establishment of a panel.  
At its meeting on 28 November 2005, the Dispute Settlement Body ("DSB") deferred the 
establishment of a panel until a second request ha d been made by the European Communities.2   
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL  
1.4 At its meeting on 20 January 2006, the DSB establis hed a panel pursuant to the request of the 
European Communities in document WT/DS332/4,  in accordance with Article 6 of the DSU.3 
1.5 At that meeting, the parties to the dispute agr eed that the panel should have standard terms of 
reference.  The terms of reference are, therefore, the following: 
"To examine, in the light of the relevant provisions of the covered agreements cited 
by the European Communities in document WT/DS332/4, the matter referred to the 
DSB by the European Communiti es in that document, and to  make such findings as 
will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements." 
1.6 On 6 March 2006, the European Communities reque sted the Director-General to compose the 
panel.  On 16 March 2006, the Director-G eneral composed the panel as follows:  
Chairman: Mr Mitsuo Matsushita 
  Members: Mr Donald M. McRae    Mr Chang-Fa Lo  1.7 Argentina, Australia, China, Cuba, Guatemala, Japan, Korea, Mexico, Paraguay, 
Chinese Taipei, Thailand and the United Stat es reserved their third-party rights. 
C. P
ANEL PROCEEDINGS  
1.8 On 22 June 2006, the Panel received an unsolicited amicus curiae  brief from Humane Society 
International.  On 4 July 2006, th e Panel received another unsolicited amicus curiae  brief from a 
                                                      
1 WT/DS332/1 of 23 June 2005.  
2 WT/DS332/4 of 18 November 2005.  
3 WT/DS332/5 of 17 March 2006 and WT/DSB/M/203, p. 13. WT/DS332/R 
Page 2  
 
  group of organizations.
4  At the first substantive meeting, Braz il informed the Panel of its decision to 
include the two amicus curiae  briefs as part of its exhibits.5   
1.9 On 23 June 2006, the Panel received a letter from the Center for International Environmental 
Law ("CIEL"), requesting that the Panel consult with  the parties to consider the possibility of web-
casting the first substantive meeting of the Panel, to be held on 5-7 July 2006.  Parties were invited to 
offer any views they might have in respect of this letter.  In light of the views expressed by the parties, 
the Panel decided that the substantive meeting w ith the parties, as well as the related third-party 
session, would be held in closed sessions in acco rdance with the Working Procedures adopted by the 
Panel at the beginning of the proceedings.   
1.10 The Panel met with the parties on 5-7 July 2006 and on 4 September 2006.  The Panel met 
with third parties on 6 July 2006. 
1.11 The Panel submitted the Interim Report to th e parties on 12 March 2007.  The Panel 
submitted the Final Report to the parties on 23 April 2007. 
II. FACTUAL ASPECTS 
A. PRODUCTS AT ISSUE  
2.1 This dispute concerns retreaded tyres which are produced by reconditioning used tyres by 
stripping the worn tread from a used tyre's skelet on (casing) and replacing it with new material in the 
form of a new tread and, sometimes, new material covering also parts or all of the sidewalls. 
2.2 Retreaded tyres can be produced through a num ber of different methods all encompassed by 
the generic term "retreading."  These methods are:  (i) top-capping, which consists in replacing only 
the tread;  (ii) re-capping, which entails repl acing the tread and part of the sidewall;  and 
(iii) remoulding or "bead to bead" method, which consists of replacing th e tread and the sidewall 
including all or part of the lower area of the tyre.6 
2.3 There are different types of retreaded tyres wh ich correspond to the different types of casings 
used to produce them, namely:  passenger car retr eaded tyres, commercial vehicle retreaded tyres, 
aircraft retreaded tyres and other.  Under interna tional standards, passenger car tyres may be retreaded 
only once.7  By contrast, commercial vehicle and aircraft tyres may be retreaded more than once. 
2.4 Under the Harmonized System nomenclature, retreaded tyres are classified under HS heading 
4012 "Retreaded or used pneumatic tyres of rubber; so lid or cushion tyres, tyre treads and tyre flaps, 
of rubber", and in particular under four sub-headings:  4012.11, which refers to retreaded tyres of a 
kind used on motor cars, including station wagons and racing cars;  4012.12, which includes the kind of retreaded tyres used on buses or lorries;  4012.13, which refers to the kind used on aircraft;  and 
4012.19, which comprises all other types of retreaded  tyres.  Consequently, for international trade 
purposes, retreaded tyres are to be distinguished from  both used tyres and new tyres.  Used tyres are 
                                                     
 
4 The group of organizations was composed of:  Association of Combats against POPs (ACPO);  
Association for the Protection of the Environment Cianorte (APROMAC);  Center for Human Rights and Environment (CEDHA);  Conectas Human Rights;  Global Justice;  Law for a Green Planet Institute;  Center for 
International Environmental Law (CIEL). 
5 See Exhibits BRA-98 and BRA-99. 
6 See UNECE Regulation No. 108 (1998):  Uniform Provisions Concerning the Approval for the 
Production of Retreaded Pneumatic Tyres for Motor Vehicles and their Trailers and UNECE Regulation 
No. 109 (1998):  Uniform Provisions Concerning the Approval for the Production of Retreaded Pneumatic Tyres for Commercial Vehicles and Their Trailers, Exhibits EC-6 and 7 and BRA-2 and 3, para. 2.37. 
7 See UNECE Regulation No. 108 (1998), para. 6.2.  WT/DS332/R 
 Page 3 
 
 
  classified under the HS sub-heading 4012.20, wh ereas new tyres are classified under HS heading 
4011. 
B. MEASURES AT ISSUE8 
2.5 On 17 November 2005, the European Communities requested the establishment of a panel in 
relation to the following measures of Brazil:9 
(a) The imposition of an import ban on retreaded tyres, notably by virtue of Portaria 14 
of 17 November 2004 of the Secretariat of Fo reign Trade of the Brazilian Ministry of 
Development, Industry and Internationa l Commerce (SECEX) that prohibits the 
issuance of import licenses for retreaded tyres. 
(b) The adoption of a set of measures banning the importation of used tyres, which are 
sometimes applied against imports of retreaded tyres.  In a footnote to this paragraph, 
the European Communities identifies the following measures banning the importation 
of used tyres:  Portaria No. 8 of the Department of Foreign Trade Operations 
(DECEX) of 13 May 1991;  Portaria DECEX 18 of 19 July 1992;  Portaria 138-N of the Brazilian Institute of the Environment and of Renewable Resources (IBAMA) of 
22 December 1992;  Portaria 370 of the Mini stry of Industry, Commerce and Tourism 
(MICT) of 28 November 1994;  Interministe rial Portaria 3 of 12 September 1995 of 
the Ministry of Industry, Commerce and Tourism and of the Ministry of the Economy;  Resolution 23 of the National C ouncil of the Environment (CONAMA) of 
12 December 1996,  and CONAMA Re solution 235 of 7 January 1998. 
(c) The imposition, by virtue of Presidentia l Decree 3919 of 14 September 2001, of a 
fine of 400 BRL per unit on the importation, as well as the marketing, transportation, 
storage, or keeping in deposit or warehouses of imported, but not of domestic retreaded tyres. 
(d) The maintenance of measures at the level of Brazilian States which prohibit the sale 
of imported retreaded tyres.  For instance, Law 12.114 of 5 July 2004 of Rio Grande 
do Sul which bans the commercialisation of  used tyres, as which are considered inter 
alia retreaded tyres that have been manufactured outside of Brazil from the casings of 
used tyres and imported into Brazil. 
(e) The exemption of retreaded tyres impo rted from other MERCOSUR countries from 
the import ban by means of Portaria SECEX 14 of 17 November 2004 and from the above-mentioned financial penalties by virt ue of Presidential Decree No. 4592 of 
11 February 2003, in response to the ruling of a MERCOSUR panel established at the 
request of Uruguay. 
2.6 The European Communities also noted that fo r each of the measures referred to above, its 
request also covers any amendments, replacement s, extensions, implementing measures or other 
related measures.   
                                                     
 
8 The text of Brazilian laws and regulations is based on  translations provided by Brazil in its exhibits as 
clarified in light of Brazil's answer to panel question No. 1.  In its answ er to this question, Brazil indicated, inter 
alia, that the Portuguese term " reformados " should be translated as "reconditioned or retreaded tyres", the term 
"recauchutagem " as "recapping", " remoldagem " as "remolding", and " recapagem " as "top-capping". 
9 WT/DS332/4. WT/DS332/R 
Page 4  
 
  1. The Import prohibition on retreaded tyres 
2.7 In its first written submission, the European Communities identifies Article 40 of Portaria 
SECEX 14 of 17 November 2004 ("Port aria SECEX 14/2004") as the current legal basis of the ban on 
the importation of retreaded tyres in Brazil.  Article 40 reads as follows: 
"Article 40 – An import license will not be granted for retreaded 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 proceeding from the MERCOSUR Member States under the Economic Complementation Agreement No. 18. 
Sole paragraph – Imports originating in  and coming from MERCOSUR must comply 
with the technical regulations adopted by  the National Institute for Metrology, 
Standardization and Industrial Quality (IN METRO) for the product in question and 
with the regulations under MERCOSUR rul es of origin and regulations of the 
environmental authoritie
s."10 
2.8 Portaria SECEX 14/2004 was preceded by a numbe r of regulations that previously prohibited 
the importation of retreaded tyres.  These measures are: 
(a) Portaria SECEX 8 of 20 September 2000, the first measure in Brazil explicitly 
banning the importation of "retreaded tyres" classified under heading 4012 of the MERCOSUR Common Nomenclature (NCM); and 
(b) Portaria SECEX 17 of 1 December 2003, which replaced Portaria SECEX 8/2000, 
prohibiting the issuance of licenses for impor ts of retreaded tyres and excluding from 
this prohibition only the remoulded tyres originating in other MERCOSUR countries. 
2.9 Before the importation of retreaded tyres was expressly banned by means of Portaria 
SECEX 8/2000, Brazil adopted several measures dealing with the importation of used goods, 
including used tyres.  The Eur opean Communities indicated in its first written submission that these 
measures included the following:
11 
(a) Portaria DECEX 8 of 13 May 1991, in force in the version of Portaria MICT 370 of 
28 November 1994, which prohibits the importation of used consumer goods, 
including 'used tyres', and 
(b) Resolution CONAMA 23 of 12 December 1996, establishing that inert waste is free 
from import restrictions except for the importation of used tyres, which is therefore prohibited. 
2. Fines on importation, marketing, transportation, storage, keeping or warehousing of 
retreaded tyres 
2.10 On 14 September 2001, through Presidential D ecree 3.919, Brazil amended Decree 3.179 of 
21 September 1999, which provides for the specific sanctions applicable to conduct and activities 
harmful to the environment, and other provisions .  The amendment introduced Article 47-A, which 
subjects the importation as well as the marketing, tr ansportation, storage, keeping or warehousing of 
                                                     
 
10 Exhibit BRA-84. See also Exhibit EC-29.  
11 European Communities' first written submission, footnote 34 to para. 59;  Exhibits EC-31-33.  WT/DS332/R 
 Page 5 
 
 
  imported used and retreaded tyres to a fine of R$400/unit.  Article 1 of Presidential Decree 3.919 
provides: 
"Art. 1. The following article is added to Decree 3.179 of September 21, 1999: 
'Article 47-A.  Importing used or retreaded tyres: Fine of R$ 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 retreaded tyre imported under such conditions. (NR)'"
12 
3. State Law restrictions on the marketing of imported retreaded tyres 
2.11 On 5 July 2004, Rio Grande do Sul issued La w 12.114, prohibiting the commercialization of 
imported used tyres within its territory, which incl udes imported retreaded tyres as well as retreaded 
tyres made in Brazil from imported casings.  This Law, however, does not prohibit the marketing of retreaded tyres produced in Brazil from domestic  casings.  Article 1 of Law 12.114 reads: 
"Art. 1.  It is forbidden to sell imported used tyres in the State of Rio Grande do Sul. Sole paragraph.  An imported used tyre is considered for the purposes hereof as 
follows: 
I – the simple carcass of the used tyre from any other country; II – the carcass of a used tyre that has been retreaded by top-capping, 
remoulding or recapping processes abroad and imported in this condition; 
III – the carcass of a used tyre from any other country and retreaded 
in Brazil by any of the industrial processes mentioned in the 
preceding item."
13 
2.12 On 28 November 2005, the state of Rio Grande do Sul amended Law 12.114 through 
Law 12.381, which allows the importation and marketi ng of imported retreaded tyres provided that 
the importer proves to have destroyed ten  used tyres in Brazil for every retreaded tyre imported.  
Law 12.381, however, requires the destruction of only one  used tyre per imported tyre in the case of 
imports of used tyre casings.  Article 1 of Law 12.381 reads: 
"Article 1 – The sole paragraph of Ar ticle 1 of Law 12.114 of 5 July 2004, 
prohibiting the sale of used tyres imported into the State and from other sources becomes paragraph 1, and the following paragraphs 2 and 3 are added: 
§1° – … 
§2° – The following shall be permitted: 
I – the import of a used tyre carcass where importers can demonstrate 
that they will collect on Brazilia n territory and destroy, in an 
                                                     
 
12 Exhibit BRA-72. See also Exhibit EC-34.    
13 Exhibit BRA-80. See also Exhibit EC-35. WT/DS332/R 
Page 6  
 
  environmentally adequate manner, 1 (one) existing used tyre on the 
domestic territory for each used tyre carcass to be imported; 
II – the import of a carcass of a tyre retreaded by means of top-
capping, remoulding, or recappi ng, outside of Brazil, where 
importers can demonstrate that they will collect within the domestic 
territory and destroy, in an environmentally-adequate manner, 10 
(ten) existing used tyres within th e domestic territory for each used 
tyre carcass to be imported. 
§ 3º – tyre retreaders shall have the right to  import one used tyre carcass for each used 
or retreaded tyre exported without having to comply with the environmental 
counterpart referred to in part I of paragraph 2 of this Article."
14 
4. Exemption of MERCOSUR countries fr om the import ban and the fines 
2.13 After the adoption of Portaria SECEX 8/2000 , the first measure explicitly banning the 
importation of "retreaded tyres", Uruguay request ed, on 27 August 2001, the initiation of arbitral 
proceedings under MERCOSUR against this Braz ilian measure.  On 9 January 2002, the 
MERCOSUR arbitral tribunal decided that the import ban on retreaded tyres imposed by 
Portaria SECEX 8/2000 was incompatible w ith MERCOSUR Decision 22/2000, which requires 
MERCOSUR partners not to introduce new r estrictions to commerce among themselves. 
2.14 Following this arbitral award, Brazil eliminated the ban for remoulded tyres imported from 
MERCOSUR countries by means of Portaria SECEX 2 of 8 March 2002.  Article 1 of Portaria 
SECEX 2/2002 provides: 
"Art. 1.  The import license for remoulded tyres is hereby authorized, classified under 
NCM codes 4012.1100 , 4012.1200, 4 012.1300 and 40 12.1900, when proceeding 
from MERCOSUR member States under the Economic Complementation Agreement no. 18."
15 
2.15 This exception was maintained in Portaria SECEX  17 of 1 December 2003, and it is currently 
contained in Article 40 of Portaria  SECEX 14/2004, transcribed above. 
2.16 Similarly, through Presidential Decree 4.592 of  11 February 2003, Brazil exempted retreaded 
tyres  imported from other MERCOSUR countries from the financial penalties set out in Presidential 
Decree 3.919.  Article 1 of Presidential Decree 4.592 reads as follows: 
"Article 1:  Article 47-A of Decree 3.179 of 21 September 1999 shall apply with the 
addition of the following paragraph, a nd 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."
16 
                                                      
14 Exhibit BRA-81.  See also Exhibit EC-37 and its answer to panel question No. 63.  
15 Exhibit BRA-78.  See also Exhibit EC-41. 
16 Exhibits BRA-79.  See also Exhibit EC-42.  WT/DS332/R 
 Page 7 
 
 
  III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES 
3.1 The European Communities request s the Panel to find that:17 
(a) Brazil has acted inconsistently with Artic le XI:1 of GATT 1994 by instituting and 
maintaining a prohibition and restriction other than a duty, tax or other charge on the 
importation of a product of the territory of  another Member, made effective through 
import licences and other measures.   
(b) Brazil has acted inconsistently with Arti cle XI:1 and/or Article III:4 of GATT 1994 
by instituting and maintaining a restriction other than a duty, tax or other charge on the importation of a product of the territory of another Member, made effective through a fine imposed on the importation of retreaded tyres in the amount of 
400 BRL per unit.   
(c) Brazil has acted inconsistently with Article III:4 and/or Article XI:1 of GATT 1994 
by imposing a fine in the amount of 400 BRL  per imported retreaded tyre that is 
marketed (sold), transported, stored, kept or kept in deposit or warehouses.  Thereby, 
Brazil has failed to accord, to products of the territory of the European Communities 
imported into the territory of Brazil, treat ment no less favourable than that accorded 
to like products of national origin in r espect of laws, regulations and requirements 
affecting their internal sale, offering for sal e, purchase, transportation, distribution or 
use.   
(d) Brazil has acted inconsistently with Ar ticle I:1 of GATT 1994 by eliminating the 
import ban and the above-men tioned financial penalties fo r retreaded tyres imported 
from other MERCOSUR countries, while maintaining those measures for other 
imports, notably from the European Commun ities.  Thereby, Brazil has failed to 
accord an advantage granted, with respect to rules and formalities in connection with 
importation, and with respect to matters refe rred to in paragraph 4 of Article III, to 
products originating in other countries i mmediately and unconditionally to the like 
products originating in the territory of the European Communities.   
(e) By applying the above-mentioned import ban on retreads as well as the financial 
penalty on every unit of retreaded tyres imported from the European Communities, but not to those imported from other MERCOSUR countries, Brazil acts inconsistently with Article XIII:1 of GA TT 1994, because it applies a prohibition and 
restriction on the importation of a product of the territory of another Member, 
although the importation of the like product of  all third countries is not similarly 
prohibited or restricted. 
3.2 The European Communities also requests the Panel to recommend, in accordance with 
Article 19.1 of the DSU, that Brazil bring its measu res into conformity with the covered agreements.
18 
                                                      
17 European Communities, Request for the establishment of a Panel, WT/DS332/4, paras. 11-15. 
18 European Communities' first written submission, para. 224. WT/DS332/R 
Page 8  
 
  3.3 In turn, Brazil requests the Panel to dismiss all the claims made by the 
European Communities in its first written submission and to find that:
19 
(a) Brazil's import ban on retreaded tyres (c ontained in Portaria SECEX 14/2004) is 
justified by Article XX(b) of the GATT b ecause it is a measure necessary to protect 
human, animal and plant life and health. 
(b) The anti-circumvention fines (app lied pursuant to Decree 3.919 of 
14 September 2001) are justified by Article XX(b) and (d) of the GATT because they are necessary to protect human and animal lif e and health and the environment, and to 
secure compliance with the import ban, whic h itself is not inconsistent with the 
GATT. 
(c) The limited exemption of MERCOSUR countries from Brazil's import ban (made 
effective through Portaria SECEX No. 14 of  17 November 2004) is authorized by 
Article XXIV, because it was adopted pursuant to Brazil's obligations under MERCOSUR – a customs union that is  consistent with Article XXIV. 
(d) The limited exemption of MERCOSUR countri es from the ban is also justified by 
Article XX(d), because it is necessary to secure compliance with Brazil's obligation 
under MERCOSUR, which itself is not inconsistent with the GATT. 
(e) The state measure of Rio Grande do Sul (Law 12.114 of 5 July 2004) is justified by 
Article XX(b) of the GATT 1994 because it is a measure necessary to protect human, animal and plant life and health. 
3.4 Brazil also states that in any event, it is not necessary for the Panel to reach an independent 
conclusion on the state measures because these measu res do not have any independent legal effect.
20 
IV. ARGUMENTS OF THE PARTIES 
4.1 The arguments presented by the parties in thei r written submissions and oral statements are 
reflected below.  This Part contains arguments of the parties as summarized in Parties' executive 
summaries and includes additional arguments take n from submissions and replies to questions as 
suggested by the Parties in their co mments to this Part.  Further arguments are contained in the replies 
and comments on replies annexed to the Panel report.   
A. THE BAN ON THE IMPORTATION OF RETREADED TYRES  
1. Article XI:I of GATT 1994 
4.2 The European Communities  submits that Article 40 of Portaria SECEX 14/2004 provides 
that no import licences shall be granted for the impor tation of retreaded tyres into Brazil;  however, 
such import licences are necessary in order to import  retreaded tyres into Brazil.  Therefore, the 
European Communities claims that Portaria SECEX  14/2004 prohibits the importation of retreaded 
tyres of any other WTO Member, including the Europ ean Communities, into Brazil.  Accordingly, the 
European Communities claims that Brazil imposes a prohibition on the importation of retreaded tyres 
                                                      
19 Brazil's first written submission, paras. 190 and 191. 
20 Brazil's second written submission, para. 199.  WT/DS332/R 
 Page 9 
 
 
  incompatible with Article XI:1 of GATT 1994.21  The European Communities notes that Brazil has 
not contested that its import ban on retreaded tyres violates Article XI:1.22 
4.3 Brazil  claims that Article XX exceptions "relate to all of the obligations under the General 
Agreement,"23 and thus allow Brazil to maintain the ban ev en if it is prima facie inconsistent with 
Article XI:1.24  Brazil submits that the European Communiti es questions the right of Brazil to adopt a 
ban that seeks to avoid the generation of unnecessary dangerous waste and reasonably deal with the 
disposal challenge – even though it recognizes the adve rse health and environmental effects caused by 
waste tyre accumulation and disposal.25   
2. Article XX of GATT 1994 
4.4 Brazil  claims that the ban on retreaded tyres is justified by Article XX(b) of GATT 1994.26  
Brazil submits that a Member invoking Article XX(b) mu st show:  (i) that the measure falls within the 
scope of paragraph (b);  and (ii) that the measure is applied in a manner that is consistent with the 
chapeau of Article XX.27  Brazil claims that it meets that burden of proof.28 
4.5 Brazil recognizes and shares the systemic c oncern that findings upholding an import ban, 
when necessary, should not lead to abuse of the ge neral exceptions of Article XX.  Because of the 
unique facts of this case, however, Brazil argues that there is no risk that a finding in favour of the ban 
could serve as a basis for other Members to invoke Ar ticle XX to justify an import ban that is not a 
legitimate measure necessary  to protect human health and the environment.29   
4.6 Brazil argues that this dispute presents a number of complex legal issues as well as 
fundamental facts that underlie those issues.30  First, Brazil contends that this dispute cannot be seen 
outside its broader context:  it involves legitimate  concerns about health and environment issues, 
particularly sensitive for developing countries.31  Brazil argues that the market for retreaded tyres in 
developed countries is small and ge tting smaller and the number of und esirable tyre casings that must 
be disposed of is getting higher.  Brazil submits that consumers in devel oped countries tend to look 
with disfavour on retreaded tyres, considering them  to be less safe even though retreaded tyres must 
be made to exacting safety applications.  Brazil submits further that consumers in developing 
countries, including Brazil, are very price-oriented and therefore are more likely to buy retreaded 
tyres than consumers in the developed world.32  Moreover, Brazil explains that from an exporting 
country point of view, every exported casing and every exported retread is a di sposal problem also to 
be exported.  Brazil stresses, on the other hand, th at from an importing developing country point of 
                                                      
21 European Communities' first written submission, executive summary, para. 18. 
22 European Communities' first oral st atement, executive summary, para. 1. 
23 Appellate Body Report on US – Gasoline , at 24 (emphasis added). 
24 Brazil's first written submission, executive summary, pa ra. 18;  Brazil's first oral statement, executive 
summary, para. 12. 
25 Brazil's first written submission, executive summary, para. 2. 
26 Brazil's first written submission, executive summary, pa ra. 17;  Brazil's first oral statement, executive 
summary, para. 11. 
27 See Appellate Body Report on US – Gasoline , at 20. 
28 Brazil's first written submission, executive summary, pa ra. 18;  Brazil's first oral statement, executive 
summary, para. 12. 
29 Brazil's first oral statement,  executive summary, para. 22. 
30 Brazil's first oral concluding stat ement, executive summary, p. 5. 
31 Brazil's first oral concluding stat ement, executive summary, p. 5. 
32 Brazil's first oral concluding stat ement, executive summary, p. 6. WT/DS332/R 
Page 10  
 
  view, along with the retreaded tyres comes the disposal problem.  Brazil argues that it has enough 
disposal problems and does not need to import more.
33 
4.7 Second, Brazil stresses the necess ity to protect life and health.34  However, Brazil contends 
that while it is often easy to identify the steps that must be taken to protect health and the 
environment, it is not always easy to take them.  Brazil argues further that the "polluter pays" 
principle may be a sound environmenta l principle, but the reality is that most polluters do not want to 
pay, and frequently they are in a position to delay – or entirely block – measures intended to protect 
health and the environment.  Brazil is no differe nt from any other country in this regard.  Brazil 
argues that there are those in Brazil who want to  import retreaded tyres and who want to import 
casings and they have strong allies and advance thei r interests through the political process and the 
judicial system.  Brazil submits that the European  Communities tried to convey to the Panel the false 
idea that Brazil has a permissive attitude towards the imports of used tyres.35 
4.8 The European Communities  claims that the import ba n cannot be justified under 
Article XX.  It also claims that it is well-established case-law that the burden of proof in relation to any defence based on Article XX rests on the responding party, in this case Brazil.
36  
(a) Paragraph b) of Article XX 
(i) Introduction 
4.9 Brazil  claims that the import ban is justified by Article XX(b) because it is a measure 
necessary to protect human life and health and the environment and it protects Brazil's public and the 
environment from dangers caused by waste tyres.37  Brazil argues that the import ban avoids the 
unnecessary generation of additional tyre waste, a nd its accumulation and disposal, which presents 
well-recognized dangers to public  health and the environment.38   
4.10 The European Communities  argues that the import ban does not fulfil the conditions of 
Article XX(b).39  The European Communities argues that it is for Brazil, as the WTO Member 
invoking an exception to its WTO obligations, to demonstrate that the requirements of Article XX(b) are met.
40  The European Communities submits that according to the Panel Report  in US – Gasoline  
and Panel and Appellate  Body Reports in EC – Asbestos , the party invoking Article XX(b) must 
prove, first, that the policy pursued falls within th e range of policies designed to protect human life or 
health, and, second, that the inconsistent measure s for which the exception is invoked are necessary to 
fulfil the policy objective.41  T h e  European Communities contends that the general explanations 
provided by Brazil as well as the facts on record do not fulfil these two requirements.42  According to 
the European Communities, the pre sent proceedings have shown that Brazil has failed to discharge 
this burden with respect to every single requirement of Article XX(b).43  The European Communities 
                                                      
33 Brazil's first oral concluding stat ement, executive summary, p. 6. 
34 Brazil's first oral concluding stat ement, executive summary, p. 6. 
35 Brazil's first oral concluding stat ement, executive summary, p. 6. 
36 European Communities' first written submission, executive summary, para. 19. 
37 Brazil's first written submission, executive summar y, para. 18;  first oral statement, executive 
summary, para. 12. 
38 Brazil's first written submission, executive summary, para. 1.  Brazil notes that it uses the term 
"environment" to refer to "animal or plant life or hea lth" within the meaning of Article XX(b) and "health" to 
refer to human life or health. 
39 European Communities' first written submission, executive summary, para. 20. 
40 European Communities' second oral concludi ng statement, executive summary, para. 7. 
41 European Communities' first written submission, executive summary, para. 20. 
42 European Communities' first written submission, executive summary, para. 21. 
43 European Communities' second oral concludi ng statement, executive summary, para. 7.  WT/DS332/R 
 Page 11 
 
 
  recalls the Appellate Body's statement in EC – Asbestos that the words "policies designed to protect 
human life or health" imply the existence of a health risk.44   
(ii) To protect human, animal, or plant life or health 
Introduction  
Policy objective 
4.11 Brazil  claims that the import ban is designed to reduce waste tyre volumes, and by so doing, 
to reduce the incidence of cancer, dengue, reproducti ve problems, environmen tal contamination, and 
other associated risks.45  Brazil further claims that the ban falls  squarely "within the range of policies 
designed to protect" human health and the e nvironment because it is designed to avoid the 
unnecessary generation of tyre waste, and consequent ly, reduce the health and environmental risks 
that flow from waste tyre accumulation and disposal.46   
4.12 Brazil claims that no one questions that waste tyres are a considerable environmental burden, 
and the fewer of them around, the better.47  Brazil argues that waste tyre accumulation threatens public 
health and the environment because waste tyres:48  (i) fuel epidemics of mosquito-borne diseases;  and 
(ii) release toxic chemicals and h eavy metals into the environment.49  Brazil also submits that 
accumulated tyres must be collected and disposed  of because they fuel mosquito-borne diseases and 
create fire hazards.50  Concerning the European Communities' claim that Brazil never explained the 
risks to animal or plant health or life resulting fro m the accumulation of waste tyres, Brazil directs the 
European Communities' attention to the submission of the Humane Society, which was incorporated 
into the record as Exhibit BRA-98.51 
4.13 Brazil states that because waste tyre disposal presents health risks that cannot be eliminated, 
only non-generation of waste tyres allows Brazil to achieve its chosen level of protection.52  Brazil 
argues53 that the import ban is necessary because it prevents the unnecessary generation of a 
dangerous waste and, consequently, reduces the risks of its disposal.54 
4.14 Brazil notes that the European Communities also admits that "waste tyres ... pose a significant 
environmental and public health problem in Brazil".55  Brazil submits that the parties agree that the 
accumulation of waste tyres presents risks to human health and the environment and that measures to 
reduce the accumulation of tyre waste are legitimate responses to these risks.56  Brazil also submits 
                                                      
44 European Communities' first written submission, executive summary, para. 20. 
45 Panel Report on US – Gasoline , at para. 6.20.  
46 Brazil's first written submission, executive summar y, para. 20; first oral statement, executive 
summary, para. 13; second oral stat ement, executive su mmary, para. 20. 
47 Brazil's first oral statement,  executive summary, para. 4. 
48 Brazil's first written submission, executive summar y, para. 3; first oral statement, executive 
summary, para. 4. 
49 Brazil's first written submission, paras. 22-37. 
50 Brazil's first oral statement,  executive summary, para. 4. 
51 Brazil's second oral concluding st atement, executive su mmary, para. 8. 
52  Brazil's second written submission, paras. 6 and 43.  
53  Brazil's first written submission, paras. 1, 6, 17 and 19.  
54 For more information on risks associated with disposal, see Section IV.A.2(a)(iv) "Existence of 
Reasonably Available Alternatives". 
55 European Commission, Directorate General-Trade, Examination Procedure Concerning an Obstacle 
to Trade, Within the Meaning of Council Regulation (EC) No 3286/94, Consisting of Trade Practices 
Maintained by Brazil Affecting Trade in Retreaded Ty res, Report to the Trade Barriers Regulation Committee 
13 (2004) (Exhibit EC-2).  Brazil's first oral  statement, executive summary, para. 7. 
56 Brazil's second written submission, executive summary, para. 1. WT/DS332/R 
Page 12  
 
  that the European Communities has recognized that "measures designe d to prevent the incidence of 
[diseases such as cancer and dengue] do potentia lly fall within the scope of Article XX(b)"
57 and that58 
"measures aiming to reduce the accumulation of waste tyres can constitute a legitimate response to 
health problems arising from waste tyres ".59   
4.15 In other words, it is Brazil's view that the European Communities does not dispute that Brazil 
can – in conformity with its WTO obligations – pur sue a waste tyre reduction policy to minimize the 
risks associated with waste tyres, including the imposition of a ban on imports of retreaded tyres.  Brazil contends that the European Communities' clai ms that (i) Brazil is pursuing a goal other than 
health and environmental protection,  and (ii) that Brazil's waste tyre management policy is not the 
most appropriate means of achieving its stated goal, are unfounded.
60  
4.16 Brazil recalls the Panel's statement in EC – Asbestos  that "a policy that seeks to reduce 
exposure to a risk should fall within the range of policies designed to protect human life or health, 
insofar as a risk exists."61  Brazil also recalls the Appellate Body's statements that WTO Members 
"have a large measure of autonomy"62 to determine their own environm ental policies, and that "the 
preservation of human life and hea lth through the elimination, or reduction " of health risks is a value 
that is "both vital and important in the highest degree."63 
4.17 The European Communities  notes Brazil's claim that Article XX(b) is a provision that 
"preserves the ability of Members to prohibit impo rts that endanger human life or health and the 
environment".  However, the European Comm unities argues that according to its wording, 
Article XX(b) covers only measures which are necessar y to protect human, animal, or plant life or 
health.  In turn, a measure designed to protect other concerns, including issues of environmental 
protection not related to human, animal or pl ant life or health, cannot be justified under 
Article XX(b).64  The European Communities also points out that Brazil regularly and even primarily 
refers to issues of environmental protection without any direct link to human, animal or plant life or 
health.65 
4.18 The European Communities is of the view that the analogy Brazil has attempted to draw with 
the prohibition of asbestos at issue in EC – Asbestos is entirely unfounded since asbestos fibres are 
immediately and directly harmful to human hea lth, particularly as regards risks resulting from 
exposure to asbestos.66  The European Communities argues that this is not comparable to retreaded 
tyres, which do not constitute any particular health risk.67  The European Communities recalls that in 
EC – Asbestos  the Appellate Body came to the conclusion th at the objective pursued  by the measure is 
the preservation of human life and health through th e elimination, or reduction, of the well-known, 
and life-threatening, health risks posed by asbest os fibres.  However, the European Communities 
                                                      
57 See European Communities' first oral statement, at para. 16.  
58 European Communities' answer to panel question No. 38 (emphasis added). 
59 Brazil's second written submission, executiv e summary, para. 4 (emphasis original). 
60 Brazil's second written submission, executive summary, para. 4. 
61 Panel Report on EC – Asbestos , at para. 8.186.  Brazil's first written submission, executive summary, 
para. 20. 
62 Appellate Body Report on US – Gasoline , at 30. 
63 Appellate Body Report on EC – Asbestos , para. 172 (emphasis added).  See also Panel Report on 
Canada – Wheat Exports and Grain Imports , para. 6.224 ("[P]rotection of human life and health against a life-
threatening risk" prevails over commercial interests").   Brazil's first written submission, executive summary, 
para. 19. 
64 European Communities' first oral statement, para. 15. 
65 European Communities' first oral st atement, executive summary, para. 3. 
66 European Communities' first oral statement, exec utive summary, para. 4; second written submission, 
executive summary, para. 4. 
67 European Communities' first oral st atement, executive summary, para. 4.  WT/DS332/R 
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  argues that the present case is far removed from th is situation as there are no "well-known and life-
threatening health risks" posed by retreaded tyr es.  The European Communities therefore contends 
that it is for Brazil to establish how its measure c ontributes to the prevention of such risks, and the 
mere importance of the protection of life a nd health cannot absolve it from this task.68 
4.19 The European Communities argues that it has al ready explained that the real aim of the 
import ban on retreaded tyres is not the protection of life and health but the protection of Brazil's 
domestic industry.69   
Factual description 
4.20 Brazil  explains that retreading, a process that involves replacing the tyre's worn-out tread 
with a new tread, extends the tyre's lifespan by giving what would otherwise be a waste tyre an 
additional life.  By retreading the tyres it consumes, Brazil claims that it directly reduces the number 
of additional waste tyres that would accumulate a nd which would have to be disposed of in its 
territory.  Brazil is of the view that there is no effective disposal method to deal with over 40 million 
waste tyres generated every year in Brazil that  is both environmentally sound and economically 
viable.  Brazil submits that unlike new tyres, passe nger car retreaded tyres – which in recent years 
comprised nearly all of European Communities' exports to Brazil – cannot be retreaded again and 
must be collected and disposed of in Brazil after ju st a single use.  Brazil further submits that at the 
end of their useful life, these imported retreaded tyres – which cannot be retreaded again – become 
waste tyres that accumulate in Brazil by the millions.70   
4.21 Brazil contends that the first written submis sion of the European Communities reveals a 
fundamental misunderstanding of what this case is a bout.  Brazil explains that it prohibits imports of 
retreaded tyres not because they are somehow less safe, but because they have a shorter lifespan:  
passenger car retreaded tyres cannot be retreaded ag ain and commercial vehicle retreaded tyres have 
fewer remaining lifecycles;  thus, while retreaded ty res are not waste, they do  become waste sooner.  
Brazil contends that the European Communities ignores the central issue:  that the import ban avoids 
the unnecessary generation of dangerous tyre wast e that must be disposed of in Brazil and, 
consequently, reduces the risks th at flow from the accumulation and disposal of that waste.71  Brazil 
contends that the European Communities agrees that  retreading "prevent[s] a used tyre from being 
discarded needlessly."72  However, Brazil claims that a country benefits from retreading only if it 
retreaded tyres consumed within  its territory and that by retreading and exporting its tyres, the 
European Communities reduces its own waste burden, not Brazil's.73 
4.22 The European Communities  claims that Brazil has tried to create the impression that the 
present case is about human life and health and the environment.  The European Communities 
contends that this is not correct, as the presen t proceedings concern a product, namely retreaded 
tyres.74  The European Communities claims that there is no disagreement that retreaded tyres are new 
products which, when produced in accordance with the existing international standards, are as safe 
and durable as new tyres.  The European Communiti es submits that tyre retreading is a mature and 
accepted technology, which is practiced in ma ny countries worldwide, including in the 
                                                      
68 European Communities' second written submission, executive summary, para. 4. 
69 European Communities' second oral statement, para. 10. 
70 Brazil's first written submission, executive summary, para. 1. 
71 Brazil's first oral statement,  executive summary, para. 1. 
72 European Communities' first written submission, at para. 45. 
73 Brazil's first oral statement,  executive summary, para. 2. 
74 European Communities' second oral concludi ng statement, executive summary, para. 8. WT/DS332/R 
Page 14  
 
  European Communities and Brazil.  The European Communities also notes that retreaded tyres are 
traded, and there are accepted UNECE standards facilitating such trade.
75 
4.23 The European Communities argues that Brazil put s used and retreaded tyres in the same 
basket, while this case is only about retreaded tyres.76  Moreover, the European Communities explains 
that there are no differences between retreaded tyr es and new tyres that would be relevant for the 
question at issue.  The European Communities furthe r submits that neither of them spread diseases 
among countries and continents:  both types of tyr es are products the production of which involves the 
use of high temperatures, pressures and solven ts, eliminate viruses, bacteria or insects.77  Moreover, 
the European Communities argues that  the risks produced by burning or disposed tyres might exist in 
relation to used or end-of-life tyres but are totally  misplaced when referring to retreaded tyres, which 
are stored, sold and then installed in vehicles, in the same way as new tyres.78 
Mosquito-borne diseases  
4.24 Brazil  notes that the European Communities h as questioned the genuineness of the cited 
health risks and has even requested a c onfirmation that "dengue or malaria cases in Brazil  are linked 
to the presence of waste tyres".79  Brazil recalls the European Communities' acknowledgement, just 
two years ago, and in the context of this very dispute that80 "[c]learly, waste tyres ... pose a significant 
environmental and public health problem in Brazil".81  Brazil notes that these risks suddenly became 
less "clear" to the European Communities.82   
4.25 Brazil explains that when discarded and stockp iled, tyres create ideal breeding grounds for 
mosquitoes that carry dengue, yellow fever, malari a, and other dangerous diseases.  Brazil submits 
that research indicates that tyres may, in fact, be the mosquitoes' favourite breeding site.  Brazil refers 
to a study of mosquito specimen in Londrina, State of Paraná which observed, for example83, that 
"[t]ires have been a preferred breeding site", po ssibly because of their "similarities with tree holes".84  
Brazil also refers to a 1 997 study that examined aedes aegypti colonization in the State of São Paulo 
and found that:85 
Positive larvae were collected ... mainly at  tyre repair shops, tyre stockpiles and 
reprocessing units, ... and deposits. ... Tyres were the main culprits for the passive 
spread of mosquito, which occurs thr ough intense tyre commerce ...  With the 
                                                      
75 European Communities' second oral concludi ng statement, executive summary, para. 1. 
76 European Communities' first oral statement, executive summary, para. 4.  European Communities' 
second written submission, executive summary, para. 4. 
77 European Communities' first written submission, executive summary, para. 21. 
78 European Communities' first written submission, executive summary, para. 22. 
79 European Communities' questions to Brazil following the First Substantive Meeting of the Parties, 
question 12 (emphasis added). 
80 Report to the Trade Barriers Regulation Committee 13  (2004) (Exhibit EC-2). 
81 Brazil's second written submission, executive summar y, para. 5;  Brazil's second oral statement, 
executive summary, para. 4. 
82 Brazil's second oral statemen t, executive summary, para. 4. 
83 João A. C. Zequi, Imaturos de Culicidae (Diptera) Encontrados em Recipientes Instalados em Mata 
Residual no Munícipio de Londrina, Paraná, Brasil , Revista Brasiliera de Zoologia, Volume 22, No. 3, at 657 
(2005) (Exhibit BRA-113).  
84 Brazil's second written submission, executive summary, para. 7. 
85 Brazil's second written submission, executive summary, para. 6.  WT/DS332/R 
 Page 15 
 
 
  presence of mosquitoes that transmit both de ngue and yellow fever, the region began 
to undergo the risk of epidemics.86 
4.26 Brazil submits that transportation of waste ty res also spreads mosqu itoes and, with them, 
diseases.  However, in some case s, transportation cannot be avoided, as for example in the Amazon 
region, which has only few disposal facilities beca use of its fragile ecosystem.  Brazil notes the 
European Communities' argument that in regions, su ch as the Amazon, the import ban will not make a 
difference because (i) few people live there, producing little  waste;  and (ii) tyres will be disposed of 
after a single use because such regions have no retreading industry.87  Brazil claims that the argument 
is clearly flawed:  the Amazon's population is ove r 20 million (with 14 million living in cities), and 
the region has some 119 retreaders.88  Brazil notes that the risks of waste tyre transportation are well 
recognized.89  One of the examples Brazil cites in support is a Japanese study that states: 
"In the northernmost limit of the mosquito, Higashiyama located on the eastern side 
of Tohoku district, there is a cement plant in which used tires are used for fuel and 
raw materials. These tires, which could be infested with mosquitoes, are frequently 
transported from large cities nearby. It h as been shown that this kind of economic 
activity has a strong connection to the spread of Ae. albopictus ."90 
4.27 Brazil submits that three out of four dengue types co-circulate in Brazil today, which 
increases the likelihood of complications and the introduction of type 4 is a great threat.91  Brazil also 
explains that because of their shape and presen ce in rainy locations, tyres contribute to the 
proliferation of mosquitoes that carry dengue.  Br azil's National Program for Dengue Control, which 
works to identify the mosquito-br eeding sites and educate the populati on, recognizes deposits of tyre 
waste as "strategic points", and inspects and fumigates them.92  Based on his personal experience and 
on the results obtained so far in the National De ngue Control Program, Dr. Giovaninni Evelim Coelho 
from Brazil's Ministry of Health states that the im port ban is necessary to prevent the spread of the 
disease and removing the ban will greatly increase the risk of epidemics.93 
4.28 Over the last decade, Brazil submits that it h as suffered from severe epidemics of dengue, a 
disease that the World Health Organization (WHO) has recognized as "a major international public 
health concern"94, and which is a viral disease that can cause high fever, muscle and joint pain, 
haemorrhage, circulatory failure, and even  death in the event of complications.95  Brazil submits that 
waste tyres fuelled Brazil's dengue epidemic, whic h peaked first in 1998 with 528,388 cases, and 
again in 2002 with 794,000 cases.  Brazil explains that it collected discarded tyres and fumigated tyre 
stockpiles in the course of its R$4.5 billion (US$ 2 billion) dengue-control e ffort, but these measures 
                                                      
86 Francisco Chiaravalloti Neto, Ph.D., Descrição da Colonização de Aedes Aegypti na Região de São 
José do Rio Preto, São Paulo,  Revista da Sociedade Brasileira de Me dicina Tropical, Volume 30, No. 4 (1997) 
(Exhibit BRA-109).  
87 European Communities' answer to panel question No. 47. 
88 Brazil's second written submission, executive summary, para. 8. 
89 Brazil's second written submission, paras.  28-31 (Exhibits BRA- 119, 120, 121, 122). 
90 Exhibit BRA-120, cited in Brazil's second written submission, para. 29. 
91 Brazil's first oral statement,  executive summary, para. 5. 
92 Brazil's first oral statement,  executive summary, para. 6. 
93 Brazil's first oral statement,  executive summary, para. 8. 
94 World Health Organization, Guidelines for Treatment of Dengue Haemorrhagic Fever in Small 
Hospitals,  (ix) (1999) (Exhibit BRA-14). 
95 See World Health Organization, Dengue and Dengue Haemorrhagic Fever  (2002) 
(Exhibit BRA-13). WT/DS332/R 
Page 16  
 
  can only mitigate, not eliminate, the risks.
96  Brazil submits that between 1998 and 2002, 70 per cent 
of the reported dengue cases in the Americas occurred in Brazil.97   
4.29 Brazil submits that the Europ ean Communities has re quested a confirmation that the dengue 
epidemic in Brazil is indeed linked to the presence of waste tyres.  In its second written submission, 
Brazil notes that it provided several studies that confirm this well-recognized fact.  Brazil also notes 
that one such study98, conducted in the State of São Paulo, f ound positive larvae mainly at tyre shops 
and stockpiles, and noted that tyres were the "the ma in culprits" for the spread of mosquitoes, and that 
the presence of mosquitoes created the risk s of dengue and yellow fever epidemics.99 
4.30 Brazil contends, contrary to the European Co mmunities' suggestion that dengue had nothing 
to do with tyres, allegedly because the import ban did not produce an immediate reduction in 
dengue100, that the progression of the epidemic depends on many factors in addition to the waste tyre 
volumes, such as prevalence of other containers, transportation of mosquitoes to new areas, and 
introduction of new types of the dengue virus.  Br azil explains that an import ban by itself cannot 
solve the dengue problem, but it plays an important pa rt in the solution.  Brazil submits that the WHO 
and the government of the United States both advise targeting waste tyres.101  Brazil notes that the 
European Communities, in the alte rnative, blames Brazil's dengue problem on the historic waste tyre 
accumulation.  However, Brazil points out that new volumes also contribute to dengue because tyres must be stockpiled before disposal and sometimes mu st be transported.  Finally, in addition to the 
import ban, Brazil submits that it is collecting tyr es, teaching the public about dengue prevention, and 
carrying out mosquito surveillance.
102  
4.31 Moreover, Brazil submits that mosquitoes that breed in tyres also transmit yellow fever, 
which is, with its high fatality ra te (over 33% in Brazil since 1999), significantly more dangerous than 
dengue.103  Brazil explains that thus far yellow fever in Brazil has been confined to sparsely populated 
areas, but the risk of urbanization, aided by w aste tyre accumulation and transportation, is real.104   
4.32 The European Communities  notes that Brazil has incorrectly claimed that the 
European Communities itself recognised the public h ealth risks of waste tyre accumulation in Brazil 
in the Trade Barriers Regulation Committee (TBR ) Report issued by the European Commission.105  
The European Communities contends that this report does not refer to public health risks of waste 
tyres generally, but to risks arising from tyres that "litter the countryside", i.e. to risks arising from 
improperly managed tyres.106   
4.33 The European Communities argues that from Br azil's submissions, it is not possible to 
understand how the life and health of plants are at risk due to mosquito-borne diseases, and Brazil has 
                                                      
96 Brazil's first written submission, executive summary, para. 4. 
97 Brazil's first oral statement,  executive summary, para. 6. 
98 Francisco Chiaravalloti Neto, Ph.D., Descrição da Colonização de Aedes Aegypti  
(Exhibit BRA-109).  
99 Brazil's second oral statemen t, executive summary, para. 3. 
100 European Communities' second written submission, para. 58. 
101 Exhibit BRA-149 and Exhibit BRA-20. 
102 Brazil's second oral statemen t, executive summary, para. 20. 
103 Brazil's first written submission, executive summar y, para. 5;  first oral statement, executive 
summary, para. 7. 
104 The WHO counts Brazil among a hand ful of countries in the Americas with the greatest risk of 
yellow fever.  See World Health Organization, Yellow Fever (2001) (Exhibit BRA-22).  Brazil's first written 
submission, executive summary, para. 5. 
105 Exhibit EC-2.  
106 European Communities' second oral st atement, executive summary, para. 5.  WT/DS332/R 
 Page 17 
 
 
  never explained the animal species that are in da nger of being infected by mosquitoes breeding in 
waste tyres.107  
The release of toxic chemicals and heavy metals into the environment  
4.34 Brazil  submits that the European Communities h as argued that the risks of waste tyre 
accumulation and disposal are essentially make-belie ve.  Brazil notes that the European Communities 
has questioned the dangers of tyre fires and has even  requested a confirmation of "their real negative 
effects on health" in Brazil.  Brazil submits that the European Communities has argued that tyre fires 
are low-risk because they are difficult to ign ite, yet the United Kingdom's own Health Protection 
Agency108 has explained that the major hazard of tyre dumps is the toxic releases during fires, noting 
that "[a]rson is a common problem; the cause of over half of the fires in the United Kingdom."109  
Brazil submits that the emissions from tyre fires cause premature mortality, reduced lung function, 
suppression of the immune system, kidney problems, learning disabilities, partial blindness, respiratory problems, heart and chest problems, and cancer.
110   
4.35 Brazil argues that this case turns mostly on facts, which the European Communities has 
persistently chosen to either mi srepresent, minimize, or outright i gnore.  For Brazil, another example 
of the European Communities' reckless disregard of th e facts in this case is its suggestion that the risk 
of tyre fires in Brazil is – for some unexplainable reason – less probable in Brazil than in the United Kingdom, Canada, or the United States; or th at leaching of dangerous substances from tyre 
waste is less likely to occur in Brazil than in othe r parts of the world.  Brazil argues that there may be 
many differences between the European Communities a nd Brazil, but it is safe to assume that the way 
natural laws apply in their respective territories  is not one of them.  Brazil notes that the 
European Communities' logic is that unless a Member has the misfortune of experiencing, first-hand, 
a particular environmental or sanitary catastrophe, it does not have the right to take preventive action;  
that clearly cannot be the case.
111 
4.36 The European Communities  claims that Brazil has never made any effort to explain the 
negative consequences of tyre fires on the life and health of animals and plants in Brazil.112  Moreover, 
the European Communities submits that the fire risk s described by Brazil appear to be related to an 
incorrect management of end-of-life tyres, as explai ned in a document prepared in December 1999 by 
a Technical Working Group of the Basel Convention.113   
4.37 Brazil argues that the European Communities' clai m that fires are but a consequence of 
improper management has no merit.114  Brazil argues that the Basel Ty re Guidelines state that even 
with proper control, stockpiling "can be used only for temporary storage before an end-of-life tyres 
[sic] is forwarded to a recovery operation," and th at "landfilling and stockpiling are the least desired 
options."115   
                                                      
107 European Communities' second oral st atement, executive summary, para. 6. 
108 Health Protection Agency (UK), Chemical Hazard and Poisons Report, 8 (2003) (Exhibit BRA-10). 
109 Brazil's second oral statemen t, executive summary, para. 2. 
110 Brazil's first written submission, executive summary, para. 6. 
111 Brazil's second oral concluding st atement, executive su mmary, para. 3. 
112 European Communities' second oral st atement, executive summary, para. 6. 
113 European Communities' first written submission, executive summary, para. 22. 
114 See European Communities' first written submission, at para. 103.  Brazil's second written 
submission, executive summary, para. 9. 
115 Brazil's second written submission, para. 63 (Exhibit BRA-40). WT/DS332/R 
Page 18  
 
  (iii) Necessity of the measure 
4.38 Brazil  recalls the Appellate Body's statement that "determination of whether a measure, 
which is not 'indispensable', may nevertheless be  'necessary'" involves "weighing and balancing a 
series of factors"
116, including:  (i) the importance of the inte rests protected by the measure;  (ii) the 
contribution of the measure to the end pursued;  (iii) the trade impact of the measure;  and (iv) the 
existence of reasonably available alternative measures.117   
4.39 Brazil  argues that the ban is necessary because no other measure can prevent the unnecessary 
generation of waste tyres.  Brazil submits that the required weighing and balanc ing of factors (interest 
protected, necessity, trade impact, and availability of alternatives) clearly demonstrates that the ban is 
necessary.118  Brazil has established that:  the ban protects interests that are vital and important in the 
highest degree;  no reasonably available alternativ e to the ban exists;  it does not restrict trade 
unfairly;  it makes a significant contribution to the go al pursued;  and therefore, it is necessary within 
the meaning of Article XX(b).119   
4.40 Brazil also argues that the strength of one fact or may compensate for the relative weakness of 
another factor.  Brazil refers to the Appellate Body's statement in EC – Asbestos  that120 "[t]he more 
vital or important the common interests or values  pursued, the easier it would be to accept as 
'necessary' measures designed  to achieve those ends."121  While the analysis does not stop at the 
interest protected, Brazil argues that the protection of  human health and the environment is an interest 
so fundamental, that it weighs substant ially in favour of a finding of necessity.122 
4.41 Should it be accepted, for the sake of argument, that retreaded tyres pose a risk to human 
health, the European Communities  argues that Brazil has still to prove that the import ban is 
necessary to protect human health, as in terpreted by the Appellate Body in Korea – Various Measures 
on Beef , EC – Asbestos  and Mexico – Taxes on Soft Drinks .123  The European Communities further 
argues that it cannot be maintained that the me asure is "necessary" for the purposes of protecting 
human life and health.124   
4.42 The European Communities also recalls the Appella te Body's statement that the determination 
of whether a measure is "necessary" involves a pr ocess of "weighing and balancing" a number of 
factors:  first, the importance of the interests prot ected by the measure;  second, the contribution of the 
measure to the end pursued;  third, the impact of  the measure on import trade;  and, fourth, the 
existence of alternative measures.125  The European Communities also notes the Appellate Body's 
confirmation in Korea – Various Measures on Beef  that "necessity" is a high standard located 
                                                      
116 Appellate Body Report on Korea – Various Measures on Beef , para. 164;  See also Appellate Body 
Report on US – Gambling , para. 323; Appellate Body Report on EC – Asbestos , para. 172. 
117 See Appellate Body Report on Korea – Various Measures on Beef , at para. 164;  Appellate Body 
Report on EC - Asbestos , at para. 172;  Panel Report on Canada – Wheat Exports and Grain Imports , at 
para. 6.223, Appellate Body Report on US – Gambling , at paras. 306, 307; Appellate Body Report on 
Dominican Republic – Import and Sale of Cigarettes , para. 69. 
118 Brazil's first oral statement, executive summary, para. 14; se cond oral statement, executive 
summary, para. 5. 
119 Brazil's second written submission, executive summary, para. 11. 
120 Appellate Body Report on EC – Asbestos , at para. 172.  See also Appellate Body Report on Korea – 
Various Measures on Beef , at para. 162. 
121 Brazil's first written submission, executive summary, para. 21. 
122 Brazil's second oral statemen t, executive summary, para. 5. 
123 European Communities' first written submission, executive summary, para. 23. 
124 European Communities' second oral concludi ng statement, executive summary, para. 8. 
125 European Communities' first oral statement, exec utive summary, para. 2; second written submission, 
executive summary, para. 1.  WT/DS332/R 
 Page 19 
 
 
  considerably closer to the pole of "indispensable" th an to that of "making a contribution to".  In the 
present case, the European Communities is of the view that Brazil has not even demonstrated that its 
ban is making a contribution to the prevention of public health problems.126 
4.43 Moreover, the European Communities contends that  Brazil is not correct to state that "the 
strength of one factor may compensate for th e relative weakness of the other".  The 
European Communities argues that Brazil seems to hope that the mere invocation of human life and 
health would be enough to render its measure immune to further le gal scrutiny.  However, for the 
European Communities, the process of weighing a nd balancing must be carried out taking into 
account all relevant factors, not just the objectives stated by Brazil.127 
Importance of the interests protected by the measure  
4.44 Brazil  claims that it has demonstrated – and th e European Communities has not contested – 
that the interests protected by the import ban (prot ection of human, animal, and plant life and health) 
are fundamental; indeed, so fundamental, that they we igh substantially in favour of the necessity of 
the measure.128  Brazil  argues that the ban seeks to protect human health and the environment129, 
values that are "both vital and important in the highest degree."130  Because the import ban is designed 
to achieve these policy goals, Brazil claims that the ban is "necessary."131   
4.45 The European Communities  contests that these interests are protected by the import ban and 
also claims that the ban was adopted with the objective of protecting the manufacturers of new and 
retreaded tyres located in Brazil and not human, animal or plant life and health.132  
Contribution of the measure to the end pursued  
4.46 Brazil  states that the contribution of the import ban lies in the fact that it prevents the 
unnecessary generation of additional waste tyres that mu st be collected and disposed of in Brazil and 
thereby reduces the health and environmental dangers caused by waste tyre accumulation and 
disposal.133  Brazil states that unlike ne w tyres, retreaded tyres are shorter-lifespan products that 
become waste sooner.  This is so, Brazil explai ns, because imported passenger car retreaded tyres 
cannot be retreaded again,134 and imported commercial vehicle retr eaded tyres have fewer remaining 
lifecycles.135  
4.47 Brazil argues that only non-generation of waste tyres, which requires an import ban on 
shorter-lifespan tyres, can achieve Brazil's chosen level of protection.136  To be justified under 
Article XX(b), Brazil is of the view that the measure must "contribute, at least to some extent ,"137 to 
addressing the health concerns, and "[t]he greater th e contribution, the more easily a measure might 
                                                      
126 European Communities' second oral concludi ng statement, executive summary, para. 8. 
127 European Communities' second written submission, executive summary, para. 3. 
128 Brazil's second written submission, executive summary, para. 12. 
129 Brazil's first written submission, executive summar y, para. 22; first oral statement, executive 
summary, para. 14.  
130 Appellate Body Report on EC – Asbestos , at para. 172.  See also Panel Report on Canada – Wheat 
Exports and Grain Imports , at para. 6.224. 
131 Brazil's first written submission, executive summary, para. 22. 
132 European Communities' second oral concludi ng statement, executive summary, para. 8. 
133 Brazil's first written submission, para. 109. 
134 Brazil's second oral statement, pa ra. 82 (Exhibit BRA-2, Exhibit EC-6). 
135 Brazil's second oral statement, para. 82. 
136 Brazil's second written submission, executive summary, para. 3. 
137 Appellate Body Report on US – Gambling , at para. 6.494 (emphasis added). WT/DS332/R 
Page 20  
 
  be considered 'necessary'."
138  For Brazil, the import ban contributes to protecting human health and 
the environment far more than just "to some exte nt" – no other practical alternative can prevent 
unnecessary creation of additional waste.139  Brazil argues that the ban's contribution to achieving this 
goal is significant because no other practical alte rnative can prevent the unnecessary generation of 
tyre waste.140  Brazil explains that the fact that not all tyres can be retreaded after their initial use does 
not undermine the ban's contribution because it is never possible to retread all  tyres.  Brazil points out 
that the goal is not to achieve the impossible (i .e., full retreadability), but to reduce waste to the 
greatest extent possible.141   
4.48 The European Communities  argues that Brazil must show that the import ban on retreaded 
tyres makes a contribution to the protection of human, animal or plant life or health.  The 
European Communities claims that Brazil tries to  avoid this question by engaging in speculation 
about why the European Communities wishes to expor t to Brazil.  The European Communities points 
out that these comments are beside the point for the purposes of Article XX(b) and recalls that under WTO rules, it is not the exporting Member which has to justify why it exports a good;  rather, it is for 
the importing Member to justify why it has decided to restrict imports.
142  
4.49 The European Communities claims Brazil has fail ed to demonstrate that the import ban on 
retreaded tyres makes a contribution to the protection of human, animal or plant life or health.143  The 
European Communities argues that the importance of life and health by itself is not sufficient to 
establish that a measure is necessary for the purposes of Article XX(b);  rather, a Member must also 
show that its measure contributes to  the achievement of the stated goa ls, and is proportionate in this 
respect given notably its trade impact and the ava ilability of other reasonabl y available alternatives.144   
4.50 The European Communities recalls th e Appellate Body's statement in Korea – Various 
Measures on Beef , that "a 'necessary' measure is … locat ed significantly closer to the pole of 
'indispensable' than to the opposite pole of simply 'making a contribution to'".145  In the view of the 
European Communities, the import ban does not even  meet the threshold of "making a contribution 
to"; in any event, it is certain ly far from being "indispensable".146  The European Communities argues 
that the importation of retreaded tyres does not in any way increase the number of waste tyres to be 
disposed of in Brazil.  For this reason, the Eu ropean Communities claims that the import ban on 
retreaded tyres cannot be necessar y for preventing any risks which might be associated with the 
disposal of waste tyres.147 
4.51 The European Communities notes Brazil's claim that the import ban on retreaded tyres 
contributes to the protection of hum an life and health because it reduces the number of waste tyres in 
Brazil, which in turn could pose a problem to human life and health.  However, the 
European Communities is of the view that the co ntribution alleged by Brazil is based on several 
assumptions which Brazil needs to prove:  (i) that the ban reduces the number of waste tyres having to 
be disposed of in Brazil, and (ii) that such a re duction, even if it were established, reduces risks to 
                                                      
138 Appellate Body Report on Korea – Various Measures on Beef , at para. 49. 
139 Brazil's first written submission, executive summary, para. 23. 
140 Brazil's first oral statement, executive summary, para. 14; second written submission, executive 
summary, para. 3. 
141 Brazil's first oral statement,  executive summary, para. 14. 
142 European Communities' first oral st atement, executive summary, para. 6. 
143 European Communities' second oral st atement, executive summary, para. 7. 
144 European Communities' second written submission, executive summary, para. 2. 
145 European Communities' first oral statement, exec utive summary, para. 19; second oral statement, 
executive summary, para. 7. 
146 European Communities' first oral st atement, executive summary, para. 19. 
147 European Communities' first written submission, executive summary, para. 24.  WT/DS332/R 
 Page 21 
 
 
  human life and health.148  For the European Communities, the import ban does not even make a 
contribution to the reduction of the accumulation of waste tyres in Brazil, or to the reduction of any 
health problems associated therewith and in an y event, the contribution is not significant.149 
4.52 Moreover, the European Communities argues that even where a measure makes some 
contribution, it is necessary to assess the significan ce of this contribution in order to be able to 
properly conduct the process of "weighing and ba lancing" required under Article XX(b).  The 
European Communities recalls that in Dominican Republic – Import and Sale of Cigarettes  the 
Appellate Body held that the limited effectiveness of a measure was a relevant factor for concluding that the measure was not "necessary".
150 
Whether the ban reduces the accumulation of waste tyres in Brazil 
4.53 Brazil  argues that for every retreaded tyre that is  not imported into Brazil, there is a higher 
likelihood that one more used tyre will be colle cted in Brazil, retreaded, and reused, thereby 
eliminating the risks of having to collect and dispo se of one additional tyre.  Brazil submits that more 
than 55 million used tyres were collected and re treaded in Brazil between 2001 and 2005.  Had the 
import ban not been imposed, Brazil contends that millions  of retreaded tyres would have entered 
Brazil to become waste after a single use, and m illions of used tyres consumed in Brazil would not 
have been retreaded, exacerbating the waste tyre problem.151  Brazil maintains that a high number of 
tyres used in Brazil are retreadable and are retreaded.152 
4.54 Brazil argues that it has demonstrated that the import ban, in fact, reduces the amount of 
waste tyres that must be disposed of in Brazil.  It notes that between 1999 a nd 2005, annual imports of 
retreaded tyres into Brazil fell from 18,455 tonn es to 1,727 tonnes.  Brazil further notes that any 
reduction in the importation of shorter-lifespan pro ducts, such as retreaded tyres, necessarily also 
leads to a corresponding reduction in the volume of waste tyres generated in the importing country, and, consequently, a reduction in the asso ciated health and environmental risks.
153 
4.55 Brazil further argues that because the ban on u sed tyres and the ban on retreaded tyres both 
make an independent contribution to the waste tyre reduction goals, imports of casings through 
preliminary injunctions do not negate the ban's contribution.154  Brazil states that so long as it 
continues to retread the tyres it consumes, fewer imported retreaded tyres will mean more suitable 
casings and less waste.  Brazil notes, however, that  because eliminating used tyre imports would 
further reduce tyre waste, it has vigorously opposed the injunctions.155 
4.56 According to the European Communities , Brazil has not demonstrated that the import ban 
on retreaded tyres reduces significantly the accumu lation of waste passenger car tyres in Brazil.156  
The European Communities argues that an increase in the number of waste tyres to be disposed of in 
Brazil could result only if the sale of an imported retread ed tyre were to replace either (a) the sale of a 
new tyre, which will then be retreaded, or (b) th e sale of a retreaded tyre made from a casing 
                                                      
148 European Communities' second written submission, executive summary, para. 6. 
149 European Communities' second oral st atement, executive summary, para. 8. 
150 European Communities' second written submission, executive summary, para. 5. 
151 Brazil's first written submission, executive summary, para. 23. 
152 Brazil's answer to panel question No. 107 (Exhibit BRA-162). 
153 Brazil's answer to panel question No. 140; Brazil's first written submission, paras. 6 and 109. 
154 For more information on the number of imported used tyres, see para. 4.65. 
155 Brazil's second written submission, para. 134. 
156 European Communities' first oral statement, exec utive summary, para. 8; second written submission, 
executive summary, para. 11; second oral statement, ex ecutive summary, para. 9; s econd oral concluding 
statement, executive summary, para. 9. WT/DS332/R 
Page 22  
 
  originating in Brazil.  However, the European Co mmunities claims that neither has been established 
by Brazil.
157   
4.57 Moreover, the European Communities submits that  retreaded passenger car tyres produced in 
Brazil are made overwhelmingly from imported casings.158  The European Communities argues that 
imported retreaded tyres will compete with domestically produced retreaded tyres.159  The European 
Communities claims that an imported retreaded ty re will replace either a new tyre which will 
generally not be retreaded, or a domestic retreade d tyre which typically has been produced with an 
imported casing.160  In either event, the European Commun ities is of the view that importation does 
not lead to an increase in the number of passenger car tyres arising in Brazil161 and that the import ban 
does not contribute at all to the reduction of waste tyres accumulating in Brazil.162 
4.58 The European Communities contends that Br azil claims, first, that Brazil retreads a 
comparatively high percentage of domestically -consumed tyres, and, second, that the ban has 
substantially contributed to the reduction of tyre waste by eliminating imports of used tyres that 
cannot be retreaded.  The European Communities not es that the second argument is irrelevant for our 
case because the European Communiti es does not challenge the import ban on used tyres that cannot 
be retreaded, though one has to observe that the impor tation of used tyres has not been eliminated, but 
has skyrocketed.163 
4.59 The European Communities notes that  Brazil has exclusively relied on the fact that such tyres, 
unlike new tyres, cannot be retreaded again.164  For the European Communities, this fact would only 
matter if passenger car tyres would be retrea ded in Brazil to any significant extent.165  T h e  
European Communities claims that only an insignificant percentage of passenger car tyres used in 
Brazil is actually retreaded.166  The European Communities notes Brazil's claim that "for every 
retreaded tyre that is not imported into Brazil, there is one more used tyre that is collected in Brazil 
and retreaded".  However, for the European Comm unities, this statement could be true only if 
100 per cent of all new tyres consumed in Brazil were  retreaded;  this is not the reality in Brazil.167  
Data on retreading activities in Brazil 
4.60 Brazil  contends that it has presented168 hard suitability data, aggregated by Mazola – a 
company that selects casings for Brazil's leading tyre retailer, DPaschoal – which shows that about 
30 per cent of Brazilian casings are retreadable169, and Brazil's Exhibit BRA-95 also demonstrates that 
domestic casings are indeed being retreaded.170  Brazil submits that an updated version of the report by 
                                                      
157 European Communities' second written submission, executive summary, para. 11. 
158 European Communities' second written submission, executive summary, para. 12; second oral 
concluding statement, executive summary, para. 9. 
159 European Communities' second written submission, executive summary, para. 12. 
160 European Communities' second written submission, executive summary, para. 12; second oral 
concluding statement, executive summary, para. 9. 
161 European Communities' second oral concludi ng statement, executive summary, para. 9. 
162 European Communities' second written submission, executive summary, para. 12. 
163 European Communities' second oral st atement, executive summary, para. 10. 
164 European Communities' first oral statement, exec utive summary, para. 8; second written submission, 
executive summary, para. 11; second oral concludi ng statement, executiv e summary, para. 9.  
165 European Communities' second oral concludi ng statement, executive summary, para. 9.  
166 European Communities' second oral concludi ng statement, executive summary, para. 9.  
167 European Communities' first oral statement, exec utive summary, para. 8; second written submission, 
executive summary, para. 7, 11; second oral statement, executive summary, para. 9. 
168 See Brazil's answer to panel question No. 17.  See also Brazil's first written submission, at para. 79. 
169 Brazil's answer to panel question No. 17;  Brazil's first written submission (Exhibit BRA-93). 
170 Brazil's answer to panel question No. 20.  Brazi l's second written submission, para. 116 (Exhibit 
BRA-95).  WT/DS332/R 
 Page 23 
 
 
  the Brazilian Association of the Retreading Industry  (ABR), which separates the data by tyre type, 
shows that most passenger car retreaded tyres are made from domestic casings.171  Brazil claims that it 
has always produced more retreaded tyres than it has imported casings and that the gap necessarily has to have been filled by domestic casings.  Braz il argues that under the most conservative scenario, 
which assumes that all imported casings were retreaded, some 70 per cent of passenger car retreaded 
tyres were made from domestic casings as recently  as 2002.  Brazil points out that the rate did not 
decline until 2004 and 2005, when very high numbers of casings were imported.
172  
4.61 The European Communities  submits that Brazil tries to  defend the supposedly high 
retreading rate of domestic casings, on two grounds:  first, with the data aggregated by Mazola on 
unusable automobile tyres in Brazil, and, second, with the report provided by ABR, to prove that 
domestic casings are indeed being retreaded and th at the European Communities overstates the extent 
to which Brazilian retreaders use imported casings.173   
4.62 Concerning the first argument , the European Communities notes Brazil's claim that about 
30 per cent of passenger car tyres in Brazil remain suitable for retreading.  The European Communities submits that in support of this  statement, Brazil has not been able to provide 
any other evidence than a table prep ared by a private company, Mazola .  However, it is not clear to 
the European Communities that this  table indeed reflects only passenger car tyres, as Brazil claims, 
and how the term "unusable" is to be understood.  The European Communities is of the view that it 
does not appear that this term only excludes tyres wh ich are "retreadable", but rather it might also 
exclude tyres which can be used for other purposes, in cluding mid-life tyres, or tyres than can be used 
for material recycling.  The European Communities al so remarks that Mazola collects used tyres left 
by customers at DPaschoal, which is the largest distributor of Goodyear tyres in Brazil.  The 
European Communities submits that it is not clear to which extent figures collected in this context are 
representative for Brazil overall.  Moreover, for th e European Communities, information provided by 
a company associated with new tyre retailers does not appear credible for the purposes of the present 
proceedings.
174  
4.63 Brazil  argues that the purported link between the interests of new tyre manufacturers and 
Mazola is too attenuated: The suitability figur es that Brazil has introduced do not come from 
Goodyear, and not even from DPaschoal, but from M azola – a third party with no direct link to the 
sales of new or retreaded tyres.  Brazil adds that  the 30 per cent suitability figure provided by Mazola 
offers a representative sample of the market at larg e.  Brazil explains that Mazola has been selecting 
tyres suitable for retreading for the last 15 years – something it would not have been able to do had 
there not been suitable Brazilian casings.175  Brazil also notes that the best testament to the 
retreadability of Brazil's tyres may be the fact that  Brazilian retreaders have retreaded tyres since the 
1950s, long before imported casings ever became available.176 
4.64 Concerning the second argument , the European Communities  points out that even if a small 
proportion of Brazilian passenger car tyres are retreada ble, this does not mean that all of these tyres 
are as a matter of fact retreaded.  The European  Communities notes Brazil's claims that in 2005 
"Brazilian retreaders processed about 18 million used tyres"177 and that, accordin g to information 
provided by ABR in 2005, Brazilian retreaders produced 18.7 million retreaded tyres.178  However, the 
                                                      
171 Exhibit BRA-157. 
172 Brazil's second oral statemen t, executive summary, para. 16. 
173 European Communities' second oral st atement, executive summary, para. 11. 
174 European Communities' second written submission, executive summary, para. 15. 
175 Brazil's second oral statement, para. 73. 
176 Brazil's second oral statement, para. 74. 
177 European Communities' first oral st atement, executive summary, para. 9. 
178 European Communities' second written submission, executive summary, para. 22. WT/DS332/R 
Page 24  
 
  European Communities notes that Brazil does not say from where these used tyr es originate.  As the 
European Communities has set out, Brazilian retreaders operate very largely with tyres imported from 
third countries:  in 2005, Brazil imported, largely for the purposes of retreading, 10.5 million used tyres, out of which 8.4 million were from the European Communities.
179   
4.65 Brazil  responds that the European Communities vastly overstates the extent to which 
Brazilian retreaders use imported used tyres in thei r production.  It notes that between 2001 and 2005, 
more than 84 million tyres were retreaded in Braz il, but only 27 million used tyres were imported;  
not all of those imported used tyres were suitable for retreading, but even if they had been, some 
57 million tyres (two-thirds) would have still been retreaded from domestic casings.180     
4.66 In Exhibit BRA-162, Brazil provides calculati ons that compare Brazil's retread production 
with used tyre imports.  The calculations set forth a conservative scenario, which assumes that all 
imported casings were retreadable and were, in fact, retreaded, as well as what Brazil calls a realistic scenario, based on the estimates by the Brazilian re treaders that only two-thirds of the imported 
casings are retreaded.
181  Brazil states that the figures show that regardless of the scenario, anywhere 
from 83 to 89 per cent of all retreaded tyres made in Brazil were made from domestic casings in 2001 
and 2002.  Brazil adds that according to the calcu lations, the overall retreading rate from domestic 
casings peaked in 2003 at some 44 per cent under th e realistic scenario, or 35 per cent under the 
conservative scenario.  To Brazil, this means that of all potentially retreadable used tyres in Brazil, as 
much as 44 per cent were not only suitable fo r retreading, but were, in fact, retreaded.182   
4.67 The European Communities  notes Brazil's argument that even if Brazil had retreaded all of 
the 10.5 million used tyres it imported in 2005, this  still would have accounted for only 56 per cent of 
all tyres retreaded in Brazil.183  However, the European Communities argues that Brazil overlooks that 
the number of 18.7 million retreaded tyres indicated by ABR is an aggregate number for truck, bus 
and passenger car tyres, out of these 18.7 million retr eaded tyres, 7.9 million were truck/bus tyres and 
10.8 million were passenger car tyres.  As  to the origin of the casings used, the 
European Communities notes that ABR indicates that 20 per cent of the truck and bus casings 
retreaded in Brazil are imported and 80 per cent are domestic.  In contrast, for passenger car tyres, the 
European Communities submits that ABR indicates th at "the large majority, but not the totality of 
passenger car casings reformed in Brazil are importe d".  The European Comm unities notes that this 
information thus fully confirms the European Co mmunities' view that the retreading of domestic 
passenger car casings represents only a very small proportion of used car tyres arising in Brazil.184  
4.68 The European Communities recalls that the ABR' s report indicates that the large majority of 
passenger car casings retreaded in Brazil are importe d.  Therefore, in the European Communities' 
view, the evidence provided by Brazil shows the contrary of what Brazil pretends.185 
4.69 Brazil  first notes that the ABR report confirms that 80 per cent of truck and bus tyres were 
made with domestic casings in 2005.  Brazil then  notes that while the report estimates that the 
majority of the passenger car retreaded tyres were  made with imported casings in 2005, this happened 
only because Brazilian retreaders were able to import a very high number of casings that particular 
year.  Brazil argues that in the previous years, wh en used tyre imports were substantially lower, 
                                                      
179 European Communities' first oral st atement, executive summary, para. 9. 
180 Brazil's second written submission, para. 135 (Exhibit BRA-95). 
181 Brazil's second oral statement, pa ras. 57-62 (Exhibits BRA-94, 162). 
182 Brazil's second oral statement, para. 61. 
183 European Communities' second written submission, executive summary, para. 22. 
184 European Communities' second written submission, executive summary, para. 23. 
185 European Communities' second oral st atement, executive summary, para. 11.  WT/DS332/R 
 Page 25 
 
 
  passenger car, truck and bus retreaded tyres in Braz il were made for the most part with domestic 
casings.186 
4.70 Brazil argues that the ABR production data plai nly demonstrates that a high proportion of 
passenger car retreaded tyres in Brazil is made from domestic casings.  Brazil states that according to 
the ABR numbers, between 2001 and 2005, Braz ilian retreaders produced some 43.7 million 
passenger car retreaded tyres, but during the same  period these retreaders imported only 27.3 million 
casings.  Brazil points out that the European Comm unities agrees that at least 15 per cent of the 
imports are discarded as "technical losses."187  Brazil argues that even if the remaining 85 per cent 
were all retreaded (which, Brazil argues, is unlik ely) and truck and bus tyres accounted for roughly 
15 per cent of the imports, imported casings would have  been used to produce just 19.8 million of the 
43.7 million passenger car retreaded tyres made between  2001 and 2005.  To Brazil, this means that at 
least 23.9 million, or 55 per cent of passenger car retreaded tyres made in Brazil necessarily had to be made from domestic casings.
188   
4.71 Brazil adds that from 2001 to 2003, before the im ports of used tyres increased, this proportion 
was even higher.  Brazil provides a table with these calculations from 2001 to 2005.189  Brazil notes 
that the table shows that even under the most conservative assumptions, as much as 74 per cent of 
passenger car retreaded tyres in Brazil were made from domestic casings.   
Suitability of Brazilian used tyres for retreading 
4.72 Brazil  submits that the European Communities inco rrectly claims that the import ban does 
not reduce waste tyre volumes because tyres used in Brazil are not suitable for retreading.190  Brazil 
argues that the European Commun ities has built its case on flawed conclusions and, sometimes, 
outright misrepresentations, as for example that tyres used in Brazil are not retreadable when, in fact, 
they not only are retreadable, but are in fact retreaded in high numbers.191  Brazil wishes to recall that 
the rational explanation for the use of imported casi ngs in lieu of domestic cas ings for retreading is 
not due to deficiencies in suitability of domestic  casings, but rather to how cheap imported casings 
are, due to their negative value in Europe.192  Brazil states that about 30 per cent of Brazilian casings 
are retreadable.  Brazil points out that this retreadab ility level is quite high compared to the available 
figures for countries such as the United Kingdom, France, Australia, and the United States.193   
4.73 The European Communities  claims that Brazilian authorities have recognised that Brazilian 
passenger car tyres are generally no longer suitable for re treading after use, as is illustrated by the fact 
that Brazilian retreaders have to import foreign tyres as necessary primary matter.194  T h e  
European Communities notes that Brazil has attempte d to reject the relevance of the fact that 
Brazilian retreaders need to import foreign casings by  claiming that foreign casings have "no value", 
or even "negative value";  this is manifestly untrue.  The European Co mmunities submits that a 
retreadable casing is a valuable resource for any retreader, which has a positive value, as it has been 
explicitly confirmed in a report by CEMPRE, a r ecycling initiative of Brazilian industry, and a 
                                                      
186 Brazil's second oral statement, para. 56. 
187 Brazil's answer to panel question No. 105, citing European Communities' second oral statement, 
para. 33. 
188 Brazil's answer to panel question No. 105. 
189 Brazil's answer to panel question No. 105. 
190 Brazil's second written submission, executive summar y, para. 31; second oral statement, executive 
summary, para. 16. 
191 Brazil's second oral statemen t, executive summary, para. 1. 
192 Brazil's second oral concluding st atement, executive su mmary, para. 11. 
193 Brazil's second written submission, para. 116;  Brazil's first written submission, para. 79. 
194 European Communities' first oral st atement, executive summary, para. 9. WT/DS332/R 
Page 26  
 
  number of invoices documenting purchases of large quantities of casings by the biggest Brazilian 
retreader, BS Colway S.A. in Europe.
195    
4.74 Moreover, for the European Communities, there is no rational explanation for the 
considerable efforts spent by Brazilian retreaders on obt aining casings abroad ot her than the fact that 
these casings are not available in Brazil and this is a further illustration of the unsuitability of 
Brazilian casings for retreading.196  The European Communities submits that Brazil has made an 
attempt to explain the import of casings providing two reasons:  first, they are substantially cheaper 
than the domestic ones, and, second, the existen ce of an excess capacity in the Brazilian retreading 
industry.  The European Communities notes that Brazil also claims that "the Federal Government has 
worked vigorously to safeguard the integrity of the ban" and has explained the judicial decisions 
issued in 2006.197 
4.75 Brazil  also notes that to the extent that there may be an apparent shortage in suitable domestic 
casings, that shortage is a reflection of excess cap acity in the Brazilian retreading industry – not of 
low rates of suitability.198 
4.76 Concerning the argument on the lower price, the European Communities  argues that it is 
already a step back from the previous statements by Brazil that used tyres have a "negative value" in 
Europe.  In any case, the European Communities argues that the imported casing price quoted by 
Brazil in its second written submission (US$3) is wrong because it does not reproduce the price reflected in Exhibit BRA-147, which is around US$7 .  The European Communities submits that this 
price should be incremented by 15 per cent (i.e. ar ound US$1) to take into account the technical losses 
in retreading tyres from abroad, plus the cost fo r the import retreader to discard these unretreadable 
casings that have become waste tyres and the costs of obtaining courts injunctions.  The 
European Communities submits further that the fina l price therefore appears to be higher than the 
average price of a domestic casing, according to  the prices given by Brazil in its second written 
submission, which are US$7 to US$9.
199 
4.77 Brazil  notes that in the European Commun ities, used tyres are a liability – the 
European Communities pays an average of €1.2 to dispose of a waste tyre.  Brazil states that if 
exports to Brazil ended, many more used ty res would have to be disposed of in the 
European Communities at a higher cost.200  Brazil adds that imported casings that begin with a 
negative value are substantially cheaper than domestic casings, and, in fact, the value of these casings 
is so low that the importers typi cally do not insure the shipments.201  
4.78 Brazil argues that domestic casings are 2-3 times more expensive than imported casings.202  
Brazil points out that Brazilian retreaders estimate that  the cost of a domestic casing is between US$7 
and US$ 9.203  At the same time, Brazil argues, the offi cial figures (Exhibit BRA-158) indicate that an 
average final cost of an imported casing, which includes freight and taxes, is US$3.7.204  Brazil 
explains that the figure includes commercial vehi cle casings, which are far more expensive than 
                                                      
195 European Communities' second written submission, executive summary, para. 21. 
196 European Communities' second written submission, executive summary, para. 21. 
197 European Communities' second oral st atement, executive summary, para. 13. 
198 Brazil's second written submission, para. 119. 
199 European Communities' second oral st atement, executive summary, para. 14. 
200 Brazil's second oral statement, para. 70. 
201 Brazil's second oral statement, para. 69 (Exhibit BRA-158). 
202 Brazil's second oral statement, para. 63. 
203 Brazil's second written submission, para. 117;  Brazil's second oral statement, para. 63 
(Exhibit BRA-147). 
204 Brazil's second oral statement, para. 63 (Exhibit BRA-158).  WT/DS332/R 
 Page 27 
 
 
  passenger car casings.  Brazil further states that of th is total amount, freight costs average a little more 
than one dollar, and that the legal costs involved in obtaining injunctions are very low. 
4.79 The European Communities  notes Brazil's argument that "collecting casings in Brazil is 
more burdensome and expensive than importing them",  since used tyres have a "negative value" in 
Europe.  However, it is not clear to the Europ ean Communities why it should be more burdensome to 
collect casings in Brazil rather than collecting th em in Europe and shippi ng them several thousand 
miles to Brazil.205  The European Communities also notes that  the fact that the market share of 
retreaded tyres has declined in the European Communities and in other countries has nothing to do 
with these tyres being "inferior".  Rather, for the European Communities this development is largely 
due to competition of increasingly cheap low-quality ne w tyres, some of which can no longer even be 
retreaded after use.  The European Communities submits  that Brazil also refers to the fact that the 
European Communities has a trade su rplus in retreaded tyres.  Ho wever, the European Communities 
points out that this is no reason under WTO law for restricting trade.  In any event, it should be noted that the European Commu nities allows the importation of retreaded tyres.
206 
4.80 Concerning the argument relating to the curren tly unused capacity of the Brazilian retreading 
industry, the European Communities is of the vi ew that it does not support the Brazilian argument 
because this capacity, which is idle at a time wh en 10 million casings are imported for retreading, 
confirms the low level of retreadability of Brazilia n casings.  The European  Communities argues that 
there is no reason why the unused capacity should increase demand for imported casings, rather than 
domestic casings, if retreadable domestic casings were available in Brazil.207 
4.81 With respect to excess capacity, Brazil  points out that over the past several years, production 
of retreaded tyres has increased by 33 per cent and that  it is possible, in principle, that retreaders now 
require more suitable casings than Brazil generates,  even with its very high suitability levels, to 
sustain these higher production levels.208  Brazil states that  if Brazilian retreaders indeed cannot 
operate at full capacity on Brazilian casings alone, excess capacity is the only plausible conclusion 
because Brazil has already achieved some of the hi ghest suitability and retreadability rates reported by 
any country – a third of the total waste arisings are retreaded according to the retreaders' numbers.209  
However, Brazil argues, it is the Brazilian retread ers that bear the risk of any excess increase in 
capacity.  Brazil states that it has no interest in helping the retreading industry sustain its growth rates 
if it requires importing shorter-lifespan casings th at will have to be disposed of in Brazil.210   
4.82 Furthermore, the European Communities  submits that it can be assumed that the sale of 
retreaded tyres, including both imported and domestic, will to some extent compete with the sale of 
new tyres.  In this respect, the European Communities points out that the import ban would only make 
a contribution to the reduction of the number of wast e tyres arising in Brazil if it could be shown that 
these new tyres are actually being retreaded afte r having been used.  The European Communities 
argues that this depends on a number of factors:  to which extent new tyres sold in Brazil are of a kind that is suitable for retreading after use; to which ex tent tyres are typically suitable for retreading after 
use in Brazil;  and to which extent retrea dable casings in Brazil are actually retreaded.
211 
4.83 The European Communities claims that it has pr ovided evidence that certain types or brands 
of new tyres are not retreadable due to the quality  or construction of the casing.  Accordingly, 
                                                      
205 European Communities' first oral st atement, executive summary, para. 9. 
206 European Communities' first oral st atement, executive summary, para. 7. 
207 European Communities' second oral st atement, executive summary, para. 15. 
208 Brazil's second written submission, para. 119; Brazil's answer to panel question No. 106. 
209 Brazil's answer to panel question No. 96 (Exhibits BRA-92, 162). 
210 Brazil's second written submission, para. 119. 
211 European Communities' second written submission, executive summary, para. 13. WT/DS332/R 
Page 28  
 
  contrary to Brazil's reply to the Panel's question No. 12, the European Communities contends that it 
cannot be assumed that all new tyres sold in Brazil are necessarily of such a kind as can be retreaded 
after use.  Moreover, the European Communities al so notes that, contrary to what Brazil seems to 
assume, the observance of international standards for new tyres does not necessarily guarantee the 
retreadability of the product.
212 
4.84 Brazil  notes that new tyres sold in Brazil (whether manufactured domestically or imported) 
are high-quality tyres that comply with strict t echnical and performance standards that are based on 
international standards.  Brazil argues that tyr es manufactured in accordance with these standards 
have the potential to be retreaded.213  Brazil believes that this fact is best demonstrated by the high rate 
of retreadability in Brazil.214  Brazil also notes that neither Brazil nor any other country, as far as 
Brazil understands, employs any measures "to preven t imports of cheap low quality new tyres."  
Brazil states that it is not aware of a means to dis tinguish between new tyres that are capable of being 
retreaded and those that are not before  the tyres have actually been used.215 
Retreading rate of Brazilian tyres 
4.85 Brazil  points out that the European Communities' entire case depends on it being able to 
demonstrate that new tyres used in Brazil cannot be retreaded again, and, therefore, present the same 
health and environmental risks as imported retread ed tyres.  Brazil states that the European 
Communities has failed to prove this point.216 
4.86 Brazil argues that, in contrast, it has demonstr ated that tyres used in Brazil not only are 
retreadable, but have been and ar e being retreaded in high numbers.217  Brazil states that the rate of 
retreading from domestic casings was 25 per cent in 2005 and 32 per cent in 2003 and 2004 under the 
realistic scenario, and 9 per cent in 2005 and 26 per cent in 2003 under the conservative scenario.218  
Brazil adds that, in comparison, Italy retreads just  14 per cent of its tyres;  Germany, 11 per cent;  
United States, 9 per cent;  Belgium and Sweden, 4 per cent;  and Austria, Hungary, Czech Republic 
and Slovak Republic do not retread at all.219 
4.87 The European Communities  submits that confirmation for the view that the retreading of 
domestic passenger car casings represents only a very  small proportion of used car tyres arising in 
Brazil, can also be found in a recent overview of th e Brazilian tyre market, which indicates the rate of 
retreading of all types of tyres in Brazil in 2005 as 9.9 per cent (which is an aggregate figure including 
both car and truck tyres):220  accordingly, given this very low ra te of retreading of domestic passenger 
car tyres in Brazil, Brazil cannot claim that the importation of passenger retreaded tyres leads to any significant increase in the accumulation of waste tyres in Brazil.
221  The European Communities 
submits that since the retreading of truck tyres in Brazil occurs with a much higher frequency than for 
car tyres, this means that the effective retreadi ng rate for passenger car tyres must lie appreciably 
below 9.9 per cent.222 
                                                      
212 European Communities' second written submission, executive summary, para. 14. 
213 Brazil's answer to panel question No. 12. 
214 Brazil's answer to panel question No. 91 (Exhibit BRA-162). 
215 Brazil's answer to panel question No. 91. 
216 Brazil's answer to panel question No. 107. 
217 Brazil's second oral statement, para. 4, Brazil's answer to panel question No. 107. 
218 Brazil's second oral statement, para. 60 (Exhibit BRA-162). 
219 Brazil's first written submissi on, para. 79 (Exhibit BRA-58). 
220 European Communities' second written submission, executive summary, para. 24; second oral 
statement, executive summary, para. 12. 
221 European Communities' second written submission, executive summary, para. 24. 
222 European Communities' second oral st atement, executive summary, para. 12.  WT/DS332/R 
 Page 29 
 
 
  4.88 The European Communities submits that in its  second oral statement, Brazil has presented 
tables concerning the rate of retreadability of Br azilian passenger car tyres, according to which a 
conservative estimate would be a rate of retreadab ility in 2005 of 9 per cent.  For the European 
Communities, the methodology according to which th is table has been prepared is not clear.  
Accordingly, on the basis of the data containe d in the LAFIS report on "Brazil – Car Parts and 
Vehicles: Tyres" (Exhibit EC-92) which gives the ra te of retreading as 9.9 per cent for passenger and 
truck tyres combined, the European Communities subm its that the rate of retreading for passenger car 
tyres must be considerably lower than 9 per cent.223 
4.89 Brazil  also criticizes the European Communitie s' reliance on the LAFIS Report and the 
9.9 per cent retreading rate that it allegedly contains.224  Brazil points out that the actual reading of the 
report reveals that the number comes from the contr oversial IPT study, which accounted for just half 
of the total waste tyre arisings.225  Brazil states that the study's me thodology was so flawed that the 
author was requested to redo it.  Specifically, Brazil explains that the study surveyed only "retailers 
and tire repair shops"226 and did not account for retreadable tyres that were retained by owners even 
though they comprise a third of the total waste aris ings.  Neither did it account for a large part of 
commercial tyres because these tyres do not typically p ass through the retailers or tyre repair shops.   
4.90 Nevertheless, Brazil contends th at should the European Communities choose to rely on this 
report, it should then also accept another one of  the report's conclusions: that the rate of technical 
suitability  is almost 50 per cent.227 
4.91 The European Communities  notes that Brazil has criticised th e 9.9 per cent indicated in the 
LAFIS Report as based on "a controversial IPT st udy", and argued that this study reflects only the 
views of new tyre manufacturers.  The European Co mmunities notes that, strikingly, at the same time, 
Brazil asks the Panel to rely on the tables provi ded by the company Mazola, which is equally 
associated with the new tyre manufacturers and retail ers.  For the European Communities, it appears 
that Brazil regards studies only as controversial when  they do not suit its purpose, whereas it would 
claim that all evidence submitted by itself is uncon troversial.  The European  Communities argues that 
the fact that Brazilian casings generally are not retr eadable is also confirmed by Exhibit BRA-157, in 
which the ABR confirms that due to the conditions  of the Brazilian roads, a great loss of casings 
occurs already in the original lifespan, leadi ng to a lack of retreadable casings in Brazil.228 
4.92 Brazil  states that even in its criticism of Br azil's sources the European Communities is 
inconsistent:  having just contested the reliability of the ABR report in its response to Panel question 
No. 107, the European Communities pr oceeds to cite the report in its response to the same question in 
support of its low suitability argument.  Brazil points out, however, that Exhibit BRA-157, which the 
European Communities cites in support, is the updated ABR report.229 
4.93 In addition, Brazil points out that the Eur opean Communities has offered no evidence in 
support of its argument of poor road conditions.  Br azil also states that th e European Communities 
misses an important point: regardless of the road conditions in Brazil's countryside, most tyres – and 
                                                      
223 European Communities' second oral concludi ng statement, executive summary, para. 10. 
224 For more information on the rate of retreadab ility, see Brazil's comment on European Communities' 
answer to panel question No. 107. 
225 Brazil's second oral statement, para. 72 (Exhibit BRA-159). 
226 Brazil's comment on the European Communities'  answer to panel question No. 107, citing 
Exhibit BRA-159. 
227 Brazil's second oral statement, para. 72 (Exhibit BRA-159). 
228 European Communities' second oral concludi ng statement, executive summary, para. 12. 
229 Brazil's comment on the European Communities'  answer to panel question No. 107, citing 
European Communities' answer to panel question No. 107 (Exhibit BRA-157). WT/DS332/R 
Page 30  
 
  especially passenger car tyres – are used in urban areas, where the roads ar e just as good as the roads 
in wealthier countries.
230 
4.94 The European Communities  submits that to demonstrate that the import ban on retreaded 
tyres reduces the accumulation of passenger car waste ty res in its territory, Brazil has attached to its 
second written submission a study prepared by a Braz ilian economist, Professor Nastari, President of 
Datagro Limitada.  The European Communities argues that  its assessment of this study shows that it is 
weak in terms of economics and fu ll of inconsistencies because the basic data are used wrongly or 
wrong assumptions are made.  The European Commun ities argues that one of the main weaknesses of 
the study is that it assumes a rate of actual retr eading of domestic casings between roughly 44 per cent 
and 92 per cent in Brazil, which is far too high.  The European Communities submits that this mistake 
in the size of a key variable, results in a gross ove restimation of the contri bution which retreading of 
domestic casings makes to waste reduction in Br azil, and accordingly an overestimation of the 
contribution which imports of passenger cars retreaded tyres would make to waste accumulation.231 
4.95 In any event, the European Co mmunities claims that a rate of retreading of 9 per cent, 
claimed by Brazil in its second oral statement, is  already considerably lo wer than the original 
30 per cent claimed by Brazil, let alone the even higher numbers used in the study prepared by 
Professor Nastari.  To the extent that the table provided by Brazil indicates higher numbers for earlier years, the European Communities is of the view th at this does not reflect the importations of used 
tyres into Brazil, but the fact that the Brazilian retreading industry is now operating in compliance 
with standards – Portaria INMETRO 133 – which impose exacting requirements on the quality of the 
casings to be used.
232  
4.96 Brazil  argues that the European Communities' criticism of the expert study is most probably 
due to a partial and incomplete understanding of the demonstration presented in the diagrams that 
depict the hypothetical cases in which imports of retr eaded and/or used tyres would be allowed.  In 
addition, Brazil states that it has demonstrated in Exhibit BRA-162 that the vast majority of tyres 
retreaded in Brazil were made from domestic casings.233  
4.97 Brazil argues that the evidence plainly demons trates that the 9.9 per cent figure does not 
represent the actual rate of retreading,  as the European Communities claims.234  Brazil states that on 
the contrary, the rate of retreading for passenger car  tyres, using only domestic casings, was, under the 
more realistic scenario, 25 per cent in 2005 and 32 per cent in 2003 and 2004.235  Brazil points out that 
at least for the year 2005, Brazil used hard numbers – not assumptions – to arrive at the number of imported casings that were actually retreaded.  Braz il states that this number was the 2005 destination 
estimate by BS Colway, cited in the "Raupp Opinion".
236  According to this number, Brazil states, of 
the 11 million casings that were imported into Brazil in 2005, only 7 million were used to make retreaded tyres in 2005.  Therefore, Brazil stat es that the realistic scenario for 2005 is based 
exclusively on hard numbers, and contrary  to the European Communities' suggestion,
237 at least 50 per 
cent of passenger car retreaded tyres necessarily had to have been made from domestic casings that 
year.  Brazil concludes that this puts the rate of retreading for the passenger car tyres alone at 25 per 
cent for 2005 – substantially higher than the rate  achieved by the European Communities itself.   
                                                      
230 Brazil's comment on the European Communities' answer to panel question No. 107. 
231 European Communities' second oral st atement, executive summary, para. 16. 
232 European Communities' second oral concludi ng statement, executive summary, para. 11. 
233 For more detail on this aspect, see Brazil's an swer to panel question No. 117 (Exhibit BRA-162). 
234 Brazil's comments on the European Communities' answer to panel question No. 107. 
235 Brazil's second oral statement, para. 60 (Exhibit BRA-162). 
236 Exhibit EC-22, p. 4. 
237 See European Communities' answer to panel question No. 107.  WT/DS332/R 
 Page 31 
 
 
  4.98 Finally, Brazil contests the European Communities' argument that the imports of used tyres 
into Brazil have increased because the stricter  new regulation – Portaria INMETRO 133 – rendered 
Brazilian casings that were previously re treadable no longer suitable for retreading.238  Brazil points 
out that the European Communities first made th is argument only in its responses to the Panel's 
questions following the second meeting of the parties.  Brazil notes that in its first written submission, 
the European Communities dedicated three paragr aphs to the discussion of Portaria INMETRO 133 
and its equivalent for commercial vehicles239, but did not once suggest that the portaria  created a 
shortage of suitable casings; in its second writte n submission, the European Communities did not 
mention the regulation at all.240  Brazil argues that the European Communities' belated invocation of 
the portaria , at the close of the proceedings, should be seen for what it is – a last minute attempt by 
the European Communities to bolster its faltering argument. 
The INMETRO technical note 83/2000 
4.99 The European Communities  argues that it has submitted evidence which proves that 
Brazilian tyres are not retreadable after use.  A ccording to Technical Note 83/2000 of the Brazilian 
standardisation authority, INMETRO, Brazilian tyr es are generally no longer suitable for retreading 
after use, which explains why Brazilian retreader s have to import foreign tyres as necessary raw 
material for their business241, and the use of Brazilian casings for retreading is not economically 
viable.242  The European Communities notes that the sa me view has also been expressed by the 
Governor of the State of Paraná.243   
4.100  Brazil  argues that the European Communities' reliance on Technical Note INMETRO 
83/2000, is misplaced for two reasons: it does not  reflect INMETRO's position and it talks of 
economic  viability, and not about availability of suitable casings.244  Specifically, Brazil explains that 
the note's only function was to memorialize INM ETRO's communications with representatives of 
Brazil's retreading industry.  The views that the not e reflects are not the official views of Brazil's 
authorities, as the European Communities suggest s, but the views of the domestic retreaders.245   
4.101  Brazil states that INMETRO took the unusual step of specifically repudiating the note 
because domestic retreaders used it in courts and in  the media to support the low suitability argument, 
as does the European Communities.246  According to Brazil, INMETRO has made clear that the note 
"had no validity whatsoever" and that any technical note is but an "opinion, not binding the Administration or private parties to its motive or conclusions, unless approved by ... Regulations."
247 
4.102  Finally, Brazil argues that the note did not mention suitability at all – it only stated that 
obtaining domestic carcasses was not economically  viable.  To Brazil, economic viability is not the 
same as the actual suitability of domestic casings – it merely refers to the higher costs of obtaining 
                                                      
238 Brazil's comments on the European Comm unities' Responses to the Question 107. 
239 European Communities' first written submission, paragraphs 20-22. 
240 Brazil's comments on the European Comm unities' Responses to the Question 107. 
241 European Communities' second oral st atement, executive summary, para. 9. 
242 European Communities' second written submission, executive summary, para. 16. 
243 European Communities' second written submission, executive summary, para. 16. 
244 For more information on Technical Note IN METRO 83/2000, see Brazil's answer to panel 
question No. 25. 
245 Brazil's answer to panel question No. 25 (Exhibit BRA-163). 
246 Brazil's answer to panel question No. 25 (Exhibit BRA-96). 
247 Brazil's answer to panel question No. 25 (Exhibit BRA-97). WT/DS332/R 
Page 32  
 
  domestic casings.
248  Brazil also notes that the Governor of  Paraná did not conf irm the alleged low 
suitability independently, but merely made a reference to the contested INMETRO note.249 
4.103  The European Communities  notes Brazil's argument that Technical Note 83/2000 speaks 
merely of "economic viability", but does not make  a statement about the suitability of Brazilian 
casings.  However, the European Communities submits  that Brazil does not o ffer any explanation for 
this lack of economic viability, other than the l ack of suitable casings.  Th e European Communities is 
of the view that if the price of suitable casings is excessively high, this must be due to the fact that 
such casings are scarce.  However, the European Communities contends that given the fact that Brazil 
itself claims that 40 millions of waste tyres arise every year in its territory, this scarcity would seem to indicate that only a very small proportion of these waste tyres seem to be suitable for retreading.
250 
4.104  The European Communities submits that Brazil h as attempted to diminish the significance of 
the INMETRO Technical Note.  First, the Europ ean Communities notes that Brazil claimed that the 
note "merely memorializes the position of the industry's stakeholders" and does not reflect 
INMETRO's position.  However, the European Comm unities explains that the note is an official 
document issued by INMETRO, and is signed by th ree officials of INMETRO in that capacity.  For 
the European Communities, if the note in addition reflects the position of industry stakeholders, this 
would seem to increase its relevance rather than diminish it.251 
4.105  Second, the European Communities notes Brazil's claim that this note h as been subsequently 
"revoked" by INMETRO through a technical note of  9 June 2005, because domestic retreaders used it 
in Court and in the media to support the low suita bility argument, as the European Communities does 
now.  The European Communities claims that the repudiation of the Note, which is made for the 
purposes of avoiding its use in litigation against the government, lacks all cred ibility.  In any event, 
for the European Communities the Technical Note cont ains a statement of fact, the "repudiation" of 
which does not mean that the statement was wrong.252 
4.106  According to Brazil , this particular note was issued by a committee of INMETRO, which 
consisted of various stakeholders, including industry representatives.  Brazil notes that the final rule, 
issued by INMETRO itself made no mention of low suitability,253 and, consequently, INMETRO's 
pronouncement on the subject, confirmed the suitability of domestic casings.254 
4.107  Brazil clarifies that the repudiation of the note was not a revocation – the note could not have 
been revoked because it had no legal effect in the firs t place.  Brazil uses the term "repudiation" to 
refer to the INMETRO's efforts to stop the misr epresentation and misuse of the note by Brazilian 
retreaders.  Brazil states that it repudiated the note not to avoid its use against Brazil in the present 
WTO proceedings – as the European Communities claims255 – but because domestic retreaders 
misused the note in injunction proceedings to ar gue that used tyre im ports should be permitted 
because no domestic casings were available.256   
                                                      
248 Brazil's answer to panel question No. 25. 
249 Brazil's second oral statement, para. 71. 
250 European Communities' second written submission, executive summary, para. 19. 
251 European Communities' second written submission, executive summary, para. 17. 
252 European Communities' second written submission, executive summary, para. 18. 
253 Brazil's second oral statement, para. 64 (Exhibit BRA-164). 
254 Exhibit BRA-163.  
255 Brazil's second oral statement, paras. 65-6 6, citing European Communities' second written 
submission, para. 39. 
256 For a response to the European Communities' ar gument on the high comparative price of domestic 
casings contained in para. 4.103, see Brazil's arguments contained in para. 4.77.   WT/DS332/R 
 Page 33 
 
 
  Imports of used tyres as a result of domestic court rulings257 
4.108  Brazil  submits that it bans imports of not only retr eaded, but also used tyres.  Brazil explains 
that its reason is simple:  used tyres will have to be discarded and disposed of e ither on arrival, or after 
a single use.  Brazil argues that the prohibition also ensures that Brazilian retreaders process only 
casings collected in Brazil, thereby helping to solve the disposal problem of Brazil, not the disposal 
problem of other countries.  Brazil submits that Br azilian retreaders have sought and, in some cases, 
have obtained preliminary injunctions that allowed some  used tyres to come in spite of the ban.  For 
these retreaders, Brazil explains that the legal fees ar e a small price to pay for foreign casings that are 
substantially cheaper – cheaper because in the Eu ropean Communities they have no value.  Brazil 
argues that they are a liability in the European Communities, not an asset, and one typically must pay 
to get rid of them.258  Brazil notes that the European Communities has based its argument on claims 
made by Brazilian retreaders, who invoke low suita bility to convince courts to authorize imports259 
and expend260 "resources [to] obtain the right to import retreadable casings".261  Brazil argues that the 
reason they do this is simple – imported casings are 2-3 times less expensive.262  
4.109  While some tyres retreaded in Brazil have been  made from used tyres imported through these 
preliminary injunctions, Brazil argues that it has successf ully reversed the vast majority of injunctions 
in courts, and it is confident that  injunctions will soon be denied ad portas .263  Brazil explains that 
these preliminary injunctions were issued in ex parte  proceedings.  Brazil notes that when the 
government had an opportunity to present its case, the courts reversed their initial grant of the 
injunction in two-thirds of the cases.  Brazil subm its that on appeal the government prevailed in 
92 per cent of the cases.  With such an overwhelmi ng precedent, Brazil is of the view that fewer and 
fewer Brazilian courts are issuing these injunctions.  While some imports continue to come in as a 
result of the previously-issued orders, Brazil argue s that the tide has now turned, ambiguities about 
the ban's legal effect have been all but  removed, and the imports will soon end.264 
4.110  Brazil stresses that circumvention of the impor t ban through preliminary injunctions is but a 
temporary phenomenon.  For Brazil, a decision guide d by what will soon become a non-factor would 
simply mean that once the imports stop a year from now, the Government of Brazil would have to 
come back to Geneva and repeat the same arguments.265  Brazil notes the European Communities' 
claim that used tyre imports negate  the contribution of the import ban.266  Brazil argues that imports of 
casings through preliminary injunctions do not de tract from the ban's contribution (and will soon 
end).267  In Brazil's view, so long as Brazil continues to retread the tyres it consumes, fewer imported 
retreaded tyres will mean more suitable casings and less waste.268  After all, it would be absurd to 
suggest that the WTO-compatibility of the French ban on imports of asbestos would be negated if a 
judge somewhere in France were to authorize a single importation of asbestos.269  
                                                      
257 Further arguments by the parties in relation to this issue are contained in paras. 4.186-4.189. 
258 Brazil's first oral concluding stat ement, executive summary, p. 2. 
259 Brazil's second oral statemen t, executive summary, para. 17. 
260 European Communities' answer to panel question No. 20, at para. 36.  
261 Brazil's second written submission, executive summary, para. 31. 
262 Brazil's second written submission, executive summar y, para. 31; second oral statement, executive 
summary, para. 17. 
263 Brazil's first oral statement,  executive summary, para. 14. 
264 Brazil's first oral concluding stat ement, executive su mmary, pp. 2-3. 
265 Brazil's first oral concluding stat ement, executive summary, p. 3. 
266 Brazil's second oral statemen t, executive summary, para. 21. 
267 Brazil's second written submission, ex ecutive summary, paras. 3 and 33. 
268 Brazil's second written submission, executive summar y, para. 33; second oral statement, executive 
summary, para. 21. 
269 Brazil's second oral statemen t, executive summary, para. 21. WT/DS332/R 
Page 34  
 
  4.111  However, because eliminating used tyre imports  would further reduce waste, Brazil explains 
that it has vigorously opposed the injunctions.  As a result, Brazil argues that the trend has turned 
around.  So far in 2006, Brazil submits that all High Court decisions and the vast majority of the lower court decisions came out against the injunctions.
270  Brazil submits further that the Federal Supreme 
Court is expected to uphold the import ban soon.271  Brazil notes that the President of the Republic has 
authorized and the Solicitor General has filed a constitutional action in Federal Supreme Court on 
21 September 2006.272  Brazil explains that this challenge  action, Allegation of Violation of 
Fundamental Precept, has the power  to revoke all the judicial decisions that have allowed the 
importation of used tyres into Brazil and preclude future judicial decisions permitting new imports.  
Brazil stated that the preliminary injunction requested  by the President in this action would be decided 
in a matter of days.273   
4.112  Brazil stresses that the Brazilian Government  is fighting each and every case to fully 
guarantee the effectiveness of the import ban.  Brazil explains that the judiciary has been 
overwhelmingly successful in reversing those wrong d ecisions.  However, Brazil's task has not been 
made easier by the willingness of others to export their tyre disposal problem to Brazil.274 
4.113  Brazil submits that while the European Communitie s is eager to consider a counter-factual in 
the case of Brazil's new tyre industry – which prov es nothing – it refuses to consider that same 
counter-factual in the case of used tyres.  In other words, Brazil argues that while the 
European Communities argues that the import ban does not make a contribution because used tyres 
continue to be imported through the court injunctions, it refuses to consider how many more used 
tyres would be imported in the absence of the ban.275  Brazil recalls a saying: " Nemo auditur propriam 
turpitudinem allegans "  – One is not entitled to base a claim on its wrongdoing.276 
4.114  The European Communities  submits that Portaria SECEX 14/2004 bans the importation of 
used tyres in Brazil.277  However, the European Communities s ubmits that the importation of the tyres 
takes place despite the ban on the basis of court in junctions, which have been obtained by Brazilian 
retreaders.278   
4.115  The European Communities argues that Brazil h as not contested any of these essential facts.279 
The European Communities notes Brazil' s confirmation that the main reason for the injunctions is that 
the import ban "restricts access to supplies of raw ma terial necessary for domestic retreaders to carry 
on their business".280  Brazil's defence has merely been that  these injunctions have been "erroneous" 
and are opposed by the government.281  The European Communities notes that Brazilian retreaders 
have confirmed that they need to import foreign casi ngs in order to be able to conduct their retreading 
                                                      
270 According to Brazil, these decisions were issued in the following proceedings:  AI 
2005.02.01.001764-6; MS 2003.51.01.020151-7; MS 2001.02.01.033748-9; AI 2005.02.01.008437-4; MS 
2004.70.01.010625-6/PR. 
271 Brazil's second written submission, executive summary, para. 33. 
272 Brazil's comments to the European Communities' answer to panel question No. 118 (Exhibits BRA-
173, 174). 
273 For more details on the action at the Federal Supreme Court, see Brazil's comments to the 
European Communities' answer to panel question No. 118. 
274 Brazil's first oral concluding stat ement, executive summary, p. 6. 
275 Brazil's second oral concluding st atement, executive su mmary, para. 6. 
276 Brazil's second oral concluding st atement, executive su mmary, para. 7. 
277 European Communities' first oral st atement, executive summary, para. 14. 
278 European Communities' first oral statement,  executive summary, para. 14; second written 
submission, executive summary, para. 51. 
279 European Communities' second written submission, executive summary, para. 52. 
280 European Communities' second written submission, executive summary, para. 51. 
281 European Communities' second written submission, executive summary, para. 52.  WT/DS332/R 
 Page 35 
 
 
  business in Brazil.  Moreover, the European Comm unities points to the considerable efforts which 
Brazilian retreaders have invested in order to gain  the right, through judicial  injunctions, to import 
casings into Brazil.282  However, the European Communities argu es that the relevant fact is that the 
importations are taking place, and are being allo wed by Brazilian courts, for which Brazil is 
responsible under international law.283 
4.116  The European Communities argues that under p ublic international law, every State is 
responsible for the acts of its organs.  The Eur opean Communities submits that as underlined by the 
Appellate Body, every WTO Member is therefore res ponsible for the acts of all emanations of all its 
departments of government, including its courts.  Moreover, the European Communities argues that 
according to Exhibit BRA-86, it is explicitly acknowle dged that at the point the appeal is decided, 
"imports are already authorized and can no longer be de facto  reverted".284 
4.117  The European Communities submits that Brazil has also tried to dismiss the large-scale 
importations of used tyres as a "temporary phenomen on" and claimed that "imports would soon come 
to a halt".  In this respect, the European Comm unities recalls that future developments are of no 
relevance for the evaluation of the measure at issue in the present dispute, because the facts have to be 
assessed as they stood when this Panel was establ ished.  Moreover, it should be noted that the 
importation of used casings has been continuing  since 2000, and that the numbers have been 
increasing steadily.285 
4.118  In addition, the European Communities argues th at it does not see the basis on which Brazil 
claims that the granting of injunctions be ende d.  The European Communities submits that Brazil 
referred to an unidentified court proceeding which is currently pend ing before the Brazilian Supreme 
Court, and indicated that "the Government anticipat es that the Federal Supreme Court will put an end 
to the loophole that have [sic] allowed millions of  used tyres to be imported into Brazil".  The 
European Communities does not see how Brazil can make predictions as to how the Supreme Court 
will decide in the future.  The European Commun ities notes that as the Appellate Body has confirmed 
in US – Shrimp (Article 21.5 – Malaysia) , speculation about the outcome of pending cases in national 
courts would be incompatible with the duty of Panels  to make an objective assessment of the facts, as 
required by Article 11 of the DSU.286 
4.119  Moreover, the European Communities argues that the question is not only whether new 
injunctions are being issued;  as Brazil itself has noted, imports are also continuing "because some of 
the previously-issued injunctions remain in eff ect".  The European Comm unities argues that Brazil 
has not explained how a reversal of the practice of Brazilian courts in the future would affect those 
injunctions which are in force and no longer subj ect to an appeal.  The European Communities 
submits that, in this context, the Brazilian retr eader Pneuback has obtained an injunction which 
entitles it to import used tyres as raw material for its retreading business.  The European Communities 
submits that this injunction has been upheld by  the Brazilian Supreme Court, and is now no longer 
subject to any further possibility of appeal.  Th e European Communities further submits that the 
biggest Brazilian retreader, BS Colway had obtained  a decision by the President of the Superior 
Tribunal of Justice of 12 December 2003 entitling it to import casings as indispensable raw material.  
The European Communities notes that the Superior Tribunal of Justice subsequently rejected three 
appeals by the government against the decisi on by President Naves.  Moreover, the 
                                                      
282 European Communities' second written submission, executive summary, para. 20. 
283 European Communities' second written submission, executive summary, para. 52. 
284 European Communities' first oral st atement, executive summary, para. 14. 
285 European Communities' second written submission, executive summary, para. 53. 
286 European Communities' second written submission, executive summary, para. 54. WT/DS332/R 
Page 36  
 
  European Communities submits that in a decision of 22 May 2006, the Federal Regional Tribunal of 
the Second Region of Brazil confirmed the right of Colway to continue importing used tyres.
287 
4.120  The European Communities submits that Brazil has tried to liken its ban to the ban on 
asbestos at issue in the EC – Asbestos case by arguing that this ban would not have been negated if a 
"judge somewhere in France were to authorize a single importation" of asbestos.  The 
European Communities claims that this scenario has not hing to do with the present case, where Brazil 
allows the importation of millions of used tyres, and in addition produces retreaded tyres itself.  The 
European Communities does not believe that the ba n on asbestos would have been upheld in similar 
conditions.288 
4.121  Brazil  notes the European Communities' argument that some injunctions have exhausted 
judicial review.  However, Brazil explai ns that the case of Pneuback, which the 
European Communities cites as an example, is subject to further appeal, and is in fact being appealed.  
Meanwhile, Brazil notes that, in describing th e BS Colway case, the European Communities 
completely ignored the substantive March 2006 ruling – in favour of the government – and noted only 
the subsequent stay pending the appeal.289 
Whether the reduction of the accumulation of waste tyres can reduce risks to human 
life and health 
4.122  Brazil  argues that its campaign against dengue, which designated tyre waste reduction as a 
key target, has been the primary reason for the dec lining incidents of dengue in recent years.  Brazil 
makes the point that by shrinking the waste tyre volumes, the import ban reduces the amount of waste 
tyres that will be stockpiled or illegally dumped,  and, consequently, reduces mosquito breeding 
grounds.290   
4.123  The European Communities  argues that even if Brazil had established that its ban makes a 
contribution to the reduction of waste tyres, th is is not yet enough for Article XX(b).  The 
European Communities is of the view that Brazil woul d also have to prove that  this reduction in waste 
tyres leads to the reduction of problems for human life and health.291  This also, the 
European Communities claims that Brazil has failed to show.292  The European Communities contends 
that Brazil cannot simply evoke the existence of such  health problems currently and it is not clear that 
there would be any additional impact on public hea lth caused by the importation of retreaded tyres.293   
4.124  As the European Communities claims to have shown that the human life and health problems 
to which Brazil has referred, e.g. dengue mosquitoes breeding in tyres, are first of all not exclusively 
due to waste tyres, and secondly, to the extent that they are, they are related to the millions of tyres 
which are, according to Brazil's submissions, litte ring the Brazilian countryside despite the ban.294  
The European Communities considers that only histor ic waste tyres (i.e. those discarded before the 
import ban on retreaded tyres was adopted) might  continue producing health risks in Brazil.295  For the 
European Communities, any health problems which might be caused by waste tyres in Brazil are not 
                                                      
287 European Communities' second written submission, executive summary, para. 55. 
288 European Communities' second oral concludi ng statement, executive summary, para. 19. 
289 Brazil's second oral statemen t, executive summary, para. 22. 
290 Brazil's second written submission, para. 123. 
291 European Communities' first oral statement,  executive summary, para. 10; second written 
submission, executive summary, para. 30; second oral concluding statement, executive summary, para. 15. 
292 European Communities' second oral concludi ng statement, executive summary, para. 15. 
293 European Communities' first oral statement,  executive summary, para. 10; second written 
submission, executive summary, para. 30. 
294 European Communities' second oral concludi ng statement, executive summary, para. 15. 
295 European Communities' second written submission, executive summary, para. 82.  WT/DS332/R 
 Page 37 
 
 
  attributable to the importation of retreaded tyres, but to the 100 million waste tyres scattered 
throughout the country, which are the heritage of an insufficient waste management policy.296  The 
European Communities contends therefore that the import ban is not a necessary measure to put an 
end to those possible health risks.297 
4.125  The European Communities claims that waste tyres management problems, such as large 
amounts of scattered tyres throughout the country and tyre  fires, are not attributable to the importation 
of retreaded tyres because imports of retreaded ty res were banned in 2000 and the health problems 
continue.298  The European Communities points out that it is not clear that any additional amounts of 
waste tyres which might be created by the removal of the ban would lead to an increase in the health problems referred to by Brazil.
299  The European Communities notes th at Brazil reacts by alleging that 
"prohibiting retread imports clearly cannot e liminate the health and environmental harms in their 
entirety  because tyre waste will continue to be gene rated".  For the European Communities, it seems 
very difficult to reconcile this affirmation with the requirement, as declared by the Appellate Body in 
Korea – Various Measures on Beef , that the contribution of the meas ure has to be significant, this 
term meaning close to indispensable.300 
4.126  The European Communities submits that the system established by Resolution 
CONAMA 258/1999 aims at putting an end to this historic problem, though the slow pace it establishes to collect waste tyres and its insu fficient implementation weakens its efficiency.
301  The  
European Communities is of the view that this s ituation is irrespective of the number of retreaded 
tyres imported into Brazil.  The European Communi ties submits that more imported retreaded tyres 
will not increment the risks described by Brazil, because these risks do not depend on the number of 
discarded tyres but on their correct management a nd other questions linked mainly to the health 
problems that Brazil is trying to solve.302 
4.127  The European Communities claims that Brazil has not demonstrated that the import ban 
contributes significantly to the prevention of life and health problems in Brazil.  To succeed in that 
demonstration, the European Communities submits th at Brazil would have to prove that a possible 
increase in the number of waste tyres arising from imported retreaded tyres would also lead to an 
increase in the life and health problems arising from mosquito-borne diseases, tyre fires and toxic leaching from "stockpiled and illegally dumped tyr es".  The European Communities submits further 
that Brazil cannot simply evoke the existence of such  health problems in order to justify the need for 
the import ban on retreaded tyres.
303 
4.128  Brazil  argues that after suggesting that de ngue has nothing to do with tyres, the 
European Communities turns around and says that in  case it does, the blame lies not with new tyre 
accumulation, but with "the 100 million waste tyr es scattered throughout the country, which are the 
heritage of an insufficient waste management policy."304  Brazil argues that the argument is manifestly 
flawed.  It explains that new tyre accumulation contributes to the volumes of waste tyres in the environment and correct management alone will not elim inate the risks in their entirety.  Brazil states 
that even if it collected all of its waste tyres – and it is doing its best to do th at – these tyres would still 
                                                     
 
296 European Communities' second written submission, executive summary, para. 31. 
297 European Communities' second written submission, executive summary, para. 82. 
298 European Communities' first oral statement,  executive summary, para. 10; second written 
submission, executive summary, pa ra. 30; second oral statement,  executive summary, para. 22. 
299 European Communities' second oral concludi ng statement, executive summary, para. 15. 
300 European Communities' second oral st atement, executive summary, para. 22. 
301 European Communities' second written submission, executive summary, para. 31. 
302 European Communities' second written submission, executive summary, para. 32. 
303 European Communities' second oral st atement, executive summary, para. 18. 
304 Brazil's second oral statement, para. 84, citi ng European Communities' second written submission, 
para. 55. WT/DS332/R 
Page 38  
 
  have to be transported to the disposal locati on and temporarily stockpiled until their disposal.  
According to Brazil, both the transportation and the stockpiling would involve risks of dengue.   
Brazil states that, in addition, collec tion does not eliminate disposal risks.
305 
In relation to dengue 
4.129  Brazil  contends that there are only a few legal issues that are in dispute in this case.  
Unfortunately for the European Communities, th is case turns mostly on facts, which the 
European Communities has persistently  chosen to either misrepresent, minimize, or outright ignore.  
Brazil submits that a good example – but certainly not the only one – is the European Communities' 
pretension that waste tyres are not an im portant factor in the spread of dengue.306  Brazil notes that 
based on that patently wrong factual premise, th e European Communities concludes that Brazil's 
import ban does not make a contribution to the pr otection of human health and the environment.307 
4.130  Brazil submits that according to the European  Communities tyre waste reduction may not 
actually help to combat dengue in Brazil.  Wh ile Brazil agrees that eliminating waste tyres alone  
would not solve the dengue problem308, Brazil states that waste tyres receive special attention because 
of their great potential for breeding and dissemi nating mosquitoes and to ignore them would be 
irresponsible.309    Brazil further submits that while waste tyres are one of mosquitoes' most common 
breeding grounds, they are not the only ones.  Brazil e xplains that this is why Brazil targets all of the 
key containers in its campaign against dengue.  Br azil also promotes changes in the habits of its 
population through advertising and ca rries out mosquito surveillance.310 
4.131  Brazil also explains that waste tyres receive special attention because they have a great 
potential for breeding and disseminating mosquito es: of over one thousand Brazilian municipalities 
surveyed, waste tyres were the most important br eeding place in a quarter of them, and either the 
second or third most important breeding place in the remaining municipalities.311  For Brazil, to ignore 
waste tyres would be irresponsible.312 
4.132  In relation to the dengue problem, the European Communities  submits that Brazil has 
explained that dengue cases jumped from 107,168 in 2004 to 214,171 in 2005, five years after the 
adoption of the import ban on retreaded tyres.  Th e European Communities argues that assuming that 
the average life of a passenger tyre is five y ears, the dengue cases should have dropped down in 2005 
instead of increasing.  In the same way, for the European Communities, the peak in imported 
retreaded tyres that occurred in 1998 should have pr oduced an increase five years later, in 2003/2004, 
compared with the situation in the preceding y ears.  The European Co mmunities argues that the 
figures provided by Brazil show just the opposite.313 
4.133  The European Communities claims that the incidence of dengue cases in Brazil is, therefore, 
not related to changes in the number of waste ty res present in Brazil, let alone to the number of 
imported retreaded tyres.  Rather, it is the view of the European Communities that it must be assumed 
that the number of dengue cases must be related to other factors, such as viral patterns and behaviour, 
                                                      
305 Brazil's second oral statement, para. 84. 
306 Brazil's second oral concluding st atement, executive su mmary, para. 2. 
307 Brazil's second oral concluding st atement, executive su mmary, para. 2. 
308 See European Communities' first oral statement, at para. 47.  
309 Brazil's second written submission, paras. 124-125, 127. 
310 Technical Note No. 25/DIGES/SVS/2006, at Components 1-3 (Exhibit BRA-148).  Brazil's second 
written submission, executive summary, para. 32. 
311 Brazil's second written submission, para. 127; Mi nister of Environment Marina Silva, initial 
statement by Brazil at the first substantive meeting of the parties, para. 6. 
312 Brazil's second written submission, para. 127. 
313 European Communities' second written submission, executive summary, para. 33.  WT/DS332/R 
 Page 39 
 
 
  or meteorological conditions.314  Moreover, the European Communities submits that waste tyres, and 
less, therefore, those arising from imported retr eaded tyres, are not the only element in dengue 
control, as it derives from the National Dengue C ontrol Programme, adopted on 24 July 2002 by the 
Brazilian Health Ministry.  The European Communities further submits that in its intervention before 
the Consumer, Environment and Minority Protec tion Committee on 14 April 2002 a representative of 
the Minister of Health explained that "even if we were to eliminate all tyres from Brazil we would still 
not prevent transmission of [dengue]" .315 
4.134  The European Communities notes that Brazil submit s a number of scientific papers that are 
mainly focused on the relation between tyres and breeding sites for mosquitoes which transmit dengue 
and yellow fever.  However, the European Comm unities notes that these studies consider that waste 
tyres are not the only reason for the current epidem iological situation related to these two diseases in 
Brazil.  The European Communities ar gues that there is even scientific  evidence, attached to Brazil's 
submissions, demonstrating the importance of sev eral other breeding sites.  Moreover, the 
European Communities notes that the World Health Organization has confirmed that relatively small 
numbers of "key containers", which are not limited to waste tyres, may produce the great majority of 
the adult mosquitoes that trigger disease outbreaks.  For the European Communities, this demonstrates 
that a reduction in waste tyres would not necessarily reduce the incidence of dengue.316  
4.135  Brazil  argues that the European Communities contin ues to embrace a simplistic view that a 
decrease in retreaded tyre imports should immediat ely reduce dengue and other risks.  According to 
Brazil, it is elemental that the progression of th e dengue epidemic depends on many factors, in 
addition to imports of retreaded tyres and the conse quent increase in waste volumes.  Brazil states that 
these factors include the prevalence of other key cont ainers that breed mosquitoes, transportation of 
the mosquitoes to new areas, and introduction of new types of the virus.  Brazil maintains that while 
prohibiting imports of the shorter-lifespan retreaded  tyres cannot, by itself, solve the dengue problem, 
it does play a key role in the solution.317 
4.136  Brazil points out that the WHO advises countri es to target "key containers"  because a 
"relatively small numbers of 'key containers' (e.g. old tyres , water storage containers) may produce the 
great majority of the adult mosquitoes that trigger disease outbreaks."318  Brazil also notes that the 
US Center for Disease Control and Prevention likewise emphasizes that "infestation may be contained through programs of surveillance, removal of breeding sites ( especially tires ), interruption of 
interstate dispersal of tires, and judicious use of insecticides."
319   
4.137  Brazil adds that it is not sitting idly on the si delines, waiting for the import ban to solve its 
dengue problem.  Brazil says that it is actively co llecting tyres that have been discarded in the 
environment:  it has helped private companies set up tyre collection centres  and launched a 
comprehensive campaign against dengue, which promot es habits that would reduce the number of all 
key containers used by mosquitoes.320   
                                                      
314 European Communities' second written submission, executive summary, para. 34. 
315 European Communities' second written submission, executive summary, para. 35. 
316 European Communities' second oral st atement, executive summary, para. 19. 
317 Brazil's second oral statement, para. 83. 
318 Brazil's second written submission,  para. 128, citing Exhibit BRA-149. 
319 Brazil's second written submission,  para. 85, citing Exhibit BRA-20. 
320 Brazil's second written submission, para. 129 (Exhibit BRA-148). WT/DS332/R 
Page 40  
 
  In relation to tyre fires 
4.138  Brazil  explains that waste tyres in stockpiles and dumps often ignite , producing devastating 
consequences
321 for human health and the environment and generating pyrolytic oil and noxious 
plumes that contain hazardous chemicals and heavy metals.322  Brazil also explains that accumulation 
of waste tyres in stockpiles and illegal dumps create s a risk of tyre fires and toxic leaching, which 
have substantial adverse effects on human health and the environment.323  Brazil contends that tyre 
fires are difficult to extinguish and can burn for week s, months, and even years – a fire in Powys, 
Wales324 has been burning for 17 years.325  In Brazil, the State of Minas Gerais alone has experienced 
338 tyre-related fires since 2000.326   
4.139  Concerning waste tyre fires on Brazil's territory, the European Communities  claims that 
Brazil recognizes that it has no statistics;327  Brazil only explained that tyre fires are a genuine threat in 
Brazil as they are elsewhere in the world.328  However, the European Communities argues that as the 
Appellate Body declared in US – Wool Shirts and Blouses , the mere assertion of a claim cannot 
amount to proof.  The European Communities argues further that risks from waste tyre fires depend 
very much on the location, dimension, distribution, and existence of fire prevention and extinction 
measures.329  The European Communities considers that a reference to some specific cases of waste 
tyre fires that occurred in the past in the United States and the United Kingdom , or a general reference 
to waste tyres fires in Brazil without providing info rmation on their location, origin/causes, dimension 
and duration and an assessment of their real nega tive effects on health, are not enough to meet the 
burden of proof that Brazil has under Article XX(b).330  The European Commu nities argues that the 
risk of a fire occurring should be considered as low,  taking into account that tyres are very difficult to 
ignite.  The European Communities explains that th e fact that, in the case of a fire, the negative 
consequences on health may be important does not imply that the risk of fire from waste tyres is high.  
Besides, for the European Communities, it should not be forgotten that there are means of minimising 
the negative consequences of a fire if the prev entive measures to which the European Communities 
made reference in its first oral statement are taken.331 
4.140  The European Communities submits that the probl ems which Brazil seems to have with tyre 
fires reflect difficulties of fighting the causes of su ch fires.  The European  Communities argues that 
even if it were the case that a certain incidence of  such fires was statistically unavoidable, Brazil's 
problems again seem to be in the first place related to  the lasting problem of waste tyres that are still 
not adequately disposed of.  In such a situation, the European Communities is of the view that where 
Brazil incidentally has not been ab le to solve its problems in a measurable way six years after the 
                                                      
321 See Environmental Protection Agency (US), Air Emissions from Scrap Tyre Combustion (viii)  
(1997) (Exhibit BRA-26). 
322 Brazil's first written submission, executive summary, para. 6. 
323 Brazil's second written submission, executive summary, para. 9. 
324 See Health Protection Agency (UK), Chemical Hazard and Poisons Report 8  (2003) 
(Exhibit BRA-10). 
325 Brazil's first written submissi on, para. 34 (Exhibit BRA-10). 
326 Brazil's first written submission, executive summary, para. 6. 
327 European Communities' second written submission, executive summary, para. 36;  
European Communities' second oral statement, executive summary, para. 20. 
328 European Communities' second oral st atement, executive summary, para. 20. 
329 European Communities' second oral st atement, executive summary, para. 20. 
330 European Communities' second written submission, executive summary, para. 36;  
European Communities' second oral statement, executive summary, para. 20. 
331 European Communities' second written submission, executive summary, para. 37.  WT/DS332/R 
 Page 41 
 
 
  imposition of the import ban, it should not be allo wed to maintain an import ban which makes no 
significant contribution to such solution.332 
4.141  In respect of leaching of hazardous substances  from tyres, the European Communities notes 
that a study attached by Brazil shows the results of the leaching behaviour under extreme conditions 
not corresponding to field trials.  In any case, th e European Communities argues that only trace 
quantities of cadmium and lead were found and the report admits that the amounts of zinc could result 
from surface contamination of the tyres.  The European Communities argues that a second report, 
with very general observations in relation to fi eld trials, shows that groundwater quality was not 
deteriorated.  Moreover, the European Communitie s notes that Brazil has provided no explanations 
and evidence on leachate from waste tyres in its territory.333 
4.142  Brazil  states that it has provided information on ty re fires in the States of Paraná, Minas 
Gerais and in the Federal District.334  Brazil explains that it has not been able to obtain information on 
tyre fires in other states because fire brigades of those states do not maintain  records that distinguish 
between tyre fires and other fires.  Brazil notes, however, that unavailability of these records does not 
mean that tyre fires do not occur in other states.335   
4.143  Brazil argues that there is no need to assess the negative effect on human, animal or plant life 
or health of tyre fires specifica lly in Brazil because there is extens ive evidence of the risks resulting 
from fires all over the world.  Brazil states that fi res in Brazil are no different from fires elsewhere.336  
Brazil states that the European Communities' argument is based on what is referred to as the problem 
of induction, i.e., reasoning that just because experience s hows that event A has always followed 
event B, it does not mean that it will do so again.   Brazil argues that Governments cannot base their 
decisions on this reasoning: prudent governments believ e that if stockpiles of used tyres can be set on 
fire by lightning or arson elsewhere, the same can happen in their territory; likewise, prudent 
governments also believe that if those fires emitt ed deadly pollutants elsewhere, the same will happen 
in their territory.337  Brazil notes that it was aware of the devastating tyre fires in Wales, in California, 
in Ontario, and in many other locati ons, both in Brazil and in other countries.338  Brazil adds that it 
was also aware of studies showing the toxic risks of such fires.339   
4.144  Brazil states that no prudent government could or  would have ignored su ch warnings with the 
unsound reasoning that, simply because tyres caught  fire elsewhere, and simply because those fires 
emitted deadly toxins into the atmosphere elsewhere,  there is no basis on which to conclude that the 
same could happen in its territory.  Brazil concludes that it saw those warning signs and acted on them 
– responsibly and prudently.340 
Contribution of the import ban on retreaded tyres for commercial vehicles and aircraft 
4.145  Brazil  argues that commercial vehicle retreaded tyres pose the same type of health and 
environmental risk as passenger car retreaded tyres.341  Brazil explains that retreaded tyres in both 
categories have fewer remaining lifecycles and become waste sooner.  Brazil adds that the level of risk from the commercial vehicle retreaded tyres is fr equently higher than that from the passenger car 
                                                     
 
332 European Communities' second written submission, executive summary, para. 38. 
333 European Communities' second oral st atement, executive summary, para. 21. 
334 Brazil's answer to panel question No. 88; Brazil's first written submission, para. 36. 
335 Brazil's answer to panel question No. 88. 
336 Brazil's answer to panel question No. 88. 
337 Brazil's answer to panel question No. 88. 
338 Brazil's answer to panel question No. 88 (Exhibits BRA-10, 35, 36, 139). 
339 Brazil's answer to panel question No. 88. 
340 Brazil's answer to panel question No. 88. 
341 Brazil's answer to panel question No. 5. WT/DS332/R 
Page 42  
 
  retreaded tyres because (1) commercial vehicle retr eaded tyres are substantially heavier and, thus, 
produce more waste, and (2) a commercial vehicle retr ead that is imported closer to the end of its 
useful life could have less than 20 per cent of its useful life left compared to the 50 per cent in the 
case of the passenger car retread.
342   
4.146  The European Communities  argues that Brazil also bans retreaded tyres for commercial 
vehicles and for aircraft, which can be retreaded more than once343, depending on the specific 
conditions of their use.344  In fact, the European Communities mak es the point that it is not even clear 
whether Brazil is invoking Article XX(b) in respect of these tyres.345  The European Communities 
argues that Brazil has made no effort to demonstrate the effect of its ban as regards a reduction of the 
waste from truck and aircraft tyres.346  However, for the Eur opean Communities a separate 
demonstration of the contribution of the import ban on truck and aircraft  tyres would be most 
necessary, since such tyres can be retreaded multi ple times, and therefore contribute less to the 
accumulation of waste tyres than passenger car tyres.347  Moreover, the European Communities notes 
that Brazil refers merely to the fact that p assenger car tyres "have made up nearly all of the 
European Communities' retread expor ts to Brazil in recent years".348  H o w e v e r ,  t h e  
European Communities points out that it challenges Brazil's import ban on retreaded tyres as such and 
as a whole.  It further argues that the WTO-compatibility of an import restriction does not depend on whether and in what quantity imports have taken place, or might take place if the ban was removed.
349   
4.147  The European Communities notes that it is true that  the retreading of truck and also of aircraft 
tyres appears to occur in Brazil.  However, the Eu ropean Communities submits that this fact is more 
than offset by the fact that truck and aircraft tyr es can be retreaded more than once, and in the case of 
aircraft tyres sometimes up to 10 times or more.  Moreover, the European Communities remarks that 
truck and aircraft tyres are typically retreaded without any change in ownership.350  Accordingly, the 
European Communities argues that trad e in such tyres is not likely to occur at a large scale, and where 
it occurs, it is not likely to have a significant net impact on the amounts of waste tyres to be disposed of.
351  Finally, the European Communities submits that  it seems that Brazil does not retread all of its 
truck and aircraft tyres.352 
4.148  The European Communities argues that Brazil's arguments as regards tyres for commercial 
vehicles and aircraft are weaker than as regards passenger car tyres.353  The European Communities 
points out that it is not clear why the importation of retreaded tyres for commercial vehicles and aircraft should increase the amount of waste tyres to be  disposed of in Brazil.  On the contrary, the 
European Communities submits that certain low-qua lity new truck tyres, even though conforming to 
the applicable technical regulations/standards, cannot be  retreaded at all after first use.  In this sense, 
the European Communities argues that the importa tion of a retreaded truck tyre made from a good-
quality casing is even preferable, since such re treaded tyres can normally be retreaded again.
354 
                                                      
342 Brazil's answer to panel question No. 5. 
343 European Communities' first oral st atement, executive summary, para. 8. 
344 European Communities' second written submission, executive summary, para. 25. 
345 European Communities' first oral st atement, executive summary, para. 8. 
346 European Communities' second oral stat ement, executive summary, para. 17;  
European Communities' second oral concludi ng statement, executive summary, para. 13. 
347 European Communities' second oral st atement, executive summary, para. 17. 
348 European Communities' first oral st atement, executive summary, para. 8. 
349 European Communities' first oral st atement, executive summary, para. 8. 
350 European Communities' second oral concludi ng statement, executive summary, para. 13. 
351 European Communities' second oral concludi ng statement, executive summary, para. 13. 
352 European Communities' second oral st atement, executive summary, para. 17. 
353 European Communities' second written submission, executive summary, para. 25. 
354 European Communities' second written submission, executive summary, para. 25.  WT/DS332/R 
 Page 43 
 
 
  4.149  The European Communities notes that Brazil has tried to defend its ban on truck and aircraft 
retreaded tyres by arguing that such tyres "nevertheless have fewe r remaining lifecycles before they, 
too, must be collected and disposed of".  Howeve r, for the European Comm unities this statement is 
largely conjectural, and does not allow evaluating th e precise contribution made by Brazil's ban to the 
reduction of waste tyres.  The European Communities recalls that there are no legal limits on the 
number of times a truck or aircraft tyre may be retreaded again.  The European Communities submits 
that conservative estimates based on the practice of  retreaders indicate that commercial vehicle tyres 
can be retreaded up to three or four times, whereas aircraft tyres can be retreaded up to eight times.  
However, the European Communities submits further that it is not excluded that in individual cases, a 
tyre can be retreaded even more frequently.355 
4.150  The European Communities argues that Brazil is  thus banning the importation of retreaded 
truck and aircraft tyres which have been retreaded only once, and can still be retreaded multiple times.  
The European Communities explains that such a ba n does not make any demonstrable contribution to 
the reduction of the amount of waste tyres accruing  in Brazil.  The European Communities submits 
that this is all the more so since the proportion of  Brazilian truck tyres actually retreaded still seems to 
be considerably below 100 per cent.356 
4.151  The European Communities notes that Brazil has also referred to the fact that commercial 
vehicle tyres are substantially heavier than passenge r car tyres, and thus produce more waste.  The 
European Communities notes further that while it may be true that truck tyres (but not necessarily 
aircraft tyres) are heavier than passenger car tyres, it is also true that truck tyres typically reach a far higher mileage compared to passenger car tyres.  Moreover, the European Communities submits that 
the number of truck tyres in Brazil appears to be far inferior to that of passenger car tyres.  
Accordingly, the European Comm unities argues that the assumption that truck tyres somehow create 
"more waste" than passenger car tyres is not accurate.
357 
4.152  Finally, the European Communities submits that  Brazil imported basically no retreaded truck 
and aircraft tyres from the European Commun ities before the imposition of the ban.  The 
European Communities notes that Brazil chose to  impose a ban on these products even though there 
was hardly any trade, and therefore certainly no waste management problem created by such trade.358  
4.153  Brazil  notes that while it is certainly true that commercial vehicle tyres can be retreaded more 
than once, all things being equal, when importe d, they will have at least one-fewer lifecycle 
remaining.  Consequently, they too will turn in to waste sooner than new tyres and augment Brazil's 
waste tyre burden.359  Brazil argues that the harm is even gr eater when a commercial vehicle retread is 
imported close to its end of life, because it might have  to be disposed of after a single use, whereas a 
new tyre could have served 3-4 lifecycles.  Finally, Brazil notes that because a commercial vehicle tyre is substantially heavier than a passenger car tyre, it will produce exponentially more waste with 
every unused lifecycle than a passenger car tyre. 
Quantification of the contribution  
4.154  The European Communities  notes Brazil's argument that it cannot be asked to quantify the 
reduction in the number of waste tyres accumula ting in Brazil due to the import ban.  The 
European Communities points out that in EC – Asbestos  the Appellate Body was referring to the risks 
to human life or health as such and noted that where direct risks to human life and health are 
                                                     
 
355 European Communities' second written submission, executive summary, para. 26. 
356 European Communities' second written submission, executive summary, para. 27. 
357 European Communities' second written submission, executive summary, para. 28. 
358 European Communities' second written submission, executive summary, para. 29. 
359 Brazil's second oral statement, para. 82. WT/DS332/R 
Page 44  
 
  concerned, it may not be possible to evaluate such risks in purely quantitativ e terms, such as numbers 
of persons dead or sick, or in terms of thres hold values for exposure to certain substances.  The 
European Communities is of the view that this has nothing to do with the present case, where, before 
even addressing the question of risks to human lif e and health, Brazil must prove its assertion that 
removing the import ban would result in "higher volumes of  waste tyres" to be disposed of in Brazil.  
The European Communities notes that "higher volu mes" is clearly a quantitative concept, and 
therefore requires a quantification of the volumes of waste tyres at issue.
360 
4.155  The European Communities notes Brazil's claim th at there are 40 million tyres which become 
waste in Brazil every year and that there are cu rrently "over 100 million waste tyres scattered around 
the country".  The European Commun ities believes that if it is possible to provide this information, it 
must also be possible to provide information on by how many tyres the import ban reduces the 
number of waste tyres accruing in Brazil.361  In the absence of this information, the 
European Communities does not see how the Panel c ould even begin to assess the contribution which 
the import ban might make to the prevention of ri sks for human life and health resulting from waste 
tyres.  Clearly for the European Communities, such  an assessment requires that the impact of the 
import ban is put into a relationship to the number of waste tyres already accumulating in Brazil.362 
4.156  Overall, the European Communities notes that Brazil has resoundingly failed to quantify the 
contribution made by its ban to the reduction of waste tyres.  In this context, the 
European Communities notes that Brazil still contests that it must proceed to such a quantification, 
and even argues that it is immaterial whether there are five hundred fewer waste tyres or five million.  
For the European Communities, this argument is  manifestly wrong.  The European Communities 
argues that imposing an import ban on retreaded tyr es just because of five hundred waste tyres, when 
there are already 100 million of waste tyres in Brazil, would manifestly be disproportionate.363 
4.157  The European Communities recalls that in r esponse to the Panel's question No. 40 on how 
much less waste Brazil accumulates as a result of the import restriction, Brazil answered by simply recalling the numbers of retrea ded tyres imported into Brazil per year.  Accordingly, the 
European Communities argues that Br azil seems to maintain its unten able view that every imported 
retreaded tyre leads to an additional waste tyre to be  disposed of in Brazil.  With these statements, it is 
the European Communities' view that Brazil fails to  discharge its burden of proof under Article XX as 
a justification under Article XX cannot be based  merely on conjecture and untested assumptions.
364 
4.158  Brazil  notes that the European Communities and so me third parties have asked Brazil to 
quantify by how much the import ban reduces the waste tyre risks.365  Brazil objects to the 
European Communities' argument that quantificatio n of the contribution is "a necessary precondition 
in the contribution analysis required by Article XX(b)".366   Brazil contends that it is common sense 
that while some risks can be easily quantified,  others cannot;  that is the reason why the 
Appellate Body in EC – Asbestos has recognized that "a risk may be  evaluated either in quantitative 
or qualitative  terms".367 
                                                      
360 European Communities' second written submission, executive summary, para. 8. 
361 European Communities' second written submission, executive summary, para. 9. 
362 European Communities' second written submission, executive summary, para. 10. 
363 European Communities' second oral concludi ng statement, executive summary, para. 14. 
364 European Communities' first oral statement, executive summary, para. 8;  European Communities' 
second written submission, executive summary, para. 7. 
365 Brazil's first oral concluding stat ement, executive summary, p. 2. 
366 Brazil's second oral statement, para. 75, citi ng European Communities' second written submission, 
para. 30. 
367 Brazil's first oral concluding statement, executive summary, p. 2, citing Appellate Body Report on 
EC – Asbestos , para. 167 (emphasis added).  WT/DS332/R 
 Page 45 
 
 
  4.159  In the EC – Asbestos case, Brazil recalls that the Appellate  Body categorically rejected the 
argument that a "quantification" of risks is necessary and made it clear that "there is no requirement 
under Article XX(b) ... to quantify, as such, the risk to human life or health."368  For Brazil, there is 
absolutely nothing in the text of Article XX(b) th at requires quantification, and the Appellate Body 
has explicitly held that there is "no requirement" to quantify the risk.369  Brazil argues that this holding 
was in no way limited to concepts that are difficult to quantify.  Brazil explains that the more waste 
tyres there are, the higher the risks.  Brazil ar gues that these risks are reduced every time the 
generation of a waste tyre is avoided and it is i mmaterial for the analysis of the contribution under 
Article XX(b) whether there are five hundred fewer tyres or five million.370 
4.160  Brazil states that when an imported retr ead displaces a Brazilian retread made from a 
domestic casing, one less suitable domestic casing will be retreaded, and when imported retreaded 
tyres displace new tyres, they increase the waste ty re volumes by about a third (Brazil's rate of 
retreading).  Brazil states that waste reduction lies between these two points and, regardless of 
whether it is closer to one or the other, it is subs tantial.  Brazil also explains that a more precise 
quantification of the waste reduction requires a complex calculation of price elasticities, which, as a 
practical matter, is impossible.  According to Br azil, calculation of elasticities requires collection of 
detailed economic data that simply does not exist for this industry, or for many others.  Brazil states, 
however, that it is obvious that imported shorter-lif espan retreaded tyres b ecome waste sooner than 
new tyres, and thereby increase the waste volumes.371 
4.161  While it is impossible to give the exact count  of mosquitoes, dengue cases, tyre fires, or 
dioxins that every imported retread would create, Brazil is of the view that one fact remains self-
evident:  higher volumes of waste tyres bring about  an increase in the risk s that flow from their 
accumulation and disposal.  For Brazil, the logic could not be more straightforwar d:  if elimination of 
tyre stockpiles helps control mosquitoes and tyre fires, then the fewer waste tyres will mean less 
dengue and fewer fires;  if waste tyre disposal ha rms public health and the environment, then fewer 
tyres disposed will mean less harm.  In this contex t, Brazil refers to the British Environment Agency, 
which said that when it comes to dealing with tyre waste, the best one can do is "to prevent or reduce 
its production".372 
4.162  Brazil argues that the import ban does precisely that – it prevents unnecessary generation of a 
dangerous waste and whether the imports involve p assenger car, truck, or airplane retreaded tyres 
makes absolutely no difference.  For Brazil, a re treaded tyre, no matter the type, will always have 
fewer remaining lifecycles and a shorter lifespan than a retreadable new tyre373, and the fact remains 
that imports of retreaded tyres increase waste tyre vol umes, and with them the associated risks.  Brazil 
claims that without the import ban, Brazil could not effectively eliminate these risks.374 
Impact of the measure on international trade  
4.163  Brazil  argues that, while the import ban, by definiti on, will always be restrictive, this does not 
make the measure unnecessary.375  Brazil argues that what is relevant is that the ban's trade impact is 
                                                      
368 Brazil's first oral concluding statement, executive summary, p. 2, citing Appellate Body Report on 
EC – Asbestos , para. 167 (emphasis added). 
369 Appellate Body Report on EC – Asbestos , at para. 167. 
370 Brazil's second oral statemen t, executive summary, para. 19. 
371 Brazil's second oral statement,  paras. 79-81 (Exhibit BRA-146). 
372 Environment Agency (UK), Tyres in the Environment , at § 4.4 (1998) (" UK – Tyres in the 
Environment ") (Exhibit BRA-1).  Brazil's first oral co ncluding statement, executive summary, p. 2. 
373 Brazil's first oral concluding stat ement, executive summary, p. 2. 
374 Brazil's first oral concluding stat ement, executive summary, p. 3. 
375 Brazil's first oral statement, executive summary , para. 15;  Brazil's second written submission, 
executive summary, para. 30. WT/DS332/R 
Page 46  
 
  not unfair or inequitable, because Brazil's waste tyre program also imposes substantial burdens
376 on 
domestic manufacturers:377  it subjects domestic tyre manufacturers and importers to costly disposal 
obligations378 and significantly raises production costs for domestic retreaders by banning imports of 
foreign casings.379  Moreover, Brazil argues that the unique facts of the present case justify Brazil's 
measures.  Brazil points out that unlike other waste streams, tyres cannot be recycled into new tyres 
and cannot be landfilled.  Brazil argues that because their disposal presents si gnificant risks, the less 
tyre waste generated, the better.380   
4.164  Brazil notes the European Communities' point th at even though it has a tyre disposal problem, 
it has not found it necessary to impose an im port ban.  Brazil argues that what the 
European Communities conveniently leaves out – or overlooks – is that it does not have a significant 
market for retreaded tyres and, therefore, does not  face imports of retreaded tyres.  Brazil further 
argues that it is disingenuous for the European Comm unities, therefore, to suggest that the conditions 
prevailing in Brazil and in the European Communities are alike.381 
4.165  Brazil also points out that a number of count ries besides Brazil have restricted used and 
retreaded tyre imports.  According to Brazil, Ar gentina, Bangladesh, Bahrain, Nigeria, Pakistan, 
Thailand, and Venezuela all prohibit imports of bo th used and retreaded tyres; Morocco, Macedonia, 
Saint Vincent and the Grenadines and Jordan dema nd previous import licenses for used and retreaded 
tyres.382 
4.166  The European Communities  argues that when assessing the necessity of the measure, the 
impact of the measure on the import trade is the most severe that a WTO Member can adopt383, as the 
Appellate Body observed in US – Gasoline .384  The European Communities argues that this 
characteristic makes it impossible to consider as "necessary" the measure challenged in this case.385  
The European Communities contends that this elem ent is important in the weighing and balancing 
analysis to assess whether the import ban can be re garded as "necessary" for the protection of life and 
health.386  The European Communities recalls the Appellate Body's statement in Korea – Various 
Measures on Beef  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".387  The 
European Communities argues that not only does Brazil not clearly reply to these arguments, but also 
the fact that its domestic producers may be required  to comply with other costly obligations is 
irrelevant for the "necessity" test set out in Korea – Various Measures on Beef .388  M o r e o v e r ,  t h e  
European Communities submits that Resolu tion CONAMA 258/1999 expressly includes imported 
retreaded tyres in the recovery programme and im poses on importers of retreaded tyres the highest 
disposal burden.  The European Co mmunities is also of the view that  some extra costs incurred by the 
                                                      
376 See Brazil's first written submission, at para. 110;  Brazil's first oral stat ement, at para. 52.  
377 Brazil's first written submission, executive summar y, para. 24;  Brazil's first oral statement, 
executive summary, para. 15. 
378 See Resolução CONAMA 258/19 99, Art. 6 (Exhibit BRA-4). 
379 Brazil's first written submission, executive summary, para. 24. 
380 Brazil's second written submission, executive summary, para. 30. 
381 Brazil's second oral concluding st atement, executive su mmary, para. 13. 
382 Brazil's first written submission, para. 67. 
383 European Communities' first written submission, executive summary, para. 28;  
European Communities' first oral statement, executive summary, para. 11;  European Communities' second oral 
statement, executive summary, para. 23. 
384 European Communities' second written submission, executive summary, para. 40. 
385 European Communities' first written submission, executive summary, para. 28. 
386 European Communities' second written submission, executive summary, para. 40. 
387 European Communities' first written submission, executive summary, para. 28;  
European Communities' first oral statement, executive summary, para. 11. 
388 European Communities' first oral st atement, executive summary, para. 11.  WT/DS332/R 
 Page 47 
 
 
  domestic industry in Brazil are not equivalent to an  import ban.  The European Communities explains 
that the protection created by Brazil's import ban has caused considerable harm to the retreading 
industry of the European Communities.389 
4.167  The European Communities notes that the only r eaction by Brazil concerning the impact on 
international trade in its first oral statement is th at "in other cases, import bans have been found to be 
justified under Article XX".  The European Communities argues that this reference to EC – Asbestos  
is incorrect, because it does not take into account th at the measure in that case was not primarily an 
import ban, which is the only measure in the presen t case, but that it was a general ban on the product, 
including an internal prohibition on the production,  processing and marketing, coupled with export 
and import bans.  The European Communities explains  that in contrast Brazil has banned imports of 
retreaded tyres, whereas both the domestic producti on and marketing, as well as the exportation of 
retreaded tyres, remain allowed.390 
4.168  The European Communities submits that Brazil has taken the radical step of banning the 
importation of a product which it produc es and exports itself, including to the European Communities.  
The European Communities points out that with th is measure, Brazil is almost alone.  The 
European Communities and the overwhelming majo rity of WTO Members do not restrict the 
importation of retreaded tyres, which are tr aded freely between many countries.  The 
European Communities submits that following the two disputes initiated by Uruguay, this is the case 
even within MERCOSUR.391 
4.169  The European Communities contends that due to  the import ban, many European retreaders 
have lost an important market for their pr oducts.  The European Communities submits that 
simultaneously, Brazil allows the importation of retreaded tyres from MERCOSUR countries, and the 
production in Brazil of retreaded tyres, most of wh ich are produced with used tyres imported from the 
European Communities.  Accordingly, retreaders of the European Communi ties have been injured 
twice.  The European Communities explains that retreading firms are typically small and medium 
enterprises, which cannot easily adjust to the loss of an important market.  The 
European Communities further submits that as a con sequence, Brazil's ban has driven several firms 
into closure, or has forced them to cut jobs.392   
(iv) Existence of reasonably available alternatives 
Burden of proof  
4.170  The European Communities  claims that it is upon Brazil to prove that there are no 
reasonably available alternatives to  the import ban on retreaded tyres.393  The European Communities 
notes Brazil's claim that the burden of identifying a reasonably available alternative is incumbent 
upon the European Communities as complaining part y and that the European Communities has not 
met this burden of proof.  The European Communities contends that this clai m is unfounded and relies 
on a distorted reading of the WTO case law.  The Eu ropean Communities recalls that in its Report in 
US – Gambling , the Appellate Body placed the burden of proof  to demonstrate that an alternative is 
not reasonably available not on the complaini ng party, but on the responding party.  The 
European Communities argues that the latter is only relinquished from the obligation to identify the 
                                                      
389 European Communities' first oral st atement, executive summary, para. 11. 
390 European Communities' second written submission, executive summary, para. 39. 
391 European Communities' second oral concludi ng statement, executive summary, para. 2. 
392 European Communities' second oral concludi ng statement, executive summary, para. 6. 
393 European Communities' first oral st atement, executive summary, para. 19. WT/DS332/R 
Page 48  
 
  universe of alternative measures, which shall be a dvanced by the complaining party or may also be 
identified by the responding party.
394 
4.171  The European Communities argues that there are alternative measures to the import ban on 
retreaded tyres that Brazil could take to improve  the management of waste tyres on its territory395 and 
that the European Communities has presented several such alternativ es in its first written submission 
and first oral statement.396  The European Communities explains th at further to measures to ensure and 
increase retreading, it has concentrated its argument s on three alternatives, each of them including 
several possibilities:  controlled stockpiling and landfilling;  energy recovery;  and material 
recycling.397  Moreover, the European Communities notes th at Brazil has also referred in its first 
written submission to some alternatives.398   
4.172  The European Communities contests Brazil's statement that the European Communities 
wishes to flood Brazil with waste tyres.  To the extent that Brazil is referring to the exportation of retreadable casings, the European Communities notes that it has already explained that such casings 
are not waste, and that their importation is precisely  for that reason, allowed by Brazilian courts.  To 
the extent that Brazil refers to actual waste tyres, the legislation of the European Communities in fact 
prohibits the exportation of such tyres to countri es which do not allow such imports.  Moreover, the 
European Communities points out that it has not challenged Brazil's ban on the importation of used 
tyres.
399 
4.173  Therefore, the European Communities argues that  the application of the Appellate Body's 
interpretation to the present case im plies that the burden of proving that those alternatives are not 
reasonably available rests with Brazil.400  The European Communities claims that Brazil has not met 
this burden401 in relation to neither measures reducing the number of waste tyres in Brazil nor 
measures improving the management of waste tyres.402  However, in order to assist the Panel in the 
resolution of the case, the European Communities de velops further arguments to support the existence 
of waste tyres management activities that are WTO-consistent alternatives to the import ban.403 
4.174  Brazil  is of the view that the main point of di sagreement between the parties is whether the 
ban is necessary to protect human health and th e environment and this question comes down largely 
to whether there is a reasonably available alternative.404  Brazil contends that an alternative measure is 
not "reasonably available" if it is merely theoreti cal, if it imposes an "undue burden," if it does not 
achieve the "desired level of protection,"405 or if its result or outcome is uncertain.406  Brazil argues 
                                                      
394 European Communities' second written submission, executive summary, para. 42. 
395 European Communities' first oral statement, executive summary, para. 15;  European Communities' 
second written submission, executive summary, para. 58. 
396 European Communities' second written submission, executive summary, para. 43. 
397 European Communities' second written submission, executive summary, para. 58. 
398 European Communities' second written submission, executive summary, para. 43. 
399 European Communities' second oral concludi ng statement, executive summary, para. 5. 
400 European Communities' second written submission, executive summary, para. 43;  
European Communities' second oral statement, executive summary, para. 27. 
401 European Communities' second written submission, executive summary, para. 44. 
402 European Communities' second oral st atement, executive summary, para. 27. 
403 European Communities' second written submission, executive summary, para. 44. 
404 Brazil's first oral statement, executive summary, paras. 3, 15. 
405 Appellate Body Report on US – Gambling , at para. 308, citing Appellate Body Report on  EC – 
Asbestos , paras. 172-174.  See also Appellate Body Report on Korea – Various Measures on Beef , at para. 180. 
406 See Panel Report on  Mexico – Taxes on  onSoft Drinks , para. 8.188.  WT/DS332/R 
 Page 49 
 
 
  further that the complaining party407, i.e. the European Communities, bears the burden of identifying a 
less trade-restrictive measure that is reasonably available.408   
4.175  Brazil claims that the Europ ean Communities has not met its burden of proof because it has 
not identified a disposal method th at is safe, adequate, and viable.409  Moreover, Brazil submits that no 
third party has proposed a viable alternative to th e ban on retreaded tyres for reducing the number of 
waste tyres that must be disposed of and that remains the case.  Brazil notes that the 
European Communities has acknowledged that it has not  had time to carry out a full assessment of the 
alternative measures.  In addition, Brazil submits that some of the third parties made confused 
statements on this issue and in response to questions  they replied that they would go back to capitals 
for further information.410   
4.176  Brazil claims that the import ban is "necessar y" because no alternative measure can eliminate 
the risks caused by the unnecessary generation of waste tyres411 and no alternative to the import ban is 
reasonably available.412  Brazil contends that while some di sposal methods are less harmful than 
others, these methods cannot handle high volumes of waste tyres.413 
Measures presented as alternatives  
Measures to reduce the number of waste tyres 
4.177  The European Communities  argues that Brazil has not done all it could to reduce the 
number of waste tyres accumulating in Brazil.414  The European Communities argues that, strikingly, 
Brazil does not even have a system of mandatory vehicle inspections in place which could contribute to ensuring that used tyres remain retreadabl e after their use.  Even more strikingly, the 
European Communities submits that Brazil allows the importation of huge amounts of used tyres into 
Brazil, most of which are used for retreading, bu t some of which are even discarded immediately.
415 
4.178  Brazil  submits that the import ban on retreaded tyres avoids the unnecessary generation of 
additional waste tyres and, therefore, reduces the volume of waste tyres that must be incinerated or disposed of through methods that pose health and environmental risks.
416  Brazil also argues that the 
incontrovertible fact is that the fewer tyres Brazil mu st dispose of, the better.  Brazil contends that the 
import ban is the most important vehicle for increasing retreadability of local casings because 
imported retreaded tyres reduce the number of retreadable tyres in Brazil.417  Brazil points out that 
imports of tyres that cannot be retreaded again "p rejudice efforts to address the used tyre issue,"418 as 
the British Used Tyre Working Group has recognized.419  Brazil also notes that it has already 
                                                      
407 See Appellate Body Report on US – Gambling , at para. 320. 
408 Brazil's second written submission, para. 39, citing Appellate Body Report on US – Gambling , 
para. 320. 
409 Brazil's first oral statement, executive summary, paras. 3, 15. 
410 Brazil's first oral concluding stat ement, executive summary, p. 1. 
411 Brazil's first written submission, executive summary, paras. 21, 25. 
412 Brazil's first oral statement,  executive summary, para. 15. 
413 Brazil's first oral statement,  executive summary, para. 15. 
414 European Communities' second written submission, executive summary, para. 45;  
European Communities' second oral st atement, executive summary, para. 28;  European Communities' second 
oral concluding statement, executive summary, para. 18. 
415 European Communities' second oral concludi ng statement, executive summary, para. 18. 
416 Brazil's second written submission, para. 6. 
417 Brazil's second oral statement, para. 52. 
418 Used Tyre Working Group (UK), Sixth Report of the Used Tyre Working Group , para. 11.5 (2003) 
(Exhibit BRA-55). 
419 Brazil's first written submission, para. 124, citing Exhibit BRA-55. WT/DS332/R 
Page 50  
 
  implemented a number of measures that encourage non-generation
420 and that it has a system of 
vehicle inspections.421 
Measures to ensure that Brazilian tyres remain retreadable after use 
4.179  The European Communities  notes that one of the main obstacles to the retreading of 
domestic tyres in Brazil remains the low suitability of Brazilian passenger car tyres for retreading.  
Therefore, for the European Comm unities measures to ensure that Br azilian tyres remain retreadable 
after use constitute one reasonable alternative to reduce the amount of waste tyres in Brazil.422 
4.180  The European Communities argues that Brazil could take further measures to reduce the 
number of waste tyres, such as:  (i) measures to pr omote the use of retreaded tyres, e.g. in public 
procurement423;  (ii) measures to reduce the use of tyres for individual transport, e.g. by promoting 
public transport424 or campaigns on better driving habits425;  and (iii) measures to ensure regular 
inspections of automobiles.426  The European Communities conte nds that Brazil has so far not 
responded to these reasonable alternatives.427 
4.181  The European Communities submits that one effect ive measure to be taken in this context are 
regular inspections of automobiles, including their tyr es, since in this way it can be ensured that tyres 
are replaced before they reach or surpass the minimum thread depth, an d thus at a time when they are 
typically still retreadable.428  The European Communities notes that Brazil has referred to a draft bill 
(5.979/2001) which would replace state-specific vehicl e safety requirements with national standards.  
Therefore, for the European Communities, Brazil re cognises that it does not currently have a system 
of regular mandatory vehicle inspections in place.  The European Communities submits that there is 
no system in place that would ensure that tyres are re placed before they become so worn that they can 
no longer be retreaded.429 
4.182  The European Communities notes that Brazil me rely argues that a system of mandatory 
inspections might be introduced in the future.  At th e point of time of the Panel's establishment, the 
European Communities submits that the establishment of  a system of mandatory vehicle inspections is 
a reasonably available alternative, which has not been used by Brazil.  For the 
European Communities, whether Brazil will implemen t such a system in the future is therefore 
irrelevant for the purposes of the present discussion.430  The European Communities notes further that 
there is no guarantee that Brazil will indeed im plement a system of mandatory inspections.431  The 
European Communities submits that Brazil has provide d no firm indication as to when the bill will be 
adopted, or as to when the mandatory inspection sy stem would finally take effect throughout Brazil.432  
                                                      
420 Brazil's second written submission, para. 104. 
421 Brazil's answer to panel questi on No. 87 (Exhibits BRA-102, 167). 
422 European Communities' second written submission, executive summary, para. 45. 
423 European Communities' second written submission, executive summary, para. 57;  
European Communities' second oral statement, executive summary, para. 28. 
424 European Communities' second written submission, executive summary, para. 57;  
European Communities' second oral statement, executive summary, para. 28. 
425 European Communities' second oral st atement, executive summary, para. 28. 
426 European Communities' second oral st atement, executive summary, para. 28. 
427 European Communities' second written submission, executive summary, para. 57. 
428 European Communities' second written submission, executive summary, para. 46. 
429 European Communities' second written submission, executive summary, para. 47. 
430 European Communities' second written submission, executive summary, para. 48. 
431 European Communities' second written submission, executive summary, para. 49. 
432 See also para. 4.83.  WT/DS332/R 
 Page 51 
 
 
  4.183  Brazil  submits that it has introduced demanding manufacturing standards for new tyres, 
which assure that more tyres remain suitable for retr eading after the first use.  Brazil explains that the 
National Code of Traffic (Law 9.503/1997) establish es a system of mandatory vehicle inspections in 
Brazil.433  Brazil points out that the Code requires examin ation of the vehicle's safety, including tyres, 
and its compliance with emission rules.  Brazil explai ns that under the law, states have the jurisdiction 
to develop and enforce safety standards and inspectio n procedures in their individual territories and, at 
present, that is what happens.  Brazil further explai ns that the Legislature is currently considering a 
bill to establish uniform federal inspection standards (Bill 5.979/2001) (Exhibit BRA-167).434 
4.184  Brazil also notes that the absence of nationwide rules at present does not mean that Brazilian 
states and municipalities cannot in the interim use lo cal rules to carry out regular inspections – they 
can and they do.  In addition, Brazil notes that  the inspections are not limited to the annual 
inspections: vehicles are inspected when first licensed, when their ow nership changes, and also when 
the vehicle owner moves to a different state.  Brazil points out that according to the National Traffic Department, 30 per cent of the Brazilian automobile fl eet is annually inspected because of a change in 
ownership or the owner's move to a different state.
435  
4.185  Brazil also notes that it is developing an annual vehicle inspection plan designed to increase 
the frequency of tyre replacement, and consequently the number of suitable casings.436  Brazil notes 
that the European Communities proposes four altern atives to achieve the non-generation goal:  "better 
vehicles maintenance," "educational campaigns on better driving habits," promotion of public 
transportation, and public procurement ru les to encourage use of retreaded tyres.437  Brazil submits 
that it has already implemented a number of measu res that encourage non-generation:  (i) a public 
transportation campaign is hardly necessary, however , in developing countries such as Brazil, where 
most of the population do not own cars and alread y use public transportation;  and (ii) public 
procurement rules are also unnecessary because Brazil already has a substantial demand for retreaded 
tyres.438  However, Brazil argues that these "alternatives" will not allo w Brazil to achieve its chosen 
level of protection, because the goal is to preven t as much waste as possible and, without the ban, 
some waste that could have been prevented would not be prevented.439  Therefore, Brazil argues that 
measures such as these complement the import ban, but they cannot replace it.440 
Measures against imports of used tyres441 
4.186  The European Communities  argues that Brazil has not taken effective measures to prevent 
the constant and growing flow of used tyres into Brazil.442  The European Communities claims that 
Brazil imports a growing number of used tyres.443  In 2005 alone, the European Communities submits 
that Brazil imported a total of 10.5 million tyres from third countries, including 8.4 million from the 
                                                      
433 Brazil's answer to panel question No. 87 (Exhibit BRA-102). 
434 Brazil's answer to panel question No. 87 (Exhibit BRA-167). 
435 Brazil's answer to panel question No. 87. 
436 Brazil's first written submission, executive summary, para. 14. 
437 See European Communities' answer to panel question No. 38;  See European Communities' first oral 
statement, at para. 57. 
438 Brazil's second written submission, para. 104. 
439 Brazil's second written submission, executive summary, para. 29. 
440 Brazil's second oral statement, para. 51. 
441 Further arguments by the parties in relation to this issue are contained in paras. 4.108-4.121 
442 European Communities' first oral statement, executive summary, para. 13;  European Communities' 
second written submission, executive summary, para. 50;  European Communities' second oral statement, executive summary, para. 29. 
443 European Communities' first oral st atement, executive summary, para. 13. WT/DS332/R 
Page 52  
 
  European Communities
444 and in the first seven months of 200 6, another 4.5 million casings have been 
imported.445  The European Communities contends that a la rge majority of these ty res are used for the 
fabrication of retreaded tyres in Brazil.  However,  unlike in the case of importation of retreaded tyres, 
the European Communities argues that a small proporti on of the imported used tyres, because they are 
unsuitable for retreading or for other reasons, will get discarded immediately.446  Accordingly, the 
European Communities submits that, following the logic of Brazil, the importation of used tyres 
should be prevented even more urgently than the importation of retreaded tyres.447   
4.187  In response to Brazil's claims that the importa tion of used tyres will soon end, the European 
Communities submits that presently ongoing legislativ e developments are moving in the direction of 
permitting the importation of casings (and retreaded ty res).  The European Communities contends that 
two such draft laws enjoy considerable support in  Brazil's Federal Chamber and the Federal Senate, 
respectively.  The European Communities further submits that draft law 203/91 was approved by the 
Special National Waste Policy Commission by a majority of 22 votes against 4 votes.  The European Communities also submits that draft law 216/03 on 16 December 2005 was approved by the 
Federal Senate's Social Affairs Commission in a vote of 18 against one, with only one abstention.
448  
The European Communities submits that Brazil only cl aims that "the Federal Government has worked 
vigorously to safeguard the integrity of the ban" and explains the judicial decisions taken in 2006.449 
4.188  However, the European Communities contends that the reality is that injunctions are in force 
under which Brazilian retreaders continue to impo rt casings for retreading in Brazil.  For the 
European Communities, Brazil's assu rances that Brazilian courts are no longer or, in the future, would 
no longer grant injunctions, and that the importation of casings would stop, remain contradicted by the 
facts.  The European Communities notes that it has already provided ev idence challenging Brazil's 
statement that all 2006 decisions in the High Court upheld the government's position.  The 
European Communities argues that although Brazil stresses its judicial victories over several 
importers of used tyres, the biggest retreaders of the country continue to operate with the permission 
to import the casings needed for their production.450 
4.189  Brazil  submits that to further promote retreading of tyres it consumes it prohibits imports of 
used tyres, compelling its retreaders to process casings from domestic and imported new tyres collected within Brazil's territory.
451   
Waste management measures 
Controlled stockpiling and landfilling 
4.190  The European Communities  understands controlled stockpiling  as the activity consisting of 
storing waste tyres in adequate installations, whic h are designed to prevent fires and pests (including 
mosquitoes).  The European Communities argues that  stockpiling is different from "landfilling" in 
that the latter consists in discarding large amounts of waste tyres directly on or into the ground.  The 
European Communities explains that landfilling has been  normally done by tossing waste into piles, a 
method that requires little effort or handling by a site  operator but also requires the most storage space 
                                                      
444 European Communities' second written submission, executive summary, para. 50;  
European Communities' second oral statement, executive summary, para. 30. 
445 European Communities' second oral st atement, executive summary, para. 30. 
446 European Communities' first oral statement, executive summary, para. 13;  European Communities' 
second written submission, executive summary, para. 50. 
447 European Communities' first oral st atement, executive summary, para. 13. 
448 European Communities' second written submission, executive summary, para. 56. 
449 European Communities' second oral st atement, executive summary, para. 29. 
450 European Communities' second oral st atement, executive summary, para. 30. 
451 Brazil's first written submission, executive summary, para. 14.  WT/DS332/R 
 Page 53 
 
 
  and where randomly stacked tyres are a greater fire  risk because they expose more tyre surface area 
and create greater volumes or air between other tyres than other stacking methods.452 
4.191  The European Communities further explains that waste tyres are stockpiled in several ways.  
The European Communities submits that besides the random stacks system, which is common in 
landfills but rarely used in controlled stockpiling because of storage space and handling requirements, 
the alternative methods of storing tyres at waste tyres facilities are:  barrel stacks, laced stacks, 
bundling and shredding.  For the European Commun ities, all these, to a different degree, take 
advantage of space, reduce interior spaces decrea sing potential insect habitats and exposes less 
surface area of the tyres to a fire.453 
4.192  The European Communities does not agree with  Brazil's argument that stockpiling is a 
dangerous454 and unsound disposal method because it poses substantial hazards455, provides breeding 
grounds for mosquitoes and contaminates the soil through the leaching of hazardous substances.  
However, for the European Communities, this is a description of the hazards arising from improperly 
managed installations, which c ould be avoided by implementing properly the Basel Convention 
Technical Guidelines and the California Code of Regulations.456  The European Communities notes 
that Brazil refers as evidence to some documents  from the United Kingdom, France, the United States 
and the European retreaders.  Th e European Communities argues that those documents do not refer to 
properly managed installations, but to illegal dumps or historic la ndfills.  The European Communities 
is of the view that they cannot, therefore, serve to contradict the European Communities' position on 
this question.457  Moreover, the European Communities claims  that it has no relevance that the Basel 
Guidelines signal that stockpiling can  be used only for temporary storage before a waste tyre is 
forwarded to a recovery operation.458  The European Communities argues that stockpiling plays an 
important role acting as a buffer to other disposal operations and its duration and capacity can be 
adjusted to the specific needs of the relevant country.459 
4.193  The European Communities argues that stockpiling allows the ma nagement of waste tyres in 
a controlled and surveyed manner, thus reducing, or even eliminating in well designed and managed 
installations, the risks arising from mosquitoes and fires.  For the European Communities, relevant 
evidence of their non-dangerous nature is the fact that waste tyre stockpiling installations are not 
subject to compulsory environmental impact assessment in Brazil and under the only existing international agreement on e nvironmental impact assessme nt:  the Espoo Convention of 
25 February 1991 on Environmental Impact Assessment in a Transboundary Context.
460 
4.194  Brazil  claims that stockpiling is a dangerous  practice that is no longer accepted as a 
legitimate waste tyre management solution.  Brazil argues that stockpiling is not a disposal method at 
all because it does not eliminate tyre waste.  In add ition, Brazil submits that stockpiling presents a risk 
of mosquitoes, toxic leaching, and dangerous emissions during fires.461  Brazil draws the attention of 
the Panel to Exhibit BRA-25, which contains images of tyre stockpiles and tyre fires and shows that 
                                                      
452 European Communities' second written submission, executive summary, para. 63. 
453 European Communities' second written submission, executive summary, para. 64. 
454 European Communities' second written submission, executive summary, para. 65. 
455 European Communities' first oral statement, executive summary, para. 16;  European Communities' 
second oral statement, ex ecutive summary, para. 36. 
456 European Communities' first oral st atement, executive summary, para. 16. 
457 European Communities' second oral st atement, executive summary, para. 36. 
458 European Communities' second oral st atement, executive summary, para. 36. 
459 European Communities' second oral st atement, executive summary, para. 36. 
460 European Communities' second written submission, executive summary, para. 65. 
461 Brazil's first oral concluding st atement, executive summary, p. 1;  Brazil's second oral statement, 
executive summary, para. 10. WT/DS332/R 
Page 54  
 
  stockpiling is hardly safe.  Brazil argues that the European Communities' cavalier treatment of these 
well-recognized risks exemplifies its tr eatment of all disposal alternatives.
462 
4.195  Brazil notes the European Communities' claim that these "haz ards aris[e] from improperly 
managed  installations" and refers the Panel to the management practi ces outlined in the Basel Tyre 
Guidelines and the California regulations.463  Brazil notes that the European Communities says that the 
Basel Tyre Guidelines endorse stockpiling.464  However, in reality, Brazil contends that the Basel 
guidelines are explicit that even with proper control, stockpiling "can be used only for temporary  
storage before an end-of-life tyres is forwarded to a recovery operation," and that "landfilling and 
stockpiling are the least desired  options".465  Moreover, Brazil submits that California's Tyre 
Recycling Act466 names among its key objectives "[c]leanup, abatement, or other remedial action 
related to waste tyre stockpiles ."467   
4.196  Brazil notes that the European Communities points to a number of documents and reports that 
Brazil has supposedly misread.468  Brazil submits some information on the content of those reports 
concerning stockpiling – a disposal method that is  entirely environmentally sound, according to the 
European Communities:469  (i) the British Environment Agency, in its publication "Tyres in the 
Environment" (Exhibit BRA-1), says that "[s]tockpiled tyres ... are a fire risk ..." and "[f]ires in the 
past have caused severe air and water pollu tion, so we need to reduce this risk"470;  and (ii) the Basel 
Tyre Guidelines.471   
4.197  Brazil submits that the environment agencies of the European Communities member States 
recognize the dangers of st ockpiling and are working to eliminate stockpiles.472  Brazil submits further 
that the United Kingdom, for example, has a Stockpile Working Group to provide guidance for 
clearance of stockpiles.473  Brazil also notes that in the United States, most states prohibit new tyre 
stockpiles and require stockpile owners and ope rators to cease accepting new tyres and to develop 
plans to eliminate the stockpiles.474 
4.198  The European Communities  notes that controlled landfilling  is also an alternative and that 
Brazil accepts landfilling of grinded or cut tyres, and,  therefore, this must also be considered as an 
                                                      
462 Brazil's first oral concluding stat ement, executive summary, p. 1. 
463 European Communities' first oral statem ent, at paras. 74-75 (emphasis added). 
464 Brazil's second oral statemen t, executive summary, para. 10. 
465 Basel Convention Technical Guidelines on th e Identification and Management of Used Tyres , 
pp. 11-12 (Exhibit BRA-40) (emphasis added).  Brazil's fi rst oral concluding statem ent, executiv e summary, 
p. 1;  Brazil's second oral stat ement, executive summary, para. 10;  Brazil's second written submission, 
executive summary, para. 21. 
466 California Tyre R ecycling Act of 1989 , California Public Resource Code Sec. 42885.5(b)(2) 
(emphasis added). 
467 Brazil's second written submission, executive summary, para. 21. 
468 European Communities' first oral statement, para. 72. 
469 Brazil's first oral concluding stat ement, executive summary, p. 1. 
470 Brazil's first oral concluding stat ement, executive summary, p. 1. 
471 See para. 4.195.  Brazil's first oral conc luding statement, execu tive summary, p. 1. 
472 See e.g., Ministère de l'écologie et  du développement durable (France), Réglementation de la 
collecte et de l'élimination des pneumatiques usagés , 10 November 2005 (Exhibit BRA-135), UK – Tyres in the 
Environment,  Foreword (1998) (Exhibit BRA-1);  Health Protection Agency (UK), Chemical Hazard and 
Poisons Report  8 (2003) (Exhibit BRA-10).  Brazil's second written submissi on, executive summary, paras. 2, 
22;  Brazil's second oral statemen t, executive summary, para. 10. 
473 The Environment Council, Stockpile Working Group, Seeking Solutions for Waste Tyres:  Informing 
the Environment Agency's Waste Tyres Program – Tyre Stockpile Paper 23 (2004) (Exhibit BRA-136) 
474 See John Serumgard, Internalization of Scrap Tyre Management Costs , at 3 (1998) (Exhibit BRA-
125), at 19.  Brazil's second written submission, executive summary, paras. 22;  Brazil's second oral statement, 
executive summary, para. 10.  WT/DS332/R 
 Page 55 
 
 
  alternative in Brazil to the import ban.475  The European Communities submits that Article 1 of Joint 
Resolution SMA/SS 1/2002 of 5 March 2002 conditions  final tyre disposal in waste landfills to 
previous decharacterization by grinding or cutting the tyre and to the previous mixing of these parts 
with household waste or its spread over the latter.476  The European Communities submits that the 
penultimate recital of this Joint Resolution remi nds that Resolution CONAMA 258/1999, stipulates 
that final disposal of waste tyres shall be ca rried out through environmentally sound measures.  
Consequently, for the European Co mmunities, it has to be concluded that Brazil considers landfilling 
of shredded tyres as creating no environmental ri sks.  The European Communities argues that the 
statement made by Brazil that "shredding of tyr es … does not prevent potential leaching of harmful 
organic chemicals" and heavy metals contradict s its own legislation and must be considered 
unfounded.477 
4.199  With respect to landfilling, Brazil  is not sure what the European Communities means by 
"controlled" landfilling, but landfilli ng of any kind is prohibited in the European Communities since 
July 2006.478  Brazil submits that both Brazil and the Eu ropean Communities prohibit landfilling of 
tyres479 because they damage the landfill's structure and can leach harmful contaminants into the 
environment.480  Brazil is of the view that there is no good reason why Brazil should accept something 
that the European Communities h as rejected.  Brazil notes the European Communities' claim that 
Brazil permits landfilling, but the regulation the European Communities cites is a provisional state measure with no nation-wide application that was adopt ed in response to an acute dengue crisis in the 
state.
481 
Energy recovery and waste co-incineration 
Activities of energy recovery and waste co-incineration  
4.200  The European Communities  contends that both parties in th is dispute allow energy recovery 
through the co-incineration of waste tyres.482  The European Communities submits that in Brazil, 
Resolution CONAMA 264 of 26 Augus t 1999 is the relevant measure.483  The European Communities 
submits that energy recovery is one of the best waste management practices mentioned in the OECD 
report on "Improving Recycling Materials".484  The European Communities submits that the 
percentage of energy recovery from waste tyres has jumped in Europe from 11 per cent in 1994 to 
30 per cent in 2003.485   
4.201  The European Communities notes that Brazil has concentrated its arguments on co-
incineration in cement kilns, though co-incinerati on can also take place in other installations, like 
paper mills or steel furnaces.486  The European Communities contends  that co-incineration of waste 
                                                      
475 European Communities' second written submission, executive summary, para. 66.  
European Communities' second oral statement, executive summary, para. 37. 
476 European Communities' second written submission, executive summary, para. 66. 
477 European Communities' second written submission, executive summary, para. 67. 
478 Brazil's second oral statemen t, executive summary, para. 10. 
479 See Golder Europe EEIG, Report on Implementation of the Landfill Directive in the 15 member 
States of the European Union  122 (2005) (Exhibit BRA-41). 
480 Brazil's first written submission, executive summary, para. 7. 
481 Brazil's second oral statemen t, executive summary, para. 10. 
482 European Communities' first oral statement, executive summary, para. 17;  European Communities' 
second oral statement, ex ecutive summary, para. 37. 
483 European Communities' first oral st atement, executive summary, para. 17. 
484 European Communities' second written submission, executive summary, para. 68. 
485 See figure 4.3 of the OECD report on "Improving Recycling Materials" contained in Exhibits EC-16 
and BRA-58, p. 125.  European Communities' first oral statement, executive summary, para. 17. 
486 European Communities' second oral st atement, executive summary, para. 37. WT/DS332/R 
Page 56  
 
  tyres or tyre-derived fuel in different installati ons (cement kilns, pulp and paper mills, electric arc 
furnaces for the manufacture of high-carbon steel products, and utility and industrial boilers) is considered a safe activity throughout the world.  For the European Communities, that explains its 
expansion in several countries, like the United States, Australia, Japan or the European Communities.
487 
4.202  The European Communities notes Brazil's ac knowledgement that it has licensed some 
46 companies to process waste tyres, and, presumably, several of them use waste tyres as fuel.488  For 
the European Communities, it is regrettable that Br azil did not provide a useful answer to the second 
part of the Panel's question No. 43 (What types of disposal methods are used by the Brazilian 
companies that are authorized to  process waste tyres in Brazil?)  and refused to answer to the 
European Communities' question No. 17 (concerni ng the 46 companies authorised to process waste 
tyres).489  The European Communities considers that the in formation requested is relevant to assess to 
what extent energy recovery is a reasonable alte rnative in Brazil, which the European Communities 
claims it is.490   
4.203  The European Communities submits  that the authorities in Br azil seem to encourage energy 
recovery as an alternative.  In its response to the Panel's question No. 43, the European Communities 
notes that Brazil admitted that co-processing in cem ent kilns and co-processing with bituminous schist 
are disposal methods usually approved by state en vironmental authorities in the framework of the 
implementation of Resolution CONAMA 258/1999.491  In any case, for the European Communities, it 
is clear that energy recovery plays already an im portant role in Brazil.  The European Communities 
submits that the report "Panorama dos Resíduos Sóli dos no Brasil" (Solid Waste Panorama in Brazil) 
states that, in 2004, 56,06 per centof waste tyres in  Brazil were used to produce alternative fuel.492  
The European Communities ha s already explained that, in view of  its capacities as country and its 
important participation in the cement and paper mills industries and energy, Brazil cannot claim to 
have difficulties in implementing energy recovery  as an alternative measure.  The European 
Communities points out that according to the World Bank country fiche, Brazil's industrial sector 
represents 40 per cent of its economy, and the publication "World Steel in Figures" by the 
International Iron and Steel Institute, ranks Braz il in the ninth post among the major steel-producing 
countries in 2005.493 
4.204  Brazil  argues that outside of landfilling, only incineration can handle the large existing 
volumes of waste tyres, but incineration produces harmful emissions that can cause cancer, as well as a variety of respiratory, reproduc tive, and immune system problems.
494  Brazil points out, for example, 
that the US EPA study found that a "well-designe d, well-operated, and we ll-maintained combustion 
device" could mitigate the added harm from the TDF emissions; however, "it is not likely that a [well-
designed] solid fuel combustor without add-on pa rticulate controls could satisfy air emission 
regulatory requirements in the United States," and "t here is serious concern that emissions [from 
poorly designed or primitive combustion devices] would be more like those of an open tire fire than a 
well-designed combustor."495   
                                                      
487 European Communities' second written submission, executive summary, para. 74. 
488 European Communities' first oral statement, executive summary, para. 17;  European Communities' 
second written submission, executive summary, para. 75. 
489 European Communities' second written submission, executive summary, para. 75;  
European Communities' second oral statement, executive summary, para. 39. 
490 European Communities' second written submission, executive summary, para. 75. 
491 European Communities' second written submission, executive summary, para. 76. 
492 Exhibit EC-114. 
493 European Communities' second written submission, executive summary, para. 77. 
494 Brazil's first written submission, paras. 21, 44 (Exhibit BRA-48). 
495 Brazil's first written submissi on, para. 46 (Exhibit BRA-26).  WT/DS332/R 
 Page 57 
 
 
  Safety of energy recovery and waste co-incineration 
4.205  Brazil  argues that it is entitled to opt for the highest level of protection, and that is precisely 
what Brazil is doing.496  Brazil explains that Brazil, the European Communities, and other WTO 
Members continue to incinerate tyre waste not b ecause the practice is safe, but because landfilling and 
stockpiling are even more dangerous, and the less ri sky disposal methods cannot absorb the volumes 
generated.497  Brazil argues that incineration of waste tyres in cement kilns and similar facilities does 
not allow Brazil to achieve its chosen level of protection.498  Brazil claims that while there is clearly an 
overwhelming consensus on the dangers of incineration, Brazil needs only to  show that it is relying, in 
good faith, on qualified and respected, even if divergent, opinion.499  Brazil notes that the European 
Communities admits that500 "some governments and scientific communities have expressed concern 
about incinerating waste tyres".501   
4.206  The European Communities  argues that Brazil distorts the European Communities' 
arguments in order to give the impression that co -incineration in cement kilns is dangerous.  The 
European Communities notes that Brazil continues w ith the surprising affirmation that dumping is a 
less harmful disposal method than incineration.  Th e European Communities contends that contrary to 
what Brazil claims co-incineration will continue to be  used in the medium term until recycling is fully 
developed, especially in the current internat ional scenario of petrol prices.  For the 
European Communities, this explains why, in 2004, 56.06 per cent of waste tyres in Brazil were used 
to produce alternative fuel.  Moreover, the Eur opean Communities notes that Brazil has not alleged 
that co-incineration is not an adequate system to  eliminate tyres, as mosquito-breeding places, or to 
reduce open tyre fires.502 
4.207  The European Communities argues that Brazil has not demonstrated either that 
co-incineration of waste tyres increases emissions of hazardous substances.  The European Communities claims that all its evidence is based on studies issued ten years ago or more, 
precisely when the discussions to regulate co-inc ineration started, and the studies correspond to 
installations using old technology, like the wet cement kilns, or burning other fuels.
503   
4.208  Brazil  states that the incineration was not safe ten years ago, and it still is not safe today.  
Brazil further argues that the studies provided by Br azil are the most recent studies available on the 
subject.  Brazil states that the European Communities has only been able to provide one study that is 
more recent, which specifically addresses the safety of waste tyre incineration.504  That very study, 
according to Brazil, reported significant increases in dioxin emissions during the incineration of waste 
tyres.  Brazil also notes that a British report, da ted 2002, prepared with the British Government's 
participation, observed that "public and regulat ory concern over emissions makes consents [to 
incinerate tyres] difficult to obtain."505   
                                                      
496 Brazil's second oral statemen t, executive summary, para. 13. 
497 Brazil's second oral statement, para. 42. 
498 Brazil's second written submission, executive summary, para. 23. 
499 See Appellate Body Report,on EC – Asbestos , at para. 178.  Brazil's second oral statement, 
executive summary, para. 13. 
500 European Communities' first oral statement, at para. 76. 
501 Brazil's second written submission,  executive summary, para. 23;  Brazil's second oral statement, 
executive summary, para. 13. 
502 European Communities' second oral st atement, executive summary, para. 38. 
503 European Communities' second oral st atement, executive summary, para. 39. 
504 Exhibit EC-86. 
505 Exhibit BRA-56, cited in Brazil's answer to panel question No. 123;  Brazil's second oral statement, 
para. 35. WT/DS332/R 
Page 58  
 
  Emissions of dioxins, furans and other persistent organic pollutants (POPs) 
4.209  Brazil  notes that the European  Communities concedes that
506 incineration "can lead to 
emissions of dioxins, furans and ot her persistent organic pollutants".507  Brazil submits further that the 
European Communities yet argues that (i) safety of  incineration is beside the point because Brazil 
permits it;  and (ii) emission controls could make it safe.508  Brazil claims that both arguments are 
flawed.509   
4.210  First , Brazil and other countries permit incineration not because it is safe, but because other, 
less risky methods cannot absorb the existing volumes of  tyre waste, even if used in combination.  
According to the European Environment Agency, inci neration is appropriate onl y "if no other outlet is 
possible".510  Brazil notes that the European Communities makes a half-hearted attempt at defending 
the safety of incineration. However, the studies it cites support Brazil's arguments.511  Brazil submits 
that the study prepared for the cement industry describes tests conducted at 16 German kilns since 
1989 and reports a 1,233 per cent to 3,900 per cent increase in dioxin emissions when tyres are burned.
512  Brazil notes that the study also acknowledges that  burning alternative fuels, such as tyres, 
could result in release of heavy metals.513  Brazil further notes that two other studies cited by the 
European Communities do not measure dioxin emissions at  all, and one admits that tyre material in 
material recycling uses leaches lead, nickel, chromium and cadmium.514   
4.211  Brazil argues that incineration produces harmfu l emissions (including dioxins, furans, and 
lead) that cause cancer, aff ect the immune system, and l ead to reproductive problems.515  Brazil notes 
that it has explained in detail why incineration of  waste tyres is harmful, even under controlled 
conditions.  Brazil submits that Ontario banned inci neration until it realized that there was no other 
way to reduce stockpiling of its tyre waste.  Braz il argues that not a single study introduced by the 
European Communities supports its ambitious claim that incineration is entirely safe – instead, the 
studies document increases in dioxin emissions and leaching.  Brazil points out that if waste tyres were indeed the safe and valuable fuel that the European Communities claims they are, it would seem 
that they would be in high demand;  however, they are not.
516  Brazil notes that cement kilns still 
charge gate fees to accept tyres and, as the Britis h Used Tyre Working Group correctly points out, 
"[t]he speed of regulatory approval for cement work s to consume used tyres as a replacement fuel has 
to date been extremely slow."517 
                                                      
506 European Communities' first oral statement, at para. 76. 
507 Brazil's second written submission,  executive summary, para. 23;  Brazil's second oral statement, 
executive summary, para. 13. 
508 See European Communities' first oral statement, at paras. 77-79.  
509 Brazil's second written submission, executive summary, para. 23. 
510 European Environment Agency, Waste from Road Vehicles  2 (2001) (" EU – Waste from Road 
Vehicles ") (Exhibit BRA-108).  Brazil's second written submissi on, executive summary, paras. 2, 24;  Brazil's 
second oral statement, ex ecutive summary, para. 11. 
511 See European Communities' answer to panel question No. 48. 
512 Exhibit EC-86.  See European Communities' answer to panel question No. 48. 
513 See European Communities' answer to panel question No. 48.  
514 See IVL Swedish Environmenta l Research Institute LTD, LCA Utilization of Used Tyres  
(Exhibit EC-87); Fraunhofer Institute Materialfluss und Lo gistik, Study on Cost-benefit Scenarios for Recycling 
in the EU 126 (Exhibit EC-62).  Brazil's second  written submission, executive summary, para. 25. 
515 Seymour Schwartz et al., Domestic Markets for California's Used and Waste Tyres , Attachment A:  
Environmental and Health Consequences from Using Tyres as Fuel; Health Risk Assessment 1 (1998) (Exhibit 
BRA-48).  Brazil's firs t written submission, executive summary, para. 8. 
516 Brazil's second oral statemen t, executive summary, para. 11. 
517 Brazil's second oral statement, para. 42, citing Exhibit BRA-55.  WT/DS332/R 
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  4.212  Brazil submits that to downplay the risks of dioxins, the European Communities explains that 
"[d]ioxins are found widely in the environment and the main source of exposure is via diet."518  
However, Brazil notes that as the United States EPA explains in Exhibit BRA-31, dioxins enter the 
food chain from the emissions in the atmosphere, accu mulate in the animal tissue, and are then passed 
on to the person who consumes the animal's meat.  Brazil submits that the European Communities 
also argues that there is a tolerable exposure level, as established by the WHO.519  Brazil submits 
further that however the United States Government  report, cited by the European Communities, 
reveals that the United States EPA disagreed that such a threshold existed, and notes that the WHO 
recommended that "every effort ... be made to reduce exposure to the lowest possible level."520  Brazil 
notes that, in addition, the same US report underlin es that every time the W HO has returned to the 
issue, it has lowered the tolera ble intake level for dioxins.521  Finally, Brazil argues that the European 
Communities is flatly wrong when it states that dioxins are not one of the 12 POPs targeted for elimination under the Stockholm Convention;  a quic k look at the Annex C and Article 5 makes this 
clear.
522 
4.213  Brazil notes that the European Communities casu ally dismissed the hazards presented by a 
deadly chemical523 by stating that dioxins are released from back-yard barbecues.524  Brazil argues that 
the level of dioxins released from a cement kiln – ev en properly operated, state-of-the-art cement kiln 
– is far greater than the amount released from any barbecue.  If the European Communities has 
contrary information, Brazil would be pleased to receive it.525 
4.214  Second , Brazil contends that stricter emission standards can mitigate, but not eliminate the 
health and environmental harm caused by incineration.526  Brazil further argues that such emission 
standards require cost-prohibitive upgrades.527  Brazil submits that zero-level emissions, in principle, 
could eliminate the risks of incineration.  Howeve r, Brazil argues that, in practice, demanding such 
standards will render incineration no longer tec hnically or economically viable, and the waste 
previously incinerated will have to be landfilled or stockpiled, whic h is even more harmful.  Brazil 
submits that because these risks are unavoidable, the only way to reduce them is to reduce the 
volumes of tyres that must be disposed of.528   
4.215  Brazil argues that the decision on whether a steel mill or paper mill will use tyres as fuel is a 
decision that the private operator of the mill will make based on various economic variables, including the cost of the fuel (in the case of tyres, most charge a fee to accept the tyres to burn), plus 
the cost of the burning process.  Brazil submits that  the higher the restrictions on that process, the 
higher the cost of compliance.  In Brazil's view, the result is that if Brazil set the emissions standards 
high enough to meet its desired level of protection, the cost of meeting those standards would be so 
high that the operators would choose an alternative source of fuel.  Paragraph 49 of Brazil's first 
written submission provides an example of an Europe an Communities member St ate, where the use of 
tyres as fuel declined after the emission standards were  raised.  Brazil noted that in Austria, the energy 
                                                     
 
518 European Communities' Second Written Submission, at para. 116. 
519 See European Communities' Second Written Submission, at para. 116. 
520 General Accounting Office (US), Environmental Health Risks:  Information on EPA's Draft 
Reassessment of Dioxins , 27-28, 46 (2002) (Exhibit BRA-33). 
521 Brazil's second oral statement, para. 39. 
522 Brazil's second oral statemen t, executive summary, para. 12. 
523 Brazil's first oral concluding stat ement, executive summary, p. 2. 
524 Brazil's first oral concluding stat ement, executive summary, p. 1. 
525 Brazil's first oral concluding stat ement, executive summary, p. 1. 
526 OECD Environment Directorate, Improving Recycling Markets  (2005) (" OECD – Improving 
Recycling Markets ") (Exhibit BRA-58), at 140.  Brazil's first wr itten submission, executive summary, para. 8;  
Brazil's second written submission, executive summary, para. 25. 
527 Brazil's first written submission, executive summary, para. 8. 
528 Brazil's second written submission, executive summary, para. 26. WT/DS332/R 
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  recovery market share declined from 70 to 40 per cent in 2000 after introduction of stricter 
environmental regulations.
529 
4.216  Brazil submits that the issue, therefore, is not  whether Brazilian incinerators can afford the 
safest technology available to reduce emissions, but whether incineration of waste tyres would 
continue to make business sense if expensive inv estments were required, especially in developing 
countries like Brazil.  Brazil points out that with the present state of technology, the fewer tyres are 
incinerated, the more tyres will have to be stockpi led and landfilled – at an even greater health and 
environmental cost.530 
4.217  Brazil argues that the European Communities has built its case on flawed conclusions and, 
sometimes, outright misrepresentations, as for exampl e the fact that it portrayed a deadly chemical 
- dioxin - as a benign substance.  In addition, Brazil is of the view that by downplaying the risks of 
waste tyre accumulation and disposal in Geneva, the European Communities has contradicted its own 
environmental officials in Brussels.531   
4.218  To respond to Brazil's arguments that ener gy recovery produces "dangerous, harmful 
emissions, even under its most controlled conditions", the European Communities  notes that in its 
first oral statement several reasons to  support this alternative were provided.532  T h e  
European Communities notes that it is true that burning wastes – if not properly done – can lead to emissions of dioxins, furans and other POPs;  however, the incineration or co-incineration of waste 
destroys POPs in the waste input.  The European Communities submits that the practice of waste co-
incineration can also be considered in the light  of the Basel Convention, which adopted in 2004 
General Technical Guidelines for the Environmenta lly Sound Management of wastes consisting of, 
containing or contaminated with POPs.  The Eur opean Communities submits that cement kiln co-
incineration is included in the guidelines as one appropriate technology for the destruction and 
irreversible transformation of the POPs content in waste.
533  The European Communities submits 
further that the technology and equipment for ensu ring the respect of those emissions limits exists, 
and the Brazilian cement, steel and paper mills compan ies can surely afford the investments, if they 
have not done it yet. Brazil has submitted no evidence to the contrary.534 
4.219  The European Communities submits that Brazil has acknowledged that stricter emissions 
standards will produce fewer emissions.  The Eu ropean Communities submits that, of course, 
emission limits are set up to protect human health  and the environment against risks that are 
significant, not against those that are insignifican t.  The European Communities contends that our 
societies are very far away from the technological  and economic levels ensuring zero risk.  The 
European Communities has the strictest standards in  the world:  its dioxin emissions limits, for 
example, are five times lower than those in Brazil.535  In the European Communities, incineration of 
tyres must meet at least the standards of the w aste incineration Directive 2000/76/EC, which ensures a 
high level of health protection.536   
4.220  The European Communities notes that Brazil reacted to the European Communities' 
arguments by saying that the European Communitie s was "casually dismissing the hazards presented 
by a deadly chemical" (dioxins).  The European  Communities notes that no arguments were advanced 
by Brazil in relation to the increased use of this alternative in the European Communities, Brazil and 
                                                      
529 Brazil's second oral concluding st atement, executive su mmary, para. 14. 
530 Brazil's answer to panel question No. 97. 
531 Brazil's second oral statemen t, executive summary, para. 1. 
532 European Communities' second written submission, executive summary, para. 68. 
533 European Communities' first oral st atement, executive summary, para. 17. 
534 European Communities' second oral st atement, executive summary, para. 40. 
535 European Communities' second oral st atement, executive summary, para. 40. 
536 European Communities' first oral st atement, executive summary, para. 17.  WT/DS332/R 
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  elsewhere and the positive role that cement kiln co-inc ineration of waste tyres plays in the destruction 
of the POPs content in waste.537   
4.221  The European Communities explains that dioxins  are formed in very small quantities when 
organic materials such as oil, wood, grease and plastics are burnt.  The European Communities 
explains that the EC fiche on emission values from the group of activities to which cement clinkers 
belong shows that dioxin total emissions to air per year in the European Communities amount to 
0.0322 kg, which represents 4 per cent of the dioxins emission in the European Communities.  The European Communities notes that the WHO considers that TCDD (the most hazardous dioxin) does 
not affect genetic material and there is a leve l of exposure below which cancer risk would be 
negligible.  The European Communities further submits that the WHO has recommended a monthly 
tolerable intake of 70 picograms per kilogram of body weight.
538 
4.222  Moreover, the European Communities stresses th at Brazil has slipped into its submissions 
some inaccuracies on dioxins as hazardous substance;  namely, the statements that dioxins are harmful 
no matter how small the amount and that the St ockholm Convention on POPs has listed dioxins 
among 12 contaminants targeted for elimination.539.  The European Communities points out that 
dioxins do not form part of the 12 contaminants whose production, use and trade are prohibited or 
must be eliminated according to Article 3 of th e POPs Convention.  The European Communities 
explains that dioxins are included in Annex C to the Convention, with other chemicals whose total 
releases from anthropogenic sources must be reduced , according to Article 5 of the Convention, with 
the goal of their continuing minimi zation and, where feasible, ultimate elimination.  Dioxins levels 
have been decreasing in recent years, mainly du e to the reduction in emissions to the air from 
industrial installations.  The European Communiti es is actively working on further reductions:  
Directive 2000/76/EC sets up 0.1 ng/Nm³ for incineration and co-incineration plants, compared to the 0.5 ng/Nm³ set up in the Brazilian Resolution CONA MA 316 of 29 October 2002 on procedures and 
criteria for the operation of thermal waste treatment systems.
540 
4.223  Finally, the European Communities notes that the reports mentioned by Brazil in its first 
written submission are not representative of the current situation of energy recovery as an alternative 
and, in some cases, the use by Brazil of those reports is biased.  The European Communities argues 
that the most recent scientific evid ence shows that incineration of wast e tyres in cement kilns does not 
influence or affect the emissions  of dioxins and furans, reduces SO 2 emissions and does not increment 
emissions for lead, nickel, chromium and cadmium.541 
Material recycling 
4.224  The European Communities  contends that material recycling of waste tyres for different 
purposes is considered a safe activity throughout th e world.  For the European Communities, that 
explains its expansion in several countries, like the United States, Australia or the United Kingdom.  
The European Communities submits that authoriti es in Brazil also seem to encourage material 
recycling as an alternative.  The European Comm unities notes that in its response to the Panel's 
question No. 43, Brazil states that the production of  rubber asphalt and rubber products and appliances 
are disposal methods usually approved by state en vironmental authorities in the framework of the 
implementation of Resolution CONAMA 258/1999.  The European Communities submits that 
according to a recent press article found on the webs ite of the Brazilian Ministry of the Economy, the 
company "Ecovias" is applying rubber asphalt on 146 kilometres of road in São Paulo and the 
                                                      
537 European Communities' second written submission, executive summary, para. 69. 
538 European Communities' second written submission, executive summary, para. 71. 
539 European Communities' second written submission, executive summary, para. 70. 
540 European Communities' second written submission, executive summary, para. 72. 
541 European Communities' second written submission, executive summary, para. 73. WT/DS332/R 
Page 62  
 
  company "Greca" one of its providers, with three as phalt installations in Rio Grande do Sul, Paraná 
and São Paulo, is constructing another one in Minas Gerais.
542 
4.225  The European Communities notes however that Braz il considers that material recycling is not 
an acceptable option.  However, for the European  Communities the reports attached as exhibits by 
Brazil show that material recycling or reuse is well expanded;  this is reflected in figure 4.3 of the 
OECD report, which shows that recycling of wast e tyres has jumped in Europe from 6 per cent in 
1994 to 28 per cent in 2003.543  The European Communities submits that Brazil repeats that material 
recycling is not always economically and technica lly viable, and can only absorb a fraction of the 
waste tyres arising in Brazil.  The European Co mmunities argues that Brazil insists in assessing this 
alternative in isolation.544   
4.226  In any case, the European Communities is of th e view that Brazil still has to explain its 
capacities in this respect and, more notably, to comment on the report "Panorama dos Residuos Sólidos no Brasil" (Solid Waste Panorama in Brazil)  that states that, "[i]n 2004, of the 146 thousand 
tonnes of unusable tyres, ... 17.65 per cent [were] ro lled into sheeting, [and] 19.65 per cent [used] for 
rubber goods and material".
545  Finally, the European Communities argues that among the 
environmental health actions foreseen in its ch apter 5.1, the National Dengue Control Programme, 
adopted on 24 July 2002 by the Brazilian Health Ministry, refers to 100.000  grinders for shredding 
tyres, which will be provided to the municipalities to  support the use of tyres as raw material for the 
construction of houses.546   
4.227  The European Communities notes Br azil's claims that material recycling of rubber remains 
"largely experimental and their environmenta l impact unknown", that rubber-asphalt can cause 
occupational hazards and that civil engineering applications  pose negative environmental effects.  The 
European Communities claims that these claims are inaccurate.  The European Communities notes 
that the report attached by Brazil to its first wr itten submission concludes that "no definitive results 
were obtained indicating that rubber asphalt expos ures are more hazardous than conventional asphalt 
exposures".  The European Communi ties submits that, in regard to civil engineering, a report 
produced by HR Wallingford Ltd., in March 2005, for the United Kingdom Department of Trade and 
Industry and the Environment Agency explains the diffe rent re-uses of tyres in port, coastal and river 
engineering and concludes that the overall risk of damage to the environment and human health is 
expected to be reduced to low or to near zero.547 
4.228  Brazil  also argues that material recycling applica tions – though often safer – are not always 
the best solution.  Brazil submits that an industry association548 that supports material recycling 
nevertheless recognizes that "[e]ach potential civil engi neering use brings with it a particular set of 
technical, environmental and economic constraints".549  Brazil states, for exam ple, that rubber asphalt 
has yet to gain wide acceptance and concerns about emissions during paving and resurfacing 
remain.550  Brazil explains that material recycling is preferred to stockpiling and incineration because 
it is generally safer and extracts the greatest envi ronmental benefit from the waste tyre, next to 
                                                      
542 European Communities' second written submission, executive summary, para. 79. 
543 European Communities' first oral st atement, executive summary, para. 18. 
544 European Communities' second oral st atement, executive summary, para. 41. 
545 European Communities' second written submi ssion, executive summary, paras. 80-81;  
European Communities' second oral statement, executive summary, para. 41. 
546 European Communities' second written submission, executive summary, para. 80. 
547 European Communities' second written submission, executive summary, para. 78. 
548 Serumgard, at 10 (Exhibit BRA-125).  
549 Brazil's second written submission, executive summary, para. 28. 
550 Brazil's first written submission, pa ra. 55 (Exhibits BRA-1, 60, 62).  WT/DS332/R 
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  retreading.  Brazil explains, however, that material recycling does not have the capacity to absorb the 
existing volumes.551   
4.229  Brazil submits that the European Environmen t Agency, for example, advises member States 
that "[r]etreading and recycling of tyres should be encouraged and increased, in preference to combustion and energy recovery".
552  However, Brazil explains that material recycling cannot absorb 
the existing volumes.  Brazil argues that in the Europe an Communities, it helps dispose of just slightly 
over a quarter of the tyre waste.553  Brazil submits that the European Environment Agency notes:554  
"Too many tyres are still being landfilled or burnt .  ... [C]ompliance with the EC Directives on land-
filling and waste combustion emissions will require considerable investment in new retreating and 
recycling facilities".555   
4.230  Brazil submits further that because the vulcan ization process that gives a tyre its rigid 
physical properties cannot be effectively reversed, true recycling is impossible.556  Brazil explains that 
devulcanization is cost-prohibitive, results in pollution and produces poor-quality rubber with limited 
demand and applications – tyre manufacturers simp ly cannot recycle an old tyre into a new one.557  
Brazil explains that pyrolysis (self-contained br eakdown of the tyre material in an oxygen-free 
environment) remains experimental and expensive.558  Brazil contends that civil engineering uses, 
such as construction of artificial reefs and landfill lin ing, can help dispose of only a small fraction of 
the existing volumes and their environmental imp act remains unknown.  Brazil notes that adding 
shredded waste tyres to asphalt has yet to gain wi de acceptance and concerns about emissions during 
paving and resurfacing remain.559   Brazil submits that in the Eu ropean Communities, rubber asphalt 
applications560 help dispose of less than one per cent of waste tyres.561 
4.231  Brazil notes the European Communities' argume nt that the report "Panorama dos Residuos 
Sólidos no Brazil" allegedly proves that Brazil successfully disposes of all of its tyres.  Brazil states that all that the report does, however, is quote th e highly controversial IPT study, commissioned by 
Brazil's new tyre manufacturers.
562  Brazil points out that the methodology of the IPT study was so 
flawed that the manufacturers requested that the study be redone.563  Brazil explains that the problem 
with the report is that, while it accounted for the dispo sal of 100 per cent of the tyres that were in fact 
disposed of by the business entiti es surveyed, the quantity disposed  of by these businesses was less 
than half of all waste tyre arisings in that particul ar year.  In addition, Brazil states, according to the 
report, more than half of the tyres were incinerate d, and incineration, as Brazil has explained, presents 
health and environmental risks.564 
                                                      
551 Brazil's second written submission, para. 94. 
552 EU – Waste from Road Vehicles , at 1 (Exhibit BRA-108). 
553 See European Communities' First Oral Statement, at para. 81.  
554 EU – Waste from Road Vehicles , at 3 (Exhibit BRA-108) (emphasis added). 
555 Brazil's second written submission, executive su mmary, para. 27.  See also Brazil's comments on 
European Communities' answer to panel question No. 125 (Exhibit EC-84). 
556 See California Environmental Protection Agency (US), Integrated Waste Management Board, 
Increasing the Recycled Content in New Tyres 21 (2004) (citing Bridgestone/Firestone Corporation) (Exhibit 
BRA-59). 
557 Brazil's first written submission, paras. 52-53. 
558 See OECD – Improving Recycling Markets  132 (Exhibit BRA-58).  
559 See UK – Tyres in the Environment  (Exhibit BRA-1). 
560 Serge Palard, BLIC, Rubber Recycling Activities in Eur ope:  Trends and Challenges , Presentation at 
a meeting of the Canadian Rubber Association, 20 October 2004, at slide 13 (Exhibit BRA-60). 
561 Brazil's first written submission, executive summary, para. 7. 
562 Exhibit BRA-159. 
563 Brazil's second oral statement, para. 24 (Exhibit BRA-159). 
 564 Brazil's second oral statement, para. 24. WT/DS332/R 
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  Other measures 
Resolution CONAMA 258/1999 and the Rodando Limpo programmes in various 
Brazilian states 
4.232  The European Communities  submits that the Brazilian legislation itself contains one 
alternative measure to the import ban on retreaded tyres:
565  the collecting and disposal system set up 
by Resolution CONAMA 258/1 999, as amended in 2002566, and makes it mandatory for domestic 
producers of new tyres and importers of new and retr eaded tyres to provide fo r the safe disposal of 
waste tyres in specified proportions.567  The European Communities is of  the view that this disposal 
scheme, if it were enforced correctly, would elimin ate the eventual health hazards created by waste 
tyres.  The European Communities argues that schemes like this are even more effective than an 
import ban, since they cover all waste tyres.  For the European Communities, this would also 
correspond to the modern waste management policies adopted around the world, where different types 
of recycling and recovery schemes have been est ablished to limit or eliminate the landfilling or 
uncontrolled disposal of certain wastes.568   
4.233  The European Communities claims that Brazil has not explained so far how waste tyre 
collection from consumers is organised in its territo ry.  It seems to the Eu ropean Communities that no 
obligations are imposed on garages or specialist tyre  retailers to collect and correctly manage waste 
tyres in the replacement activities.  The European  Communities submits that Brazil has only referred 
to the system established by Resolution CONAMA 258/1999, which institutes an obligation on new 
tyres producers and importers and on importers of retreaded tyres.  However, the European Communities argues that Brazil is not  ensuring the correct implementation of the 
CONAMA scheme, as can clearly be deduced from the very high figures of incidents of non-
compliance.
569 
4.234  Moreover, the European Communities submits that  an alternative measure could consist in 
destroying waste tyres beyond the mandatory controlled disposal programme adopted by Resolution CONAMA 258/1999.  Thus, in the State of Paraná , the European Communities notes that there is a 
voluntary multi-sector programme called "Paraná Rodando Limpo" ("Paraná Rolling Clean"), in 
which more than 10 million old tyres have so far be en disposed of, thus eliminating the waste tyre 
problem in that State.  The European Communities submits that equivalent programmes are now being implemented in Pernambuco and Paraíba.  The European Communities argues that nothing 
prevents Brazil from applying to the whole Union a programme that has been put in place in several 
of its States.
570  The European Communities also notes th at Brazil has not explained why these 
programmes could not be applied to the whole Union.571 
4.235  The European Communities submits that tyre co llection, transport and interim storage, are 
activities necessary to ensure the various recycling,  recovery and other disposal practices.  The 
European Communities argues that th ese activities should be carried out in a way ensuring that tyres 
are free of adult mosquitoes or their larvae and eggs.  The European Communities submits that 
Brazil's own exhibits reflect the need to ensure a pr oper handling of tyres, where it is explained that 
                                                      
565 European Communities' first oral st atement, executive summary, para. 15. 
566 European Communities' first oral st atement, executive summary, para. 15. 
567 European Communities' first written submission, executive summary, para. 25. 
568 European Communities' first written submission, executive summary, para. 26. 
569 European Communities' second written submission, executive summary, para. 61. 
570 European Communities' first written submission, executive summary, para. 27. 
571 European Communities' first oral st atement, executive summary, para. 15.  WT/DS332/R 
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  tyres "should be properly discarded, covered or stacked in a shed … so that they cannot be filled with 
water".572 
4.236  The European Communities argues that R esolution CONAMA 258/1999 and the import ban 
are measures having different objectives and are not, contrary to Brazil's opinion, "the complementary and indivisible foundations of the national strategy for waste tyre management".  In reality, the 
European Communities is of the view that the im port ban renders obsolete some of the obligations 
explicitly imposed by the Resolution CONAMA to co llect and dispose of a certain number of waste 
tyres, namely those relating to the importers of retreaded tyres.
573   
4.237  Finally, the European Communities notes Ko rea's suggestion that Brazil could foresee 
retreading as a possibility to fulfil the ob ligations under Resolution CONAMA 258/1999.574  I n  
addition, the European Communities argues that im posing disposal obligations on the importers of 
retreaded tyres could be another alternative, provided  that such disposal obligations are proportionate 
to the contribution that retreaded tyres make to the additional waste burden in Brazil.  The 
European Communities argues further that this is already the case under Resolution 
CONAMA 258/1999, which imposes on importers of retr eaded tyres the highest disposal burden.  The 
European Communities contends that Brazil has not explained why proportionate disposal obligations 
are not a sufficient means of addressing any waste implications that imported retreaded tyres might have.
575 
4.238  Brazil  notes at the outset that the alternative measure  must be likely to secure the goals of the 
contested measure, yet do so in a ma nner that is less trade-restrictive.576  Brazil notes that the 
European Communities has pointed to Resoluti on CONAMA 258/1999 as an alternative measure.  
Brazil explains, however, that Resolution C ONAMA 258/1999 imposes the obligation on tyre 
manufacturers and importers of collecting and en suring the "environmentally appropriate final 
disposal of unusable tyres in Brazil."577  According to Brazil, th e Resolution specifies that 
manufacturers and importers (or third parties contra cted by manufacturers or importers) must collect 
and dispose of a certain number of waste tyres, in proportion to the number of imported or locally 
manufactured new tyres or imported reconditioned tyres.578  Brazil notes that the Resolution does not 
specify which disposal methods are considered environmentally appropriate; it does identify, 
however, the methods that are prohibited (i.e., dumpi ng of waste tyres in landfills, the sea, rivers, 
lakes or streams, derelict land or wetlands and open burning).579 
4.239  Brazil states that Resolution CONAMA 258/1999 is but one component of Brazil's 
comprehensive waste management program, which complements – but cannot substitute for – the 
import ban.580  Brazil points out that even when the collection and disposal methods conform to the 
environmental legislation in force, in accord ance with Resolution CONAMA 258/1999, they pose 
health and environmental risks.  Brazil notes that while effective and timely collection may help control mosquito-borne diseases, the collected tyres must still be disposed of – and there is no known 
completely safe way to do that with the volumes i nvolved.  For this reason, Brazil explains, although 
                                                     
 
572 European Communities' second oral st atement, executive summary, para. 35. 
573 European Communities' second oral st atement, executive summary, para. 4. 
574 European Communities' second written submission, executive summary, para. 57. 
575 European Communities' second oral concludi ng statement, executive summary, para. 17. 
576 Brazil's first written submission, para. 112. 
577 Brazil's first written submission, para. 118 (Exhibit BRA-4). 
578 Brazil's first written submission, para. 118 (Exhibit BRA-4). 
579 Brazil's first written submission, para. 118 (Exhibit BRA-4). 
580 Brazil's first written submission, para. 118 (Exhibit BRA-4). WT/DS332/R 
Page 66  
 
  collection is a vital part of Brazil's program, it is not an "alternative" to the disposal or the non-
generation of additional waste.
581   
4.240  Brazil explains that because the collection and final disposal of waste tyres have significant 
adverse effects on human health and the environm ent, Brazil's waste tyre management program 
emphasizes non-generation because to rely solely on collection and disposal of waste tyres would not 
as effectively avoid or mitigate the health and e nvironmental risks. Brazil states that because the 
Resolution is a collection, the Resolution, by itsel f, does not achieve the desired level of protection 
sought by the import ban and it is therefore not an alte rnative measure that is "reasonably available" to 
Brazil.582 
4.241  Brazil also adds that between the moment a waste tyre is collected and the moment it is 
disposed of, it must be transported (spreading di seases along the way) to a disposal facility, stockpiled 
(posing the risks of accidental fires, soil and water course contamination, etc.),  and only then disposed 
of.  Thus, even if huge strides were made in t echnology so that the harmful effects of the known 
disposal methods were eliminated, collection, tr ansport and stockpiling them selves would pose health 
and environmental risks.583 
4.242  The European Communities  notes Brazil's claim that collec tion schemes, such as Resolution 
CONAMA 258/1999 and Paraná Rodando Limpo, are not alternatives because they are not non-
generation instruments.  For the European Commun ities, this reflects a fundamental misunderstanding 
by Brazil of the nature of the requirement about existing alternatives.  Th e European Communities 
contends that these are not alternatives equal to  a hypothetical non-generation waste measure (the 
import ban), but alternatives, even if they manage waste, which would allow Br azil to attain the same 
objectives it pretends to achieve with the import ban:   the protection of life and health from mosquito-
borne diseases, tyre fires and leaching.584 
Imposition of Fines 
4.243  The European Communities  argues that Brazil's imposition of fines for the non-compliance 
with the CONAMA scheme is not a sign of ser ious enforcement, but the opposite.  The 
European Communities submits that an official IB AMA press release of June 2005 gives evidence of 
fines against 8 companies.  The European Comm unities further submits that the total amount of 
unfulfilled tyre disposal obligations is around 3 40 thousand tonnes, i.e. nearly 70 million waste 
(passenger) tyres.  Therefore, the European Commun ities submits that these fines result in an amount 
of R$0.30 per tyre (R$60 per tonne), which is extrem ely low and much lower than the saving, namely 
the cost of disposal.  In this context, the Eur opean Communities finds it interesting to note that the 
Senate draft 216/2003 proposes to increase th is fine to R$400 per non-disposed tyre.585 
4.244  Brazil notes the European Communities' suggestion to increase the fines for failure to satisfy 
the disposal obligations because it would allegedly cost  tyre manufacturers less to pay the fine than to 
dispose of the required number of used tyres.586  Brazil argues that the European Communities 
misunderstands the operations of fines:  first, they  are discretionary, and fines for the second offence 
may well be higher;  second, they do not relieve th e companies of having to satisfy the obligations.587  
                                                      
581 Brazil's first written submission, para. 120. 
582 Brazil's first written submission, para. 119. 
583 Brazil's first written submission, para. 121; Brazil's second written submission, paras. 26-31 
(Exhibits BRA-119, 120, 121, 122). 
584 European Communities' second oral st atement, executive summary, para. 32. 
585 European Communities' second written submission, executive summary, para. 62. 
586 See European Communities' second written submission, at para. 102.  
587 Brazil's second oral statemen t, executive summary, para. 15.  WT/DS332/R 
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  Brazil contends that the fines do not substitute fo r the obligations themselves because they are but a 
penalty for non-compliance.588 
4.245  To reinforce the import ban on used and retreaded tyres, Brazil  explains that it imposes a 
R$400 per unit fine589 for importation of used and retreaded ty res, as well as marketing, transporting, 
and storing of such imports.590  To stimulate tyre collection and disposal, Brazil submits that it has 
established rigid tyre collection and disposal oblig ations.  Brazil requires manufacturers and importers 
of new tyres to collect and dispose of five scrap tyres for every four new or imported tyres.  Brazil explains that the importers must also furnish a ppropriate disposal plans to receive import licenses.
591  
Brazil claims that it has strictly enforced these obligations and has fined violators R$20.5 million 
(approximately US$8.8 million).592 
Combination of various disposal measures within a waste tyre management 
programme 
4.246  The European Communities  argues that Brazil has not done all it could to improve the 
management of waste tyres in Brazil.593  The European Communities submits  that alternatives such as 
collection, controlled stockpiling, shredded tyres la ndfilling, material recovery and energy recovery, 
must form part of a policy scheme, a plan or a pr ogramme, to improve the management of waste tyres 
on its territory.594  The European Communities claims that stockpiling, incineration and material 
recycling, plus landfilling in those countries accepting it, can play a relevant role in waste tyre 
management provided the existence of adequate wast e tyre collection from consumers, as it has been 
underlined in the two reports by the Atech Group and by the United Kingdom Environment Agency and by Japan, in its submissions as third party in this case.
595   
4.247  The European Communities submits further that  these alternatives cannot be organised in 
isolation or rejected one by one, as Brazil conti nues doing, just because each one does not ensure 
alone that all waste tyres are properly managed.  The European Communities argues that all options 
should be implemented with a policy scheme, not in isolation, in order to ensure a sound management 
of waste tyres.596  The European Communities notes Brazil's claim that it has a comprehensive waste 
tyre management policy, where it includes the impor t ban;  however, it has attached no documents to 
prove it.597  Moreover, the European Communities claims that Brazil has not explained yet whether 
such a scheme exists for the whole of its territory.598   
4.248  Brazil  explains that it has implemented a compre hensive management program to protect its 
population and its environment from the dangers caused by waste tyres.  Brazil's ban on imports of used and retreaded tyres
599 is a central element of that program because it prevents creation of tyre 
waste.600  Brazil submits that it classifies tyres as a "spe cial" waste because they are difficult to collect 
and to dispose of.  The waste tyre management polic y is governed by the principles of non-generation, 
                                                      
588 Brazil's second oral statement, para. 53. 
589 Decreto Presidencial 3.919/2001  (Exhibit BRA-72), amending Decreto Presidencial 3.179/1999, 
Art. 47-A (Exhibit BRA-73).  
590 Brazil's first written submission, executive summary, para. 10. 
591 See Resolution CONAMA 258/1999 (Exhibit BRA-4).  
592 Brazil's first written submission, executive summary, para. 11. 
593 European Communities' first oral st atement, executive summary, para. 12. 
594 European Communities' second oral statem ent, executive summary, paras. 31, 33. 
595 European Communities' second written submission, executive summary, para. 60. 
596 European Communities' second written submission, executive summary, para. 59. 
597 European Communities' second oral st atement, executive summary, para. 33. 
598 European Communities' second written submission, executive summary, para. 59. 
599 The ban is currently effected through Portaria SECEX 14/2004. 
600 Brazil's first written submission, executive summary, para. 10. WT/DS332/R 
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  reduction, reutilization and recycling.  Resolu tion CONAMA 258/1999 and the prohibition on used 
and retreaded tyres are two complementary and inseparable pillars of this policy.
601 
4.249  Brazil contends that its public authorities have  helped private companies set up collection 
centres and stepped up their own co llection efforts.  However, coll ection by itself does not address the 
disposal problem.  Brazil works actively to de velop viable and safe disposal methods:  it funds 
research on rubber asphalt, it has established emission rules for tyre incinerati on, it has licensed some 
46 companies to process waste tyres, and its state-owned Petrobras is testing a pyrolysis unit.602 
4.250  Brazil submits that as the European environm ental authorities struggle with waste tyre 
disposal, the European Communities' representatives in  Geneva seem to think that there is an easy 
answer:  a combination of stockpiling, landf illing, material recycling, and cement kilns.603  Brazil 
contends that the combination of stockpiling, incinera tion, and material recycling is not an alternative 
because material recycling has limited disposal capacity, and stockpiling and incineration are 
dangerous.604   
4.251  Moreover, Brazil argues that the combination of the three disposal alternatives proposed by 
the European Communities does not enable Brazil to saf ely dispose of waste tyres:  material recycling 
– the least risky of the three – cannot absorb th e existing volumes – as the European Communities 
openly admits605;  and the remainder must be incinerated or  stockpiled, both of which are harmful.  
Brazil argues that it is thus impossible to dispose of waste tyres without producing adverse health and 
environmental effects.606   
Alternative measures and chosen level of protection  
4.252  The European Communities  argues that Brazil has adopted a measure which, despite the 
existence of other available alternatives, unfairl y and disproportionately burdens imported products 
compared to domestic products.607  For the European Communities, mo st of the health risks to which 
Brazil refers arise from improperly discarded or  managed tyres.  The European Communities 
contends however that such risks can be avoided through the establishment of appropriate collection 
and disposal programmes.608  The European Communities argues that to the extent that appropriate 
collection and disposal programmes are not properly enforced – and this is the sole responsibility of 
Brazil –, Brazil can therefore not justify th e imposition of a ban on the products of other 
WTO Members.609  Moreover, the European Communities is of  the view that the evidence shows that 
Brazil greatly exaggerates the difficulties of waste tyre management in its territory.610  Thus, the report 
"Panorama dos Residuos Sólidos no Brasil" (Solid W aste Panorama in Brazil) states that "[i]n 2004, 
of the 146 thousand tonnes of unusable tyres, 56.06  per cent were used to produce alternative fuels, 
17.65 per cent rolled into sheeting, 19.65 per cent for rubber goods and material and 6.64 per cent for 
export". 
4.253  The European Communities submits that it has s hown that there are numerous alternatives for 
properly managing and disposing of waste tyres, including stockpiling, shredded tyres landfilling, 
                                                      
601 Brazil's first oral statement,  executive summary, para. 9. 
602 Brazil's first written submission, executive summary, para. 12. 
603 Brazil's second oral statemen t, executive summary, para. 10. 
604 Brazil's second written submission, executive summary, paras. 2, 13. 
605 Brazil's second oral statemen t, executive summary, para. 14. 
606 Brazil's second oral statemen t, executive summary, para. 14. 
607 European Communities' first oral statement, executive summary, para. 19;  European Communities' 
second oral concluding statemen t, executive summary, para. 16. 
608 European Communities' second oral concludi ng statement, executive summary, para. 16. 
609 European Communities' second oral concludi ng statement, executive summary, para. 16. 
610 European Communities' second written submission, executive summary, para. 81.  WT/DS332/R 
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  material recycling, and energy recovery.  The Eu ropean Communities contends that Brazil's response 
to each of these alternatives has been  to analyse and dismiss them one by one in isolation.  However, 
as the European Communities has show n, the alternatives must be evaluated and implemented not in 
isolation, but as part of a coherent policy.  Acco rdingly, the European Communities contends that a 
single alternative does not have to absorb  all the waste tyres arising in Brazil.611   
4.254  The European Communities claims that the a lternatives that it has presented allow ensuring 
the objectives of protection of life and health from mo squito-borne diseases, tyre fires and leaching.  
For the European Communities, collection, controlle d stockpiling, shredded ty res landfilling, material 
recovery and energy recovery, which will be applied to  all waste tyres, not only to those arising from 
imported retreaded tyres, contribute importantly to  the fight against diseases, tyre fires and leaching.612   
4.255  Brazil  is still waiting for someone to establish that  there is an alternative way to reduce the 
level of tyre casings that must be disposed of in Brazil.  Until they do, Brazil contends that the import 
ban remains necessary.613  Brazil claims that its chosen measure – the import ban on the shorter-
lifespan used and retreaded tyres – is the only kno wn waste tyre management option that does not 
endanger human health and the environment because it prevents the unnecessary creation of 
additional waste tyres, thereby eliminating the ad verse health and environmental effects of their 
collection and disposal.614   
4.256  Because no known disposal method is simultan eously safe, adequate, cost-effective and 
economically viable to deal with the high volume of waste tyres, Brazil prohibits importation of the 
shorter-lifespan retreaded tyres to preven t the unnecessary generation of tyre waste.615  Brazil contends 
that every known method capable of dealing with th e existing volumes carries with it serious risks and 
adverse effects on human h ealth and the environment.616  Brazil argues that to this day neither Brazil 
nor any other country has discovered a safe, effec tive, and economical disposal method.  Until such 
method emerges, Brazil contends that retreading of tyres that Brazil consumes and prohibiting imports 
of tyres that must be disposed of after a si ngle use remains the only way to minimize the risks 
associated with waste tyre accumulation and disposal.617 
4.257  Brazil claims that it cannot achieve the level of protection it has chosen without prohibiting 
imports of shorter-lifespan tyres because without the import ban, some generation of waste tyres that could have been prevented would not, in fact, be prevented.
618  Thus, in Brazil's view only non-
generation of waste tyres, which requires an import ban on shorter-lifespan tyres, can achieve Brazil's 
chosen level of protection.619 
4.258  Brazil argues that the alternatives suggested by the European Communities will not allow 
Brazil to achieve its chosen level of protection, which is to reduce the waste tyre risks to the maximum 
extent possible620, and to do that Brazil must reduce the volumes of waste tyres generated as much as 
                                                      
611 European Communities' second oral concludi ng statement, executive summary, para. 20. 
612 European Communities' second oral st atement, executive summary, para. 33. 
613 Brazil's first oral concluding stat ement, executive summary, p. 1. 
614 Brazil's first written submission, executive summary, para. 9. 
615 Brazil's first written submission, ex ecutive summary, paras. 3, 7;  Brazil's first oral statement, 
executive summary,  para. 4. 
616 Brazil's first written submission, executive summary, para. 7. 
617 Brazil's first written submission, executive summary, para. 13. 
618 Brazil's second written submission, executive summ ary, para. 29.  Brazil's second oral statement, 
executive summary, para. 14. 
619 Brazil's second written submission, executive summary, para. 2. 
620 Brazil's second written submission, executive summary, para. 2. WT/DS332/R 
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  possible.
621  Brazil notes that because the disposal capacity of material recycling is limited, the 
European Communities advises Brazil to comb ine it with incineration and stockpiling.622  However, 
Brazil is of the view that both incineration and stockpiling present significant risks.623  Brazil argues 
that to limit these risks to the maximum extent  possible, Brazil must prevent the unnecessary 
generation of tyre waste to reduce th e volumes that must be incinerated.624   
4.259  Brazil submits that collection and disposal oblig ations alone do not achieve the desired level 
of protection and are not an available alternative.625  The obligations complement – but cannot 
substitute for – the import ban, because they do not  help avoid generation of additional waste tyres 
that must be disposed of in Brazil.626  Because transportation, stockpili ng, and the eventual disposal 
present unavoidable health and envi ronmental dangers, they cannot reduce the risks of waste tyre 
accumulation and disposal as effectively as the im port ban does, and thus cannot achieve Brazil's 
desired level of protection.627   
4.260  Brazil submits that it has demonstrated that th e import ban is necessary within the meaning of 
Article XX(b) to reduce the accumulation of tyre waste and the associated risks because no reasonably 
available alternatives exist.628 
Other issues  
The European Communities' management of waste tyres 
4.261  Brazil  submits that in the European Communities itself:  20 per cent of the tyre waste 
continues to be landfilled, despite a formal pr ohibition;  illegal dumping remains a big problem;  
funding for stockpile remediation is difficult to s ecure;  the consumer demand for retreaded tyres 
remains low;  and material recycling remains limited.629  Brazil argues that the positions taken by the 
European Communities before this Panel contradict  its statements made in Brussels, which support 
Brazil's position.630   
4.262  Brazil submits that when the European Landfill directive prohibited landfilling of whole tyres 
from 2003 and shredded tyres from 2006, the European Environment Agency631 expressed concern 
that some EU Members "still [had] to find alternativ e outlets for more than two thirds of their waste 
tyres to meet the target".632  Brazil submits that in 2004, only nine of the EU 25 countries recovered at 
least 90 per cent of the annual arisings;  the rema ining 16 recovered less than 61 per cent, with seven 
of them recovering anywhere between zero and 25 per cent.633  Brazil submits further that634 today a 
                                                      
621 Brazil's second written submission,  executive summary, para. 29;  Brazil's second oral statement, 
executive summary, para. 14. 
622 See European Communities' First Oral Statement, at para. 72. 
623 Brazil's second written submission, executive summary, para. 29. 
624 Brazil's second written submission, executive summary, para. 29. 
625 Brazil's first written submission, executive summary, para. 26. 
626 Brazil's first written submission, executive summary, para. 26. 
627 Brazil's first written submission, executive summary, para. 26. 
628 Brazil's first written submission, executive summary , para. 26;  Brazil's second oral statement, 
executive summary, para. 14. 
629 See Brazil's second written submission, at paras. 94-98.  
630 Brazil's second oral statemen t, executive summary, para. 25. 
631 European Environment Agency, Paving the Way for EU Enlargement  27 (2002) (Exhibit BRA-127). 
632 Brazil's second written submission, executive summar y, para. 16; second oral statement, executive 
summary, para. 7. 
633 European Tyre & Rubber Ma nufacturers' Association, End-of-life Tyres:  A Valuable Resource with 
a Wealth of Potential (2006) (" End-of-life Tyres ") (Exhibit EC-84) (Exhibit BRA-126), at 5. 
634 End-of-life Tyres , at 6 (Exhibit EC-84) (Exhibit BRA-126).  WT/DS332/R 
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  fifth of waste tyres in the European Communities are still landfilled.635  Brazil submits that the 
Environment Agency notes that:636  "[t]oo many tyres are still being land-filled or burnt" and that 
"compliance with the EC Directives ... will require considerable investment".637  In light of this data, 
Brazil argues that it is hardly surprising to hear  the Chairman of the British Environment Agency 
admit:638  "[a]s a nation, we have a problem with the disposal of tyres".639   
4.263  Brazil further submits that a report by the European Tyre and Rubber Manufacturers' 
Association provides that the enlarged European Union faces the "challenge of managing, in an 
environmentally sound manner, more than 3.2 million metric tons of used tyres,"640 at the annual cost 
of at least €600 million, which translates into €1.2 per passenger car tyre e quivalent.  Brazil submits 
that the specific challenges include:641  unavailability of landfilling, guaranteeing ecological treatment, 
promoting efficient and sustainable disposal so lutions, remedying the historic stockpiles, and 
controlling exportation to low-income countries.642   
4.264  Brazil submits that the United States faces simi lar challenges.  Brazil notes that a rubber 
industry official643 has remarked that "[the United States] is a fully developed economy, although to 
look at some experiences involving scrap tyres one might think otherwise".644  Brazil notes that this 
data squarely contradict the European Communities'  claim that the available disposal options, when 
"implemented within a policy scheme, not in isol ation, [can] ensure a sound management of waste 
tyres."645  Brazil argues that if this disposal capacity were indeed available, nothing should prevent the 
European Communities members from achieving full recovery.646   
4.265  Brazil submits that the European Communities apparently considers exports a legitimate 
disposal alternative.  Brazil notes that Exhibit EC-92 states:  "In practice, there is still no 
economically viable way to reduce the dumping of used tyres ... .  Thus, the cheapest solution in 
Europe has been to try to export them to developing countries".647  Brazil notes that the 
European Communities considers648 exports a legitimate means of  reducing its waste tyre burden.649  
Brazil submits that within the European Comm unities, however, the British Used Tyre Working 
Group650 has expressed consternation that tyres were  being imported into the United Kingdom, "with 
the UK ultimately being responsible for their dis posal," and expressed concern that "the UK is 
                                                      
635 Brazil's second written submission,  executive summary, para. 16;  Brazil's second oral statement, 
executive summary, para. 7. 
636 EU – Waste from Road Vehicles  3 (Exhibit BRA-108). 
637 Brazil's second oral statemen t, executive summary, para. 7. 
638 UK:  Clamping Down on Illegal Tyre Dumping , Newsletter of the Europe an Environmental Press, 
4 September 2002 (Exhibit BRA-129). 
639 Brazil's second written submission, executive summary, para. 16. 
640 Exhibit EC-84.  Brazil's second written submission, executive summary, para. 15;  Brazil's second 
oral statement, executive summary, para. 7. 
641 End-of-life Tyres , at 4 (2006) (Exhibit EC-84) (Exhibit BRA-126).  
642 Brazil's second written submission,  executive summary, para. 15;  Brazil's second oral statement, 
executive summary, para. 7. 
643 See Serumgard, at 19 (Exhibit BRA-125). 
644 Brazil's second written submission, executive summary, para. 17. 
645 European Communities' first oral statement, at pa ra. 72.  See also European Communities' answer to 
panel question No. 46.  
646 Brazil's second written submission, executive summary, para. 18. 
647 Exhibit EC-92, p. 10. 
648 See Valerie L. Shulman, Ph.D., Secretary General of the European Tyre R ecycling Association, at 
29-30 (Exhibit BRA-9). 
649 Brazil's second written submission, executive summary, para. 19. 
650 Used Tyre Working Group (UK), Sixth Report of the Used Tyre Working Group  6 (2001) (Exhibit 
BRA-55).  WT/DS332/R 
Page 72  
 
  continuing to be the tyre dump of Europe".
651  Brazil argues that its ban on used and retreaded tyres is 
based on this very concern:  Brazil does not want to  receive shorter-lifespan tyres and "ultimately [be] 
responsible for their disposal" and Brazil does not  want to be "the tyre dump of Europe."652    
4.266  Finally, Brazil points out that the European Communities dismissed the well-established 
environmental principle of non-generation as nothing more than a political statement.653  In the same 
manner, Brazil submits that the European Commun ities dismissed the well-recognized risks of waste 
management and disposal.654   
4.267  The European Communities  notes that Brazil claims that a good illustration that the 
alternatives do not exist is the European Commu nities' continued challenges with managing its 
growing volumes of tyre waste.  The European Communities argues that Brazil does not take into 
account that 6 European Communities member Stat es already recycle and recover 100 per cent of 
their waste tyres.  Moreover, the European Comm unities claims that it is not true that some 
20 per cent of waste tyres are still being landfilled.  This was the situation in 2004, two years before 
the complete landfilling prohibition entered into fo rce.  Furthermore, the European Communities 
points out that it has not adopted an import ban on retreaded tyres. Accordingly, the 
European Communities is not obliged to explain its waste tyres management policy or the policy of its 
25 member States, which is not at issue in the present dispute.655 
4.268  The European Communities contests Brazil's statement that the European Communities 
wishes to flood Brazil with waste tyres.  To the extent that Brazil is referring to the exportation of retreadable casings, the European Communities notes that it has already explained that such casings 
are not waste, and that their importation is precisely  for that reason, allowed by Brazilian courts.  To 
the extent that Brazil refers to actual waste tyres, the legislation of the European Communities in fact 
prohibits the exportation of such tyres to countri es which do not allow such imports.  Moreover, the 
European Communities points out that it has not challenged Brazil's ban on the importation of used 
tyres.
656 
4.269  Brazil submits that the European Communities ma kes the point that even though it has a tyre 
disposal problem, it has not found it necessary to impo se an import ban.  Brazil responds that what the 
European Communities conveniently leaves out – or overlooks – is that it does not have a significant market for retreaded tyres and, therefore,  does not face imports of retreaded tyres.
657 
4.270  Brazil points out that in Europe, most consum ers have refused to purchase retreaded tyres, 
largely because they perceive retreaded tyres as inferi or.  Brazil notes that this perception remains in 
place even though retreaded tyres must comply with stringent quality controls comparable to the new 
tyre standards.658    
                                                      
651 Brazil's second written submission, executive summary, paras. 19- 20. 
652 Brazil's second written submission,  executive summary, para. 20;  Brazil's second oral statement, 
executive summary, para. 9. 
653 For examples of the European Communities' own policies on non-generation of waste, see Brazil's 
answer to panel question No. 37.  See also, Brazil' s comments on European Communities' answer to panel 
question No. 125 (Exhibit EC-84) and Brazil's answer to panel question No. 124. 
654 Brazil's first oral concluding stat ement, executive summary, p. 2. 
655 European Communities' second oral st atement, executive summary, para. 34. 
656 European Communities' second oral concludi ng statement, executive summary, para. 5. 
657 Brazil's second concluding statement, para. 13. 
658 Brazil's first written submission, para. 62 (Exhibits BRA-2, 3, 58).  WT/DS332/R 
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  Economic and environmental costs of disposal of waste tyres 
4.271  Moreover, Brazil  argues that the disposal of waste tyres carries high economic and 
environmental costs.  Brazil submits that the b asic fact remains that w aste tyres are a liability:659   
"At present, in most of the world, a basic fact of life about scrap tyres is that they are 
a waste material...;  that is, it costs money to have them removed from the point of 
generation... .  In addition to these direct management costs, scrap tyres can also 
generate indirect social costs...".660 
4.272  Brazil explains that it authorizes certain disposal methods, but each method creates a new set 
of environmental problems.  Brazil argues that in cineration can handle large volumes of waste tyres, 
but it produces higher emissions of dioxins, furans, and heavy metals than conventional fuels.  Brazil 
submits that the co-processing with bituminous schist, a form of pyrolysis, is still experimental, with 
unknown environmental impact and limited capacity.  Br azil explains that rubber asphalt applications 
remain limited in Brazil, as in other countri es and recycling involves high costs and produces low 
quality material with limited demand.  Brazil submits  that these disposal methods are all used in 
Brazil, but they are not, in any manner, alterna tive measures to the non-generation achieved by the 
import ban.  Brazil further submits that beyond di sposal, collection and transportation of used tyres 
are also a challenge because of Brazil's geographic characteristics.661 
4.273  Brazil submits that the European Communiti es argues that waste tyres are a valuable 
resource.  However, Brazil notes that, to quote the European tyre industry, they are, in fact, "waste with a negative value (collecti on and recovery/disposal cost)."
662  Brazil claims that the 
European Communities, in its arguments before the Panel, has constructed an alternate reality where 
waste tyres are a valuable resource, where waste tyre accumulation has no relation to disease, where 
dioxins are benign, and where a developing country lik e Brazil could safely dispose of all of its waste 
tyres if it only were as efficient and competent as the European Communities.  For Brazil, the 
alternate reality the European  Communities paints is wholly divorced from the real world.663   
4.274  For the European Communities , the fact that all alternatives may have some environmental 
disadvantages is unavoidable, and not specific to w aste tyres.  The European Communities is of the 
view that there is hardly any waste which can be  disposed of in a way which is environmentally 
entirely neutral.  In addition, the European Co mmunities submits that none of the disadvantages or 
costs to which Brazil has referred are so significant as to rule out these altern atives, as illustrated by 
the fact that all of the alternativ es discussed are used in many countri es, including in Brazil.  Finally, 
for the European Communities these disadvantages or costs still would appear to be lower than the 
risks to human life and health resu lting from improperly managed tyres.664 
4.275  The European Communities argues that there are different options available also for 
developing countries, as explained in the OECD Report on Improving Recycling Markets, the Basel 
Convention Technical Guidelines on the Identification and Management of Used Tyres, the Report of 
the United Kingdom Environment Agency on Transport and Management of Waste Tyres and the 
report on Tyre Piles Fires, prepared by Environmental Engineering and Contracting, Inc.665  Moreover, 
the European Communities notes that the OECD repor t on "Improving Recycling Materials" explains 
                                                      
659 Brazil's second written submission, executive summary, para. 14. 
660 Serumgard, at 3 (Exhibit BRA-125). 
661 Brazil's first oral statement,  executive summary, para. 10. 
662 Brazil's second oral statement, para . 18, citing G. Paolo Giuliani, BLIC, Management of End-of-Life 
Tyres:  The Point of View of Tyre Manufacturers , at 8 (2000) (Exhibit BRA-138). 
663 Brazil's second oral statemen t, executive summary, para. 25. 
664 European Communities' second oral concludi ng statement, executive summary, para. 21. 
665 European Communities' first oral st atement, executive summary, para. 15. WT/DS332/R 
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  that incineration, energy recovery, rubber recy cling and retreading are best waste management 
practices for waste tyres.
666 
4.276  Besides, the European Commun ities claims that any measure establishing a scheme to ensure 
that waste tyres are disposed correctly would be c oherent with Principle 16 of the Rio Declaration on 
Environment and Development. Indeed, waste tyre disposal schemes allow charging the 
environmental costs on the relevant  operators/consumers, while ensuring, at the same time, a high 
level of environmental protection with no distortion of international trade.667 
(v) Conclusion on Article XX(b) 
4.277  The European Communities  is of the view that the ruling of the present Panel will have 
considerable implications on how retreaded tyr es will be regarded in the future.  For the 
European Communities, if Brazil were to prevail wi th the argument that banning retreaded tyres is 
necessary to protect human life and health, other countries may equally feel encouraged to impose 
similar bans.  The European Communities claims th at this would mean that retreaded tyres would 
become a product which might be increasingly exclud ed from international trade and such a situation 
would be extremely harmful to the public percepti on of retreaded tyres.  The European Communities 
considers that such a result would be diametrical ly opposed to the interests of environmental 
protection and responsible waste management.668    
4.278  The European Communities also notes that Brazil's arguments concerning Article XX(b) have 
implications that go beyond retreaded tyres.  The European Communities contends that contrary to the 
assertions of Brazil, retreaded tyres are not unique in having implications from the point of view of waste management.  The European Communities notes that all products eventually turn into waste, 
and many products which are commonly traded toda y turn into waste which is as or even more 
problematic than waste tyres.  The European Comm unities argues that if it were possible to ban the 
importation of products simply because of the fact th at they eventually turn into waste which may be 
difficult to dispose of, then many products might in the future become affected by similar trade 
bans.
669 
4.279  The European Communities notes that Brazil admits  that the general exceptions of Article XX 
should not be abused and that "the import ban does not restrict trade unfairly or inequitably".  The 
European Communities notes further that the reason given by Brazil for this presentation is that the 
facts of this case are unique, because "tyres differ from most other waste streams".670  T h e  
European Communities does not agree with this c onclusion.  The European Communities points out 
that the policy rationale that Braz il has applied to justify the ban c ould perfectly be used by other 
WTO Members to ban the importation of products w ith a shorter life than other competing goods that 
are also produced domestically.   
4.280  The European Communities argues that international trade in cars, electric and electronic 
equipment, toys, furniture, clothing and other goods c ould thus be limited by an extended application 
of Article XX(b).671  Moreover, the European Communities notes that similar arguments to those 
made by Brazil in respect of retreaded passenger car tyres could also be made with respect to other 
goods which have a perfectly predictable lifesp an:  WTO Members could decide to ban the 
importation of beverages bottled in  plastic bottles rather than reusable glass bottles taking into 
                                                      
666 European Communities' first written submission, executive summary, para. 26. 
667 European Communities' first written submission, paras. 138-139. 
668 European Communities' second oral concludi ng statement, executive summary, para. 3. 
669 European Communities' second oral concludi ng statement, executive summary, para. 4. 
670 European Communities' second oral st atement, executive summary, para. 23. 
671 European Communities' second oral st atement, executive summary, para. 24.  WT/DS332/R 
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  account that plastic bottles are also used by mos quitoes as breeding places a nd, if they burn, the 
smoke plume also contains hazardous substances.672 
4.281  As for commercial and airplane tyres, the European Communities submits that these products 
do not have a predictable life span.  Accordingly, the European Communities argues that if Brazil is 
allowed to ban imported truck and aircraft tyres, there is no reason why other Members could not ban 
low quality electronic goods on the basis that these ar e likely to have a shorter life span than high-
quality ones.673 
4.282  Brazil  notes the European Communities' argument th at waste tyres are no different from other 
products, and that, therefore, finding that Brazil's im port ban is justified would pave the way for other 
WTO Members to abuse Article XX exceptions.  Brazil contends that all the products pointed out by 
the European Communities are clearly distinguishab le from waste tyres – i.e. the uniqueness of the 
product – because none of those products mentione d by the European Communities pose a similar set 
of collection and disposal problems.  Brazil notes th at for instance, unlike waste tyres, plastic bottles 
can be easily recycled.  Brazil also notes that the European Communities has an  end-of-life directive 
for cars;  however even the European Communities does not have an end-of-life directive for waste 
tyres.  Brazil explains that many internal discussions took place in Brazil on this issue to try and find a 
product that presents waste management challenges similar to those of waste tyres, but no such 
product could be found.  Brazil notes that th e European Communities also failed to do so.674  
4.283  Brazil contends that the waste tyre problem is not black and white.  For Brazil, every solution 
presents its own set of risks.  The dilemma that Br azil faces is essentially this:  does it risk exposing 
its population to dengue or to cancer?  Brazil submits that choices such as th is are best avoided, as 
much as possible, by avoiding the generation of tyre waste as much as possible.  In Brazil's view, the 
import ban allows Brazil to accomplish this goal.  Brazil argues that the Panel should, therefore, dismiss all of the claims made by the European Communities.
675 
4.284  Therefore, Brazil claims that the foregoing ma kes it clear that Brazil's import measures are 
"necessary" within the meaning of Article XX(b).676  
(b) Paragraph g) of Article XX 
4.285  Brazil  does not rely on Article XX(g) as a possible defence for the import ban on retreaded 
tyres.   
4.286  According to the European Communities , the import ban does not fulfil the conditions of 
Article XX(g).  The European Communities argues th at as a first condition, the ban would have to 
relate to the protection of "exha ustible natural resources".  The European Communities argues further 
that it is for Brazil, as the defending party, to demo nstrate that waste tyres, which are considered as 
inert waste by Article 4 of Resolution CONAMA No 23, cause pollution of specific exhaustible 
natural resources.677 
4.287  The European Communities submits that the GATT Panel Report on Canada – Herring and 
Salmon  was of the view that a measure must be "primarily aimed at" the conservation of exhaustible 
natural resources in order to fall within the sc ope of Article XX(g).  The European Communities 
                                                      
672 European Communities' second oral st atement, executive summary, para. 25. 
673 European Communities' second oral st atement, executive summary, para. 26. 
674 Brazil's second oral concluding st atement, executive su mmary, para. 12. 
675 Brazil's second oral statemen t, executive summary, para. 26. 
676 Brazil's first oral statement,  executive summary, para. 15. 
677 European Communities' first written submission, executive summary, para. 29. WT/DS332/R 
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  submits further that this language was fo llowed by three (unadopted) GATT reports ( United States – 
Tuna I and Tuna II , and United States – Taxes on Automobiles ) and by the Appellate Body in 
United States – Gasoline , where it also accepted a measure because it presented a "substantial 
relationship", which "cannot be regarded as merely  incidentally or inadvertently aimed at the 
conservation of clean air".  The Eur opean Communities notes that finally, in United States – Shrimp , 
the Appellate Body accepted a measure because there was "a close and real" relationship of means 
and ends and the measure was "re asonably related" to the protecti on and conservation of sea turtles.
678 
4.288  The European Communities claims that it is th erefore clear that a measure which does not 
make a contribution to the achievement of the stated goal, namely the protection of natural exhaustible resources, cannot be regarded as "rel ated to" the protection of natural exhaustible 
resources.  Moreover, the European Communities cont ends that whether a measure is related to the 
protection of natural exhaustible resources must be es tablished on the basis of objective and verifiable 
criteria, such as notably the actual effect of the measure, as it was confirmed by the GATT Panel report in the second US – Tuna  case.
679 
4.289  The European Communities argues that the application of these interpretations of 
Article XX(g) to the case before the Panel can only resu lt in the conclusion that the justification is not 
applicable to this case.  The Eur opean Communities submits that retread ed tyres have the same useful 
life as new tyres, for which they are in fact s ubstitutable.  Accordingly, the European Communities 
submits further that retreaded tyres are neither used tyres nor waste tyres and, therefore, an import ban 
affecting them cannot be considered as having a substantial, close, r eal or reasonable relationship with 
the protection of the air, soil or water.  The European Communities argues that retreaded tyres are 
new products and, if a import ban like the one being challenged in this case were to be considered 
justified under Article XX(g), that would imply giving to all WTO Members the authorisation to 
adopt bans on the importations of all kind of products, because all products ultimately become 
waste.680 
4.290  The European Communities contends that the l ack of relationship between the import ban and 
the protection of the environment is also evid ent because the ban does not have the effect of 
protecting the environment, to the extent that th e latter is being threatened by the accumulation of 
waste tyres in Brazil.  The European Communities argues that the import ban on retreaded tyres does 
not reduce the rate of this accumulation for the fo llowing two reasons:  (i) imported retreaded tyres 
and domestic new tyres contribute equally to the accumulation of tyre waste, given that most new passenger tyres are not even suitable for retreading after a first life cycle on Brazilian roads and that 
not all retreadable passenger tyres are in fact retr eaded in Brazil;  and (ii) it can be assumed that 
practically every potential sale of an imported retr eaded tyre is currently, due to the import ban, 
substituted by a sale in Brazil of a new (domestic or imported) tyre or of a domestic retreaded tyre, 
most likely manufactured from an imported used tyre, neither of which will, in the case of a passenger 
car tyre, be retreaded again.  Thus, the European Communities is of the view that the import ban on 
retreaded tyres leaves unaffected the total tyre co nsumption and the rate of subsequent waste tyre 
accumulation.
681 
4.291  Furthermore, the European Communities argues th at this lack of relationship between the 
import ban and the protection of exha ustible resources is more blatant in relation to tyres that can be 
retreaded several times (those used in commerc ial vehicles, buses, trucks, off-road vehicles, 
airplanes…).  The European Communities explains th at in those cases the retreaded tyres have a life 
time-span which does not primarily depend on the number of times they are retreaded but on the 
                                                      
678 European Communities' first written submission, executive summary, para. 30. 
679 European Communities' first written submission, executive summary, para. 31. 
680 European Communities' first written submission, executive summary, para. 32. 
681 European Communities' first written submission, executive summary, para. 33.  WT/DS332/R 
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  concrete conditions and circumstances of use.  Ho wever, for the European Communities, irrespective 
of these differences, the import ban adopted by Br azil applies to all types of retreaded tyres.682 
4.292  Finally, the European Communities argues that confirmation that the import ban of retreaded 
tyres is not related to environmental protection can also be found in rulings, awards and submissions 
made by Brazilian and MERCOSUR authorities.683  Thus, the European Communities explains that 
the first instance ruling of 22 July 2003 of the federal judiciary of Porto Alegre, issued in the case 
regarding the import ban on MERCOSUR retreaded tyres, states that the importation of these tyres is not more damaging to the environment than the mark eting of new tyres, be they imported or locally 
produced and that such importation did not result in a higher consumption of tyres and was not significant for environmental risks, in part icular the increase of waste tyres.  The 
European Communities further submits that in the appellate decision adopted in August 2003 in the 
same lawsuit by the Chief Judge of the Federal Regional Court of the 4
th Region, the judge upheld the 
first instance decision.  Moreover, the Europ ean Communities notes that in this lawsuit, the 
Advocacia-Geral da União defended the lifting of  the import ban on retreaded tyres from other 
MERCOSUR countries, inter alia , by arguing that the importation of retreaded tyres generated no 
environmental damage.684 
4.293  The European Communities submits that the decision of the High Court of Justice ("Superior 
Tribunal de Justiça") of 12 December 2003, whic h permits the importation of used tyres in a 
procedure of interim relief, dismissed the Environmen t Ministry's claims that the importation of used 
tyres caused damage to public health and the envi ronment, given that the importation of retreaded 
tyres from other MERCOSUR countries was permitted.685 
4.294  Furthermore, the European Communities submits  that Brazil raised no defence based on 
environmental justifications in the MERCO SUR case brought by Uruguay and decided by the 
MERCOSUR Arbitral Tribunal in its award of 9 Jan uary 2002.  Finally, the European Communities 
notes that the ruling of the Permanent Appeals Tribunal of MERCOSUR 1/2005 in the dispute between Uruguay and Argentina states in its para graph 17 that "the adopted ban has not reduced, 
objectively speaking, the concept of envir onmental damage applicable to the case" .
686 
4.295  The European Communities claims that the im port ban on retreaded tyres does not fulfil, 
either, the second requirement laid down by Article XX(g), namely that it must be made effective in 
conjunction with restrictions on do mestic production or consumption.687  The European Communities 
argues that Brazil has not taken effective restricti ons on the production in Brazil of new or retreaded 
tyres, not even as regards retreaded tyr es produced from used imported tyres.  The 
European Communities also argues that Brazilian c ourts have granted interim relief to national 
retreaders allowing them to import used tyres to keep running the production of retreaded tyres in 
Brazil.  In this situation, the European Commun ities contends that domestic producers can continue 
their production of retreaded tyres using impor ted used tyres while tyres retreaded outside 
MERCOSUR cannot be imported into Brazil.688 
4.296  The European Communities claims  that Brazil has not adopted any obligation to retread new 
tyres produced in its territory once they have become  used tyres, despite the fact that new tyres that 
will not be retreaded produce the same public hea lth and environmental externalities as retreaded 
                                                      
682 European Communities' first written submission, executive summary, para. 34. 
683 European Communities' first written submission, executive summary, para. 35. 
684 European Communities' first written submission, executive summary, para. 36. 
685 European Communities' first written submission, executive summary, para. 37. 
686 European Communities' first written submission, executive summary, para. 38. 
687 European Communities' first written submission, executive summary, para. 39. 
688 European Communities' first written submission, executive summary, para. 40. WT/DS332/R 
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  tyres.  Moreover, the European Communities argues that it also app ears that Brazil is not taking any 
measures to ensure that new tyres used in Brazil remain suitable for retreading after use.
689   
4.297  Moreover, the European Communities claims th at as in relation to the "human health" 
justification, disposal schemes such as Reso lution CONAMA 258/1999 would be an alternative 
measure to the import ban, provided they are enforced correctly.690 
(c) Chapeau of Article XX 
4.298  Brazil  claims that the manner in which Brazil a pplies the import ban is neither "arbitrary or 
unjustifiable discrimination," nor a "disguised restric tion on international trade," and therefore the ban 
complies with the chapeau of Article XX.691  Brazil claims further that the relevant question is not 
whether the challenged measure discriminates between  like products based on origin, or whether it 
accords less favourable treatment to impor ts, but whether it is applied reasonably.692 
4.299  The European Communities  argues that the ban does not fulfil the two requirements of the 
chapeau  of Article XX.693  In other words, the European Comm unities claims that the ban at issue 
constitutes an arbitrary and unjustifiable discrimin ation between countries where the same conditions 
prevail and amounts to a disguised restriction on international trade.694  The European Communities 
submits that in the US – Gasoline  case, the Appellate Body stated th at "the purpose and object of the 
introductory clauses of Article XX is generally the prevention of abuse of the exceptions of 
[Article XX]", and, in US – Shrimps , the Appellate Body added that the chapeau is:  1) a balancing 
principle to mediate between the right of a Me mber to invoke an Article XX derogation and its 
obligation to respect the rights of other Members;  2) a qualification making the Article XX exemptions limited and conditional;  and 3) an  expression of the principle of good faith in 
international law.
695 
(i) A means of arbitrary or unjustifiable discrimination between countries where the same 
conditions prevail 
4.300  Brazil is of the view that the relevant question is how the ban is applied.696  Brazil  argues 
further that the ban's application is reasonable, consistent, and predictable.697  Brazil notes the 
European Communities' claim that the ban does not comply with the chapeau  of Article XX because 
of the MERCOSUR exemption, imports of used tyr es through injunctions, and the alleged benefit to 
Brazil's industry.698  Brazil claims that this is not true as the import ban is not applied in a manner that 
constitutes "arbitrary or unjustifiable discrimination".699   
                                                      
689 European Communities' first written submission, executive summary, para. 41. 
690 European Communities' first written submission, executive summary, para. 42. 
691 Brazil's first oral statement, executive summar y, para. 16;  Brazil's first written submission, 
executive summary, para. 27. 
692 See Appellate Body Report on US – Gasoline , at 22.  Brazil's first written submission, executive 
summary, para. 27. 
693 European Communities' first written submission, executive summary, para. 44;  
European Communities' second written submission, executive summary, para. 83;  European Communities' 
second oral concluding statemen t, executive summary, para. 22. 
694 European Communities' first oral st atement, executive summary, para. 20. 
695 European Communities' first written submission, executive summary, para. 44. 
696 See Appellate Body Report on US – Gasoline , at 23. 
697 Brazil's first oral statement,  executive summary, para. 16. 
698 European Communities' First Written Submission, at para. 160. 
699 Brazil's second written submission, executive summary, para. 34.  WT/DS332/R 
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  4.301  The European Communities argues that at least two elements can explain the inconsistency 
of the ban adopted by Brazil with the first requireme nt of the chapeau:  first, Brazil imports retreaded 
tyres from the other MERCOSUR countries;  second, used tyres continue to be imported into Brazil.  The European Communities argues that these two di scriminations cannot be considered reasonable 
since the waste originating from these tyres imported into Brazil may produce the same health hazards 
as the waste from retreaded tyres imported from the European Communities and other WTO 
Members.
700   
The MERCOSUR exemption  
4.302  Brazil  argues that the exemption of MERCOSUR countries from the import ban does not 
constitute arbitrary or unjustifiable discriminati on because Brazil introduced the exemption to comply 
with a ruling by an independent MERCOSUR tribun al and both the interna tional and domestic law 
required such compliance.701  Brazil argues that the European Co mmunities is wrong to suggest that 
Brazil's compliance with its MERCOSUR commitments is in bad faith, or that Brazil has undertaken 
obligations under the MERCOSUR with the purpo se of circumventing its obligations under 
the WTO.702   
4.303  Brazil claims that the limited exemption of its MERCOSUR customs union partners from the 
import ban is also consistent with the chapeau because the regulation, on its face, establishes the 
exemption.  For Brazil, if the ch apeau did deal with the design of  the measure, complying with an 
Article XXIV customs union obligation is certainly not arbitrary.703  Brazil states that this is not a case 
where Brazil, on the books, bans all imports, but in practice, permits imports from the MERCOSUR 
partners.  According to Brazil, the very language of the regulation that th e European Communities 
challenges explicitly provides for the MERCOSUR ex emption, which itself is permitted under Article 
XXIV and XX(d).  Brazil argues that there is nothi ng arbitrary about applying the WTO-consistent 
law as it is written.  Brazil also argues that even if the chapeau did deal with the design of the 
measure, complying with an Article XXIV cust oms union obligation is certainly not arbitrary.704 
4.304  Brazil notes that the Appellate Body has expl ained that the standard of discrimination 
contemplated in the chapeau of Article XX is diffe rent from the standard of discrimination in the 
treatment of products under other substantive obliga tions of the GATT.  In the view of Brazil, to 
apply the same standard of other substantive provisions  – such as Articles I, III, XI, or XIII of the 
GATT – to the chapeau would be, in the words of the Appellate Body: 
"[T]o empty the chapeau of its contents a nd to deprive the exceptions in paragraphs 
(a) to (j) of meaning. Such recourse would also confuse the question of whether 
inconsistency with a substantive rule exis ted, with the further and separate question 
arising under the chapeau of Article XX as to whether that inconsistency was 
nevertheless justified."705 
4.305  Brazil argues that in determining whether the im port ban is discriminatory within the meaning 
of the chapeau, the relevant legal question is not whether the ban discriminates between like products 
based on origin, or whether it accords less favourable  treatment to imported products than that 
accorded to like products of domestic origin.  Braz il argues that those questions would be relevant 
only under Articles I:1 and III:4, respectively.  To Brazil, the relevant legal issue is whether the 
                                                      
700 European Communities' first oral st atement, executive summary, para. 21. 
701 Brazil's first written submission, executive summary, para. 28. 
702 Brazil's second written submission, executive summary, para. 34. 
703 Brazil's first oral statement,  executive summary, para. 16. 
704 Brazil's first oral statement, para. 64. 
705 Appellate Body Report on US – Gasoline , at 23, cited in Brazil's first written submission, para. 133.  WT/DS332/R 
Page 80  
 
  challenged measure is applied reasonably .
706  Brazil argues that the manner in which Brazil applies the 
import ban is reasonable, and in no way arbitrary or ex cessive.  It is applied in strict observance of its 
express terms, contained in Portaria SECEX 14/2004. 
4.306  The European Communities argues that the import ban on retreaded tyres adopted by Brazil 
is applied not only in a discriminatory way but also in a manner that is arbitrary and unjustifiable.  
The European Communities contends that the arbitrar y and unjustifiable application of the ban derives 
from the fact that the importation of retreaded  tyres into Brazil from non-MERCOSUR countries is 
banned, while it is accepted for the retreaded tyr es produced in the other MERCOSUR countries.  For 
the European Communities, this discrimination is not  reasonable, and therefore arbitrary, because all 
retreaded tyres, irrespective of their country of origin, produce the same environmental externalities.707 
4.307  The European Communities argues that the ban also discriminat es "between countries where 
the same conditions prevail" as the Brazilian legisla tion treats differently retreaded tyres produced in 
the other MERCOSUR countries, which can be impor ted into Brazil, and those produced in the 
European Communities (or the rest of the WT O Members), to which the import ban applies.708   
Moreover, the European Communities submits th at retreaded tyres from MERCOSUR countries are 
largely produced with casings imported from the European Communities or other non-MERCOSUR 
countries.  Accordingly, from a waste management point of view, the European Communities is of the 
view that they are exactly identical to retr eaded tyres produced in the European Communities.709 
4.308  The European Communities argues that what is an arbitrary and unjustifiable discrimination 
must be established in relation to the objectives of  the measure at issue, in the present case, the 
protection of human life and health.  The European Communities notes that the stated objective of the 
measure is to prevent negative consequences for hu man life and health resulting from additional waste 
tyres.  However, the European Communities is  of the view that retreaded tyres from the 
European Communities and from other MERCOSUR countries, should pose identical risks from a 
waste management point of view.  In addition, the European Communities contends that retreaded 
tyres from the European Communities and those from other MERCOSUR countries are both made 
from non-MERCOSUR casings.  Consequently, the European Communities claims that the 
discrimination introduced by Brazil between ME RCOSUR and non-MERCOSUR re treaded tyres is in 
every respect arbitrary and unjustifiable.710 
4.309  The European Communities notes Brazil's cl aim that with this argument, the 
European Communities fails to distinguish between the "measure's design and its application".  The 
European Communities notes furthe r that in the view of Brazil, because the exemption of the 
MERCOSUR exports is contained in  Article 40 of Portaria SECEX 14/2004, its "application" cannot 
be regarded as discriminatory.  The European Co mmunities submits that Brazil seems to believe that 
whereas the chapeau of Article XX forbids a discrim inatory application of measures by the executive 
authorities of a WTO Member, it allows the legislator  to oblige the executive au thorities to apply such 
discrimination.711 
4.310  The European Communities argues that this view is unsupported by case law and 
incompatible with the object and purpose of the ch apeau of Article XX.  The European Communities 
                                                      
706 Brazil's first written submission, para. 134, citing Appellate Body Report on US – Gasoline , at 22. 
707 European Communities' first written submission, executive summary, paras. 45, 47. 
708 European Communities' first written submission, executive summary, para. 45. 
709 European Communities' first written submission, executive summary, para. 45;  
European Communities' first oral statement, executive summary, para. 21;  European Communities' second 
written submission, executive summary, para. 84;  Europe an Communities' second oral concluding statement, 
executive summary, para. 22. 
710 European Communities' second written submission, executive summary, para. 85. 
711 European Communities' second written submission, executive summary, para. 86.  WT/DS332/R 
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  contends that even where an application of a measu re is mandated by law, it does not cease to be an 
application.  Accordingly, the European Communiti es is of the view that if the law mandates an 
application which discriminates between countries wh ere the same conditions prevail, then this 
application is contrary to the chapeau of Artic le XX.  The European Communities argues that any 
other provision would make it very easy for any WTO Member to circumvent the requirements of the 
chapeau by simply providing for a discr iminatory application in the law itself.712  T h e  
European Communities contends that this is further re inforced by the fact that the "administration" of 
laws is already governed by Article X:3 (a), whic h requires that the administration of laws must be 
uniform, impartial and reasonable.  The Europ ean Communities argues that this provision should 
normally exclude arbitrary and unjustifiable discrimination.  Accordingly, the European Communities 
claims that the chapeau of Article XX cannot be r ead to merely refer to administrative, as opposed to 
legislative, discrimination.713 
4.311  Moreover, the European Communities argues th at the exemption of MERCOSUR countries 
from the import ban is not a reasonable justifica tion, although, as Brazil asserts, it was made in 
compliance with its international obligations under th e Treaty of Asunción and pursuant to an arbitral 
award of an international tribunal.  Indeed, the Eu ropean Communities argues further that what is an 
arbitrary and unjustifiable discrimination must be  established in relation to the objectives of the 
measure at issue, that is, in this case, th e protection of human life and health.  For the 
European Communities, the existence of a regional agreement, to which Brazil is a party, cannot 
modify the meaning of the chapeau of Article XX.714    
4.312  The European Communities submits that the existence of an inte rnational agreement, like the 
Treaty of Asunción, cannot justify the introduction of an unjustifiable and arbitrary discrimination 
contrary to the chapeau of Article XX.  The Eu ropean Communities argues that if Brazil's reasoning 
were accepted, it would be possible for WTO Members to discriminate in the application of measures 
taken under Article XX simply by concluding agr eements with other WTO Members providing for 
the discriminatory application of such measures.715 
4.313  Brazil  argues that contrary to the European Communities' suggestion, WTO Members cannot 
justify otherwise inconsistent measures by simply  concluding agreements with other Members that 
provide for discriminatory treatment.  Brazil states that, first, the European Communities is assuming 
that Members would act in bad faith by trying  to circumvent its obligations under the GATT by 
relying on an exception.  However, Brazil notes that Members are presumed to act in good faith.716  
Brazil further states that the hypothetical agr eement between the Members that the European 
Communities refers to would still have to meet th e requirements of Article XXIV for it to justify 
discriminatory treatment that is contrary to Article I:1.  Brazil notes that Article XXIV contains safeguards ensuring that only bona fide customs uni on parties could invoke the Article to justify 
prima facie discriminatory treatment.  Brazil explains that in other words, in the 
European Communities' hypothetical, countries a ttempting to discriminate against other WTO 
Members would have to prove that they have liber alized substantially all trade among themselves and 
substantially harmonized duties and trade regulations  for non-parties – all without raising outside 
trade barriers.  By imposing such a high burden, Brazil argues, Article XXIV ensures against any 
potential abuse.
717 
                                                      
712 European Communities' second written submission, executive summary, para. 87. 
713 European Communities' second written submission, executive summary, para. 88. 
714 European Communities' first oral st atement, executive summary, para. 22. 
715 European Communities' second written submission, executive summary, para. 89. 
716 Brazil's answer to panel question No. 50 , citing Decision by the Arbitrators, EC – Hormones (US) 
(Article 22.6 – EC) , para. 9. 
717 Brazil's answer to panel question No. 50. WT/DS332/R 
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  4.314  Brazil also states that the European Comm unities cannot possibly be suggesting that 
MERCOSUR, the second biggest customs union in th e world, was designed and executed with the 
sole purpose of discriminating in favour of MERCOSUR retreaders.  Brazil states that the European Communities' argument is  both far-fetched and offensive.
718   
4.315  The European Communities  notes that Brazil has contested this by arguing that 
WTO Members are "presumed to be acting in good fa ith", and therefore cannot be assumed to want to 
circumvent their WTO obligations.  The European Co mmunities is of the view that this argument is 
entirely unconvincing.  The European Communities s ubmits that according to Brazil's interpretation, 
the chapeau of Article XX allows the introducti on of discrimination between countries where the 
same conditions prevail, provided that this discrimin ation is based on an international agreement.  The 
European Communities contends that this interpre tation seriously weakens the safeguards imposed by 
the chapeau, and the European Co mmunities does not see how a requirement of "good faith" could 
correct this result.719 
4.316  The European Communities submits that Brazil ha s also argued that in order to allow the 
discrimination, the agreement on which the discrim ination is based "would still have to meet the 
requirements of Article XXIV for it to justify discrimin atory treatment that is contrary to Article I:1". 
For the European Communities, this is equally un convincing.  The European  Communities argues that 
the import ban is contrary to Ar ticle XI:1, and needs to be justified under Article XX.  For the 
European Communities, whether an exemption from th e ban is incompatible with Article I:1, and 
justified under Article XXIV, is an entirely different question.720 
4.317  The European Communities argues that in order to limit the excessive consequences of its 
own argument, Brazil is manifestly trying to import the conditions of Article XXIV into Article XX.  
However, the European Communities argues further that as Brazil has itself confirmed, Articles XX 
and XXIV are separate exceptions, and the fulfilment of  the conditions of one is independent of the 
fulfilment of the conditions of the other.  Moreover,  the European Communities contends that with its 
reference to Article XX, Article XXIV:8 precisely allows WTO Members to create a customs union 
or free trade agreement without being obliged to introduce discrimination against third countries not 
belonging to the customs union or free trade agreement.721  The European Communities argues further 
that if Brazil was right and the compliance with an  international agreement was sufficient to render a 
discrimination justifiable, then this should apply to all international agreements, not just to agreements 
justified under Article XXIV.722 
4.318  Brazil  agrees that a measure's compliance with the chapeau does not depend on the measure's 
justification under Article XXIV, that is, a measure  that does not meet Article XXIV requirements can 
nevertheless meet the requirements of the chapeau if  it is neither "arbitrary or unjustifiable" nor a 
"disguised restriction on international trade."  Howe ver, Brazil states that when a measure does fulfil 
the requirements of Article XXIV, all else being equal, it is necessarily consistent with the chapeau because a measure expressly permitted under the WTO agreements cannot be "arbitrary or 
unjustifiable" or a "disguised restriction."
723 
4.319  The European Communities argues that the ar bitrary and unjustifiable character of the 
discrimination applied by Brazil becomes even clear er when considering that at no point during the 
                                                      
718 Brazil's answer to panel question No. 50. 
719 European Communities' second written submission, executive summary, para. 90. 
720 European Communities' second written submission, executive summary, para. 91. 
721 European Communities' second written submission, executive summary, para. 92. 
722 European Communities' second written submission, executive summary, para. 93. 
723 Brazil's second oral statement, para. 107;  Brazil's answer to panel question No. 126;  Brazil's 
answer to panel question No. 54.  WT/DS332/R 
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  proceedings before the MERCOSUR Arbitral Tribunal Brazil claimed that its measure was justified as 
a measure regarding the protection of human, animal and plant life and health.  For the European Communities, this is striking, since Artic le 50(d) of the Treaty of Montevideo specifically 
allows measures regarding the protection of human, an imal and plant life and health to be imposed or 
maintained in the context of MERCOSUR.
724 
4.320  Brazil  explains that it defended the ban before the MERCOSUR tribunal  on technical and not 
environmental or public health grounds because the scope of the MERCOSUR proceeding was limited to whether Portaria SECEX 8/2000 was, in fa ct, a new restriction, or simply a continuation of 
a prior measure, and whether an earlier MERCO SUR decision permitted Members to enact such 
prohibitions in any event
.725  Brazil states that the decision to defend the ban on technical grounds was 
a tactical decision made by the attorneys who argued that case.  Brazil states that it may have turned 
out to be a tactical mistake, but that is no indication of improper motives.726  Brazil notes that 
Exhibit EC-92 describes what happened: 
"Argentina succeeded in obtaining a ban on the importation of used tyres ... claiming 
that free trade could not be placed above "higher values" such as health and the environment.  Brazil had used technical arguments ... and lost for that reason."
727 
4.321  The European Communities  submits that Brazil has tried to explain this situation by 
conceding that it may have made a "tactical error" by not defending its import ban on public health 
grounds against Uruguay under Article 50(d) of the Treaty of Montevideo.728  T h e  
European Communities notes that in reply to a qu estion from the European Communities, Brazil has 
explained that "reliance on this article did not see m necessary at the time because this was a straight-
forward question of legislative history".  For the European Communities, that Brazil's first defence 
was not straightforward is illustrated not only by the out come of the dispute, but also by the fact that 
Uruguay and Brazil engaged in a serious cont roversy on the question before the ad hoc  tribunal.729 
4.322  In such a situation, the Eur opean Communities contends that if Brazil really believed its 
measure was justified for reasons related to hu man life and health, it would have been normal 
litigation practice to invoke Article 50(d) of the Treaty of Montevideo at least as a subsidiary defence, 
whereas it is now invoking this defence ag ainst the European Communities.  For the 
European Communities, this behaviour by itsel f already constitutes arbitrary and unjustifiable 
discrimination between countries wh ere the same conditions prevail.730  Moreover, for the 
European Communities, it is not clear why the European Communities, or  other WTO Members, 
should have to bear the trade consequences of this "tactical error" made by Brazil.731   
Tyres retreaded domestically  
4.323  Brazil argues that the application of the ban to imported, but not locally manufactured 
retreaded tyres, does not constitute arbitrary or un justifiable discrimination.  Brazil explains that 
retreading of used tyres collected in Brazil help s extend their useful life and avoids creation of 
additional tyre waste.  Brazil contends that allo wing the importation of the shorter-lifespan retreaded 
                                                      
724 European Communities' second written submission, executive summary, para. 94. 
725 Brazil's first written submission, para. 164 (Exhibit BRA-74). 
726 Brazil's second oral statement, para. 108. 
727 Brazil's second oral statement, para. 108, citing Exhibit EC-92. 
728 European Communities' second oral concludi ng statement, executive summary, para. 22. 
729 European Communities' second written submission, executive summary, para. 95. 
730 European Communities' second written submission, executive summary, para. 95. 
731 European Communities' second oral concludi ng statement, executive summary, para. 22. WT/DS332/R 
Page 84  
 
  tyres, on the other hand, would exacerbate the waste tyre disposal problem.
732  Brazil argues that it 
prohibits such imports to prevent unnecessary creation of dangerous waste.733 
4.324  The European Communities  claims that the import ban also constitutes arbitrary and 
unjustifiable discrimination between the European Communities and Brazil.734  T h e  
European Communities recalls that  the Appellate Body accepted in US - Gasoline that discrimination 
in the sense of the chapeau could occur not only  between different exporting countries, but also 
between exporting Members and the importing Member concerned.735  M o r e o v e r ,  t h e  
European Communities notes that the Appellate Bo dy in the same case affirmed that "if no 
restrictions on domestically-produced like products are imposed at all, and all limitations are placed 
upon imported products alone, the measure cannot be accepted as primarily or even substantially 
designed for implementing conservationist goals" and that, in such case, "the measure would simply 
be naked discrimination for pr otecting locally-produced goods".736  For the European Communities, 
the fact that Brazil has not adopted any measure to en sure that new tyres consumed in its territory are 
retreaded when they become used  tyres reveals a discrimination against imported retreaded tyres, 
which produce the same public health and environm ental externalities as new tyres that are not 
retreaded.737 
4.325  Moreover, the European Communities claims th at Brazil allows domestically the production 
of retreaded tyres which, like retreaded tyres from the European Communities, are produced with 
casings imported from outside MERCOSUR, including the European Communities.738  T h e  
European Communities argues that due to the interim relief adopted by the Brazilian courts, used 
tyres continue to be imported into Brazil by national retreaders.739  For the European Communities, the 
discrimination is arbitrary, because all retreaded tyre s, made from used tyres not originating in Brazil, 
produce the same environmental externalities in Brazil irrespective of the country of origin.740  The 
European Communities explains that it is manifest that a casing originating in the 
European Communities is not more problematic from a waste management point of view just because it is retreaded in the European Communities rath er than in Brazil.  The European Communities 
submits that on the contrary, retreading in Brazil should be more problematic, since in this case, 
Brazil also has to deal with some degree of industrial losses which inevitably occur.
741 
4.326  Brazil  notes the European Communities' argument that Brazil arbitrarily discriminates 
between retreaded tyres from the European Communiti es and retreaded tyres made in Brazil, because 
domestic retreaded tyres are allegedly made from fo reign casings and do not reduce waste in Brazil.  
Brazil responds that the European Communities' argum ent could be true only if all of the Brazilian 
retreaded tyres had indeed been made from foreign casings.  However, Brazil states, it has extensively 
demonstrated that the great majority of domestic retreaded tyres are made from domestic casings.742 
                                                      
732 Brazil's first written submission, executive summar y, para. 29;  Brazil's first oral statement, 
executive summary, para. 16. 
733 Brazil's first written submission, executive summary, para. 29. 
734 European Communities' second written submission, executive summary, para. 96. 
735 European Communities' first written submission, executive summary, para. 46. 
736 European Communities' first written submission, executive summary, para. 43. 
737 European Communities' first written submission, executive summary, para. 46. 
738 European Communities' second written submission, executive summary, para. 96. 
739 European Communities' first written submission, executive summary, para. 48;  
European Communities' second oral concludi ng statement, executive summary, para. 22. 
740 European Communities' first written submission, executive summary, para. 48. 
741 European Communities' second written submission, executive summary, para. 96. 
742 Brazil's second oral statemen t, para. 109 (Exhibit BRA-162).  WT/DS332/R 
 Page 85 
 
 
  (ii) Disguised restriction on international trade 
Objective of the import ban  
4.327  Brazil  notes that the European Commun ities insists that the real aim of the import ban is not 
the protection of life and health, but the protection of Brazil's domestic industry (see paragraph 10 of 
the European Communities' second oral statement).  Brazil argues, however, that it has demonstrated 
that the import ban is imposed and enforced at c onsiderable cost to the Brazilian domestic retreading 
industry, as well, which would much rather face competition from the European Communities' 
retreading companies (many of which have investments in Brazil, by the way), than have its source of 
cheap casings cut off.743  
4.328  Brazil contends further that it does not seek to protect its tyre industry because:  it has not 
restricted imports of new tyres;  at the same time it subjected its tyre manufacturers to costly disposal 
obligations and prohibited imports of cheap fore ign casings, preferred by the domestic retreaders.744  
Moreover, Brazil argues that the strict producer r esponsibility obligations offer further evidence that 
Brazil's measure seeks the protection of human health and the environment, not commercial interests.
745 
4.329  The European Communities  recalls that the Appella te Body acknowledged in 
Japan - Alcoholic Beverages  that the aim of a measure may not be easily ascertained, though it 
suggested that the protective application of a m easure can most often be discerned from its design, 
architecture and revealing structure.746  The European Communities argues that the real aim of the 
import ban on retreaded tyres is not the protection of life and health but the protection of Brazil's 
domestic industry.  The European Communities points out that the rulings, awards and submissions 
made by Brazilian and MERCOSUR authorities confirm this assertion and that they have not been 
contested by Brazil in any of its submissions.747   
4.330  The European Communities notes that the protec tive application of the import ban is evident 
in the Brazilian legislation on tyres.  The Eu ropean Communities submits that the import ban 
emanates from the Ministry responsible for Developm ent, Industry and Foreign Trade by means of the 
measures challenged in this case, which, none of them , make a link with the legislation adopted by the 
Ministry in charge of the environment.748  The European Communities submits that Portaria 8 of 
25 September 2000, the first measure prohibiting the import of retreaded tyres, contains no reference 
whatsoever to the objective pursued by the ban.  The European Communities argues that the very 
reason is that the Brazilian authorities do not consid er it a public health measure.  According to the 
European Communities, this can be deduced fro m the fact that the National Dengue Control 
Programme adopted in July 2002 only includes m onitoring the effective application of Resolution 
CONAMA 258/1999.  For the European Communities, the fact that Portaria 8 is not mentioned is a silence that confirms that the measure is  not intended to protect life and health.
749  Moreover, the 
European Communities submits that Resolu tion CONAMA 258/1999 expressly includes imported 
retreaded tyres in the recovery programme.750 
4.331  The European Communities argues that the prot ectionist objective of the import ban also 
finds support in several statements made by th e Brazilian authorities.  The European Communities 
                                                      
743 Brazil's second oral concluding st atement, executive su mmary, para. 4. 
744 Brazil's first oral statement,  executive summary, para. 16. 
745 Brazil's first written submission, executive summary, para. 31. 
746 European Communities' first written submission, executive summary, para. 50. 
747 European Communities' second oral st atement, executive summary, para. 2. 
748 European Communities' first written submission, executive summary, para. 51. 
749 European Communities' second oral st atement, executive summary, para. 3. 
750 European Communities' first written submission, executive summary, para. 51. WT/DS332/R 
Page 86  
 
  submits that in the domestic lawsuit against the lifting of the retread import ban for MERCOSUR, the 
Advocate-General of the Union stated that the ba n on the importation of retreaded tyres was not 
adopted for the defence of public health and the environment, but to protect national trade and 
industry
751:  "… SECEX Portaria No 08/2000 prohibits the importation of 'retreaded' tyres not for the 
defence of public health and the environment,  but to protect national trade and industry".752   
4.332  The European Communities submits further that in this lawsuit, SECEX stated that the 
importation of used and retreaded tyres was harmful to the level of employment in Brazil by creating 
disloyal competition vis-à-vis  domestic tyre manufacturers and by reducing the incentive to invest in 
the country.753  Moreover, for the European Communities, that the original ban on imports of used 
products is similarly aimed at protecting Brazil's i ndustry, emerges clearly from the statement which a 
representative of the Ministry of Development, Indus try and Foreign Trade, made in a parliamentary 
public hearing on 10 April 2002.754   
4.333  The European Communities also contends that draft decree law 243/00 introduced in 2000 by 
three Brazilian Senators to abrogate Portaria SECEX  8/2000, suggests that this Portaria was the fruit 
of lobbying by manufacturers of new tyres established in Brazil who wanted to reduce the sales of 
retreaded tyres as a competing product.755  Finally, the European Commun ities argues that the fact that 
Presidential Decree 3.919, which establishes the fine for violation of the import ban, refers to an 
environmental law cannot be interpreted, in the ab sence of an equivalent reference in the measures 
establishing the import ban, as meaning that the ba n has been established expressly to protect the 
environment.756   
4.334  The European Communities contends that the impor t ban on retreaded tyres is not designed to 
protect life or health, because of three flaws in its design:  first, not all new tyres sold in Brazil are 
retreadable or retreaded;  second, tyres other than p assenger car tyres, whose import into Brazil is also 
banned, are retreadable several times, and, third, the import ban is not applied to retreaded tyres from 
MERCOSUR countries.757   
4.335  Brazil  points out that Minister Marina Silva told the Panel: 
"The core issues at stake in this dispute are public health and the environment.  The 
impact that the outcome of this dispute will have on Brazil's ability to preserve those fundamental values cannot be overstated. 
[O]ur own country generates a considerable amount of tyres that are suitable for 
supplying the retreading industry.  This c onfers a second life cycle to the product and 
reduces the environmental burden.  The same does not occur in relation to imported 
retreaded tyres, because they are al ready in their last lifecycle. 
The importation of used and retreaded tyres exacerbates the difficulties involved in 
the management of rubber waste.  That's why the import ban is a legitimate and necessary environmental measure."
758 
                                                      
751 European Communities' first written submission, executive summary, para. 52. 
752 European Communities' second written submission, executive summary, para. 102. 
753 European Communities' first written submission, executive summary, para. 52. 
754 European Communities' second written submission, executive summary, para. 102. 
755 European Communities' first written submission, executive summary, para. 53. 
756 European Communities' second written submission, executive summary, para. 101. 
757 European Communities' first oral st atement, executive summary, para. 5. 
758 Brazil's second written submission, para. 110, citin g Minister of Environment Marina Silva, initial 
statement by Brazil at the first substantive meeting of the Parties, at paras. 2, 7, 8.  WT/DS332/R 
 Page 87 
 
 
  4.336  Brazil also notes that the statement made  by a trade official – cited by the 
European Communities to suggest that the import ban was adopted to protect national industry – dealt exclusively with the 1991 ban on all used goods and made no specific mention of used or retreaded 
tyres.  Brazil adds that regardless of any statement that may have been made by a trade official and 
wrongly used by the European Communities in these pro ceedings, what is relevant in this case is that 
Brazil clearly demonstrated that there is a legiti mate environmental and h ealth rationale behind the 
import ban.
759 
Effects of the import ban  
4.337  Brazil  argues that the restrictions that the ba n imposes are not "disguised" because there is 
nothing disguised, deceptive or concealed about the ban's application.760  Brazil contends further that 
the import ban is also not applied in a manner that  constitutes a "disguised restriction on international 
trade."761  Brazil recalls the Appellate Body's statement that762 "'disguised restriction' ... may properly 
be read as embracing restrictions amounting to arb itrary or unjustifiable discrimination ... taken under 
the guise of a measure formally within the te rms of an exception listed in Article XX".763   
4.338  The European Communities contends that in order to assess whether there is a disguised 
restriction on international trade, what matters is not only the objective of the import ban, but also its 
effects.  In the present case, the European Communities argues th at the effects have been the 
exclusion of the European Communities retreaders fr om the Brazilian market to the benefit of their 
direct competitors, the retreaders located in Braz il.  The European Communities claims that this 
outcome is clearly a disguised restriction on international trade.764   
In relation to new tyres 
4.339  Brazil  contends that it has demonstrated – and the European Communities has not contested 
it – that the new tyre industry in Brazil has not benefited from the import ban.765  Brazil argues that it 
does not protect its new tyre industry.  To do that, Brazil explains that it would have had to restrict 
imports of new tyres, but it has done no such thing.   Brazil argues that in fact, imports of new tyres 
have increased since the ban766 and meanwhile, sales of new tyres by domestic manufacturers767 have 
remained stable.768   
4.340  Brazil is of the view that the European Communitie s' response to that fact  has been simply to 
suggest – without any evidence what soever – that in the absence of the import ban, the new tyre 
industry would have had a negative growth, rather th an remain stable.  Brazil notes that this is the 
European Communities' attempt at rebutting the evidence that the new tyre industry has not 
experienced any exceptional or ev en substantial growth resulting from the imposition of the import 
                                                      
759 Brazil's second oral statement, para. 110;  Brazi l's answer to panel question No. 129. See also, 
Brazil's answer to panel question No. 112. 
760 Brazil's first written submission, executive summar y, para. 30;  Brazil's first oral statement, 
executive summary, para. 16. 
761 Brazil's first written submission, executive summary , para. 30;  Brazil's second written submission, 
executive summary, para. 36. 
762 Appellate Body Report on US – Gasoline , at 25.   
763 Brazil's first written submission, executive summar y, para. 30;  Brazil's first oral statement, 
executive summary, para. 16. 
764 European Communities' first oral st atement, executive summary, para. 24. 
765 Brazil's first written submission, executive summary,  para. 31;  Brazil's second oral concluding 
statement, executive summary, para. 5. 
766 See Exhibit BRA-66 for detailed information on Brazil's tyre imports. 
767 See Exhibit BRA-66 for detailed information on Brazil's tyre imports. 
768 Brazil's first written submission, executive summary, para. 31. WT/DS332/R 
Page 88  
 
  ban on retreaded tyres.  Brazil explains that the ne w tyre industry, on the one hand, and the retreaded 
tyre industry on the other, do not compete for the same market.
769 
4.341  The European Communities  contends that the measure adopting the import ban and its 
subsequent modifications constitute a disguised restri ction on international trade, since it has excluded 
the retreaders of the European Communities from the Brazilian market, and protects the new tyre and 
retreaded tyre industry in Brazil.770  The European Communities claims that the import ban of 
retreaded tyres has, as main objec tive, to protect the Brazilian tyre industry from the competition of 
the foreign industry, by restricting international trade.771  The European Communities contends that 
the trade of retreaded tyres from the European Communities (and other WTO Members) has ceased to 
the benefit of new tyres manufactures located in Br azil, who do not have to face competition from a 
product with similar characteristics and th e same end-use as a new tyre, but cheaper.772  In fact, the 
European Communities submits that the new tyres in dustry lobbied for the ban and warmly welcomed 
it upon its entry into force.773   
4.342  The European Communities notes that Brazil has cl aimed that the total sales of new car tyres 
made in Brazil have not changed, that for all typ es of new tyres total sales remained stable, and that 
their market share, compared to that of imported new tyres, fell.774  The European Communities notes 
that the assessment made by Brazil does not include an  estimation of what would have occurred if the 
import ban on retreaded tyres had not been in pl ace.  The European Commun ities submits that Brazil 
has not reacted directly to this argument yet and its analysis of market shares, where new tyres and retreaded tyres are treated as separate market s, shows that it is not prepared to react.
775 
4.343  The European Communities argues that Brazil's position is hiding the fact that new tyre 
manufacturers located in Brazil lobbied for the adop tion of the import ban on retreaded tyres, as is 
clearly admitted in the circular from Pirelli of 4 Oc tober 2000, where Pirelli informed its retailers in 
Brazil of the entry into force of Portaria 8 of  25 September 2000, which banned the importation of 
retreaded tyres, in the following terms:  "There is  no doubt that this Order, which is the result of 
extensive work carried out in conjunction with th e authorities, will make it even more difficult to 
import these products".  The European Communities c ontends in addition that the draft decree law 
243/00 introduced by three Brazilian Senators to ab rogate Portaria SECEX 8/2000, suggests that this 
Portaria was the fruit of lobbying by manufacturers of new tyres established in Brazil who wanted to 
reduce the sales of retreaded tyres as a competing product.776   
4.344  Brazil  notes the European Communities' suggestion that the import ban produced an increase 
in the sales of new tyres manufactured in Brazil.  Brazil responds that the increase in the sales of new 
tyres in Brazil was caused not by the import ban, but by the fact that there are simply more cars on 
Brazilian roads.  Brazil notes that from 2001 to 2005, the Brazilian fleet expanded from 32 million 
registered motor vehicles to 42 million, according to the National Traffic Department.  During this 
period, Brazil points out, the replacement market ex panded by 9.4 million, or 22 per cent, from about 
42.7 million to 52.1 million; however, the sales of new tyres produced in Brazil increased by only 
900,000, or a mere five per cent.  Brazil states that  the European Communities' suggestion that these 
                                                      
769 Brazil's second oral concluding st atement, executive su mmary, para. 5. 
770 European Communities' first oral statement, executive summary, para. 23;  European Communities' 
first written submission, executive summary, para. 49;  second oral concluding statement, executive summary, 
para. 22. 
771 European Communities' first written submission, executive summary, para. 49. 
772 European Communities' first oral statement, executive summary, para. 23;  European Communities' 
second written submission, executive summary, para. 97. 
773 European Communities' second oral concludi ng statement, executive summary, para. 22. 
774 European Communities' second written submission, executive summary, para. 98. 
775 European Communities' second written submission, executive summary, para. 99. 
776 European Communities' second written submission, executive summary, para. 100.  WT/DS332/R 
 Page 89 
 
 
  sales increased by "a few millions" in footnote 151 is untrue and misleading.  Brazil adds that even if 
one counts 1999 and 2000 – for which Brazil does not have retread production information to 
calculate the market size – the sales of domestic tyr es increased by only 1.6 million, or nine per cent.  
At the same time, Brazil notes, imports of ne w tyres more than doubled from 1999 to 2005.777 
In relation to used tyres 
4.345  Brazil  notes the European Communities' argument778 that injunctions protect the Brazilian 
industry by ensuring supplies.779  Brazil argues that it actively opposes the injunctions that have led to 
the imports of used tyres and that, in the great major ity of the cases, it has prevailed.  Brazil is of the 
view that to state that the ban "has b een suspended by Brazilian courts" – as the 
European Communities does – is a gross misrepresentation.780  Brazil submits that the ban has not 
been "suspended" in any way and it is in force and enforced.781  Furthermore, Brazil argues that its ban 
on used tyre imports – which significantly increases production costs for domestic retreaders – and its stern opposition to the injunctions on used tyre imports dispels any suggestion that Brazil seeks to protect its retreading industry.
782   
4.346  The European Communities  submits that due to the MERCOSUR exemption and the 
imports in Brazil of used tyres to be retreaded , the export flow from the European Communities on 
tyres has been radically altered.783  First, the European Commun ities submits that the trade of 
retreaded tyres from the European Communities (and other WTO Members) has been replaced by 
exports of used tyres to Brazil and the other MERCOSUR countries, which are used to produce retreaded tyres.
784  Second, the European Communities contends  that the trade of retreaded tyres from 
the European Communities (and other WTO Members) has ceased to the benefit of retreaded tyres 
manufactures located in Brazil and in other MERCOSUR countries, who do not have to face 
competition from a product with the same characteristics.785   
4.347  On this question, the European Communities notes that Brazil relies on the fact that the 
import ban covers also casings impor ted into Brazil to be retreaded and that this ban substantially 
increases the Brazilian retreaders' production costs by prohibiting imports of cheap foreign casings.786  
The European Communities submits that it has repeated ly explained in its submissions that the import 
ban on used tyres is not being implemented because  Brazilian courts have granted injunctions under 
which a large number of used tyres are imported.   The European Communities notes also that the 
import ban on used tyres into Brazil does not aff ect the retreading indust ry located in other 
MERCOSUR countries and exporting to Brazil.  Finally, the European Communities is of the view that Brazil has not demonstrated that imported casings are cheaper than those gathered on its territory.  
On the contrary, the European Co mmunities notes that it has proved that, if the importation of casings 
into Brazil takes place, this is because it is not po ssible for the Brazilian retreaders to find in Brazil 
suitable casings for retreading.
787   
                                                      
777 Brazil's answer to panel question No. 26. 
778 European Communities' answer to panel question No. 51. 
779 Brazil's second written submission, executive summary, para. 36. 
780 See European Communities' first written submission, at para. 147. 
781 Brazil's second written submission, executive summary, para. 35. 
782 Brazil's first written submission, executive summary , para. 31;  Brazil's second written submission, 
executive summary, para. 36. 
783 European Communities' first oral st atement, executive summary, para. 23. 
784 European Communities' first oral st atement, executive summary, para. 23. 
785 European Communities' second written submission, executive summary, para. 103. 
786 European Communities' second written submission, executive summary, para. 104. 
787 European Communities' second written submission, executive summary, para. 105. WT/DS332/R 
Page 90  
 
  B. T
HE FINES ON IMPORTATION , MARKETING , TRANSPORTATION , STORAGE , KEEPING OR 
WAREHOUSING OF IMPORTED RETREADED TYRES  
4.348  The European Communities  claims that the fines imposed by Brazil on the importation, as 
well as the transportation, storage, keeping or warehousing of retreaded imported tyres constitute a 
restriction on imports incompatible with Artic le XI:1 of GATT 1994.  In the view of the 
European Communities, the fines on the marketing, transportation, storage, keeping or warehousing 
must be regarded as constituting a restriction on the importation of goods. In this context, it should be 
noted that the disciplines of Article XI:1 also extent to measures of a de facto nature.788  By imposing 
a fine – which normally will exceed the value of th e goods – on any action which is necessary for the 
internal commercialisation of imported retread ed tyres, Brazil is essentially making any 
commercialisation of such tyres impossible.  These re strictions only apply to imported goods affected 
by the ban, not to domestic goods.  Moreover, these fi nes are ancillary to the import ban, which they 
complement and reinforce.  Accordingly, they equally constitute a violation of Article XI:1.  
4.349  Alternatively, the European Communities conte nds that should the Panel consider that the 
fines at issue do not constitute a restriction on th e importation of products, they would have to be 
considered as incompatible with Article III:4 of  GATT 1994, which obliges Brazil not to discriminate 
against imported products in respect of all laws, re gulations and requirements affecting their internal 
sale, offering for sale, purchase, transportation, distribution or use.789  The European Communities 
claims that in either case the violation of Brazil's WTO obligations cannot be justified under 
Article XX of GATT 1994.790 
4.350  The European Communities submits that although Br azil asserts that the justification of the 
import ban under Article XX(b) applies mutatis mutandis to the fines, no additional argument was 
presented to justify the latter measure.  Moreover, the European Communities notes that in light of 
Article XX(d), Brazil claims that the fines are "nece ssary to secure compliance" with the provisions of 
the import ban.  For the European Communities, th is argument is equally doomed to fail because 
Article XX(d) applies only to measures necessary to secure compliance with laws or regulations "which are not inconsistent with the provisions of this Agreement", whereas the import ban is 
inconsistent with Article XI:1, and is not justified under Article XX(b).
791 
4.351  The European Communities contends further that since both parties agree that there is a prima 
facie incompatibility with Article XI:1, the Panel n eed not address the question whether there is also a 
violation of Article III:4.  The European Communiti es argues that like the import ban, the fines cannot 
be justified under Article XX(b) or (d).  Accord ingly, for the European Communities the fines are 
likewise WTO-inconsistent.792 
4.352  Brazil  argues that it imposes anti-circumvention fines to safeguard the integrity of the import 
ban by penalizing traders that circumvent import controls.793  As such, Brazil argues that the fines are 
measures to enforce the import ban.794  Brazil contends that because the import ban is justified by 
                                                      
788 Panel Report on Argentina – Hides and Leather , para. 11.17. 
789 European Communities' first written submission, executive summary, para. 54;  
European Communities' first oral statement, executive  summary, para. 25;  European Communities' second 
written submission, executive summary, para. 106. 
790 European Communities' first written submission, executive summary, para. 54. 
791 European Communities' first oral st atement, executive summary, para. 25. 
792 European Communities' second written submission, executive summary, para. 107. 
793 Decreto Presidencial 3.919/2001  (Exhibit BRA-72), amending Decreto Presidencial 3.179/1999, 
Art. 47-A (Exhibit BRA-73). 
794 Brazil argues that the European Communities reco gnizes that the fines are an enforcement measure 
of the import ban;  see European Communities' first written submission, at paras. 172-174, 179.  WT/DS332/R 
 Page 91 
 
 
  Article XX(b), fines that enforce the ba n are likewise justified by Article XX(b).795  Brazil contends 
that the anti-circumvention fines are justified by  Article XX(b) because they are measures necessary 
to protect human life and health, and the environment.796   
4.353  Moreover, Brazil is of the view that Article XX (d) also justifies the fines because they are 
"necessary to secure compliance with" the import ban, which is not inconsistent with the 
GATT 1994.797  For Brazil, the fines are "necessary" becau se they significantly enhance effectiveness 
of the ban.798  Brazil claims that the fines meet the criteri a of the chapeau for the same reasons that the 
import ban itself meets that criteria and because they discipline mainly Brazilian businesses.799  
4.354  Brazil submits that both parties800 agree that anti-circumven tion fines are an ancillary 
enforcement measure that must stand or fall with the ban.801  Beyond these points, Brazil notes that 
parties essentially disagree.802 
C. RESTRICTIONS ON THE MARKETING OF IMPORTED RETREADED TYRES AT STATE LEVEL  
4.355  The European Communities  claims that Law 12.114 of the Brazilian State of Rio Grande do 
Sul of 5 July 2004 prohibits the marketing of retreaded tyres produced outside Brazil.  The 
European Communities contends that this prohibiti on does not apply to the marketing of retreaded 
tyres produced in Brazil from domestic carcasses.   For the European Communities, this measure 
constitutes a discrimination against imported prod ucts which is incompatible with Article III:4803 and 
Brazil has not contested this incompatibility.804  
4.356  The European Communities submits that Ar ticle 1, paragraph 1 of Law 12.114, as originally 
adopted , prohibits the domestic marketing, in Rio Gr ande do Sul, of imported used tyres, which it 
defines as including imported retreaded tyres.805  The European Communities submits that Law 
12.114, as recently amended  (through State Law 12.381 of 28 November 2005), also contains 
elements of discrimination which are not  found in the Brazilian federal measures.806  T h e  
European Communities contends that paragraph 2 of  Article 1 of the amended law now specifically 
authorises the importation of used or retreaded tyres.  The European Communities submits that 
importation of retreaded tyres produced in Brazi l from imported used tyres would be allowed, 
provided that the importer proves to have destr oyed one used tyre existing in Brazil for every 
retreaded tyre.  In contrast, the European Comm unities notes that the importation and marketing of 
                                                      
795 Brazil's first written submission, executive summar y, para. 32;  Brazil's first oral statement, 
executive summary, para. 17;  second writte n submission, executive summary, para. 37. 
796 Brazil's first written submission, executive summary, para. 17. 
797 Brazil's first written submission, executive summary, paras. 17, 32. 
798 Brazil's first written submission, executive summar y, para. 32;  Brazil's first oral statement, 
executive summary, para. 17. 
799 Brazil's first written submission, executive summary, para. 32. 
800 See European Communities' answer to panel question No. 65.  See also European Communities' first 
written submission, at paras. 172-174, 179. 
801 Brazil's second written submission, executive summary, paras. 1, 37. 
802 Brazil's second written submission, executive summary, para. 1. 
803 European Communities' first written submission, executive summary, paras. 55, 57;  
European Communities' first oral statement, executive summary, para. 26;  European Communities' second written submission, executive summary, para. 108. 
804 European Communities' second written submission, executive summary, para. 108. 
805 European Communities' second written submission, executive summary, para. 109. 
806 European Communities' first written submission, executive summary, para. 56;  
European Communities' first oral statement, executive summary, para. 27. WT/DS332/R 
Page 92  
 
  imported retreaded tyres is allowed only if the impor ter proves to have destroyed ten used tyres in 
Brazil for every retreaded tyre.
807   
4.357  The European Communities argues further as regard s paragraph 2 of Article 1, that a measure 
which requires the disposal of ten used tyres fo r every imported retreaded tyre is manifestly 
disproportionate, as Brazil has in fact itself ac knowledged.  The European Communities submits that 
even according to Brazil's own arguments, according to  which every imported retreaded tyre leads to 
one more used tyre to be disposed of in Brazil,  it cannot be argued that an  additional amount of ten 
waste tyres is due to the importation of each retreaded tyre.808  The European Communities notes 
Brazil's argument that the disposal obligation is a "non-circumvention fine" for the import ban which, 
as a "penalty", need not be proportionate.  For the European Communities, this argument does not 
correctly reflect the content of the State la w.  The European Communities argues that under 
paragraph 2 of Article 1 of the amended law, impo rts of retreaded tyres are explicitly authorised, 
provided that the importer disposes of ten u sed tyres per imported retreaded tyre.  The 
European Communities contends that this provision is not a "sanction" for violation of an import ban.  
Rather, for the European Communities, it is a measur e which restricts the internal sale of retreaded 
tyres to the disadvantage of imported retreaded tyres.809 
4.358  The European Communities argues that the requirement of having to dispose of ten used 
tyres, rather than one tyre, clearly constitutes less fa vourable treatment of imported retreaded tyres.  In 
other words, for the European Communities the amended law introdu ces an additional discrimination 
between retreaded tyres produced in Brazil from imported carcasses, and retreaded tyres imported into Brazil.
810   
4.359  Furthermore, the European Communities submits th at it is not entirely clear how paragraphs 1 
and 2 of Law 12.114 relate to one  another.  The European Communities notes that when questioned 
by the Panel on this point, Brazil replied that the amendments introduced by Law 12.381, permitting 
imports under certain conditions, seem to conflict with Article 1 of Law 12.114, which prohibits 
imports of used tyres, and that it is not clear whether the amendments intended to lift the import 
prohibition.811  The European Communities assumes that in th e Brazilian legal order, the conflict rules 
of lex posterior derogat priori  and lex specialis derogat generali  apply.  The European Communities 
assumes that since paragraph 2 of Article 1 of Law 12.114 is both later in time and more specific than 
paragraph 1 thereof, tyres which have been importe d in accordance with the conditions of paragraph 2 
may also legally be marketed in Rio Grande do Sul.812 
4.360  In this sense, the European Communities ar gues that paragraph 2 would constitute an 
exception from paragraph 1.  The European Commun ities contends that the combined effect of 
Law 12.114 with its combination of prohibitions and c onditional, but discriminatory, authorisations, is 
to create considerable uncertainty about the lega lity of the sale of imported retreaded tyres in 
Rio Grande do Sul.  The European Communities subm its further that the law discourages imports of 
retreaded tyres, and as such has a cons iderable chilling effect on foreign trade.813 
                                                      
807 European Communities' first written submission, executive summary, para. 56;  
European Communities' first oral statement, executive summary, para. 27;  European Communities' second written submission, executive summary, para. 109. 
808 European Communities' second written submission, executive summary, para. 117. 
809 European Communities' first oral statement, executive summary, para. 27;  European Communities' 
second written submission, executive summary, para. 118. 
810 European Communities' first written submission, executive summary, para. 56. 
811 European Communities' second written submission, executive summary, para. 110. 
812 European Communities' second written submission, executive summary, para. 111. 
813 European Communities' second written submission, executive summary, para. 112.  WT/DS332/R 
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  4.361  As regards the legal effect of the Rio Gra nde do Sul Law, the European Communities notes 
Brazil's argument that it "warrants no independent consideration because it does not restrict imports of retreaded tyres any more than the federal impor t ban". The European Co mmunities does not agree 
with these arguments.
814  The European Communities argues that , in contrast to what Brazil has 
claimed, Law 12.114 is a measure independent of th e measures adopted at the federal level in Brazil 
and, consequently, does warrant independent cons ideration in the context of the present dispute.815   
4.362  The European Communities submits Brazil's clai m that the State measure is incompatible 
with Brazilian constitutional law, and therefore has no legal effect.816  The European Communities 
argues, however, that Brazil has failed to establish both that the measure in its entirety is indeed 
unconstitutional, nor that this unc onstitutionality as such would depr ive the measure of its legal 
effect.817  The European Communities submits that Brazil h as also claimed that "to the extent that the 
state measure conflicts with the federal measure ... the federal measure will prevail and trump the state 
measure".  The European Communities further submits th at in support, Brazil has referred to the fact 
that the federal government has the exclusive pow er to regulate foreign and interstate trade.818 
4.363  For the European Communities, these explanations are unconvinc ing.  First of all, the 
European Communities argues that it is not clear whether and to which extent Law 12.114 falls under 
the exclusive competence of the federal governme nt for foreign and inter-state trade.  The 
European Communities is of the view that this is pa rticularly doubtful with respect to paragraph 2 of 
Article 1 of that Law, which in essence contains  disposal obligations imposed on importers of 
retreaded and used tyres.  The European Communiti es notes that, as Brazil has explained, States and 
the federal government have concu rrent jurisdiction over environmental protection.  For this reason, 
the European Communities argues, as Brazil has e qually confirmed, that Rio Grande do Sul can 
legislate on matters related to disposal of waste.  However, the European Communities contends that 
it can be argued that this is precisely what Rio Gr ande do Sul has done in para graph 2 of Article 1 of 
Law 12.114.  The European Communities argues that th e fact that the disposal obligations heavily 
discriminate against imported retreaded tyres, and have the obvious intention of discouraging such 
imports, is not enough to assume that these measures per se constitute regulations of foreign trade.819 
4.364  Second, for the European Communities, even to  the extent that Law 12.114 conflicts with 
Brazilian constitutional law, Brazil has not shown that the law for this reason has no legal effect in the 
Brazilian legal order.  On the contrary, the Eur opean Communities argues that Brazil has confirmed 
that "[i]n order to have the state measures at issue declared null and void, a specific court ruling – i.e., 
a ruling by the Federal Supreme Court in an unconstitutionality action cf. Art. 102(I)(a) of the 
Constitution) – is required".  In the absence of such  a ruling, the European Communities argues that it 
would thus appear that there is no basis for assuming that courts and administrators in Rio Grande do 
Sul would not apply the Rio Grande do Sul law.820 
4.365  The European Communities conte nds further that if the ban at federal level were lifted 
following the present dispute, but the State law main tained, this would continue to restrict the 
marketing of imported retreaded tyres in Rio Grande do Sul.821 
                                                      
814 European Communities' second written submission, executive summary, para. 113. 
815 European Communities' first oral statement, executive summary, para. 26;  European Communities' 
second written submission, executive summary, para. 113. 
816 European Communities' second oral concludi ng statement, executive summary, para. 23. 
817 European Communities' second oral concludi ng statement, executive summary, para. 23. 
818 European Communities' second written submission, executive summary, para. 114. 
819 European Communities' second written submission, executive summary, para. 115. 
820 European Communities' second written submission, executive summary, para. 116. 
821 European Communities' first oral statement, executive summary, para. 26;  European Communities' 
second written submission, executive summary, para. 113. WT/DS332/R 
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  4.366  The European Communities claims that th ese restrictions cannot be justified by 
Article XX(b).
822  The European Communities contends that Brazil has offered no arguments as 
regards the possibility of a justification of the Ri o Grande do Sul measure under Article XX(b).  For 
the European Communities, any attempt to justif y this measure as "necessary" under Article XX(b) 
must fail.823  The European Communities claims that Br azil has also not succeeded in demonstrating 
that the measure, and in particular the discriminat ory disposal obligations it imposes, can be justified 
under Article XX(b).824  For the European Communities, su ch a discriminatory scheme, the only 
intention of which in fact seems to be to  discourage imports, cannot be justified under 
Article XX(b).825  Moreover, the European Communities ar gues that Brazil, as a WTO Member, is 
responsible for the respect of its WTO obliga tions by its federal states in accordance with 
Article XXIV:12.826 
4.367  Brazil  argues that the state of Rio Grande do Sul imposes a state ban on sales of imported 
retreaded tyres,827 which has effect only to the extent th at it is consistent with federal law.828  Brazil 
contends that it has demonstrated that the chal lenged state measure is not inconsistent with 
Article III:4 because the import-related provisions in this measure are pre-empted by federal law and 
have no effect.  Brazil also notes that in July 2006, the Office of the Chief of Staff to the President 
issued a legal opinion829, advising the Solicitor General that the state measure violates provisions of 
the Brazilian Constitution and recommending that th e Solicitor General bring a Direct Action of 
Unconstitutionality.830  Brazil reports that that the General Prosecutor of the Republic has 
consequently presented to the Federal Supreme Court the Unconstitutionality Action recommended by 
the Chief of Staff Minister.831 
4.368  Brazil notes that it has also explained that the law has no legal effect because Brazilian states 
have no authority to regulate interstate or intern ational trade under Brazil's Constitution.  According 
to Brazil, state authorities simply cannot authorize or prohibit imports because import licenses are issued by the federal government, not by the stat es; neither can state authorities impede sales of 
imported products.
832 
4.369  Brazil  claims that the Rio Grande do Sul state measure is justified by Article XX(b) because it 
is a measure necessary to protect human life and health, and the environment.833  Moreover, Brazil 
contends that the state measure warrants no indepe ndent consideration because it does not restrict 
                                                      
822 European Communities' first written submission, executive summary, para. 57;  
European Communities' first oral statement, executive summary, para. 26;  European Communities' second 
written submission, executive summary, para. 117. 
823 European Communities' first oral st atement, executive summary, para. 28. 
824 European Communities' second oral concludi ng statement, executive summary, para. 23. 
825 European Communities' second written submission, executive summary, para. 117. 
826 European Communities' first written submission, executive summary, para. 57. 
827 Law No. 12.114 of Rio Grande do Sul (Exhibit BRA-80), as amended by Law 12.381 
(Exhibit BRA-81). 
828 Brazil's first written submission, executive summary, para. 16. 
829 Office of the Chief of Staff to the Presiden t, Official Letter SAJ No. /05-, 26 June 2006 
(Exhibit BRA-156). 
830 Brazil's second written submission, executive summary, para. 46. 
831 Brazil's comment to the European Comm unities' answer to panel question No. 118 
(Exhibit BRA-169). 
832 Brazil's responses to question 111. 
833 Brazil's first written submission, executive summary, paras. 17, 36.  WT/DS332/R 
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  imports of retreaded tyres from the European Co mmunities any more than the federal import ban 
does.  In the event of a conflict, Brazil submits that the federal measure prevails.834 
D. THE MERCOSUR  EXEMPTION  
1. Articles XIII:1 and I:1 of GATT 1994 
4.370  The European Communities  claims that the exemptions of retreaded tyres imported from 
other MERCOSUR countries from the import ban and the associated fines are incompatible with 
Articles XIII:1 and I:1 of GATT 1994.835  The European Communities contends that Brazil has not 
denied this inconsistency a nd has argued that the MERCOSUR exemption is justified under 
Articles XXIV and XX(d) of GATT 1994.836  
4.371  The European Communities submits that in  relation to the scope of the MERCOSUR 
exemption, Brazil has argued that the exem ption for exports from MERCOSUR countries in 
Article 40 of Portaria SECEX 14/2004 does not apply to all retreaded tyres, but only to "remoulded 
tyres", i.e. tyres where the tread and the si dewall have been renewed from bead to bead.837  T h e  
European Communities argues that this  explanation is not compatible with the wording and context of 
the Brazilian measures.  For the European Communities,  if the term "remoldagem" in Article 40 were 
to apply only to retreaded tyres produced throug h one specific process, then  the same should also 
apply to the term "recauchutados", which should a pply only to tyres retreaded through the process of 
re-capping.  However, the European Communities submits that Brazil maintains that the term 
"recauchutagem" is to be interpreted and applied in a large sense as including all retreaded tyres.  For 
the European Communities, it is not clear, therefore, why only one term is to be interpreted in a large 
sense, whereas the other term in a narrow sense.838 
4.372  The European Communities contends that Braz il's interpretation is also contradicted by 
Presidential Decree 4.592, which exempts from the fines imposed on the importation of retreaded 
tyres, all retreaded tyres originating in MERCOSUR countries.  Accordingly, for the 
European Communities, it would appear that th e importation of all retreaded tyres from these 
countries is legal, and not just the importation of remoulded tyres.839 
4.373  The European Communities also argue s that Brazil's claim is also at odds with its reply to the 
Panel's question No. 30, where it explains that "b ecause Portaria SECEX 14/2004 is a foreign trade 
regulation, it employs the HS terminology", and concl udes that the "terms 'used' and 'retreaded tyres' 
refer, respectively, to HS tariff lines 4012.20 and 4012.11, 4012.12, 4012.13, and 4012.19".  The 
European Communities contends that the HS term inology does not distinguish between retreaded 
tyres depending on the process according to which they have been produced.840 
4.374  However, the European Communiti es argues that even if the Panel were to conclude that the 
exemption only covers the specific type of retreaded tyres produced by "remoulding", there would still be a violation of Article XIII: 1 and XI:1 to the extent that Br azil grants an advantage to these 
                                                     
 
834 Brazil's first written submission, executive summar y, para. 36;  Brazil's first oral statement, 
executive summary, para. 21. 
835 European Communities' first oral statement, executive summary, para. 29;  European Communities' 
first written submission, executive summary, para. 58. 
836 European Communities' first oral st atement, executive summary, para. 29. 
837 European Communities' second written submission, executive summary, para. 119. 
838 European Communities' second written submission, executive summary, para. 120. 
839 European Communities' second written submission, executive summary, para. 121. 
840 European Communities' second written submission, executive summary, para. 122. WT/DS332/R 
Page 96  
 
  specific products from MERCOSUR countries which it does not extend to the products of other 
WTO Members.
841 
4.375  Further, as regards Brazil's claim that it is wo rking with its MERCOSUR partners to eliminate 
the MERCOSUR exemption, the European Communiti es considers that these remarks are irrelevant 
for the purposes of deciding this dispute.  The Eu ropean Communities submits that the measure at 
issue is the MERCOSUR exemption as in force at the date of establishment of the Panel.  The 
European Communities contends that whether this ex emption might be removed at some date in the 
future is not only entirely speculative, but also irrelevant for the purposes of the findings and 
conclusions which this Panel must make.842   
4.376  The European Communities submits that, moreove r, Brazil's claim that it would "soon be 
allowed to prohibit retreaded tyre imports fro m other Mercosul countries" is also entirely 
unsupported.  The European Communities notes that Brazil has submitted a draft MERCOSUR agreement on waste policy.  However, the European  Communities argues that apart from the fact that 
this agreement is not yet in force, this agreement would only apply to used tyres, not to retreaded 
tyres.  The European Communities sees no basis for Brazil's statement that it "would soon be allowed 
to prohibit retreaded tyre imports from other Mercosul countries".  Moreover, in the European 
Communities' view, it does not appear likely that Ur uguay, after having obtained the right to export 
retreaded tyres to Brazil and Argentina thr ough two MERCOSUR dispute settlement proceedings, 
would agree to a prohibition of these same exports.
843 
4.377  According to Brazil , the MERCOSUR exemption is justified by Articles XX(d) and XXIV.844   
2. Article XXIV 
4.378  Brazil  submits that it exempted MERCOSUR countries from the ban and the anti-
circumvention fines to comply with a ruling by a MERCOSUR tribunal.  Brazil states that because 
Uruguay only challenged the ban's application to re moulded tyres, the proceedings did not affect 
imports of other types of retreaded tyres and Br azil limited its exemption to the remoulded tyres.845  
Brazil contends that Article XXIV authorizes customs union members to adopt measures that would 
otherwise be contrary to their WTO obligations, provided that such measures do not raise trade 
barriers to non-parties.846  Brazil argues further that the limited exemption did not raise Brazil's level 
of protection, but relaxed trade restriction for MERCOSUR partners.847  Brazil argues that the 
MERCOSUR exemption is authorized under Article XXIV848 and the European Communities has 
failed to rebut Brazil's defence of the lim ited exemption of MERCOSUR under Article XXIV.849   
4.379  Brazil submits that with respect to Article XXIV, the two main arguments made by the 
European Communities and certain third parties are:   first, that the members of MERCOSUR did not 
notify that customs union under Article XXIV;  a nd second, they argue that Brazil has not 
                                                      
841 European Communities' second written submission, executive summary, para. 123. 
842 European Communities' second oral st atement, executive summary, para. 79. 
843 European Communities' second oral st atement, executive summary, para. 79. 
844 Brazil's first written submission, executive summary, para. 17. 
845 Brazil's first written submissi on, para. 77 (Exhibit BRA-74). 
846 See GATT 1994, Art. XXIV:5, 8. 
847 Brazil's first written submission, executive summary, para. 33. 
848 Brazil's first written submission, executive summar y, para. 33;  Brazil's first oral statement, 
executive summary, paras. 11, 18. 
849 Brazil's first oral concluding stat ement, executive summary, p. 4.  WT/DS332/R 
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  demonstrated that the limited exemption was in troduced upon the formation of the customs union and 
that such formation would have been preven ted if the exemption had not been introduced.850   
4.380  The European Communities  argues that the MERCOSUR exemption cannot be justified 
under Article XXIV.851  The European Communities submits that  Brazil appears to be arguing that the 
import ban and fines on the importation of retreaded tyres are justified under Article XX.  However, 
in the European Communities' view, measures whic h are permitted under Article XX are explicitly 
excluded by Article XXIV:8(a)(i) from the require ment to eliminate restrictive regulations of 
commerce with respect to substantially all trade.  Accordingly, for the Eu ropean Communities, an 
exemption from a measure which is justified unde r Article XX cannot be "necessary" within the 
meaning of Article XXIV:5.852  Furthermore, the European Communities argues that Brazil has not 
shown that the MERCOSUR exemption was necessar y for allowing the formation of MERCOSUR.  
In particular, Brazil has failed to explain why it could be necessary to exempt its MERCOSUR 
partners from a measure which it claims is nec essary for the purposes of protecting human life and 
health, and which Article XXIV:8 explicitly exempt s from the need to liberalise internal trade.853   
4.381  The European Communities argues th at there is therefore a fundamental logical contradiction 
in the measures adopted by Brazil with respect to retreaded tyres.  The European Communities 
contends that if Brazil was right in arguing that th e ban and fines on the importation of retreaded tyres 
are justified under Article XX, then the ban and the fines should be imposed on imports from all 
countries, including from other MERCOSUR members.  On the other hand, if the ban and fines are not justified under Article XX, the European Communities submits that not only MERCOSUR 
members should be exempted from them, but all WTO Members.
854 
4.382  The European Communities argues that the only applicable exception which could be invoked 
would appear to be Article XXIV:5.  The European  Communities is of the view that it would be for 
Brazil to invoke this provision, and to establish that its conditions are met.855  T h e  
European Communities argues that in order for a m easure to be justified under Article XXIV:5, the 
defending party must fulfil the two conditions set out by the Appellate Body in Turkey – Textiles :  
1) it must demonstrate that the measure is introduced  upon the formation of a customs union that fully 
meets the requirements of Article XXIV:8(a) and 5(a) ;  and 2) it must establish that the formation of 
the customs union would have been prevented if it were not allowed to introduce the measure at 
issue.856  In the present case, the European Communiti es contends that Brazil could not successfully 
invoke Article XXIV:5.857   
(a) Whether MERCOSUR meets the requirements of Article XXIV 
4.383  Brazil  submits that MERCOSUR fully meets the conditions under Article XXIV because it is 
a customs union, whose members have liberaliz ed substantially all trade among themselves, 
substantially harmonized duties and trade regulations  for non-parties, and did not raise outside trade 
barriers.858  Brazil notes that it has adduced ev idence that establishes a prima facie  case that 
                                                      
850 Brazil's first oral concluding stat ement, executive summary, p. 4. 
851 European Communities' second written submission, executive summary, para. 124. 
852 European Communities' first written submission, executive summary, para. 61. 
853 European Communities' second oral concludi ng statement, executive summary, para. 25. 
854 European Communities' first written submission, executive summary, para. 62. 
855 European Communities' first written submission, executive summary, para. 59. 
856 European Communities' first oral statement, executive summary, para. 30;  European Communities' 
second written submission, executive summary, para. 124. 
857 European Communities' second oral concludi ng statement, executive summary, para. 24. 
858 Brazil's first oral statement, executive summar y, para. 18;  Brazil's first written submission, 
executive summary, para. 33. WT/DS332/R 
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  MERCOSUR is a customs union that meets the conditio ns of paragraphs 5 and 8 of Article XXIV.  
Brazil contends that the European Communities ha s done nothing to rebut that prima facie case.
859   
4.384  The European Communities  argues that Brazil must establish that MERCOSUR is a 
customs union that fully meets the requirements of Article XXIV:8(a) and 5(a).  However, the European Communities claims that Brazil has merely  asserted, without offering any further proof or 
argument, that the conditions of Ar ticle XXIV:8(a) are met by MERCOSUR.
860  T h e  
European Communities contends that Brazil has not taken any position on the condition of 
Article XXIV:5(a).  The European Communities argues that submissions of Brazil do not seem 
sufficient to enable the Panel to determine whether the conditions of  Article XXIV:8(a) and 5(a) are 
met.861  The European Communities claims further that Brazil has failed to demonstrate that 
MERCOSUR is a customs union which is in full accordance with the requirements of Article XXIV:5 
and 8.  Instead, the European Communities contends that Brazil appears to believe to be able to 
establish these requirements by simple force of assertion.  However, as the European Communities 
has shown, there are numerous open questions  as to the fulfilment by MERCOSUR of the 
requirements of Article XXIV.862   
(i) The notification requirement under Article XXIV:7 
4.385  Brazil  submits that the European Communities and certain third parties have argued that 
MERCOSUR was not notified pursuant to Article XXIV:7863, and, as a consequence, Brazil cannot 
invoke Article XXIV as a justification for the exemption.864  Brazil notes, first of all, that Article 
XXIV:7 does not provide formal requirements c oncerning the obligation to notify CONTRACTING 
PARTIES of the formation of a customs union.865  Brazil argues further that there is nothing in 
Article XXIV:7 that says that the notification mu st explicitly state that the information is being 
provided pursuant to the Article.   
4.386  In any event, as a factual and legal matter, Brazil submits that MERCOSUR was notified to 
the CONTRACTING PARTIES in a manner that m eets the notification obligation contained in 
Article XXIV:7.866  Brazil submits that Argentina, Br azil, Paraguay and Uruguay notified the 
CONTRACTING PARTIES in March 1992 that they ha d entered the Treaty of Asunción, with the 
objective of facilitating the creation of the neces sary conditions for the establishment of a common 
market between the four countries.867  Brazil argues that the effectiveness of that notification to inform 
the CONTRACTING PARTIES of the creation of the customs union, in accordance with Article XXIV:7, is evidenced by the fact th at a Working Group was established to examine 
MERCOSUR "in light of the relevant provisions of the Enabling Clause and the GATT, including 
Article XXIV".
868   
                                                      
859 Brazil's first oral concluding statement, executive summary, p. 5;  Brazil's second written 
submission, executive summary, para. 38. 
860 European Communities' first oral statement, executive summary, para. 31;  European Communities' 
second written submission, executive summary, para. 125. 
861 European Communities' first oral st atement, executive summary, para. 31. 
862 European Communities' second oral concludi ng statement, executive summary, para. 24. 
863 Brazil's first oral concluding statement, execu tive summary, p. 4;  second written submission, 
executive summary, para. 41. 
864 Brazil's second written submission, executive summary, para. 41. 
865 Brazil's first oral concluding stat ement, executive summary, p. 4. 
866 Brazil's first oral concluding stat ement, executive summary, p. 4. 
867 Brazil's first oral concluding stat ement, executive summary, p. 4. 
868 Brazil's first oral concluding statement, executive summary, p. 4;  Brazil's second written 
submission, executive summary, para. 41.  WT/DS332/R 
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  (ii) The requirements of Article XXIV:8(a) and 5(a) 
4.387  Brazil argues that the European Communities h as explicitly acknowledged that MERCOSUR 
is a customs union869 and that870 MERCOSUR "has a common external tariff and a common external 
trade policy".871  Brazil contends further that Article XXIV :8(a) requires internal liberalization with 
respect to "substantially all the trade" between  the constituent territories and application of 
substantially the same external duties and other regulations to non-parties.  Brazil argues that 
MERCOSUR meets these requirements, as the doc uments submitted to the Committee on Regional 
Trade Agreements (CRTA) demonstrate.  Brazil submits that calculation of the weighted average duties was the last major hurdle in the examina tion of MERCOSUR by the CRTA, and the Committee 
Chairman has noted that the Committee
872 now appeared to have all the necessary information and that 
the examination would soon be concluded.873 
4.388  Brazil explains that MERCOSUR is presently being examined by the CRTA874 under 
Article XXIV.875  Brazil notes that in 2005, the Secretariat completed calculations of the weighted 
average tariffs, which showed that they were not "on the whole" higher than before the formation (in 
fact, they fell from 12.5 per cent to 10.4 per cent).876  Thus, Brazil argues that MERCOSUR meets the 
conditions of Article XXIV:5(a).877   
4.389  Brazil notes that MERCOSUR is being examined by the CRTA under Article XXIV, and that 
the Members of the WTO, including the European Co mmunities, have actively participated in that 
process.  Brazil notes that the Committee has not comp leted its examination, but the same can be said 
of every other customs union and free trade agreem ent being examined by the Committee, including 
the European Communities.878 
4.390  Brazil argues that it has demonstrated that MERCOSUR meets the requirements of Article 
XXIV:5 and 8.  Brazil first points out that the Committee on Regional Trade Agreements has completed its factual inquiry on MERCOSUR, and that during the April 2006 meeting of the CRTA, 
the Committee Chairman noted that the Committee "seemed to have exhausted its factual inquiry," 
that the Secretariat would begin drafting the repor t on the examination of MERCOSUR, and that the 
examination would soon be concluded.
879  Brazil notes that in meetings of the CRTA, the 
European Communities has asked Br azil about how certain aspects of the customs union operate, but 
has not made any substantive objections.880   
4.391  Brazil notes that in the context of this dis pute, however, the European Communities argues 
that sugar and automotive sectors have not been full y liberalized.  Brazil responds that as Argentina, 
acting as MERCOSUR's president pro tempore , pointed out at the April meeting, sugar's share of the 
intra- MERCOSUR trade is minimal – 0.001 per cent of the total.  Argentina also explained that 
                                                      
869 Brazil's first oral concluding statement, executive summary, p. 4;  Brazil's second written 
submission, executive summary, para. 38. 
870 See European Communities' answer to panel question No. 76.  
871 Brazil's second written submission, executive summary, para. 40. 
872 See Note on the Meeting of 3 April 2006, WT/COMTD/1/Add.16, at para. 14. 
873 Brazil's second written submission, executive summary, para. 40. 
874 See COM.TD/133. 
875 Brazil's first oral statement, executive summary , para. 18;  Brazil's second written submission, 
executive summary, para. 39. 
876 See Committee on Regional Trade Agreements, WT/COMTD/1/Add.15, 24 May 2005, at 3. 
877 Brazil's second written submission, executive summary, para. 39. 
878 Brazil's first oral statement, para. 70 and second written submission, para. 170. 
879 Brazil's answer to panel question No. 132, citing WT/COMTD/1/Add.16, at para. 14 (Exhibit 
BRA-170). 
880 Brazil's answer to panel question No. 132. WT/DS332/R 
Page 100  
 
  MERCOSUR members are in the process of liber alizing the intra-MERCOSUR trade in the 
automotive sector under the MERCOSUR Automobile Policy.
881  Brazil notes that the bilateral 
agreements between MERCOSUR members have already led, in practice, to duty-free trade in almost 
one hundred per cent of the commerce in the auto sector.  Brazil also notes that with respect to 
measures that affect extra-MERCOSUR imports an d exports, Argentina submitted evidence to the 
CRTA indicating that MERCOSUR applies common exte rnal tariff to products in over 90 per cent of 
the tariff lines and has a specific timetable in place to cover the remaining categories of products by 
2008.882  Brazil argues that it can hardly be disputed that harmonizing external tariffs and regulations 
affecting more than 90 per cent of tariff lines amount s to application of "substantially the same duties 
and other regulations" under Article XXIV:8.  Brazil also notes that extra-regi onal trade has increased 
by 239 per cent since the founding of MERCOSUR.883  
4.392  Brazil also notes the European  Communities' argument that MERCOSUR parties maintain 
"non-tariff barriers."  Brazil states that the "non-tariff barrier" presented by the European Communities is the import ban on retreaded ty res, which is the subject to this dispute.  
Brazil again recalls that  the ban was initially applied erga omnes , that it was not imposed on non-
members as one step in the formation of MERCOSU R, and that it is justified by Article XX(b).
884 
4.393  The European Communities  notes that Brazil has also claimed that the 
European Communities has recognised MERCOSUR as a customs union by engaging in negotiations of a "bi-regional free trade agreement".
885  The European Communities does not contest that the 
Treaty of Asuncion involves the establishment of a customs union in a general sense.  However, for 
the European Communities, this is independent of the question whether MERCOSUR is fully in 
accordance with the conditions of Article XXIV:5( a) and 8(a).  The European Communities argues 
that it is for Brazil, as the party invoking these pr ovisions, to establish that the conditions of the 
exception are met.  The European Communities conte nds that the negotiations for a bi-regional trade 
agreement between the European  Communities and MERCOSUR are of no relevance in this 
context.886 
4.394  The European Communities cons iders as surprising Brazil's ass ertion that it has recognised 
that the conditions of Article XXIV are fulfille d.  Throughout the present proceedings, the 
European Communities has clearly and unambiguously stated that Brazil has failed to demonstrate 
that the conditions of Articles XXIV:5 and 8 are fulf illed.  The European Co mmunities is of the view 
that Brazil should not be allowed to escape its burden of proof by imputing statements to the European Communities.  
4.395  The European Communities submits that Brazil ha s limited itself to the simple assertion that 
MERCOSUR is in compliance with Ar ticles XXIV:5(a) and 8(a), without  substantiating this with any 
sufficient evidence.  The Europ ean Communities contends that Brazil has referred to "documents 
submitted by Brazil and its Mercosul  partners" to the CRTA.  Howe ver, the European Communities 
argues that Brazil does not identify the specific docum ents to which it refers, nor does it explain in 
which way they are relevant for establishing complian ce with the conditions of Article XXIV:5 and 8.  
For the European Communities, this blanket re ference does not constitute a sufficient way of 
discharging Brazil's burden of proof.  Moreover, th e European Communities is of the view that 
documents submitted to the Committee in 1995 to 1997  do not reflect the current state of affairs.  
                                                     
 
881 Brazil's answer to panel question No. 132, c iting WT/COMTD/1/Add.17, at 2 (Exhibit EC-121).  
See also Exhibit BRA-171 and Exhibit BRA-172. 
882 Brazil's answer to panel question No. 132, ci ting WT/COMTD/1/Add.17, at 2 (Exhibit EC-121). 
883 Brazil's answer to panel question No. 132,  citing WT/COMTD/1/Add.16 (Exhibit BRA-170). 
884 Brazil's answer to panel question No. 132. 
885 European Communities' second written submission, executive summary, para. 125. 
886 European Communities' second written submission, executive summary, para. 126.  WT/DS332/R 
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  4.396  The European Communities argues that despite the information submitted by Brazil and its 
MERCOSUR partners, the CRTA and the Committee on Trade and Development did not reach the 
conclusion that MERCOSUR is in compliance with Article XXIV. In fact, the European Communities 
points out that many WTO Members continue to express doubts about MERCOSUR's compliance 
with the conditions of this provision.  The Eu ropean Communities argues that it is therefore 
astonishing that Brazil would consider a blanket re ference to the inconclusive discussions in the 
Committee sufficient for establishing the compa tibility of MERCOSUR with Article XXIV.  
4.397  Moreover, the European Commun ities argues that Article XXIV:8(a)(i) and (ii) requires that 
duties and other restrictive regulations of commerce mu st be eliminated with respect to substantially 
all trade between the members of the customs union, and that substantially the same duties and other 
regulations of commerce are applied by each of the members of the union to the trade with territories 
not included in the union.887  It is noteworthy that for certain sectors, notably the automotive and the 
sugar sectors, trade has not been entirely liber alised within MERCOSUR.  As the MERCOSUR 
member States have confirmed, the automotive sect or alone accounts for approximately 29 per cent of 
intra-MERCOSUR trade.  Accordingly, even with out going into the further question of persisting 
internal non-tariff barriers, MERCOSUR does not seem to have achieved a liberalisation of 
"substantially all" intra-MERCOSUR trade as required by Article XXIV:8(a)(i). 
4.398  Second, according to the European Communities, Article XXIV:8(a)(ii) requires that 
substantially the same duties and other regulations  of commerce are applied by each of the members 
of the customs union to the trade with territories not included in the union. In this context, it is noted that the Contracting Parties of MERCOSUR have  confirmed that there are exceptions to 
MERCOSUR's common external tariff which currently concern up to 10 per cent of the tariff lines 
according to the information given by the MERCO SUR member States.  In addition, MERCOSUR 
member States maintain export duties and "other regulations of commerce" on trade with third 
countries that are not common to all MERCOSUR countries.  Accordingly, it does not appear clear that MERCOSUR member States currently apply subs tantially the same duties and other regulations 
of commerce on trade with third countries. 
4.399  The European Communities stresses that the fa ilure to comply with the requirements of 
Article XXIV:8(a) could not be jus tified as part of an "interim arrangement" within the meaning of 
Article XXIV:5(c).  Such an interim arrangement must lead to the formation of a customs union within a reasonable length of time.  The Unde rstanding on the Interpretation of Article XXIV 
provides that this reasonable length of time sha ll exceed 10 years only in exceptional cases.  Since 
there appear to be no exceptiona l circumstances which would justif y a longer transition period, this 
period has already expired for MERCOSUR.  
4.400  In addition, the European Communities argues th at Article XXIV:5(a) requires that the duties 
and restrictive regulations of commerce imposed on trade with certain parties shall not on the whole 
be higher or more restrictive than the general in cidence of the duties and regulations of commerce 
prior to the formation of the customs union.  In this regard, the European Communities notes that 
Brazil has referred to calculations of weighted import tariff rates prepared by the WTO Secretariat.  In this respect, the European Communities notes first of all that the calculations of the Secretariat show 
that the average weighted tariff rates have incr eased for three of the four MERCOSUR members.  
Moreover, the European Communities remarks that  these calculations do not address non-tariff 
measures, as at issue in the present case.  For the Eu ropean Communities, this is  significant, since, as 
the measure at issue in the present dispute illust rates, MERCOSUR countries continue to adopt non-
tariff measures affecting extra-MERCOSUR imports  and exports which are not reflected in the 
calculations of the WTO Secretariat.
888  The European Communities ar gues that Brazil has therefore 
                                                      
887 European Communities' second written submission, executive summary, para. 127. 
888 European Communities' second written submission, executive summary, para. 128. WT/DS332/R 
Page 102  
 
  not demonstrated what is the situation for non- tariff measures, and whet her these measures on the 
whole are not more restrictive than prior to th e creation of MERCOSUR.  The European Communities 
submits that the answer to this question is fa r from obvious.  Moreover, the European Communities 
also notes that Article XXIV:5(a) concerns not only import duties, but also export duties.  However, 
although MERCOSUR countries continue to im pose export duties on certain products, the 
European Communities is of the view that these du ties are not addressed in the calculations of the 
Secretariat either. 
4.401  The European Communities also notes that despite several years of examination in the 
WTO Committee on Trade and Development, WTO Members have not reached agreement on whether MERCOSUR is compatible with Article XXIV.
889 
4.402  Finally, the European Communities submits that, as regards specifically the automotive 
sector, Brazil referred to a recent agreement liber alising this sector.  However, the European 
Communities submits that the only agreement in th is respect is a bilateral agreement between 
Argentina and Brazil which institutes a form of managed trade for the automotive sector.  For the 
European Communities, this ag reement does not amount to a liberalisation of trade within 
MERCOSUR.890 
(b) Whether the formation of the customs union woul d have been prevented if brazil were not 
allowed to introduce the measure at issue 
4.403  Brazil  claims that it has adduced evid ence that establishes a prima facie  case that the 
MERCOSUR exemption is justified by Article XXIV .  Brazil claims that the European Communities 
has done nothing to rebut that prima facie case.891  Brazil notes that it has also demonstrated that it 
adopted the limited exemption of MERCOSUR countries from the ban and the anti-circumvention 
fines pursuant to its MERCOSUR obligations, after a MERCOSUR Ad Hoc Tribunal ruled that Brazil 
could not maintain the ban on other MERCOSUR countries.   In order to comply with that award, and 
safeguard the integrity of MERCOSUR dispute settle ment system, Brazil explains that it exempted 
only remoulded tyres imported from ot her MERCOSUR countries from the ban.892   
4.404  Brazil submits that another argument presented by certain third parties893 and half-heartedly 
endorsed by the European Communities is that Br azil has not demonstrated that it meets the two 
conditions set forth by the Appellate Body in Turkey – Textiles , including that the exemption is 
necessary to the formation of MERCOSUR.894  Brazil is of the view that the analysis of the 
Appellate Body in that case, however, cannot be appl ied to the present dispute.  In the present factual 
context and in line with the panel's findings in US – Line Pipe , Brazil is not required to demonstrate 
that the measure was “necessary” for the formation of the customs union.  Brazil contends that the 
facts in this case are starkly different from those in Turkey – Textiles .  Brazil also submits, as the 
panel in United States – Line Pipe  made clear  that Turkey – Textiles addressed a measure which 
imposed new restrictions.895   
                                                      
889 European Communities' second written submission, executive summary, para. 129. 
890 European Communities' second oral concludi ng statement, executive summary, para. 24. 
891 Brazil's second written submission, executive summary, para. 38. 
892 Brazil's first oral concluding stat ement, executive summary, p. 5. 
893 See, e.g., Third Party Submission of Chinese Taipei, at paras. 11-13. 
894 Brazil's first oral statement, ex ecutive summary, para. 19;  Brazil's first oral concluding statement, 
executive summary, pp. 4-5;  Brazil's second written submission, executive summary, para. 42. 
895 Brazil's second written submission, executive summary, para. 42.  WT/DS332/R 
 Page 103 
 
 
  4.405  Brazil argues that unlike Turkey, Brazil is not  invoking Article XXIV to justify measures 
raising barriers to the trade of other WTO Members.896  Brazil submits that the measure in this case is 
the exemption of MERCOSUR countries from the ban; that  is to say, it consists of lifting restrictions 
internally, within the territory of the customs union.897  Brazil contends that it merely relaxed an 
already-existing restriction for its MERCOSUR partners .  Brazil relies on Article XXIV not to justify 
a trade restriction for non-members, but to justif y internal liberalization within a customs union.  
Therefore, Brazil is of the view that it does not n eed to demonstrate that the exemption is necessary 
for the formation of the customs union.898  
4.406  Brazil contends that a more apposite case for the Panel's examination of Brazil's defence 
under Article XXIV is United States – Line Pipe , which considered whether the United States could 
exclude its NAFTA partners, Canada and Mexico, fro m the application of safeguard measures to other 
WTO Members.  Brazil notes that the panel in that case  noted the decision of the Appellate Body in 
Turkey – Textiles  but distinguished the facts in each case.  Brazil recalls that the Panel found, in 
paragraphs 7.144 to 7.146, that "the United States [was] entitled to  rely on Article XXIV defence 
against Korea's claims under Articles I, XIII and XI X regarding the exclusion of imports from Canada 
and Mexico from the scope of the line pipe measure s".  Brazil notes that the Panel explained that in 
Turkey – Textiles , the Appellate Body had been addressing a measure which imposed new restrictions 
against third countries whereas in the United States – Line Pipe  case, the measure was part of the 
elimination of duties and other restrictive regula tions between parties to the free-trade agreement.899 
4.407  Brazil also notes that the Panel concluded that  it was "not at all convinced" that Members 
should be required to demonstrate the necessity of  a measure related to internal liberalization.900  
Brazil argues that the same is true in  this case.  Similar to the facts in United States – Line Pipe , Brazil 
contends that in this case the measure at issue do es not impose new restrictions against third countries 
but rather eliminates restrictive regulations between parties to the customs union.901   
4.408  Contrary to what the European  Communities says, Brazil submit s that the Appellate Body did 
not overturn the finding of the United States – Line Pipe  decision.  Brazil argues that the 
Appellate Body said that it was moot and had no lega l effect, but it did so based on entirely different 
grounds, which had nothing to do with the substan ce or soundness of the Panel's reasoning.  Brazil 
submits that the reasons that led the Panel to reach th at conclusion are equally applicable in this case.  
Brazil submits further that the factual differences that the European Communities points to have no 
relevance or importance for the main point that Brazil (and the United States – Line Pipe ) made:  in 
this case, Brazil has not imposed new restrictions on WTO Members.902 
4.409  Finally, Brazil argues that contrary to th e European Communities' claim, Article XXIV 
authorizes the MERCOSUR exemption and does not require a showing of necessity.903 
4.410  The European Communities  claims that Brazil must show that without the exclusion of 
MERCOSUR members from the import ban, the formation of MERCOSUR would have been 
                                                      
896 Brazil's first oral statement, ex ecutive summary, para. 19;  Brazil's first oral concluding statement, 
executive summary, pp. 4-5;  Brazil's second written submission, executive summary, para. 42. 
897 Brazil's first oral concluding statement, execu tive summary, pp. 4-5;  Brazil's second written 
submission, executive summary, para. 42. 
898 Brazil's first oral statement,  executive summary, para. 19. 
899 Brazil's first oral concluding stat ement, executive summary, p. 5. 
900 Panel Report on US – Line Pipe , para. 7.148. 
901 Brazil's first oral concluding statement, executive summary, p. 5;  Brazil's second written 
submission, executive summary, para. 42. 
902 Brazil's second oral concluding st atement, executive su mmary, para. 16. 
903 Brazil's second written submission, executive summary, para. 3. WT/DS332/R 
Page 104  
 
  prevented.
904  The European Communities argues that Brazil fails in demonstrating that the 
MERCOSUR exemption was necessary in order to allow the formation of the customs union, as required by Article XXIV:5.
905  As regards the second condition, Brazil has been unable to show the 
necessity of the MERCOSUR exemption, and has instead  chosen to contest that it must demonstrate 
the necessity of the exemption. As a consequence, Br azil has failed to demonstrate that this exemption 
is justified under Article XXIV. 
4.411  The European Communities notes Brazil's argument that the case law in Turkey - Textiles 
does not apply in the present case, because Turkey –  Textiles concerned a new quantitative restriction 
on imports, whereas in the present case, Brazil ex empted MERCOSUR countries from an "existing" 
ban on the importation of retreaded tyres.906  The European Communities is of the view that this 
amounts to an unduly narrow interpretati on of the Appellate Body's case law in Turkey – Textiles .907  
The European Communities argues that the conditi ons formulated by the Appellate Body in Turkey 
- Textiles, which are derived from the plain wording of Ar ticle XXIV:5, were formulated without any 
reference to the sequence in which the discrimination was introduced.  For the 
European Communities, there is therefore no indicati on that the Appellate Body wanted to distinguish 
between cases where the restriction is imposed immediately on imports, w ithout being imposed on 
goods from within the customs union, and cases wher e the restriction is first imposed on all goods, 
and then lifted for goods originating in the customs union.908  The European Comm unities stresses that 
what is relevant is that in both cases, there is a difference in treatment which is incompatible with 
most-favoured nation obligations, and which theref ore requires a justification under Article XXIV.909 
4.412  Moreover, the European Communities submits that  in support of its view, Brazil, relying 
mainly on the Panel in US – Line Pipe , has contested that it must demonstrate the necessity of the 
measure.910  The European Communities submits that  this reliance by Brazil on the Panel in US – Line 
Pipe is misplaced.911  For the European Communities, the fi ndings on which Brazil relies in the Panel 
Report in US – Line Pipe were explicitly declared "moot and as having no legal effect" by the 
Appellate Body in US – Line Pipe .  The European Communities considers it odd that Brazil would 
ask the Panel not to "disturb" findings which the Appellate Body has already overturned.912   
4.413  The European Communities submits furt her that the reliance by Brazil on US – Line Pipe  is 
also unjustified in substance.  The European Communities is of the view that the Panel in US – Line 
Pipe did not concern an exemption from a measure whic h is allegedly justifie d under Article XX, but 
rather the question whether the United States could exclude its NAFTA partners from the scope of a 
safeguard measure.  However, for the European  Communities, it is noteworthy that whereas 
Article XXIV:8(a)(i) specifically exempts measure s justified under Article XX from the need to 
liberalise substantially all trade, it does not re fer to Article XIX, which concerns safeguard 
measures.913   
                                                      
904 European Communities' second written submission, executive summary, para. 130. 
905 European Communities' first oral statement, executive summary, para. 33;  European Communities' 
first written submission, executive summary, para. 60;  European Communities' second written submission, executive summary, para. 135;  second oral concl uding statement, executive summary, para. 25. 
906 European Communities' first oral statement, executive summary, para. 32;  European Communities' 
second written submission, executive summary, para. 130. 
907 European Communities' first oral st atement, executive summary, para. 32. 
908 European Communities' first oral statement, executive summary, para. 32;  European Communities' 
second written submission, executive summary, para. 131. 
909 European Communities' second written submission, executive summary, para. 131. 
910 European Communities' second oral statement, para. 68. 
911 European Communities' second oral statement, para. 69. 
912 European Communities' second oral statement, para. 69. 
913 European Communities' second oral statement, para. 70.  WT/DS332/R 
 Page 105 
 
 
  4.414  Finally, the European Communities argues that Brazil greatly over-interprets the findings of 
the Panel in US – Line Pipe .  The European Communities submits th at the Panel in that case stated 
that "if the alleged violation of GATT 1994 forms part of the elimination of 'duties and other 
restrictive regulations of commerce', there can be no question of whether it is necessary for the elimination of 'duties and other restrictive re gulations of commerce'".  In support, the 
European Communities notes the Panel's argument that  the elimination of duties on one product (e.g. 
cars) could not be questioned by arguing that dutie s could be eliminated on another product (e.g. 
peanuts), since otherwise, it might never be possibl e to achieve the threshold of "substantially all 
trade".
914  For the European Communities, this reasoni ng manifestly has no application in the present 
case.  The European Communities is not arguing th at instead of liberalising intra-MERCOSUR trade 
in retreaded tyres, Brazil should have removed duties or restrictive regulations on some other product.  
Rather, the European Communities is arguing that  if Brazil were correct that the ban on the 
importation of retreaded tyres is necessary for the pr otection of public health, then it is not necessary 
to remove this ban on imports from other MERCO SUR countries, which have precisely the same 
implications from the point of view of  waste management or public health.915   
4.415  The European Communities considers that its reasoning is supported by the explicit wording 
of Article XXIV:8(a), which explicitly excludes m easures justified under Article XX from the need to 
liberalise trade within the customs union.  Accord ingly, the European Communities submits that an 
exemption from such measures cannot be necessary for the purposes of allowing the formation of a 
customs union.  The European Communities argues that  Brazil's interpretation, in contrast, fails to 
give any useful meaning to the explicit referenc e in Article XXIV:8(a) to Article XX.  For the 
European Communities, this is not in accordance with the principle of effective treaty interpretation.  
The European Communities notes, as the Appellate Bo dy has confirmed on numerous occasions, that 
this principle implies that the interpreter "must give  meaning and effect to all the terms of the treaty", 
and may not "adopt a reading that would result in re ducing whole clauses or paragraphs of a treaty to 
redundancy or inutility".916 
4.416  Brazil  points to the difficulty of overextending the analysis of Turkey – Textiles  to cover 
measures of internal liberalization that do not raise outside trade barriers, as the panel in US – Line 
Pipe recognized.  Brazil contends that GATT Contr acting Parties intended Article XXIV to be an 
effective tool of regional liberalization, not its death knell.917  Brazil states that the MERCOSUR 
exemption is fully consistent with the purpose of  customs unions and free trade agreements, which is 
to "facilitate trade between the constituent terr itories" of the union and eliminate "restrictive 
regulations of commerce … with substantially  all the trade" between those territories.918 
4.417  The European Communities  submits that Brazil has also argued that "over-extending" the 
analysis of Turkey – Textiles  could be the "death knell" of regional trade liberalisation.  The 
European Communities does not see why it would be  problematic for WTO Members to demonstrate 
the necessity of discrimination which results from the creation of a customs union or free trade area.  
Typically, the European Communities argues that this  will be a reasonably straightforward exercise, 
given the requirement in Article XXIV:8(a) and (b) to eliminate tariffs and other restrictive 
regulations of commerce on substantially all trad e between the members of the customs union or free 
trade area.  That this is different in the present case, which involves a discriminatory application of 
                                                      
914 European Communities' second oral statement, para. 71. 
915 European Communities' second oral statement, para. 72. 
916 European Communities' second oral statement, para. 73. 
917 Brazil's answer to panel question No. 78. 
918 Brazil's second written submission, para. 182. WT/DS332/R 
Page 106  
 
  measures purportedly justified under Article XX, is a different matter which, for the 
European Communities, confirms th e usefulness of the necessity test.
919 
4.418  The European Communities contends that if Br azil's argument were accepted, Article XXIV 
would be turned into an almost limitless exception,  which would allow parties to a customs union to 
take any measure derogating from WTO obligations without having to demonstrate that the measure 
is in fact necessary for the formation of the customs union.920 
4.419  The European Communities argues that according to Article XXIV:4, the basic objective of a 
customs union is to facilitate trade between the co nstituent territories of the customs union, while not 
raising barriers to the trade with other WTO Member s.  For the European Co mmunities, this objective 
is reflected in Article XXIV:8(a)(i), which requires th at in principle, duties and restrictive regulations 
on trade should be abolished with respect to substantially all trad e between the constituent members 
of the customs union.921  However, the European Communiti es submits that Article XXIV:8(a)(i) 
explicitly exempts from this need to liberalise tr ade within the customs union a number of measures, 
including in particular those which are justif ied under Article XX.  The European Communities 
argues that this means that the maintenance of rest rictive regulations of commerce which are justified 
on the basis of Article XX does not prevent the formation of a customs union.  In other words, the 
European Communities contends th at the selective abolition of such  measures only as regards trade 
with another member of the customs union is not  necessary for the formation of a customs union.922 
4.420  The European Communities argues th at this is where the fundamental logical contradiction of 
Brazil's arguments lies.  The European Communities re marks, as Korea and Chinese Taipei, that if, as 
Brazil argues, the import ban on retreaded tyres was indeed justified as a measure necessary to protect 
human life or health under Article XX(b), then ther e was no need to abolish this ban in trade with 
other MERCOSUR countries, since its maintenance was explicitly allowed by Article XXIV:8(a).  
The European Communities argues further that if , in contrast, the ban is not justified under 
Article XX(b), then it should be removed for a ll WTO Members, and not just for other MERCOSUR 
members.923 
4.421  Brazil  explains that the phrase "where necessary" gives WTO-Members that are part of a 
customs union the right to maintain duties and othe r restrictive regulations between the constituent 
territories, based inter alia  on the general exceptions in Article XX, and still meet the requirement 
under Article XXIV:8 that restrictions be eliminat ed with substantially all the trade between the 
constituent territories.  However, Br azil argues, Article XXIV:8 does not require  or impose the 
obligation on customs union members to maintain tr ade restrictions by invoking Article XX.  To 
Brazil, that interpretation of the parenthetical in Article XXIV:8(a) would contradict the very purpose 
behind the formation of customs unions – which is  to eliminate trade barriers among members – and 
be contrary to Article XXIV, whic h encourages the highest level of internal liberalization ("eliminated 
with respect to substantially all the trade").924 
4.422  The European Communities  notes that Brazil has contested this interpretation by arguing 
that Article XXIV:8 "does not require or impose the obligation on customs union members to 
maintain trade restrictions by invoking Article  XX".  The European Communities argues that the 
                                                      
919 European Communities' second written submission, executive summary, para. 133. 
920 European Communities' second written submission, executive summary, para. 134. 
921 European Communities' first oral statement, executive summary, para. 33;  European Communities' 
second written submission, executive summary, para. 136. 
922 European Communities' first oral statement, executive summary, para. 33;  European Communities' 
second written submission, executive summary, para. 137. 
923 European Communities' first oral statement, executive summary, para. 34;  European Communities' 
second written submission, executive summary, para. 138. 
924 Brazil's answer to panel question No. 80.  WT/DS332/R 
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  question is not whether Article XXIV requires th e maintenance of trade restrictions based on 
Article XX, but whether it requires their eliminati on.  The European Communities argues further that 
since it does not do the latter, it can therefore also  not be invoked in order to justify the selective 
elimination of such trade restrictions only with respect to trade with othe r members of the customs 
union.925 
4.423  Finally, the European Communities argues th at the necessity of the MERCOSUR exemption 
is also put into doubt by the sequencing of the me asures adopted by Brazil.  It should be recalled that 
MERCOSUR was concluded in 1991, when imports of retreaded tyres into Brazil took place both 
from the European Communities and from other MERCOSUR countries.  The European Communities 
submits that the ban on imports of retreaded tyr es was adopted by Brazil only in 2000, and then 
partially lifted for imports from MERCOSUR count ries in March 2002.  The European Communities 
notes, as Chinese Taipei has aptly remarked, that Brazil cannot claim that the introduction of these 
measures, which were adopted several years afte r the conclusion of MERCOSUR, was necessary for 
the formation of the customs union.926  In fact, the European Commun ities submits that since at the 
formation of MERCOSUR, trade in retreaded tyres was free of any quantitative restrictions, no further 
measures regarding this product were necessary to  allow the formation of the customs union.927 
4.424  Brazil  states that in the present case, the sequenc ing of measures demonstrates that Brazil did 
not engage in unjustifiable and arb itrary discrimination.  Brazil explains that it maintained an import 
prohibition that applied to imports of all countries; when Uruguay challenged the prohibition in 
MERCOSUR, Brazil vigorously defended the ban be fore the MERCOSUR Ad Hoc Tribunal.  Brazil 
states that it was only after the MERCOSUR trib unal ruled against Brazil, that Brazil exempted 
MERCOSUR members from the ban, and only to th e minimum extent required.  Brazil concludes 
that, if anything, the sequencing of Brazil's measur es demonstrates that Brazil's goal has always been 
intent on protecting public health and the envir onment by applying the import ban as rigorously and 
comprehensively as possible.928 
3. Article XX(d) 
4.425  Brazil  submits that the MERCOSUR exemption is also justified by Article XX(d)929, which 
permits WTO Members to adopt and enforce measure s "necessary to secure compliance with laws or 
regulations" not inconsistent with the GATT.   Brazil argues that the measure must be930 "designed to 
'secure compliance'" and must be "' necessary' to secure such compliance."931  Brazil explains that its 
import prohibition on retreaded tyres does not appl y to the constituent territories of MERCOSUR.  
Brazil submits that it exempted its MERCOSUR pa rtners from the ban after a MERCOSUR tribunal 
ruled that the ban violated the customs union's intern al trade rules and ordered the exemption.  Brazil 
further submits that because the decision was lim ited to tyres retreaded by remoulding, Brazil 
continued to prohibit imports of the other kinds of retreaded tyres.  Brazil argues that the exemption is 
thus limited.932   
                                                      
925 European Communities' second written submission, executive summary, para. 139. 
926 European Communities' first oral statement, executive summary, para. 35;  European Communities' 
second written submission, executive summary, para. 140. 
927 European Communities' second written submission, executive summary, para. 140. 
928 Brazil's answer to panel question No. 79. 
929 Brazil's first written submission, executive summary , paras. 34-35;  European Communities' first 
oral statement, executive summary, para. 20;  seco nd written submission, executive summary, para. 43. 
930 Appellate Body Report on Korea – Beef , at para. 157. See also Appellate Body Report on Mexico – 
Taxes on Soft Drinks , para. 67. 
931 Brazil's first written submission, executive summary, para. 34. 
932 Brazil's first written submission, executive summary, para. 15. WT/DS332/R 
Page 108  
 
  4.426  Brazil argues that it enacted the MERCOSUR exemption with no other purpose than to 
"secure compliance" with Brazil's municipal la w that made the MERCOSUR commitments and the 
rulings
933 of the MERCOSUR dispute settlement body binding on Brazil.  In the Article XX(d) sense, 
Brazil is of the view that the exemption was t hus "necessary to secure compliance with laws and 
regulations", with laws that are themselves consistent with the GATT.934  Brazil contends that the 
exemption is also consistent with the chapeau of Article XX:  Brazil introduced the exemption not to 
favour fellow MERCOSUR countries, but to comply with a ruling of an international tribunal;  it also 
limited the exemption to remoulded tyres (a subcategory of retreaded tyres).935   
4.427  Brazil recalls that the Appellate Body has made  clear that for purposes of Article XX(d), "the 
terms 'laws or regulations' cover 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".936  Brazil argues that, with respect to Arti cle XX(d), the only disagreement between the 
European Communities and Brazil is whether th e term "to secure compliance with laws or 
regulations" applies to the government's comp liance with international obligations:  the 
European Communities argues that it does not, and th at the term "to secure compliance" means to 
enforce laws or regulations "as regard other actors, typically natural or legal persons" rather than by 
the government itself.937   
4.428  Brazil notes that the only case that the European  Communities cites in support of its argument 
is EEC – Parts and Components .938  Brazil notes that according to the European Communities, that 
case confirms that the terms "to secure compliance"  in Article XX(d) "imply that compliance is 
'secured' by the governmental authorities agains t other subjects in the domestic legal order."939  Brazil 
is of the view that this case confirms no such th ing.  Brazil argues that the passage cited by the 
European Communities simply notes that Article XX(d) covers only laws and regulations "that 
require enforcement," that is laws that give rise to  legal obligations.  For Brazil, there is no suggestion 
that only obligations that fall on individuals, as opposed to the State, are relevant and within the scope of that provision.
940   
4.429  Brazil argues that the Appellate Body's  interpretation of Article XX(d) in Mexico – Taxes on 
Soft Drinks  confirms that there is no basis for the European Communities' position.941  Brazil submits 
that the Appellate Body made no distinction between la ws and regulations that are to be enforced as 
regards "individuals" (natural or lega l persons), as opposed to "governments."942  Brazil argues that it 
has explained in its second written submission that th e term "to secure compliance" of Article XX(d) 
covers not only individuals but also governments.  Brazil notes that, in its second written submission, 
the European Communities also ar gues that Brazil did not incorp orate its MERCOSUR obligations 
                                                      
933 See Protocol of Brasilia, Art. 20 (Exhibit BRA- 89), Decreto Legislativo 88/1992 (Exhibit BRA-76). 
Brazil's original regulation that exempted MERCOSUR imports, Portaria SECEX 2/2002, specifically stated 
that its goal was to bring Brazil into compliance with the tribunal's ruling. 
934 Brazil's first written submission, executive summar y, para. 35;  Brazil's first oral statement, 
executive summary, para. 20. 
935 Brazil's first written submission, executive summary, para. 35. 
936 Appellate Body Report on Mexico – Soft Drinks , para. 79.  Brazil's first written submission, 
executive summary, para. 34. 
937 European Communities' answer to panel question No. 83. 
938 See European Communities' First Oral Statement, at para. 135 (citing GATT Panel Report on 
European Economic Community – Regulation on Imports of Parts and Components ("EEC – Parts and 
Components) , L/6657, adopted 16 May 1990, BISD 37S/132, para. 5.18).  
939 European Communities' first oral statement, para. 135. 
940 Brazil's second written submission, executive summary, para. 43. 
941 Appellate Body Report on Mexico – Taxes on Soft Drinks , para. 79. 
942 See Appellate Body Report on Mexico – Taxes on Soft Drinks , para. 79.  Brazil's second written 
submission, executive summary, para. 44.  WT/DS332/R 
 Page 109 
 
 
  and that, to conclusively establish this fact, Brazil must produce court decisions striking down 
incompatible internal laws.943  Brazil argues that according to the European Communities' logic, a 
government that complies with its international oblig ations without being prod ded by its courts could 
never prove that international oblig ations have been incorporated.944 
4.430  Brazil notes the European Communities' argument that if Brazil's position was accepted, the 
Members could violate WTO provisions by reaching international agreements.  That is not Brazil's 
argument.  Brazil argues that in order to meet the requirements of Article XX(d), the challenged measure must be necessary to secure compliance with laws and regulations that themselves  are not 
inconsistent with GATT provisions.  Brazil argues further that in its interpretation of Article XX(d) 
and its incorrect reading of the Appellate Body's decision in Mexico – Taxes on Soft Drinks , it is clear 
that the European Communities conf uses "direct effect" with incorporation into domestic law.  Brazil 
contends that a law may have direct effect in a c ountry, and yet be incorporated into domestic law.  
Brazil argues that the Appellate Body in Mexico – Taxes on Soft Drinks  clearly noted that distinction 
when it said that "laws and regulations" cover "rules th at form part of the domestic legal system of a 
WTO Member, including rules deriving from interna tional agreements that have been incorporated 
into the domestic legal system of a WTO Member  or have direct effect according to that 
WTO Member's legal system".
945   
4.431  Brazil also contends that the European Co mmunities' suggestion that Brazil could have 
implemented the MERCOSUR Ad Hoc  Tribunal's ruling by lifting the import ban to all 
WTO Members, as opposed to only MERCOSUR count ries, highlights the European Communities' 
complete disregard for Brazil's policy and the serious ness of the health and environmental problems it 
seeks to solve through the import ban.946 
4.432  Presently, Brazil explains that it has a lega l obligation to comply with the MERCOSUR 
tribunal's ruling.  However, Brazil submits that it is actively working with its MERCOSUR partners 
on a common waste policy and expects that it will so on be allowed to prohibit retreaded tyre imports 
from other MERCOSUR countries.  Brazil submits furt her that during their March 2006 meeting, the 
environmental ministers of the MERCOSUR countri es approved a draft agreement on waste policy, 
which designates used tyres as a special waste,  recognizes the principle of non-generation, and 
establishes as one of its objectives "[discouragemen t of] the entry into the region of wastes and 
products from third countries that imply an environmental problem."947   
4.433  The European Communities  submits that the MERCOSUR exemption cannot be justified 
under Article XX(d).  The European Communities not es that Brazil has argued that the exemption 
was necessary to "secure compliance" with the ruling of the Arbitral Tribunal in the dispute Brazil vs. 
Uruguay, which had found the import ban on retread ed tyres to be incompatible with Brazil's 
obligations under MERCOSUR.948  However, for the European Comm unities, this argument is equally 
                                                      
943 See Brazil's Second Written Submission, at para. 244. 
944 Brazil's second oral statemen t, executive summary, para. 24. 
945 Brazil's second oral concluding st atement, executive su mmary, para. 17. 
946 Brazil's second oral concluding st atement, executive su mmary, para. 18. 
947 Draft Decision:  Agreement on the MERCOSUR Policy for Environmental Management of Special 
Universal Wastes and Post Consumer Responsibility, included as Annex IV to Minutes of the First 
Extraordinary Meeting of Environmental Ministers of MERCOSUR in Curitiba,  29 March 2006 (Exhibit 
BRA-155).  Brazil's second written submission, executive summary, para. 45. 
948 European Communities' first oral statement, executive summary, para. 36;  European Communities' 
second written submission, executive summary, para. 141. WT/DS332/R 
Page 110  
 
  unfounded because the exemption of MERCOSUR imports from such a ban is not a measure 
"necessary to secure compliance with laws or regul ations" within the meaning of Article XX (d).
949 
4.434  First, the European Communities contends that th e obligation to comply with the ruling of the 
Arbitral Tribunal is not contained in a "law or re gulation" within the meaning of Article XX(d).  The 
European Communities submits that in Mexico – Taxes on Soft Drinks , the Appellate Body found that 
the term "laws and regulations" covered "rules that form part of the domestic legal system of a WTO 
Member, including rules deriving from international agre ements that have been incorporated into the 
domestic legal system of a WTO Member or have direct effect according to that WTO Member's legal system".
950 
4.435  The European Communities contends that by contrast, Brazil has shown neither that the 
obligation to comply with rulings of MERCOSUR Arb itral Tribunals – as contained in Article 21.2 of 
the Protocol of Brasilia – has been incorporated nor that it has direct effect into the Brazilian legal 
order.951  In its first written submission, the Europ ean Communities notes that Brazil argued that the 
Protocol of Brasilia was contained in Brazilian legi slative decree 88/1992, concerning the conclusion 
of the Protocol of Brasilia.  The European Comm unities argues that when it pointed out that this 
Decree does not "contain" the obligation set out in Ar ticle 21.2 of the Protocol of Brasilia, but merely 
approves the Protocol on behalf of Brazil, Brazil ch anged its reasoning and now refers to a subsequent 
Presidential decree as the measure incorporati ng the Protocol into the Brazilian legal order.952 
4.436  For the European Communities, this explanation remains unconvincing.  The 
European Communities argues that lik e legislative decree 88/1992, the presidential decree is part of 
the Brazilian ratification process with respect to the Protocol of Brazil.  The European Communities is 
of the view that Brazil has not shown that this Decree will render the Protocol of Brasilia, and in 
particular Article 21.2 thereof, applicable within the domestic legal order in such a way that it could 
be invoked by individuals, or enforced as against them.953 
4.437  In order to prove its point, the European Communities argues that Brazil should have 
provided examples where Brazilian courts have, on the b asis of Article 21.2 of the Protocol of Brasilia 
set aside Brazilian laws because they were inco mpatible with a ruling of a MERCOSUR arbitral 
tribunal.  However, the European Communities poin ts out that Brazil has not provided any such 
examples.954  In particular, the European Communities s ubmits that Brazil has not provided evidence 
that Brazilian courts have relied on Article 21.2 of the Protocol in order to set aside Brazilian laws, 
such as for instance Portaria 8/2000.  In fact, the European Communities argues that Brazil's own 
practice disproves its arguments.  The European  Communities submits that after the MERCOSUR 
Arbitral Tribunal had issued its ruling, Brazil adopted  a specific measure, namely Portaria Secex 2 of 
8 March 2002, which exempted imports from othe r MERCOSUR countries from the import ban.  The 
European Communities submits further that accordingly,  Brazil did not simply l eave it to its courts or 
administrative authorities to apply Article 21.2 of the Protocol of Brasilia in conjunction with the 
ruling of the MERCOSUR Arbitral Tribunal.955 
                                                      
949 European Communities' first oral statement, executive summary, para. 36;  European Communities' 
second written submission, executive summary, para. 142. 
950 European Communities' first oral statement, executive summary, para. 37;  European Communities' 
second written submission, executive summary, para. 143. 
951 European Communities' first oral statement, executive summary, para. 37;  European Communities' 
second written submission, executive summary, para. 144. 
952 European Communities' second written submission, executive summary, para. 144. 
953 European Communities' second written submission, executive summary, para. 145. 
954 European Communities' second written submission, executive summary, para. 146. 
955 European Communities' second written submission, executive summary, para. 147.  WT/DS332/R 
 Page 111 
 
 
  4.438  Brazil  notes the European Communities' argument that Article XX(d) does not justify the 
MERCOSUR exemption because Brazil has not show n that it had incorporated its MERCOSUR 
obligations into its domestic law.  Brazil responds that it has presented to the Panel legislative and 
presidential decrees, which unambiguously incorpor ate the MERCOSUR obligations;  Brazil has also 
confirmed this fact at the First Panel Meeting.  Brazil notes the European Communities' argument that 
to conclusively establish this fact, Brazil must produce court decisions striking down incompatible 
internal laws.  Brazil responds that the European  Communities' argument is grounded neither in 
international law, nor in Brazilian law, nor in reason.  Brazil states that according to the European Communities' logic, a government that co mplies with its international obligations without 
being prodded by its courts could never prove that international obligations have been incorporated.
956 
4.439  Second, the European Communities  argues that Brazil's measure is not intended to "secure 
compliance" with Article 21.2 of the Protocol of Brasilia.  The European Communities contends that the terms "to secure compliance" in Article XX(d ) imply that compliance is "secured" by the 
governmental authorities against other subjects in the domestic legal order.  In other words, for the 
European Communities, Article XX(d) covers measu res through which the public authorities enforce 
laws and regulations in the domestic legal sy stem, as it was confirmed by the GATT Panel in 
EEC - Parts and Components .
957   
4.440  The European Communities contends that Brazil has misrepresented its argument by claiming 
that the European Communities "attempts to different iate between laws that bind private parties ... and 
laws that bind the State or its organs".  The Eu ropean Communities notes that it is not distinguishing 
between different kinds of laws, but between th e acts of "complying with" and "securing compliance 
with".  The European Communities submits that Braz il is effectively proposing that Article XX(d) be 
interpreted as referring to measures "necessary to comp ly with laws and regula tions".  However, for 
the European Communities, the term "to secure" in Article XX(d) cannot simply be omitted, and must 
thus be given a useful meaning.958  The European Communities argues th at if all the terms of Article 
XX(d) are supposed to have a useful meaning, "securing compliance" must mean something other 
than "complying", namely that the compliance is ac hieved by persons which are separate of the actor 
which is "securing" the compliance.  In other words, for the European Communities, measures 
adopted under Article XX(d) are enforcement measures. 
4.441  The European Communities argues that this is also illustrated by the concrete examples given 
in Article XX(d).  The European  Communities notes, as the Appellate Body has confirmed, that those 
matters typically involve the regulation by the government of activity undertaken by economic 
operators.  The European Communities is of the view  that the fact that Article XX(d) covers only 
enforcement measures was also confirmed by the GATT Panel in EEC – Parts and Components .959 
4.442  The European Communities argues further that  the fact that the Appellate Body in 
Mexico - Taxes on Soft Drinks  has held that laws and regulations  may also include rules deriving from 
international agreements is not incompatible with  this interpretation.  The European Communities 
contends that international agreements may also d eal with matters which require enforcement in the 
internal legal order of WTO Members.  For the Euro pean Communities, if such  an agreement, rather 
than being transposed through internal legislation, is  directly applicable in the domestic legal order, 
then it may also be the subject of enforcemen t measures within the meaning of Article XX(d).960 
                                                      
956 Brazil's second oral statement, para. 116. 
957 European Communities' first oral statement, executive summary, para. 38;  European Communities' 
second written submission, executive summary, para. 148. 
958 European Communities' second written submission, executive summary, para. 149. 
959 European Communities' second written submission, executive summary, para. 150. 
960 European Communities' second written submission, executive summary, para. 151. WT/DS332/R 
Page 112  
 
  4.443  The European Communities submits that in the present case, by lifting the ban on imports 
from other MERCOSUR countries, the Brazilian authorities were not enforcing and "securing compliance" with the ruling of the Arbitral Tri bunal by anyone else.  The European Communities 
argues rather that Brazil was in fact simply "compl ying" with its obligations under international law, 
in this case under MERCOSUR.
961  Thereby, the European Commun ities argues that Brazil confuses 
the notions of "securing compliance" and "complying". 
4.444  The European Communities stresse s that accepting the interpretation of Brazil would have 
far-reaching and pernicious consequences for the mu ltilateral trading system, since any measure taken 
to comply with an international agreement, be it bilateral or multilateral,  would be justified under 
Article XX(d).962  The European Communities argues that WTO Members could in the future grant 
each other advantages without having to justify this under Article XXIV, provide d only that they have 
agreed to do so in an international agreement which forms part of their domestic legal order.  For the 
European Communities, this would mean that wherever two WTO Members grant each other 
advantages through conclusion of an international agreement, they could rely on Article XX(d) to 
justify these advantages.963  The European Communities is of th e view that such an interpretation 
would mean the end of a cornerstone of WTO legal order, namely the most-favoured nation principle 
enshrined, inter alia , in Article I:1 and XIII:1.964  The European Communities is of the view that this 
was certainly not the intention of the Appellate Body in Mexico – Soft Drinks when it confirmed that 
international agreements under certa in conditions might also constitu te "laws and regulations" within 
the meaning of Article XX(d).  The European Co mmunities argues that the Panel should not follow a 
reasoning which would be profoundly dama ging to the multilateral trading system.965  
4.445  Brazil  argues that WTO Members cannot justify ot herwise inconsistent measures by simply 
concluding agreements with other Members that prov ide for discriminatory treatment.  Brazil explains 
that the hypothetical agreement between the Member s that the European Communities refers to would 
still have to meet the requirements of Article XXIV for it to justify discriminatory treatment that is 
contrary to Article I:1.  Brazil notes that Article  XXIV contains safeguards ensuring that only bona 
fide customs union parties could invoke the Article to justify prima facie discriminatory treatment.  
The high burden of Article XXIV, Brazil argues, ensures against any potential abuse.966 
4.446  The European Communities  submits that it would at the same time make redundant the 
specific conditions for customs unions and free trade agreements contained in Article XXIV.967  For 
the European Communities, it is clear  that such an interpretation of  Article XX(d) cannot have been 
within the intention of the drafters of the WTO Agreements.968  Similarly, the European Communities 
argues that the question would arise why the Eu ropean Communities had to obtain a waiver under 
Article IX:1 of the WTO Agreement in order to ju stify the preferential treatment it was obliged to 
grant to the ACP countries under the Lomé and Cotonou Agreements.  If Brazil's reasoning was correct, the European Communities contends that th en these waivers were legally superfluous, since 
                                                     
 
961 European Communities' first oral statement, executive summary, para. 38;  European Communities' 
second written submission, executive summary, para. 152. 
962 European Communities' first oral statement, executive summary, para. 39;  European Communities' 
second written submission, executive summary, para. 153. 
963 European Communities' first oral st atement, executive summary, para. 39. 
964 European Communities' first oral statement, executive summary, para. 39;  European Communities' 
second written submission, executive summary, para. 153 ;  European Communities' second oral concluding 
statement, executive summary, para. 26. 
965 European Communities' first oral statement, executive summary, para. 39;  European Communities' 
second oral concluding statemen t, executive summary, para. 26. 
966 Brazil's answer to panel question No. 50. 
967 European Communities' first oral statement, executive summary, para. 39;  European Communities' 
second written submission, executive summary, para. 154. 
968 European Communities' first oral st atement, executive summary, para. 39.  WT/DS332/R 
 Page 113 
 
 
  the European Communities could simply have invoked Article XX(d) to justify any measure 
necessary to comply with its obligations under the Cotonou Agreement.969 
4.447  Third, the European Communities submits that Brazil's measure could also not be "necessary" 
in order to secure compliance with laws or regul ations.  The European Co mmunities argues that the 
determination of whether a measure is "necessary"  involves a weighing and balancing a number of 
factors, including inter alia  the existence of alternative m easures.  The European Communities 
contends that in the present case, as certain third parties have also remarked, there was a clear alternative available to Brazil:  in order to comp ly with its MERCOSUR obligations, it could have 
lifted the ban on imports from all WTO Members, rather than only on imports from other MERCOSUR countries.
970  Accordingly, Brazil had a reasonable alternative available which it failed 
to take. 
4.448  Finally, the European Communities stresses th at the MERCOSUR exemption would also not 
fulfil the requirements of the chapeau of Article XX.  In particular, as already explained in respect to 
Article XX(b), the MERCOSUR exemption constitut es an unjustifiable and arbitrary discrimination 
between countries where the same conditions prevail.971  This is particularly obvious since Brazil even 
allows the imports of tyres from MERCOSUR count ries which are made from used tyres originating 
in the European Communities. 
4. The Enabling Clause 
4.449  Brazil did not defend its measures under the Enabling Clause. 
4.450  The European Communities  claims that Brazil could not invoke the Enabling Clause, either.  
The European Communities submits that the En abling Clause constitutes an exemption from 
Article I:1.  However, the European Commun ities contends that the exemption of Brazil's 
MERCOSUR partners from the ban and the fines are not only incompatible with Article I:1, but 
equally with Article XIII:1.  The European Communities notes that in accordance with the 
Appellate Body's conclusion in EC – Bananas , Articles I:1 and XIII:1 are distinct obligations.  
Therefore, the European Communities argues that th e Enabling Clause cannot be interpreted to justify 
violations of Article XIII:1.972 
4.451  Moreover, the European Communities argues that the CONTRACTING PARTIES have not 
established the criteria and conditions applicable to the elimination of non-tariff measures under 
paragraph 2(c) of the Enabling Clause.  Accordi ngly, for the European Communities, the Enabling 
Clause cannot be invoked to justify the reduction or  elimination of non-tariff measures such as an 
import ban.973 
4.452  The European Communities argues further that Brazil's measures must also be regarded as 
creating undue difficulties for the trade of other parties contrary to paragraph 3(a) of the Enabling Clause.  In addition, the European  Communities argues that with its measure, Brazil is also impeding 
the elimination of restrictions to trade on a most-fa voured nation basis contrary to paragraph 3(b) of 
the Enabling Clause.
974 
                                                      
969 European Communities' second written submission, executive summary, para. 154. 
970 European Communities' second written submission, executive summary, para. 155. 
971 European Communities' first oral statement, executive summary, para. 40;  European Communities' 
second written submission, executive summary, para. 156. 
972 European Communities' first written submission, executive summary, para. 63. 
973 European Communities' first written submission, executive summary, para. 64. 
974 European Communities' first written submission, executive summary, para. 65. WT/DS332/R 
Page 114  
 
  V. ARGUMENTS OF THIRD PARTIES
975 
A. ARGENTINA 'S ORAL STATEMENT976 
5.1 Argentina addresses a number of issues relating to the admissibility of the exception invoked 
under Article XX(b), with regard to the interpreta tion of the legal requirements for invoking that 
exception, and the possibility for a MERCOSUR me mber country to invoke the exception provided 
for in Article XXIV.5. 
1. Conditions for the application of Article XX(b) 
5.2 Argentina deems it relevant to examine th e actual conditions of the exception under 
paragraph (b) namely:  (i) that the policy pursued by the measure in question should come within the 
scope of policies designed to protect human, animal or  plant life or health, and (ii) that the measure in 
question should be "necessary" to fulfil the objective of that policy. 
(a) Policy for the protection of human, animal or plant life or health 
5.3 Concerning the first point, it may be recalled that, in the EC – Asbestos  case977, the Appellate 
Body held that every WTO Member has the "right to determine a level of protection of health that [it 
considers] appropriate in a given situation".  The Appellate Body also stated that "there is no 
requirement under Article XX(b) to quantify, as such , the risk to human life or health (emphasis 
added). 
5.4 Argentina notes that, in analysing the exception pr ovided for in Article XX(b) with respect to 
the measures at issue, the European Communiti es maintains that "... there are no differences between 
retreaded tyres and new tyres that would be relevant  for the question at issue".978 (Emphasis added) 
5.5 Argentina does not share this view and consid ers that there are fundamental differences 
between retreaded and new tyres.  Such differe nces are relevant for analysing and weighing the 
increase in waste materials generated by the massive importation of retreaded tyres and, hence, for the 
conditions of application of the Article XX(b) exception, as is explained below. 
5.6 The European Communities maintains in its writte n submission that retreaded tyres "are as 
safe and durable as new tyres"979, that they "are comparable to new tyres in all aspects of performance, 
quality, safety, and durability"980, and that "retreaded and new tyres can be substituted with one 
another".981 
5.7 However, Argentina considers th at these assertions do not properly reflect the reality.  Thus, 
with regard to: 
 ▪ Performance, quality, safety and durability :  from the technical standpoint, the 
lifespan of retreaded tyres is approximately 30 per cent of that of new tyres.  A 
reconstructed tyre (despite having the appear ance of a new tyre) continues to exhibit 
the limitations caused by the ageing of the basic component:  the used tyre.   
                                                      
975 The summaries of third parties' arguments are ba sed on the executive summaries submitted by third 
parties to the Panel, where available.  Footnote s in this section are those of third parties.  
976 This oral statement was originally made in Spanish. 
977 Appellate Body Report on EC – Asbestos , paras. 167-168.  
978 European Communities' first written submission, para. 102. 
979 European Communities' first written submission, section D. 
980 European Communities' first written submission, para. 32. 
981 European Communities' first written submission, para. 46.  WT/DS332/R 
 Page 115 
 
 
   
 ▪ Consumer prices :  these technical differences have a logical correlation to other 
aspects of the retreaded tyre, such as the consumer price gap between a new tyre and a retreaded one.  This disparity, together w ith those referred to above in respect of 
durability, quality, safety and performance, contradicts the European Communities' 
position that a retread is comparable to a new tyre and is enough to explain the 
marked discrepancy in sales figur es for the two types of tyre. 
  ▪ Tariff classification
:  in the Harmonized System, retreaded and used tyres come under 
the same tariff heading (4012), while new tyres are classified under a different 
heading (4011). 
 5.8 Moreover, the European Communities itself clearly  distinguishes, within its internal market, 
between new tyres and used tyres or tyres reprocessed from used tyres, by means of regulations specific to each category.  And it even recognizes tha t:  "There are no types of retreaded tyres as they 
are products remanufactured from used tyres.  In a ddition, they are not new products as such, as they 
are remanufactured products and, therefore, they are not put into circulation on the market for the first 
time."
 982 
5.9 Consequently, in view of all the differences me ntioned, including some highlighted by the 
European Communities itself, Argen tina considers that it is no way possible to consider a retreaded 
tyre as equivalent to a new tyre.  Argentina thus deems it important to draw the Panel's attention to 
this point for the sake of a proper analysis of the conditions governing application of the exception 
provided for in Article XX(b) in r espect of the measures at issue. 
(b) The measure is "necessary" to protect  human health and the environment 
5.10 The determination relating to the "necessity" of an allegedly inconsistent measure requires a 
process of "weighing and balancing" a series of factors,  which must be looked at collectively, i.e. in 
terms of the relative weight of the interests or va lues protected by the measure, the degree to which 
the measure contributes to the realization of the end pursued and the degree to which the measure 
produces restrictive effects on international commerce.   Essentially, on this point, Argentina considers 
that the Panel cannot fail to note the developing coun try status of one of the parties involved in the 
"factual context"983 of this dispute.   
5.11 In this connection, the Appellate Body's jurisp rudence makes it clear that the party relying on 
the Article XX(b) exception has the burden of establishing prima facie that no less trade-restrictive 
alternatives were "reasonably available".  However, in the US – Gambling  dispute, the 
Appellate Body held that an alternative is not r easonably available where it is merely theoretical in 
nature, either because the Member concerned is not capable of applying it, or where the alternative 
measure imposes an undue burden on that Member , owing to its prohibitive cost or technical 
complexity.984 
5.12 In Argentina's view, when a developing country invokes Article XX (b), the necessity test and 
the "reasonably available" alternatives must be looked at in the light of the actual possibilities 
available to developing countries, and in particular  their economic cost and technical complexity in 
relation to the scarcity of financial and techni cal resources characteristic of such countries. 
                                                      
982 "Explanatory memorandum to the Proposal for a Council Decision presented by the Commission, 
amending Decisions 2001/507/EC and 2001/509/EC.  Decision approved by the Council of Ministers in 
March 2006. COM (2004) 774 final, 2004/0271 (AVC). 
983 Appellate Body Report on US – Gasoline , p. 18. 
984 Appellate Body Report on US – Gambling , para. 308. WT/DS332/R 
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  5.13 In the present case, Argentina considers that  Brazil has amply demonstrated that, as a 
developing country, it had no reasonably available al ternatives to banning imports of retreaded tyres 
in order to maintain a manageable stockpile of wast e tyres, so that final disposal would not adversely 
affect public health and the environment.  The ad option by Brazil of alternative measures to the ban 
on imports of retreaded tyres would have made it impo ssible in practice to attain the desired level of 
protection of health and the environment. 
2. MERCOSUR and Article XXIV 
5.14 Argentina challenges the assertion by the United St ates, in its third party submission, that 
MERCOSUR could not be covered by Article XXI V.5 since it was notified under the Enabling 
Clause. 
5.15 In this connection, as is indicated by th e European Communities, although MERCOSUR was 
notified under the Enabling Clause, the terms of reference of the Committee on Trade and 
Development, under which MERCOSUR is exam ined, include both the Enabling Clause and 
Article XXIV.
985  Furthermore, MERCOSUR has been subjected to four rounds of review in the 
Committee on Regional Trade Agreements, and in May 2005 the WTO Secretariat circulated 
document WT/COMTD/1/Add.15 containing the evalua tion of the general incidence of MERCOSUR 
customs duties, in accordance with the provisions  of paragraph 2 of the Understanding on the 
Interpretation of Article XXIV, which refers e xpressly to the evaluation of customs unions under 
paragraph 5(a) of Article XXIV. 
B. AUSTRALIA 'S ORAL STATEMENT  
5.16 Australia joined this dispute as a third party in view of its systemic interests in the questions 
under consideration by the Panel.  Australia ther efore refrains from taking a position on the specific 
facts of this dispute.   
5.17 In Australia's view, the panel's determinati on of the Article XX and Article XXIV issues 
before it in this dispute will be of significance  for Members.  GATT 1994 is of vital importance to 
WTO Members– it specifies Members rights and respons ibilities with regard to international trade in 
goods.  Article XX offers Members important exce ptions from other GATT provisions, where the 
application of a measure is justifiable in order to  achieve a particular policy objective – meeting all 
the requirements both of the specific exception cited and the chapeau to Article XX.  The application 
of Article XX to a measure is of critical significance,  in that such an outcome permits a Member to 
derogate from the GATT rules on trade in go ods.  Accordingly, each exception made under 
Article XX requires cautious weighing of Members' ri ghts, and careful application of the Article XX 
exceptions and the chapeau. 
5.18 Australia does not offer an assessment as to  whether the challenged Brazilian measure 
satisfies the requirements of Article XX.  The reso lution of this question will require the Panel to 
determine complex factual and legal issues.  In unde rtaking this task, Australia encourages the Panel 
to evaluate carefully the factua l evidence before it, including by drawing on expert opinion as 
necessary.   
5.19 As to the legal issues, Australia notes that th e Appellate Body has clarified significant aspects 
of the operation of Article XX.  In particular, Au stralia draws the attention of the Panel to the 
                                                      
985 The terms of reference for the review of MERCOSUR, as contained in document 
WT/COMTD/5/Rev.1 of 25 October 1995, are "to examine the Southern Co mmon Market Agreement, 
(MERCOSUR) in the light of the relevant provisions of the Enabling Clause and of the GATT 1994, including 
Article XXIV ... ".  WT/DS332/R 
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  Appellate Body's jurisprudence concerning the in terpretation and application of the chapeau of 
Article XX.  The Panel's views on whether Brazil's measures can pass the tests set out in the chapeau 
will be important in this case.  In relation to Brazi l's reliance on Article XX(b), Australia notes that it 
claims the obligation to comply with the MERCOSU R arbitral decision means that its discrimination 
between MERCOSUR Members and other WTO Members is neither arbitrary nor unjustifiable in the 
terms of the chapeau to Article XX.   Australia encourages the Panel to  apply carefully the terms of the 
chapeau, mindful of the broad purpose – namely, th e prevention of abuse of the general exceptions 
listed under Article XX paragraphs  (a) to (g).  The implementation of the MERCOSUR arbitral 
decision is also of relevance to Brazil's arguments concerning the application of Article XX(d).  The 
Panel will need to consider carefully whether Artic le XX(d) covers arbitral decisions such as this. 
5.20 Brazil's submission also raises the interpretation and application of Article XXIV.  Australia 
notes that there is limited Appellate Body jurispru dence on this provision.  Accordingly, the Panel 
may be required to traverse new gr ound in dealing with the arguments of the Parties on Article XXIV.  
The questions arising include:  
(a) What is the scope of the requirements of Article XXIV:5(a) and XXIV:8(a) and their 
application in time?;  
(b) Is MERCOSUR a customs union which has met these requirements as between its 
Members and as between its Members and other WTO Members?  and 
(c) How are the challenged measures to be assessed against these requirements? 
5.21 Australia recognises that this dispute may also present an opportunity for the Panel to clarify 
the relationship between Articles XX and XXIV.   
C. CHINA 'S WRITTEN SUBMISSION AND ORAL STATEMENT  
5.22 The People's Republic of China notes that it is n eedless to stress the importance of the present 
dispute.  It concerns how WTO Members can protect the environment and human health in a manner consistent with WTO obligation.  China focuses its submission on the subject "product" of this 
dispute and the analytical approaches related to Article XX(b) and (d) and Article XXIV. 
1. The product 
5.23 The subject product of this dispute is really special.  It is not a totally newly manufactured 
product.  It is not a used product, either.  Rather , a reconditioned product is a product which could be 
used like a "new" one whereas with a shorter lifespan.  
5.24 Tyres are indispensable for modern human society, and on the other side, waste tyres could 
pose a serious threat to environment.  It seems both parties of this dispute agree that retreaded tyres 
are not equivalent to waste tyres while the main difference between a retreaded tyre and a new tyre is 
that the former has a shorter lifespan.  Specifically , both parties mention that passenger car tyres can 
only be retreaded once and other tyres, such as co mmercial vehicle tyres and airplane tyres can be 
retreaded for several times.
986  Accordingly, it is important for the panel to ascertain the 
interchangeability of retreaded tyres with new ones.  China believes that it is  necessary for the panel 
to investigate the nature of the retreaded tyres in depth before it continues its legal analysis. 
                                                      
986 See paragraph 16 of Brazil's first written submission and paragraph 23 of the 
European Communities' first written submission. WT/DS332/R 
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  2. Issues under Article XX(b) 
5.25 In this dispute, Brail invoked Article XX(b) to  justify its measures under dispute.  According 
to WTO jurisprudence, it is the party who is to  invoke the exceptions contained in Article XX to 
assume the burden of proof.
987  With respect to paragraph (b) of Article XX, the defendant should 
establish two elements: 
(a) There is a policy designed to protect human, animal or plant life or health; and 
(b) the inconsistent measures for which the exception is being invoked were necessary  to 
fulfil the policy objective.988 
5.26 Furthermore, the Appellate Body has established th at the analysis of justification protection of 
Article XX is two-tiered, that is, the measure at i ssue must not only come under one or another of the 
particular exceptions under paragraphs (a) to (j) listed under Article XX, it must also satisfy the 
requirements imposed by the chapeau of Article XX.989  The chapeau required that the measure should 
not constitute arbitrary or unjustifiable discrimina tion or disguised restriction on international trade.  
5.27 Such sequence of analysis should be followe d in this dispute because exceptions under 
Article XX are invoked.  Moreover,  in the examination of the measu res at issue in this case, China 
thinks it is proper for the Panel to take into consideration the ever-growing attention given to 
environmental protection among the international co mmunity and in WTO itself.  The preamble of 
Marrakech Agreement declares that one objective of WT O is to pursue "the optimal use of the world's 
resources in accordance with the objec tive of sustainable development" and "seeking both to protect 
and preserve the environment".  Under the guidan ce of these statements, the Appellate Body, in 
several disputes, accepted the identification of certa in disputed measures with environmental concern 
as under paragraph (b) of Article XX.990   
3. The MERCOSUR exemption 
5.28 Brazil's ban and restriction on the importation of retreated tyres do not apply to other 
members of MERCOSUR and Brazil cited Article XXIV and Article XX(d) to justify the exemption.  
To China's understanding, the question of whether the exemption is justified would arise only after the 
import ban itself being determined by the Panel to be  legitimate.  If the import ban itself is found to be 
inconsistent with Brazil's WTO obligation, th e Panel does not need to touch the MERCOSUR 
exemption at all. 
5.29 According to the Appellate Body, Article XXIV may justify a measure that is inconsistent 
with certain other GATT provisions when two conditions are fulfilled: 
5.30 First, the party claiming the benefit of this defe nce must demonstrate that the measure at issue 
is introduced upon the formation of a customs union that fully meets the requirements of sub-
paragraphs 8(a) and 5(a) of Article XXIV.  A nd, second, that party must demonstrate that the 
formation of that customs union would be prevented if it were not allowed to introduce the measure at 
issue.991 
                                                      
987 Appellate Body Report on US-Gasoline  pp. 22-23.  
988 Panel Report on US-Gasoline , para. 6.20. 
989 Appellate Body Report on US-Gasoline , p. 22. 
990 For example, in the cases of US-Gasoline , and US – Shrimp . 
991 Appellate Body Report on Turkey – Textiles , para. 58.   WT/DS332/R 
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  5.31 In China's view, jurisprudence set up by the Appellate Body in the Turkey-Textiles case seems 
to apply to the scenario of a measure being intr oduced upon the formation of a customs union, which 
is different from the present case.  Clearly, Brazil introduced the import ban of retreaded tyres after the formation of MERCOSUR, rather than upon the fo rmation of the customs union.  It remains to be 
decided by the panel what kind of conditions should be met by Brazil in order to invoke Article XXIV 
as a justification of its measures.  
5.32 Furthermore, China notices that measures whic h are permitted under Article XX are explicitly 
excluded by Article XXIV:8(a)(i) from the require ment to eliminate restrictive regulations of 
commerce with respect to substantially all trade.  Therefore, if Brazilian import ban is exempted by 
Article XX from the discipline of Article XI:1, Br azil is entitled to impose the ban on all importing 
sources, including other MERCOSUR members.  What n eeds to be examined by the Panel is whether 
Brazil could further rely on Article XXIV as an  exception clause to exempt its exclusion of 
MERCOSUR members from the import ban which might otherwise violate the most favoured nation treatment principle contained in Article I.  China believes that the finding on this issue to be rendered 
by this Panel will definitely have syst ematic implication on further disputes. 
5.33 Brazil also invoked Article XX(d) to justify the exemption for MERCOSUR countries.  
According to the Appellate Body, a Member intend ing to rely on Article XX(d) must show that 
(1) the measure is "designed to 'secure compliance' with laws or regulations that are not themselves 
inconsistent with some provision of the GATT 1994," and (2) the measure is "'necessary' to secure 
such compliance."
992 
5.34 Brazil submitted that the subject exemption is  to secure the compliance with a ruling of 
MERCOSUR Ad Hoc Tribunal and Brazilian domestic  laws regulation that implemented the 
MERCOSUR Treaty.993  A systematic issue that might emerge in this context is whether the obligation 
of a WTO Member under international treaties could be deemed its municipal law and constitutes the 
"laws or regulations" under Article XX(d).   This needs the Panel to clarify. 
5.35 On this point, China noted that Article XX(d) requires that the "laws and regulations" being 
secured must be WTO-consistent.  Hence, Article XX(d) does not cover all pieces of "laws and 
regulations" without condition.  
5.36 As the facts submitted by both parties show, it seems that the ruling of MERCOSUR Ad Hoc 
Tribunal only prohibits Brazil's import ban for im ports of retreaded tyres from other MERCOSUR 
members, but does not authorize Brazil's import ban on other WTO members.  China has stated above that the essence of this dispute is that whether th e import ban against non-members is WTO-consistent 
and the MERCOSUR Tribunal's decision has little relevance to such ban. 
4. Conclusion 
5.37 China hopes that the Panel will give considerations to the fact that the defending party in this 
case is a developing country.  In fact, developing countries are facing more difficulties than developed 
countries in balancing their economic development and environment protection.  In addition, in 
dealing with environmental probl ems, developing countries usually are less sufficient in terms of 
funding and less efficient in terms of technology.  Therefore, the multilateral trade system should give more support and tolerance to de veloping countries' endeavour to improve the environment. 
                                                     
 
992 Appellate Body Report on Korea – Beef , at para. 157.  
993 See pp. 61-63 of Brazil's first written submission WT/DS332/R 
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  D. C
UBA'S ORAL STATEMENT994 
5.38 Cuba has a systemic interest in the dispute under consideration and shares Brazil's concerns 
regarding the harmful effects on the environment and human health resulting from the accumulation 
and destruction of retreaded tyres. 
5.39 Retreaded tyres are tyres that have been used a nd remoulded so that they can be used again,  
after which they become waste products.  Their mass  manufacture and the difficulties in disposing of 
them after use constitute one of the world's most serious environmental problems of recent years.  
Tyres need large amounts of energy for their manuf acture and also cause environmental pollution if 
not properly recycled, as they are usually consigned to unregulated landfills. 
5.40 Retreaded tyre waste is frequently eliminated by means of direct burning which causes 
serious environmental problems through smoke-indu ced air, water and ground contamination.  
Stockpiling also has seriously detrimental effects.  The high volume of such tyres, the difficulty of 
disposal in landfills and the ease of exposure to  water – which, when stagnant, promotes the 
proliferation of various disease-carrying insects – result in problems of stability and safety caused by their partial chemical degradation.  The mountains of stored tyres are breeding grounds for rodents, 
insects and other animals, and this is an additiona l problem.  Certain mosquitoes whose bite transmits 
fever and encephalitis are 4,000 times more likely to re produce in the stagnant water in a tyre than in 
nature.  Retreaded tyres may also start fires in la ndfills when methane gas is present, producing large 
quantities of hydrocarbons and emissions harmful to the atmosphere. 
5.41 Obviously, each country has to bear the cost of  disposing of waste generated on its territory, 
and this explains why many developed countries ap pear to promote exports of used and retreaded 
tyres.  However, wastes of this kind should not be e liminated by transferring them to other countries.  
Retreaded tyres are much cheaper than new ones, and it is easy to see why underdeveloped countries 
are the main users of such tyres.  As a result, their exportation is in practice tantamount to a transfer to 
other, essentially underdeveloped, countries of  the social, economic and environmental burden 
implicit in the disposal of the waste they generate. 
5.42 The position of the Brazilian Government appear s to be somewhat similar to the position 
taken by the European Communiti es when in 1999 it adopted a Di rective banning the disposal of 
whole tyres in landfills, and when in July 2006 it proposed to ban the disposal of cut or shredded 
tyres.  The developed countries, the world's main users of means of transport, must find the most appropriate technological solution to prevent this  type of waste from continuing to harm the 
environment.  The worsening situation is exem plified by increasingly repetitive and severe natural 
disasters in different parts of the world, which m eans that the ill-conceived strategies of certain 
countries are damaging the global environment. 
5.43 Cuba reiterates that all countries, whether or not they are Members of the WTO, have the 
right to adopt the measures they deem necessary to  alleviate the harmful effects on the environment 
and human health caused by the growing accumulation of waste tyres.  Having a healthy environment 
and thereby contributing to an improved quality of  life and human health are fundamental rights 
enshrined in all the world's national constitutions.  Accordingly, Cuba reiterates its support for the 
restrictive measures introduced by Brazil on imports of retreaded tyres, which are designed essentially 
to protect the environment and public health. 
                                                     
 
994 This oral statement was originally made in Spanish.  WT/DS332/R 
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  E. JAPAN 'S WRITTEN SUBMISSION AND ORAL STATEMENT  
1. Inconsistency of Brazil's import ban on retreaded tyres with Article XI:1 
5.44 Brazilian law Portaria SECEX 14/2004 provides that no import licenses shall be granted for 
the importation of retreaded tyres into Brazil, and based on the law Brazil has prohibited importation of the retreaded tyres from WTO Members, in cluding the European Communities, other than 
MERCOSUR countries.  With regard to general elim ination of quantitative restrictions, Article XI:1 
provides that "[n]o prohibitions or restrictions other than duties, taxes or other charges, whether made 
effective through quotas, import or export licences  or other measures, shall be instituted or maintained 
by any contracting party on the importation of any pr oduct of the territory of any other contracting 
party (emphasis added)…".  Therefore, Brazil's adoption of import ban is  inconsistent with 
Article XI:1. 
2. Inconsistency of the fines on importation, ma rketing, transportation, storage, keeping or 
warehousing of imported retreaded tyres with Article XI:1 or, in the alternative, Article III:4 
5.45 Brazilian President Decree 3919 of 14 September 2001 provides the imposition of fine of 
R$400 per unit for importation, marketing, transportation, storage, keeping or warehousing of used 
and retreaded tyres.  According to Brazil's first written submission, paragr aph 157, such fines are 
imposed as an "anti-circumvention measure that safeguards the integrity of the import ban by 
penalizing traders that circumvent import controls".  If this is the case, imposition of such fine for 
importation of retreaded tyres is nothing more than a part of quantitative restriction for trade, and therefore the fine is inconsistent with Article XI:1, which prohibits restrictions other than duties, taxes 
or other charges for the purpose of  controlling the quantity of imports. 
5.46 Besides, the fine is applied only to imported retr eaded tyres and not to domestic ones.  In this 
regard, Article III:4 provides the National Treatme nt requirements, and the Appellate Body in 
Korea – Various Measures on Beef  has indicated that three elements should be examined in 
determining a measure's inconsiste ncy with Article III:4:  (i) whet her imported and domestic products 
at issue are "like products" ;  (ii) whether the measure at issue is a "law, regulation, or requirement" 
affecting their internal sale, offering for sale, pur chase, transportation, distribution, or use;  and 
(iii) whether the imported products are accorded "less favourable" treatment than that accorded to like 
domestic products.   
5.47 Regarding the first element, the Appellate Body in  EC-Asbestos  has stated the general criteria 
for determining the likeness  mainly consists of (i) the properti es, nature and quality of the products, 
(ii) the end-uses of the products, (iii) consumers' tastes and habits – more comprehensively termed 
consumers' perceptions and behaviour – in respect of  the products, and (iv) the tariff classification of 
the products.  The Appellate Body in EC-Asbestos  has also stated that "under Article III:4, the term 
'like products' is concerned with competitive relationships between and among pr oducts". (emphasis 
added) 
5.48 Imported retreaded tyres and domestic retreaded tyres have the same physical characteristics 
and their end-uses are the same.  In addition, since the adoption of the import ban:  (i) the European Communities' exports of retreaded tyres to  Brazil have declined dramatically and at the 
same time  (ii) the Eu ropean Communities' export of used tyres to be used by Brazil's domestic 
retreaders have increased rapidly.  This shows th at imported and domestic retreaded tyres are in a 
competitive relationship, and thus they should be deemed like products  under Article III:4. 
5.49 Regarding the second element, Brazil's imposition of  the fine is based on the above mentioned 
Brazilian President Decree 391 9 of 14 September 2001. WT/DS332/R 
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  5.50 Finally, regarding the third element, importe d retreaded tyres are obviously treated less 
favourable than domestic retreaded tyres because the fine is imposed only on imported retreaded 
tyres.  
5.51 Therefore, Brazil's discriminatory imposition of th e fine is, in the alternative, inconsistent 
with Article III:4. 
3. Inconsistency of the restriction on the mark eting for imported retreaded tyres at state 
level with Article III:4 
5.52 Based on the Law 12.114 of 05. 07.2004, Brazilian State of Rio Grande do Sul prohibits 
marketing of retreaded tyres produced outside Brazil,  while the law does not prohibit the marketing of 
those produced in Brazil.  Further, based on a r ecent amendment, used tyr es, including retreaded 
tyres, imported from outside Brazil is subject to discriminatory obligation in disposal of unusable 
tyres.  For the same reason argued above in Section 2, Japan considers that the State of Rio Grande do 
Sul's measure is also inconsistent with Article III: 4 in light of the three elements set forth by the 
Appellate Body in Korea – Various Measures on Beef .  
4. Applicability of Article XX to Brazil's measures on retreaded tyres 
5.53 Brazil's measures may be justified, as Brazil h as argued in its first written submission, when 
such measures satisfy the requirements of paragr aph (b) or paragraph (d) and the chapeau of 
Article XX. 
5.54 Regarding the methods of analysis concerning Article XX defence, the Appellate Body in 
US – Gasoline  sets forth the two-tiered test:  (i) first th e measure at issue must come under one or 
another of the particular exceptions – paragraphs (a) to (j) – listed under Article XX;  and then (ii) it 
must also satisfy the requirements imposed by the opening clause of Article XX. 
5.55 According to the two-tiered test, this case should also be analyzed by examining the 
applicability of paragraph (b) and (d) first, and th en the applicability of the chapeau of Article XX. 
(a) Applicability of Article XX(b) 
5.56 With regard to the applicability of Article XX (b), the WTO jurisprudence provides that the 
party invoking that provision must prove that:  (i) the policy in resp ect of the measures for which the 
provision was invoked fell within  the range of policies designed  to protect human, animal or plant life 
or health ;  and (ii) the inconsistent measures fo r which the exception was being invoked were 
necessary to fulfil the policy objective 
5.57 Concerning the first element, the panel in EC – Asbestos  has stated that "…'policies designed 
to protect human life or hea lth' imply the existence of a health risk . (emphasis added)"  Japan believes 
that the Panel should follow the same approach adopted by the panel in EC – Asbestos  in examining 
the applicability of Article XX(b) as a defence for the WTO consistency of Brazil's measures in question. 
5.58 Regarding the health risk of retreaded tyres, it should be noted that there is a clear difference 
between asbestos and retreaded tyres; while the former itself contains very high risk for causing 
cancer and mesothelioma directly, the latter does not  contain any risk for human health by itself, 
unless inappropriately disposed of.  Retreaded tyres ar e stored, sold and then installed in vehicles, in 
the same way as new tyres.  There is no health risk  contained in retreaded tyres as new tyres are not 
harmful to health.   WT/DS332/R 
 Page 123 
 
 
  5.59 In any event, as the panel in EC – Asbestos  conducted the analysis of a health risk with 
sufficient and various kinds of scientific evidence,  this Panel should examine the applicability of 
Article XX(b)  taking full account of a risk analysis based on a great deal of scientific evidence issued 
by credible international bodies and experts, whic h shows direct relationshi p between retreaded or 
waste tyres and health risk.  
5.60 As regards the second element, the panel in EC – Asbestos has indicated, following the panel 
Report in Thailand – Cigarettes , that "…[the measure in question] could be considered to be 
'necessary' in terms of Article XX(b) only if ther e were no alternative meas ure consistent with the 
General Agreement, or less inconsistent with it, which Thailand could reasonably be expected to 
employ to achieve its health policy objectives."  Be sides, in relation to a determination of whether 
measures are "necessary" in the context of  Article XX(d), the Appellate Body in 
Dominican Republic – Import and Sale of Cigarettes  has set out the following three factors:  (i) trade 
impact of the measure;  (ii) importance of the interests protected by the measure;  and 
(iii) contribution of the measure to the realization of  the end pursued.  In this case, Brazil fails to make 
a prima facie case on these necessity requirements. 
5.61 First , Japan considers that Brazil's measures do not  contribute to the pursued end.  Brazil 
insists that the objective of its measures in questi on is to reduce the volume of waste tyres in its 
territory.  However, according to the European  Communities' first written submission, Brazil's 
importation of used tyres from the European Comm unities has increased dramatically year by year 
since the adoption of the ban, which Brazil has not rebutted in its first written submission.  Accordingly, the total amount of imported tyres, including retreaded tyres and used tyres, from the 
European Communities has increased  rather than decreased since the adoption of the import ban on 
retreaded tyres.    
5.62 In this regard, Brazil has stated that although  the Brazilian government adopted the restrictive 
measures for importation of both used and retreaded ty res, some court authorized used and retreaded 
tyres imports through preliminary injunctions.  However, according to the Appellate Body in  
US-Shrimp , where it has indicated that a WTO Member bears responsibility for acts of all its 
departments of government, including its judiciar y, Brazil can not bring domestic court decision for 
justifying the consequence of its measures in a WTO dispute. 
5.63 Moreover, as quoted in paragraph 132 of the Eu ropean Communities' first written submission, 
the Brazilian High Court of Justice ("Superior Tr ibunal de Justica") has judged on 12 December 2003 
that there does not seem to be alleged injury to public health  and that imports of retreaded tyres from 
MERCOSUR member countries be permitted.  This fact undermines the argument of injury to the 
public health . 
5.64 Second , Brazil's measures have the highest nega tive impact on trade because it is a total 
import ban.  Concerning the determination on whethe r a measure has restrictive effects on trade, the 
panel in Dominican Republic – Import and Sale of Cigarettes has indicated  that "…Honduras has still 
been able to export cigarettes to the Dominican Repub lic and, in fact, its exports have increased quite 
significantly over the last few years", and therefore "…the Panel may assume that the measure has not 
had any intense restrictive effects on trade."  This indication by the panel supports the notion that whether imports are totally banned or not is an im portant criterion in considering a measure's impact 
on trade.  In this case, the European Communities is totally forbidden to export retreaded tyres to 
Brazil and its export amount has reduced to reach clo se to zero in fact due to Brazil's import ban.  
When a Member employs a measure with the highest negative impact on trade and claims that such 
measure is justified under an exemption clause incl uding Article XX, the Member is responsible for 
providing well-founded explanations that the introduc tion of the measure is worth the price of the 
measure's negative impact. WT/DS332/R 
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  5.65 Third , Japan considers there exists alternative measures that Brazil could reasonably be 
expected to employ.  Brazil's measures in question aim at reducing the volume of waste tyres in its 
territory.  In light of such objective, Japan agrees with the European Communities' view that Brazil's 
regulation called Resolution CONAMA 258/1999 is one of the alternative measures.  The regulation 
obligates domestic producers of new tyre and retread ed tyre importers to dispose waste tyres in 
specified proportions in an environmentally appropr iate and safe manner.  If the regulation enforced 
correctly, the volume of waste tyres left without being disposed of will not increase because the more 
retreaded tyres are imported, the more waste tyres ar e to be disposed of.  The problem which needs to 
be addressed here is not the existence of used tyres or retreaded tyres itself but the existence of waste 
tyres which are left without being disposed of. 
5.66 Brazil argues that the import ban is the best wa y to reduce the risk to human health resulting 
from waste tyres because there is no known completely  safe disposal option.  Although Brazil admits 
that there exist the least harmful disposal methods such as certain civil engineering use, crumbing, and 
devocalization, it insists that these methods are not practicable because of the cost.  In this regard, 
there should still be several alternative measures.  One of the examples is collecting disposal cost 
from domestic producers of the retreaded tyres, as well as retreaded tyre importers.  Other example is 
recycling used retreaded tyres.  In Japan, most of used tyres are recycled in various ways, about half 
of them are for fuels.   
(b) Applicability of Article XX(d) 
5.67 Brazil claims that "anti-circumvention fines" ar e justified by Article XX(d) because they are 
necessary to "secure compliance" with the import ban, which falls into, according to the Brazil's 
argument, the "laws or regulations which are not inconsistent with the provisions of the GATT 1994" 
under Article XX(d).  
5.68 Brazil's argument is based on an unproved assump tion that the import ban is justified by 
Article XX(b). Whether or not "laws or regulations  [in question] are not inconsistent with the 
provisions of this Agreement" depends on the dem onstration to meet not only the requirement of 
paragraphs (a) to (j) of Article XX, but also the criteria set forth in the chapeau of Article XX.  
Without a finding of consistency with the chapeau of Article XX, it cannot be found that laws or 
regulations are "not inconsistent with the provisi ons of the GATT 1994" in terms of Article XX(d).  
Thus, Brazil's argument is not well-grou nded and therefore not persuasive.  
(c) Applicability of the chapeau of Article XX 
5.69 Even if, arguendo , the Panel finds that Brazil's measures satisfy the requirement of 
paragraph (b) or (d) of Article XX, it is still necessar y for Brazil to prove that its measures also satisfy 
the requirement of the chapeau of Article XX. 
5.70 Concerning the element of "unjustifiable discrimination", the Appellate Body in US – Shrimp 
has indicated that, among other things, "[c]learly, the United States negotiated seriously with some, 
but not with other Members (including the appellees), that export shrimp to the United States.  The 
effect is plainly discriminatory and, in our view, unjustifiable."  Although the Appellate Body did not 
indicate that a Member is required to have consu ltations with other Members in order to justify a 
measure under the Article XX, in light of the said A ppellate Body's reasoning, it is still assumed that 
it was desirable for Brazil to have consulted with  other Members which are major exporting countries 
of retreaded tyres as well when Brazil lifted th e import ban on retreaded tyres only for MERCOSUR 
countries in accordance with the order of the MERCOSUR Ad Hoc Tribunal in 2002.  WT/DS332/R 
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  5. Brazil's limited exemption of MERCOSUR countries 
(a) Inconsistency of the MERCOSUR exem ption with Articles XIII:1 and I:1 
5.71 Based on Article 40 of Portaria SECEX 14/20 04, retreaded tyres imported from MERCOSUR 
countries are exempted from the import ban.  Simila rly, based on Presidential Decree 4592, retreaded 
tyres from these countries are exempted from the fines imposed on their importation, marketing, 
transportation, storage, keeping or warehousing.  
5.72 Article XIII:1 sets forth that "…unless the importation of the like product of all third 
countries  … is similarly prohibited or restricted", no prohibition or restricti on shall be applied on the 
importation of any product.  The MERCOSUR exempti on contradicts to this condition and, therefore, 
is inconsistent with Article XIII: 1.  In addition, the MERCOSUR exem ption is also inconsistent with 
Article I:1, which provides the Most-Favoured-Nation Treatment principle. 
(b) Brazil's limited exemption of MERCOSUR c ountries is not justified by Article XXIV 
5.73 In its first written submission, Brazil assert s that its MERCOSUR limited exemption from the 
import ban and the fines may be inconsistent with Arti cle I or XIII, but it is justified by Article XXIV.  
Japan points out some defects contained in su ch assertion, setting aside the question whether 
MERCOSUR itself is WTO-consistent or not.   
5.74 Firstly, Brazil argues that it is not necessary to examine the conditions indicated by the 
Appellate Body in Turkey – Textiles  concerning the Article XXIV defence, because the exemption in 
question "did not raise trade-barriers to [the WTO Members not participating in MERCOSUR]".  
Japan does not see the reason why it is not necessary to examine the conditions when the measure in 
question did not raise trade-barriers to non-parties.   
5.75 Such argument of Brazil seems to be based on its understanding that "... Article XXIV 
authorizes customs union members to adopt measures that would otherwise be contrary to their WTO obligations (such as most-favoured nation treatment obligation under Article I) provided that such measures do not raise trade-barriers to non-parties."  The f ootnote to this remark refers to 
"GATT 1994, Art. XXIV 5, 8". 
5.76 In Turkey – Textiles , the Appellate Body has conducted an  analysis on Article XXIV defence, 
particularly through the interpreta tion of paragraphs 5 and 8 of the Article.  Japan does not consider 
that the Appellate Body's analysis regarding these pr ovisions supports the said explanation of Brazil.  
In Turkey – Textiles , the Appellate Body has indicated as follows .  First, the term "shall not prevent" 
in the chapeau of paragraph 5 of Article XXIV shows that "Article XXIV may, under certain 
conditions, justify the adoption of a measure which is inconsistent with certain other 
GATT provisions, and may be invoked as a possible 'd efence' to a finding of inconsistency."  Next, 
the term "the formation of a customs union" in the same chapeau indicates that "Article XXIV can 
justify the adoption of a measure which is inconsiste nt with certain other GATT provisions only if the 
measure is introduced upon the formation of a cu stoms union, and only to the extent that the 
formation of the customs union would be preven ted if the introduction of the measure were not 
allowed."  The term "customs uni on" here, of course, needs to be interpreted in the context of 
subparagraph 8(a) of Article XXIV, which provides th e definition of the term.  Third, the relevant 
proviso concerning the term "Provided that" in the ch apeau of paragraph 5 of Article XXIV is set out 
in subparagraph 5(a) of the Article.  The party in voking Article XXIV defence, therefore, needs to 
show that a customs union in question "meets the requirement in subparagra ph 5(a) of Article XXIV 
relating the 'duties and other regulations of comme rce' applied by the constituent members of the 
customs union to trade with third parties." Subparagraph 5(a) provides that the "duties and other 
regulations of commerce" imposed under a customs union, "shall not on the whole be higher or more WT/DS332/R 
Page 126  
 
  restrictive than the general incidence of the du ties and regulations of commerce in the constituent 
territories prior to the formation of such union" in respect of trade with "[WTO Members] not parties 
to such union." 
5.77 The Appellate Body's analysis mentioned so far indeed refers to the condition that a measure 
introduced under a customs union shall not be more rest rictive than before in relation to the trade with 
non-parties to such union.  However, the Appellate  Body refers to it only as one of the conditions 
which needs to be satisfied among others in a pplying Article XXIV defence.  Moreover, it has 
referred to such condition in relation to the time- line between before and after the formation of a 
customs union.  In light of the Appellate Body's in terpretation of paragraphs 5 and 8 of Article XXIV, 
therefore, it cannot be concluded that these provision s allow any measure to be justified only if the 
measure does not raise trade barriers to non-parties.  Japan also notes that the Appellate Body has not 
mentioned that the conditions for the Article XXIV defence are required to be satisfied only when the 
measure in question raises trade-barriers to non-pa rties.  Japan therefore does not agree to Brazil's 
explanation that the MERCOSUR limited exemption is  automatically justified by paragraphs 5 and 8 
of Article XXIV just because it did not raise trade-barriers to non-parties.   
5.78 Secondly, Brazil asserts that the exempti on was indispensable for the formation of 
MERCOSUR in preparation for a possible counterar gument that Brazil should demonstrate the WTO 
consistency of the MERCOSUR limited exemption in  the light of the conditions indicated by the 
Appellate Body in Turkey – Textiles .  According to Brazil, it was Brazil's obligation under 
MERCOSUR to introduce such an exemption in accordance with the order by the MERCOSUR Ad 
Hoc Tribunal.  Brazil claims that MERCOSUR's formation would have been prevented without 
MERCOSUR Members' compliance with its obligations.  
5.79 Regarding such an explanation of Brazil, Japan  points out first that Brazil touched upon only 
one of the conditions indicated by the Appellate Body in Turkey-Textiles .  While Brazil provided a 
partial explanation on the condition that a measure can be introduced only to the extent necessary for 
the formation of the customs union, it did not menti on at all on other requirements such as that "the 
measure at issue is introduced upon the formation  of a customs union".   
5.80 Further, with regard to the condition of "necess ity", on which Brazil seems to have mentioned 
briefly, Japan considers that Brazil's explanation is far from enough.  Brazil argues that it was required to exempt MERCOSUR countries from the im port ban and the fines because of its obligation 
under MERCOSUR to comply with the order by the Ad Hoc Tribunal.  Although Japan does not 
object to Brazil's compliance with its obligation u nder an international agreement other than the 
WTO Agreement, Japan be lieves that the MERCOSUR limited  exemption was not the only way for 
Brazil to comply with the order of the Tribunal.  In other words, Brazil could have complied with the 
Tribunal's order by lifting the import ban and the fines not only for MERCOSUR countries but also for all the other WTO Members in this case where th e Ad Hoc Tribunal just found that Brazil's import 
ban was inconsistent with  MERCOSUR agreement.   
5.81 A similar argument occurred in Turkey – Textiles  concerning this "necessity" requirement.  In 
that case, the defendant claimed that the introdu ction of certain quantitative restrictions were 
necessary because the defendant would have been prevented from forming a customs union without 
the restrictions, and, therefore, su ch restrictions were justified by  Article XXIV.  The Appellate Body 
has declined the argument.  It agreed with the pane l in that not adopting the quantitative restrictions in 
question would not have prevented th e formation of a customs union.  It has also supported the panel's 
observation that there were other alternatives availabl e to the defendant to form the customs union.    
5.82 For the same reason indicated by the panel and the Appellate Body in Turkey – Textiles , Japan 
considers that the MERCOSUR limited exemption is not justified by Article XXIV because an alternative is available to Brazil for the form ation of MERCOSUR.  The formation of MERCOSUR  WT/DS332/R 
 Page 127 
 
 
  would not have been prevented even if Braz il had not introduced the exemption limited to 
MERCOSUR countries.  Brazil could have introduced  alternatively lifting the import ban and the 
fines to all the WTO Members, which also complies with the Ad Hoc Tribunal's order.  As a member 
of not only MERCOSUR but also the WTO, Brazil is  required to satisfy its obligations under both 
agreements at the same time. 
5.83 For all the reasons mentioned so far, Japan c onsiders that Brazil did not establish prima facie 
case in justifying the MERCOSUR limited exemption by Article XXIV.     
(c) Brazil's limited exemption for MERCOSUR count ries is not justified by Article XX(d) 
5.84 In its first written submission, Brazil asserts that its MERCOSUR limited exemption is also 
justified by Article XX(d), because the exempti on is the measure "necessary to secure compliance 
with laws or regulations which are not inconsiste nt with the provisions of [the GATT 1994]".  Setting 
aside the question whether Brazil's municipal la w falls under such laws or regulations, Japan 
considers that MERCOSUR limited exemption cannot be a measure "necessary" to comply with such 
laws or regulations.  As has already mentioned in  this statement, Japan believes that the MERCOSUR 
limited exemption was not the only way to comply with the municipal law or the Ad Hoc Tribunal's 
order, and therefore such an exemption does not sat isfy the requirement of "necessity".  Brazil could 
have alternatively lifted the import ban and the fines not only for MERCOSUR countries but also for 
the other WTO Members. 
5.85 Relating to this point, the Appellate Body in Korea – Various Measures on Beef  has indicated 
that the meaning of the term "necessary" in Article  XX(d) has a range from that of  "indispensable" or 
"of absolute necessity" to that of "making a cont ribution to".  Japan believes that, in examining 
whether the MERCOSUR limited exemption is jus tified under Article XX(d), the term "necessary" 
means "indispensable" or "of absolute necessity" in the light of the obligation of the most-favoured-
nation treatment under the WTO Agreement and  the chapeau of Article XX.   
5.86 Even if, arguendo , the Panel finds that Brazil's measures satisfy the requirement of 
paragraph (d) of Article XX, Brazil still needs to pr ove that its measures also satisfy the requirement 
of the chapeau of Article XX.  The chapeau provi des that a WTO Member may take measures which 
fall under any of the categories set forth in the Ar ticle "[s]ubject to the requirement that such 
measures are not applied in a manner which would c onstitute a means of arbitrary or unjustifiable 
discrimination between countries where the same co nditions prevail".  Japan does not see any reasons 
that justify or necessitate Brazil's discrimination between MERCOSUR countries and other WTO Members, both of which equally export retreaded tyres.      
5.87 In this regard, decisions of the Ad Hoc Tribunal has no bearing with the WTO dispute 
settlement proceeding here.  Thus, Brazil cannot justify the favourable treatment of MERCOSUR 
countries compared to other WTO Members.  
5.88 Therefore, Japan considers that Brazil has not established a prima facie case in justifying the 
MERCOSUR limited exemption by Article XX(d) either. 
5.89 In addition, relating to the chapeau of Article  XX, Japan reiterates that Brazil did not make 
sufficient effort to consult with other non-MERCOSU R countries before or after the imposition of the 
measures in question.  Contrary to the finding of the Appellate Body in US – Gasoline  and US 
- Shrimp
, non-MERCOSUR countries such as the European  Communities or Japan did not even have 
any opportunity to participate in the discussion a nd consultation concerning the justifiability of the 
measure.  In contrast, Brazil made serious effo rt to convince MERCOSUR countries in the course of 
the Ad Hoc Tribunal proceeding, obviously rec ognizing the need for concerted and cooperative 
efforts.  WT/DS332/R 
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  5.90 Assuming the existence of the emergent need to address a threat to human health and 
environment, Brazil should have pursued internati onal cooperation through seri ous consultations with 
interested countries.  By failing to engage in su ch consultation seeking for international cooperation 
"as far as possible," Brazil made an unjustifiable discrimination among WTO Members.  
6. Conclusion 
5.91 For the foregoing reasons, Japan considers that  Brazil's measures are inconsistent with 
Articles I, III:4, XI and XIII and Brazil has not est ablished prima facie case that such measures are 
justified by Articles XX or XXIV. 
F. K
OREA 'S WRITTEN SUBMISSION AND ORAL STATEMENT  
5.92 Korea considers that Brazil's measures affecting the imports of retreaded tyres are 
inconsistent with the relevant provisions of th e GATT 1994 and cannot be justified under Articles XX 
or XXIV.  Therefore, Korea generally supports the arguments raised by the European Communities in 
its First Written Submission.  
1. Brazil's import ban on retreaded tyres cannot be justified under Article XX(b) 
5.93 Korea considers that Brazil's import ban applied by Portaria SECEX 14/2004, is not justified 
by Article XX(b) because it is not a measure necessary to protect human, animal or plant life or 
health. 
5.94 Korea will now examine whether the import ban is justified under both the requirements of 
Article XX(b) and the chapeau of Article XX.   
5.95 Under Article XX(b), the Panel in US-Gasoline  requires that Brazil prove that 1) the policy in 
respect of the measures for which the provision was invoked fell within the range of policies designed 
to protect human, animal or plant life or health and 2) the otherwise inconsistent measures for which 
the exception was being invoked, were necess ary to fulfill the policy objective.  
5.96 In Korea's view it does not seem that banning th e imports of retreaded tyres protects human 
life, health or the environment ag ainst the unnecessary generation of a dditional tyre waste.  Certain 
imported new tyres and retreaded tyres from ME RCOSUR that cannot be retreaded are being 
imported to accumulate as waste.  Brazil also admits  there are retreaded tyres that can be retreaded 
again but all retreaded tyres are banned under the import ban regardless.  Therefore it does not seem that the import ban is designed to protect human life, health and environment to the extent the latter is 
being threatened by the generation of additional waste tyres. 
5.97 Even if the Panel finds that Brazil has satisfied the first requirement, Brazil must still prove 
that the import ban is "necessary" to fulfill its objective.  In determining whether a measure is 
"necessary," Korea – Beef, EC – Asbestos, and Thailand – Cigarettes  indicate several factors that are 
weighed and balanced, including whether the measu re contributes to the realization of the end 
pursued, and whether there is an alternative meas ure which could reasonably be expected to be 
employed that would achieve the same end and th at is less trade restrictive than a prohibition. 
5.98 In Korea's view the ban on imports of retreaded  tyres does not seem to contribute to avoiding 
the unnecessary generation of additional tyre waste wh en new imported and domestic tyres, retreaded 
tyres from MERCOSUR and domestic retreaded tyres that cannot be retreaded are generating such 
waste despite the ban.  Korea considers that the collecting and disposing of waste tyres provided for 
by the Resolutions CONAMA 258 and 301 of 26 August 1999 and 21 March 2002 respectively, 
which the European Communities sets forth as alte rnatives, would achieve the same end the import  WT/DS332/R 
 Page 129 
 
 
  ban seeks to fulfil of avoiding the generation of addi tional waste tyres.  Korea believes that dealing 
with unusable tyres already accumulated and setting pr oportionate disposal requirements for all waste 
tyres for the importation or manufacture of tyres, no t only deals with disposal but also the generation 
of waste tyres, providing a more effective, and less trade restrictive measure in avoiding the unnecessary generation of additional waste tyres in Braz il than the import ban.  Therefore, Korea does 
not view the import ban as "necessary" in protecting human life, health or the environment from the 
unnecessary generation of additional waste tyres. 
5.99 The import ban in Korea's view does not fulfil the requirements of the chapeau of Article XX.  
The chapeau requires that a measure shall not be applied in a manner which would 1) constitute a 
means of "arbitrary or unjustifiable discriminati on between countries where the same conditions 
prevail" or 2) a "disguised restriction on international trade."  In US – Gasoline , the Appellate Body 
stated that the "purpose and object of the introductory clauses of Article XX is generally the prevention of 'abuse of the exceptions of Article  [XX]'."  Jurisprudence has also imposed a 
reasonableness requirement. 
5.100  The Appellate Body in US – Shrimp  stated that:  
"in order for a measure to be applied in a manner which would constitute 'arbitrary or 
unjustifiable discrimination between countri es where the same conditions prevail,' 
three elements must exist.  First, the application of the measure must result in discrimination ... Second, the discrimination must be arbitrary  or unjustifiable  in 
character... Third, this discrimination must occur between countries where the same 
conditions prevail ."   
5.101  Brazil does not dispute the fact that the import ban results in discrimination.  Applying the 
purpose and object of Article XX in interpreting "a rbitrary" and "unjustifiable," these two terms can 
be seen to indicate measures that are not reasonabl e in nature and abusive in the application of 
Article XX(b).  Although certain retreaded tyres th at can be retreaded again would not contribute to 
the "unnecessary generation of additional rubber wast e," all imported retreaded tyres are banned.  
Moreover, retreaded tyres from MERCOSUR are allowed.  Korea considers that the import ban is 
"arbitrary" and "unjustifiable" in nature because of  this unreasonable and abusive application of the 
import ban.  Korea also considers that the import ban discriminates between countries where the same conditions prevail, since the ban does not apply to retreaded tyres from MERCOSUR. 
5.102  The Appellate Body in US – Gasoline  ruled that concepts of "arbitrary or unjustifiable 
discrimination" and "disguised restriction on inte rnational trade" were related concepts which 
"imparted meaning to one another" and "the funda mental theme is to be found in the purpose and 
object of avoiding abuse or illegitimate use of the exception to substantive rules available in 
Article XX."  Thus, Korea considers the import ba n as a disguised restriction on international trade 
pursuant to its discussions above. 
2. Brazil's fines on importation, marketing, transportation, storage, keeping or 
warehousing of imported ret readed tyres cannot be justified under Articles XX(b) 
or XX(d) 
5.103  Korea considers that the fines on importation, ma rketing, transportation, storage, keeping or 
warehousing of imported retreaded tyres applied through Presidential Decree 3919 and 4592 of 14 
September 2001 and 11 February 2003 respectively, ar e not justified under Articles XX(b) or XX(d). 
5.104  Korea considers that the fines do not meet the requirements of Article XX(b) nor the chapeau 
of Article XX as discussed above. WT/DS332/R 
Page 130  
 
  5.105  The Appellate Body in Korea – Beef  provided for two requirements that the Member 
invoking Article XX(d) as a justification has the burden of meeting.  First, it must be shown that "the 
measure must be one designed to 's ecure compliance' with laws or re gulations that are not themselves 
inconsistent with some provision of the GATT 1994" and second that "the measure must be 
'necessary' to secure such compliance." 
5.106  Article XX(d) clearly provides that only those "laws or regulations which are not inconsistent 
with the provisions of this Agreement [emphasis added] " are justified under the exception of 
Article XX(d).  Brazil argues that the import ban wh ich it does not contest is inconsistent with the 
relevant articles of the GATT 1994, is justified by  Article XX(b) and this makes the import ban "not 
inconsistent" with the GATT 1994.  However, Korea believes that a measure which has already been 
deemed GATT inconsistent will not  become consistent through the intermediary of an Article XX 
exception.  Therefore, Korea considers that the fines cannot be justified under Article XX(d). 
3. The State of Rio Grande do Sul's prohibitio n on marketing of imported retreaded tyres 
cannot be justified under Article XX(b)  
5.107  Korea considers that State Rio Grande do Su l's prohibition on the marketing of imported 
retreaded tyres applied by Law 12.114 of 5 July 2004 and Law 12.381 of 28 November 2005 of the 
State Rio Grande do Sul are not justified under Article  XX(b).  Korea respectfully refers the Panel to 
the discussions above. 
4. The MERCOSUR exemption from the import ban and fines cannot be justified under 
Articles XXIV:5 or XX(d) 
5.108  In Turkey – Textiles , the Appellate Body set out a two-prong test for assessing whether 
Article XXIV may justify a measure in consistent with other WTO provisions: 
"First, the party claiming the benefit of this defence must demonstrate that the 
measure at issue is introduced upon the form ation of a customs-union that fully meets 
the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV.  And, second, that 
party must demonstrate that the formation of  a customs union would be prevented if it 
were not allowed to introduce the measure at issue."   
5.109  In regard to the second prong, Korea does not consider that were Brazil not allowed to 
introduce the import ban and fines, the formati on of a customs union would be prevented.  
Article XXIV:8(a)(i) allows restrictive regulations th at are justified under Article XX in the formation 
of a customs union.  Therefore, arguing that the impor t ban and fines are necessary in the formation of 
a customs union while claiming that the import ban and fines are justified under Article XX raises a 
logical contradiction in Brazil's argument.  Sin ce the second prong is not satisfied, Korea considers 
that the MERCOSUR exemption cannot be justified by Article XXIV:5. 
5.110  In Korea's view the MERCOSUR exemption al so cannot be justified under Article XX(d).  
Brazil claims that the exemption to the import ban and fines are necessary to secure Brazil's 
compliance with its own laws and regulations which provide for the implementation of its 
MERCOSUR obligations, that by virtue of Articles XXIV:5 and 8 these laws and regulations are not 
inconsistent with GATT 1994.  Ho wever, as discussed above, "laws or  regulations" which can only be 
claimed, at most, to be justified under an exception of the GATT 1994, cannot be a basis for 
justification under Article XX(d).  Therefore, Korea considers that the MERCOSUR exemption 
cannot be justified as an exception under Article XX(d).  WT/DS332/R 
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  5. Necessity requirement under Article XX(b) 
5.111  In determining whether a measure is "necessary" under Article XX(b), Korea – Beef, 
EC - Asbestos and Thailand – Cigarettes indicate several factors that are weighed and balanced.  
Among them, in Korea's view, a critical factor is wh ether there is an altern ative measure which could 
reasonably be expected to be employed that woul d achieve the same end and that is less trade 
restrictive than a prohibition.  Korea be lieves that Brazil has failed to rebut the 
European Communities' argument that the Resolu tion CONAMA can be such an alternative.   
5.112  The Resolution CONAMA sets certain proportionate disposal requirements of unusable tyres 
for the domestic manufacture of new tyres and impor tation of new and reconditioned tyres.  Brazil 
argues that the Resolution CONAMA cannot be an a lternative because the Resolution deals with the 
final "disposal" of waste tyres in Brazil whereas th e import ban deals with the "generation" of waste 
tyres.  However, in Korea's view, the Resoluti on CONAMA provides for the disposal as well as the 
"generation" of waste tyres.  Disposal requirements for the import of new and retreaded tyres, and the manufacture of domestic new tyres, impose a high cost to the manufacture and imports of these tyres, decreasing the manufacture of new tyres and imports of new and retreaded tyres.  Moreover, the 
absence of a disposal requirement on the production of domestic retreaded tyres will also reduce the 
amount of waste tyres by promoting the domestic retreading of tyres.  Thus, in Korea's view, the Resolution CONAMA restricts the "generation" of waste tyres.  Therefore, Korea believes, in 
protecting human, animal or plant life or health, th e Resolution would be a more effective, less trade 
restrictive alternative. 
6. Chapeau of Article XX 
5.113  To satisfy the "arbitrary or unjustifiable discrimination" requirement of the chapeau of 
Article XX, which seeks to guarantee reasonable and non-abusive application of each of the 
exceptions, US-Shrimp provides that the measures must result in discrimination and the discrimination 
must be arbitrary or unjustifiable in character. 
5.114  Brazil argues in its first submission that its  exemption of MERCOSUR countries from the 
measures on imports of retreaded tyres is not "arb itrary or unjustifiable discrimination" under the 
chapeau of Article XX because Brazil exempted them  by the order of a MERCOSUR tribunal.  Korea 
disagrees.  Korea believes that whether a me asure constitutes "arbitrary or unjustifiable 
discrimination" should be based on the reasonableness of the measure.  If Brazil's argument is supported by the Panel, it will provoke serious syst emic concerns because a member's action can be 
regarded as non-arbitrary and justifiable as long as the action is taken to comply with other 
international agreements.  It means that the right s and obligations of a member can be added or 
diminished by an international agreement to which the member has not committed.  
5.115  With respect to the relationship between Artic le XXIV:5 and the chapeau of Article XX, 
Brazil also seems to argue that Article XXIV:5  justifies its obligations under the chapeau of 
Article XX.  Korea considers that the text of Article XXIV does not support this argument.  The 
Appellate Body in Turkey – Textiles  sets forth two conditions in us ing Article XXIV:5 as a defence 
for a measure that is inconsistent with other provisions: the measure has to be introduced upon the 
formation of a customs union and the formation of the customs union would be prevented if the 
measure was not introduced.  In particular, with regard to the second condition, Article XXIV:8(a)(i) 
explicitly provides that a measure justified under Artic le XX is not within the scope of restrictive 
regulations that need to be liberalized for the formation of a customs union.  It means that the 
inconsistency of Brazil's discriminatory measures under the chapeau of Article XX may not be cured 
by Article XXIV:5.  WT/DS332/R 
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  7. Conclusion 
5.116  For the foregoing reasons, Korea respectfully subm its that Brazil has failed to justify its 
measures affecting the imports of retreaded ty res at issue under the GATT 1994, therefore its 
measures are inconsistent with the re levant Articles of the GATT 1994.   
G. M
EXICO 'S ORAL STATEMENT995 
5.117  Mexico's participation as a third party in these pr oceedings is a reflection of the importance of 
the questions under consideration.  Mexico is re ferring to the interaction between trade and the 
environment, and the relationship between obliga tions and agreements and treaties pursuant to 
Article XXIV and WTO obligations.  These are undoubt edly two of the most controversial issues on 
the agenda of WTO panels and the WTO Appellate Body. 
5.118  Mexico thus has a purely systemic interest in this  dispute.  Mexico is confident that this Panel 
will make every effort to meet its obligation to  secure a positive solution to the dispute, without 
adding to or diminishing rights and obligations, pa rticularly as regards any measures that may be 
adopted under Article XX and with respect to the objectives of Article XXIV. 
H. WRITTEN SUBMISSION AND ORAL STATEMENT OF THE SEPARATE CUSTOMS TERRITORY OF 
TAIWAN , PENGHU , KINMEN AND MATSU  
5.119  The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei") 
joins this case as a third party because of the systemic concerns it has,  especially with regard to the 
interpretation of Article XXIV.  The submission focuses on the interpretation of the exception under 
Article XXIV without taking a position on whethe r MERCOSUR meets the definition of a customs 
union.   
5.120  In its submission, Chinese Taipei shows that Article XXIV has not been properly asserted by 
Brazil to justify its measure, even assuming that MERCOSUR is a customs union.  The submission also addresses Article XX to the extent that Brazil asserts the MERCOSUR exemption as arguments 
to support its Article XX(b) and (d) defences that the import ban and the fines are not arbitrary and unjustifiable under the chapeau.
996  In the view of Chinese Taipei, Article XX chapeau has not been 
correctly interpreted by Brazil.  Finally, the s ubmission discusses briefly the relationship between 
Article XXIV and Article XX chapeau. 
5.121  With regard to the other issues raised  by the European Communities and Brazil, 
Chinese Taipei does not take any position but reserv es the right to express any views at a later stage 
should it choose to do so. 
1. Article XXIV 
5.122  At the outset, Chinese Taipei would like to reiterate  that there are four measures of Brazil that 
the European Communities is alleging to be violatin g WTO rules:  the import ban on retreaded tyres, 
the fines on importation, marketing, transportati on, storage, keeping or warehousing of imported 
retreaded tyres, restrictions on marketing at stat e level, and the exemption from the ban and the fines 
of imports of retreaded tyres from MERCOSUR countries.997  Brazil, in its first written submission, 
                                                      
995 This oral statement was originally made in Spanish. 
996 Brazil's first written submission, 8 June 2006, pa ras. 136-138 (in reference to consistency with 
chapeau of Article XX pursuant to the assertion of (b) as a defence);  paras. 173-185 (in reference to the assertion of Article XX(d) as a defence and consistency with chapeau). 
997 European Communities' first written submission, 27 April 2006, para. 47.   WT/DS332/R 
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  applies different exceptions to different measures.  In its discussion of Article XXIV, Brazil makes 
reference only to the exemption.998  Therefore, Brazil, as the respondent party with the burden of 
asserting and proving its defences, seems to be asser ting the Article XXIV:5 defence with regard only 
to the exemption but not the ban and the fines.    
5.123  However, despite this separation for the purpose of the allegation of specific WTO violations 
between the ban and the fines on the one hand, and the exemption on the other, in application of the 
measures, the exemption's existence depends on the im port ban and the fines, and cannot be separated.  
Therefore, it stands to reason that if the import ba n and the fines are determined by the Panel to be 
inconsistent with provisions of the GATT, the exemption could not stand on its own as a separate 
measure.  In this event, the Panel should exerci se judicial economy on Brazil's Article XXIV defence 
for the exemption.  Chinese Taipei thus discusse s the exemption and Brazil' s Article XXIV defence 
under the assumption that the Panel did not find th e import ban or the fine to be inconsistent. 
5.124  Brazil did not specifically point to Article XXIV:5 as the provision in Article XXIV that gives 
rise to the respondent's right to assert a defence.  Nevertheless, it is the text of Article XXIV:5 
chapeau that sets the lega l basis for the defence: 
"Accordingly, the provisions of this Agre ement shall not prevent, as between the 
territories of contracting parties, the form ation of a customs union or of a free-trade 
area or the adoption of an interim agreemen t necessary for the formation of a customs 
union or of a free-trade area." 
5.125  The Appellate Body, in Turkey – Textiles , in examining the text of the chapeau, recognized 
Article XXIV as an exception that "under certain c onditions, justify the adoption of a measure which 
is inconsistent with certain other GATT provisions , and may be invoked as a possible 'defence' to a 
finding of inconsistency."999  The Appellate Body then went on to  say that two conditions must be met 
in order to benefit from the defence:  first, th e measure in question has to be introduced upon the 
formation of a customs union that is consistent w ith subparagraphs 8(a)(i) and 5(a); and second, the 
formation of the customs union would be prevented if the measure in question was not introduced.1000  
Chinese Taipei submits that these two cond itions are relevant in this case.   
5.126  These conditions derived from the Appellate Body 's examination of the text of the above-
quoted provision as well as the context, which incl uded the rest of Article XXIV:5, paragraph 4 and 
subparagraph 8(a), in accordance with the customary ru les of interpretation of the Vienna Convention.  
Therefore, this interpretation is generally app licable and not dependent on the specific factual 
situation as Brazil argues.1001  The factual situation to keep in mind in this case is that Brazil first 
raised restrictions in the form of an import ban on retreaded tyres.  The exemption that followed did 
not further liberalize trade among ME RCOSUR countries as claimed by Brazil,1002 but should be 
viewed as a rather dangerous partial reversal of the ban, which was implemented, if Brazil's claim 
were to be accepted, for the protection of human, anim al or plant life and health.  Indeed, even if the 
facts were taken into account, considering the im port ban, Chinese Taipei sees no reason for this 
Panel to depart from the Appellate Body's  interpretation of Article XXIV:5.   
                                                      
998 Brazil's first written submission, paras. 163- 172. Brazil does not seem to be making a 
Article XXIV:5 defence with regard to European Commun ities' allegation of violation of WTO rules on the state 
level restrictions, choosing only to raise the Article XX (b) defence in Section D of the submission.  Therefore, 
Chinese Taipei will refrain from dealing with thes e measures under the Article XXIV:5 discussion. 
999 Appellate Body Report on Turkey – Textiles , para. 45. 
1000 Ibid., para. 58. 
1001 Brazil's first written submission, para. 170. 
1002 Ibid., para. 170. WT/DS332/R 
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  5.127  In the view of Chinese Taipei, Brazil does not meet the above conditions as set out by the 
Appellate Body concerning the measures that ex empt imports of retreaded tyres from MERCOSUR 
countries from the ban and the fines.  Regarding th e first condition that the measures at issue were 
introduced upon the formation of the customs union, Brazil, despite its burden of proof, did not discuss it at all in its first written submission.  In the view of Chinese Taipei, the phrase "upon the 
formation" denotes more than a temporal element, because in most cases the formation of the customs 
union is a gradual event that may require additional adjustments even after the official date of the 
formation.  However, the timing of introduction of the measure certainly can be relevant evidence, 
depending on the facts of the case.  The longer the period of time is between the official formation 
date and the introduction of the measure, the less likely the measure was introduced "upon the 
formation of the customs union."  In this case, the im port ban itself, which has nothing to do with the 
"formation", was introduced in September 2000.  The exemptions were introduced in March 2002 
only after the MERCOSUR Arbitral Tribunal ruled against Brazil on the import ban, and more than seven years after the official formation of MERCOSUR. 
5.128  What is more important to the formation is that the measure in question conforms to the 
purpose of a customs union stated in Article XXIV:4.  This is confirmed by the Appellate Body in 
Turkey – Textiles  that "paragraph 4 of Article XXIV constitut es an important element of the context of 
the chapeau of paragraph 5."
1003  Paragraph 4 states that "the purpose of a customs union… should be 
to facilitate trade between the constituent territories and not to raise barriers to the trade of other 
contracting parties with such territories."  A meas ure that does not go toward fulfilling that purpose, 
or ensure that a related measure go toward fu lfilling the purpose, cannot be relevant to the 
"formation".  In the present case, the exemptions are the result of a MERCOSUR ruling regarding the 
import ban and the fines, and have more to do with the initial ban and the fines, rather than facilitating 
trade.  As already stated above, the exemption should be viewed as a partial re versal of the ban, which 
was implemented, according to Brazil, for the protection of human, animal or plant life and health.  Therefore, the exemption cannot be considered to be introduced "upon the formation of the customs 
union." 
5.129  Turning to the second condition, a measure that is not introduced "upo n the formation" and 
does not conform to the purpose stated in paragr aph 4 cannot prevent the formation of the customs 
union had it not been allowed to be introduced.  Br azil argued in its submission that "the formation of 
MERCOSUR indeed would have been prevented if it s constituent territories had not been allowed to 
introduce a measure prohibiting the adoption of new trade restrictions among the parties,"
1004 and that 
Brazil is required to comply with a MERCOSUR d ecision to eliminate restrictive regulations of 
commerce within the constituent territories.  Howeve r, again, the exemptions are measures exempting 
the application of import ban and fines that Brazil itself introduced, which a MERCOSUR dispute 
tribunal had deemed to be violating an existing MERCOSUR rule that precisely prohibits the adoption 
of new trade restrictions among the parties.  The rule that Brazil claims to be essential to the 
formation of the customs territory already exists and Brazil should already have been complying with 
it.  Brazil's introduction of the ban and the fines violated that rule, and the introduction of the exemption corrects that violation.  At most, th e exemption restored the trade within MERCOSUR 
prior to the introduction of the ban and provided a remedy for the an act of violation in the 
MERCOSUR.  Brazil cannot subsequently come back  and claim that the continued non-introduction 
of the measures that corrected the initial violation would have prevented the formation of the customs 
union, since Brazil violated the rule in the first place.   
5.130  It bears reminding that Brazil, as the respondent, bears the burden of proof in its assertion of 
the Article XXIV:5 defence.  As the above discussion shows, Brazil has not ad equately shown that the 
                                                     
 
1003 Turkey – Textiles , para. 56. 
1004 Brazil's first written submission, para. 171.  WT/DS332/R 
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  exemption meets the two conditions outlined by the Appellate Body.  Therefore, Brazil cannot benefit 
from the Article XXIV:5 defence. 
2. Article XX chapeau 
5.131  Brazil argues in its first written submission that  the import ban and the fines are consistent 
with the chapeau of Article XX  because the MERCOSUR exemptions were introduced to comply 
with a MERCOSUR decision and dispute ruling, and thus are not arbitrary or unjustifiable.1005  I n  
Chinese Taipei's view, Brazil bases its argument on an incorrect reading of Article XX chapeau. 
5.132  The application of Article XX exceptions is dependent on "the requirement that such 
measures are not applied in a manner which would c onstitute a means of arbitrary or unjustifiable 
discrimination between countries wher e the same conditions prevail."1006  While Chinese Taipei does 
not disagree with Brazil's position, as confirmed by the Appellate Body in US – Gasoline ,1007 that the 
"discrimination" Article XX chapeau should not be  interpreted in the same manner as the MFN 
treatment obligation in Article I or the national treat ment obligation in Article III, Brazil unfortunately 
did not examine the chapeau in th e context of the specific exceptions  under which it seeks to justify 
its measures. 
5.133  Brazil states that, "[t]o be contrary to the ch apeau, the distinction between Mercosul countries 
and other WTO Members would have to  be 'arbitrary or unjustifiable'."1008  Brazil  then went on to 
conclude that its measures were not arbitrary or unjustifiable because there exists a valid reason for 
the exemption of MERCOSUR countries.  However,  the obligation under Article XX chapeau is not 
met by the asserting Member simply for having a reas on for its discrimination.  Whether the measures 
constitute "arbitrary or unjustifiable discrimination" must be viewed pursuant to an examination of 
"countries where the same conditions prevail." 
5.134  The "countries" are WTO Members between whom th e discrimination is alleged, and in this 
case, the European Communities and the countries of the MERCOSUR except Brazil.  "The same 
conditions prevail" cannot simply mean any co nditions, otherwise the asserting Member can easily 
argue in every case that the same conditions do not prevail between the countries being compared, 
thus the discrimination is not arb itrary or unjustified.  This woul d render the chapeau meaningless.  
The only reasonable way of finding whether "the same conditions" indeed prevail between the 
countries being compared would be to examine thes e conditions in the context of specific exception 
asserted under Article XX. 
5.135  For the import ban and the fines, Brazil asserts the Article XX(b) defence.1009  Therefore, in 
examining whether there is "arbitrary or unjustif iable discrimination between countries where the 
same conditions prevail," the conditions must rela te to the necessity, as Brazil argues, "to protect 
human, animal or plant life or health."1010  The same conditions would prevail if the countries being 
compared have similar impact on  human, animal or plant life or health.   
5.136  In the present case, MERCOSUR and the Eur opean Communities, and presumably other 
WTO Members that export retreaded tyres, assuming th at Brazil is justified in considering retreaded 
tyres to be harmful, are in the same conditions to impact human, animal or plant life or health.  Given 
the import ban on retreaded tyres is as important as Brazil claims to the protection of human, animal 
                                                      
1005 Ibid., paras. 130-138 (relating to XX(b)), 182-185 (relating to XX(d)). 
1006 GATT Article XX chapeau. 
1007 Appellate Body Report on US – Gasoline , p. 23. 
1008 Brazil's first written submission, para. 136. 
1009 Ibid., paras. 86-156 (relating to the im port ban),157-162 (relating to the fines). 
1010 GATT Article XX(b). WT/DS332/R 
Page 136  
 
  or plant life or health, Brazil would have no justif ication in treating imported retreaded tyres, or 
countries that export retreaded tyres for that matter , differently.  In other words, if the ability to 
jeopardize human, animal or plant life or health n ecessitates an import ban, any loophole in the ban 
would seriously jeopardize that total protection.  Vi ewed from this perspective, an exemption only to 
MERCOSUR countries seems to be an arbitrary or  unjustifiable discrimination between countries 
where the same conditions prevail.   The MERCOSUR exemption thus cannot be the reason that the 
ban and the fines are consistent with the chapeau. 
5.137  Brazil also argues that the fines are "necessary to  secure compliance with laws or regulations 
which are not inconsistent with the provisions of this Agreement" pursuant to Article XX(d).
1011  
There may be other arguments that the fines are not  "necessary" for compliance with the import ban.  
But for the same reason as above, the MERCOSUR exemption cannot be the reason that the fines are 
consistent with the chapeau.  Again, in relation to the necessity of securing compliance to the import 
ban, the same conditions prevail for the MERCO SUR countries and other WTO Members.  An 
exemption would be a big loophole in the overall compliance scheme to the import ban.  Therefore, an exemption that favors only the MERCOSUR countri es still cannot be consis tent with Article XX 
chapeau. 
3. Relationship between Article XXIV and Article XX Chapeau 
5.138  Brazil, in using the MERCOSUR exemption ju stifying the consistency of Article XX 
chapeau, seems to be also implicitly arguing that Ar ticle XXIV may be interp reted as an exception to 
the requirements in the chapeau.  Such an argument ca nnot stand.  It is worth bearing in mind that the 
goals of the two provisions are diametrically opposed.  Article XX and its chapeau deal with 
restrictions or barriers that are justifiable under certain exceptional reasons.  Article XXIV deals with 
further liberalization of trade among certain territories.  Precisely because the goals are dissimilar, Article XX measures are explicitly exempted from further liberalization of customs unions under 
Article XXIV:8(a)(i) and (ii).  No similar explic it exemption exists with respect to Article XXIV 
anywhere in Article XX.  This is significant because  it shows that the drafters of the Agreement did 
not contemplate Article XXIV overriding Article XX,  but does allow Article XX to override certain 
requirements under Article XXIV. 
5.139  From a policy perspective, it is also importa nt that the exceptional reasons to maintain 
restrictive measures can override other provisions of GATT, and precisely because of this broad ability to override other provisions, th e integrity of the chapeau is preser ved to prevent abuse.  As the 
Appellate Body states in US – Gasoline ,  
"[t]he chapeau is animated by the princi ple that while the exceptions of Article XX 
may be asserted as a matter of legal right, they should not be so applied as to frustrate or defeat the legal obligations of the holder of the right under the substantive rules of  
the General Agreement.  If those exceptions ar e not to be abused or misused, in other 
words, the measures falling within the particular exceptions must be applied 
reasonably, with due regard both to th e legal duties of the party claiming the 
exception and the legal rights of the other parties concerned."
1012 
5.140  Therefore, in order to maintain the balance of obligation and rights under Article XX, the 
ability to assert the general exception must be checked by the chapeau to prevent abuse.  
Article XXIV cannot be interpreted as to allow the Member asserting the Article XX defence to 
escape the scrutiny under the chapeau. 
                                                      
1011 Brazil's first written submission, para. 161. 
1012 US – Gasoline , p. 22.  WT/DS332/R 
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  I. THAILAND 'S ORAL STATEMENT  
5.141  In general, Thailand recognizes the environmenta l concerns relating to retreaded tyres raised 
by Brazil in its first written submission.1013  However, Thailand does not address the details of the 
Brazilian measure at issue.  Thailand simply notes that the disposal of shorter lifespan used and 
retreaded tyres raises significant concerns for both the environment and human, animal or plant life or 
health.  These include, for example, the accumulation of  landfill and resultant release of contaminants.   
5.142  Thailand considers that Members, including Braz il, are entitled to take necessary measures to 
protect human, animal or plant life or health so  long as the measures are not applied in a manner 
constituting arbitrary or unjustifiable discriminati on, and in accordance with the other conditions set 
forth under Article XX.    
5.143  Therefore, Thailand requests the Panel to give careful consideration to the environmental and 
health issues raised in this proceed ing and to ensure that its ruling fully protects the rights of Members 
under Article XX to take necessary steps to safeguard  the environment and to protect public health. 
J. UNITED STATES ' WRITTEN SUBMISSION AND ORAL STATEMENT  
5.144  The European Communities argues – and Brazil does not dispute – that Brazil's ban on 
importation of retreaded tyres is inconsistent with Article XI, and that certain additional restrictions 
imposed at the federal and state level are inconsiste nt with Articles XI and III:4.  Thus, the question 
remains as to whether Brazil's measures ar e nonetheless permissible under Article XX. 
1. Legal analysis of Article XX(b) 
5.145  While the United States does not express a view in  its submission as to whether the particular 
facts of this case would support the conclusi on that Brazil's measures are justified under 
Article XX(b), several statements by the parties regarding the legal requirements for establishing an 
Article XX(b) defence merit comment. 
5.146  As both parties appear to agree, in evaluati ng whether Brazil has established that the import 
ban is covered by Article XX(b), the Panel must fi rst determine whether the measure is "necessary to 
protect human, animal or plant life or health," and then assess whether it satisfies the terms of the 
chapeau to Article XX. 
5.147  With respect to establishing whether a measu re is "necessary", the Appellate Body has 
described the word "necessary" as "normally denot[ing]  something 'that cannot be disposed with or 
done without, requisite, essential, needful.'"1014  While "necessary … 'is not limited to that which is 
'indispensable' or 'of absolute n ecessity' or inevitable'," the Appe llate Body has stated that a 
"'necessary measure" is "located significantly closer  to the pole of 'indispensable' than to the opposite 
pole of simply 'making a contribution to'."1015  To evaluate whether a measure meets this requirement, 
the Appellate Body has used a weighing and bala ncing approach, taking into account a number of 
different factors, including the impact on trade of the measure being challenged, the importance of the 
interests or values pursued, and whether there exis ts a reasonably available alternative that is 
consistent with a Member's WTO obligations.1016 
                                                      
1013 Brazil's first written submission.  
1014 Appellate Body Report on Korea – Various Measures on Beef , paras. 160-61. 
1015 Appellate Body Report on Korea – Various Measures on Beef , paras. 160-61. 
1016 The United States notes that in their submissions, both Brazil and the European Communities 
appear to suggest that where a measure causes particular impacts or is intended to achieve particular objectives, 
that fact is dispositive of whether th e measure is "necessary." As a legal matter, the United States does not, for WT/DS332/R 
Page 138  
 
  5.148  In applying this analysis to the measure at issue, Brazil makes several arguments that do not 
accord with a proper interpretation of Article XX(b).  First, Brazil argues that the impact of the import 
ban is "balanced by disposal obligations on domestic producers."
1017  Whether or not true, the 
statement that domestic producers may be required to comply with other costly obligations is 
irrelevant to establishing whether or not maintaini ng the challenged measure is "necessary" within the 
meaning of Article XX(b). 
5.149  Second, in discussing whether an alternate meas ure is "reasonably ava ilable," Brazil appears 
to misstate the burden of proof.  Article XX(b) is an affirmative defence;1018 as the party invoking that 
provision, Brazil has the burden of demonstrating th at the import ban is "necessary."  In examining a 
parallel provision under the GATS in US – Gambling , the Appellate Body stated that "it is not the 
responding party's burden to show, in the first in stance, that there are no reasonably available 
alternatives to achieve its objectives," but that "[i]f … the complaining party raises a WTO-consistent 
alternative measure that, in its view, the responding party should have taken, the responding party will 
be required to demonstrate … why the proposed alternative is no t, in fact, 'reasonably available'."1019  
Similarly, in Korea – Beef , the Appellate Body upheld the pane l's examination of alternatives and 
finding that it was up to the responding party, Korea,  to demonstrate that the alternatives were not 
reasonably available.1020 
5.150   Contrary to the reasoning in Korea – Beef and US – Gambling , Brazil states that "[t]he 
European Communities … has the burden of demonstrating that there is an alternative measure that is 
reasonably available to Brazil."1021  However, Brazil retains the burden of demonstrating "necessity," 
including the unavailability of alternatives de scribed by the European Communities.  The 
European Communities' description of alternative m easures in its submission was sufficient such that 
the burden of demonstrating that the measures identified by the European Communities are not 
"reasonably available" lies with Brazil.  Third,  Brazil suggests that the alternative reasonably 
available measure must be "less trade-restrictive."1022  There is no basis in the text of Article XX(b) for 
this requirement.  In this regard, it is worth notin g that the concept of less trade restrictive measures 
arises in two WTO agreements only:  the SPS Agre ement and the TBT Agreement.  Incorporating 
such a requirement into Article XX(b) would "add to" or "diminish" the rights and obligations of 
Members under the covered agreements, contra ry to Articles 3.2 and 19.2 of the DSU .  Rather, as the 
Appellate Body has explained, the trade impact of the challenged measure is one element that may be useful in determining whether the measure is "necessary."
1023 
5.151  The United States contends that certain aspect s of Brazil's analysis of its measures under 
Article XX(b) do not accord with a proper interpre tation of that provision.  In particular, the 
United States disagrees with Brazil's arguments that disposal obligations imposed on domestic 
producers are relevant to establishing necessity, th at the European Communities bears the burden of 
                                                                                                                                                                     
example, agree that simply because, as Brazil claims, the import ban is  designed to achieve the policy goal of 
protecting human life or health, "it must be accepted" that the ban is "necessary" or that because, as the 
European Communities argues, the measure challenged is a "total import ban," it is "impossible to consider" it 
necessary. Brazil's first written submission, para. 101 ;  European Communities's first written submission, 
para. 115. 
1017 Brazil's first written submission, para. 110. 
1018 E.g., Appellate Body Report on US – Wool Shirts and Blouses , p. 14 (noting that Article XX is "in 
the nature of [an] affirmative defence" and that "[i]t is only reasonable that the burden of establishing such a 
defence should rest on the party asserting it"). 
1019 Appellate Body Report on US – Gambling , paras. 309-311. 
1020 Appellate Body Report on Korea – Various Measures on Beef , paras. 172-173. 
1021 Brazil's first written submission, para. 117. 
1022 Ibid., para. 116. 
1023 Appellate Body Report on Korea – Various Measures on Beef , para. 164.  WT/DS332/R 
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  proof in establishing that the alternative measure it d escribed is reasonably available, and that the test 
under Article XX(b) is whether any such alternativ e measure must be less trade restrictive.   
5.152  In addition to these legal issues, as the European Communities, Japan1024, and Korea1025 have 
observed, Brazil's characterization of the effect of the import ban raises several important factual questions.  These questions may also bear on the Panel's analysis of the measures under 
Article XX(b).   
5.153  While Brazil asserts that "[f]or every retreaded ty re that is not imported into Brazil, there is 
one more used tyre that is collected in Brazil and retreaded,"
1026 it elsewhere says that retreaded tyres 
in Brazil are often derived from imported used tyres.1027  Therefore, the ban may not result in 
retreading of additional domestic used tyres but ma y simply increase the number of used tyres being 
imported and retreaded in Brazil.  As a result, Brazil may have the same number of tyres to dispose of 
as it would without the ban.  Furthermore, while Br azil argues that "a retreaded tyre has a shorter 
lifespan than a new tyre" because new passe nger car tyres can be retreaded only once,1028 it also 
acknowledges that most new passenger car tyres produced in Brazil are not in fact retreaded,1029 and 
therefore, under Brazil's reasoning, typically have a lifespan comparable to that of a retreaded tyre.  
Brazil also acknowledges that a retreaded tr uck tyre can be retr eaded sever al times;1030 therefore, it 
does not necessarily have a shorter lifespan than a new tyre. 
5.154  Given these various assertions, even if one accepts for the sake of argument that a reduction 
in waste tyres is a relevant test for Article XX(b) purposes, it is unclear whether the ban in fact results in an appreciable reduction in waste tyres, as Brazi l asserts.  Should the Panel conclude that the ban 
does not in fact result in an appreciable reduction in  waste tyres, this factor may appropriately weigh 
against a finding that the measure is "necessary":  the ban would not contribute appreciably to the end 
pursued.
1031  Similarly, such a conclusion may also, as Korea suggests, indicate that the measure does 
not fall within the range of policies designed to protect human, animal or plant life or health. 
2. Brazil's reliance on Article XXIV is misplaced  
5.155  In its submission, Brazil does not dispute that th e application of import restrictions to tyres 
from Members that are not parties to MERCOSUR is in consistent with Article I:1 and Article XIII.  
Rather, it argues that the exemption of MERCOSUR pa rties from its import ban on retreaded tyres is 
authorized under Article XXIV:5,1032 which provides that "the provisions of [the GATT 1994] shall 
not prevent … the formation of a customs union or of a free-trade area."    
5.156  However, the United States submits that Brazi l's reliance on Article XXIV is misplaced:  
MERCOSUR has not been notified under Article XX IV as a customs union within the meaning of 
that provision, as required by Article XXIV:7.  The Understanding on the Interpretation of 
Article XXIV, which is an in tegral part of the GATT 1994,1033 makes clear that satisfaction of the 
notification requirement contained in Article XXIV:7 (a) is a prerequisite to demonstrating that a 
                                                      
1024 Third Party Submission of Japan, paras. 31-33. 
1025 Third Party Submission by the Republic of Korea, para. 12. 
1026 Brazil's first written submission, para. 107. 
1027 Ibid., para. 153. 
1028 Ibid., para. 16. 
1029 Ibid., para. 79. 
1030 Ibid., para. 16. 
1031 Mexico – Taxes on Soft Drinks , para. 74 (in context of Mexico's Article XX(d) defence, stating that 
"a measure that is not suitable or capable of securing compliance", or whose design does not "contribute 'to 
secur[ing] compliance, ' is not "necessary"). 
1032 Brazil's first written submission, para. 163 et seq.  
1033 See GATT 1994 para. 1(c)(iv). WT/DS332/R 
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  regional arrangement is a customs union or free-trade area consistent with Article XXIV.  As 
Members agreed in Article 1 of the Understanding, "Customs unions, free-trade areas, and interim agreements leading to the formation of a customs union or free-trade area, to be consistent with 
Article XXIV, must satisfy, inter alia,  the provisions of paragraphs 5, 6, 7 and 8 of that Article."  
Absent notification, Brazil cannot demonstrate that MERCOSUR in fact so comp lies.  Brazil's limited 
analysis of MERCOSUR's compatibility with Article  XXIV:5 is plainly insufficient to support its 
claim that MERCOSUR "complies with the requirements of Article XXIV" as a whole.
1034 
5.157  Rather than notifying the arrangement under Ar ticle XXIV, MERCOSUR parties notified the 
MERCOSUR treaty instruments pursuant to paragraph 4(a) of the Ministerial Decision of 28 November 1979 regarding "Diffe rential and More Favourable Treatment, Reciprocity and Fuller 
Participation of Developing Count ries" (the "Enabling Clause").
1035  In notifying the agreement 
pursuant to paragraph 4(a) of the Enabling Clause rather than Article XXIV:7(a), MERCOSUR parties identified the agreement as an "action to indu ce an arrangement" described in paragraphs 1, 2, 
and 3 of the Enabling Clause.  Regional arrangeme nts as defined in these provisions have different 
characteristics and are subject to different obligations than customs unions and free-trade areas 
described in Article XXIV.
1036  Brazil has not asserted that the measures in question, if inconsistent 
with either or both Articles I and XIII, could be justified by the Enabling Clause. 1037 
3. The Amicus Curiae submission of Humane Society International. 
5.158  Finally, with respect to the amicus curiae  submissions received by the Panel, pursuant to the 
authority given to the Panel under DSU Article 12 to  establish its own working procedures, the Panel 
may consider these submissions to the extent they are relevant to issues in dispute in this proceeding.  
Should the Panel choose to consider the submissi on of Humane Society International in this 
proceeding, the United States would like to clarif y one reference to a statement made by the 
Unites States Environmental Protection Agency (EPA ).  The statement, which appears in paragraph 
10 of the Humane Society submission, describes certa in "downsides" to exporting "scrap tyres".  The 
United States would like to note that it does not co nsider marketable retreaded tyres to be "scrap 
tyres"; therefore, the EPA statement does not relate to the exportation of the products subject to the 
measures at issue in this dispute. 
VI. INTERIM REVIEW 
6.1 On 12 March 2007, the Panel submitted its Interim Report to the parties.  On 26 March 2007, 
Brazil submitted a written request for review of the Interim Report and the European Communities 
informed the Panel that it did not have any commen ts on the Interim Report.  On 2 April 2007, the 
European Communities submitted written comments on Brazil's request for interim review.   
6.2 In accordance with Article 15.3 of the DSU, this section of the Panel's report sets out the 
Panel's response to the arguments made at the interim re view stage, to the extent that an explanation is 
necessary.  The Panel has modified aspects of its report in light of the parties' comments where it 
considered appropriate, as explained below.  The Pa nel has also made certain editorial corrections to 
the Interim Report for the purposes of clarity and accuracy.  References to sections, paragraph 
numbers and footnotes in this Section VI relate to the Interim Report. 
                                                      
1034 Brazil's first written submission, para. 169. 
1035 L/4903, adopted 28 November 1979, BISD 26S/203.  See L/6985 (March 5, 1992) (notifying 
MERCOSUR agreements "in pursuance of paragraph 4(a) of the Ministerial Decision of 28 November 1979 regarding 'Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing 
Countries', known as the Enabling Clause"). 
1036 Compare GATT 1994 Article XXIV to Enabling Clause, para. 2. 
1037 The United States expresses no view at this time  as to whether the MERCOSUR arrangement meets 
the requirements of the Enabling Clause.  WT/DS332/R 
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  A. BRAZIL 'S COMMENTS ON SECTION VII.A.2( A) OF THE INTERIM REPORT  
1. Risks from the disposal of waste tyres 
6.3 Brazil submitted that it consistently argued throughou t the dispute that the risks that make the 
import ban necessary arise not only from the accu mulation and transportation, but also from the 
disposal of waste tyres.  Brazil therefore requested  that the Panel acknowledge , in paragraph 7.65, the 
existence of disposal risks in addressing the existen ce of risks within the meaning of paragraph (b) of 
Article XX and refer to the section on the reasonabl e availability of alternative measures for specific 
risks arising from the disposal of waste tyres.  Brazi l also suggested to have this change reflected in 
relevant parts of Section VII.A.2.(a) of the report, in particular paragraphs 7.65, 7.109, 7.146, 7.177, 
7.213 and 7.214. 
6.4 The European Communities objected to Brazil's request and argued that Brazil never 
presented a case that the protection of human, animal  and plant life and health from the disposal risks 
was the objective of the import ban and that Brazil's arguments relating to such risks were related to the existence of alternative measures.  The Europe an Communities also considered that it is not the 
function of the interim review stage to allow the pa rties to correct or modify their submissions made 
at earlier stages of the proceeding. 
6.5 The Panel confirms its view that Brazil did not suffi ciently substantiate its arguments on the 
disposal risks in the context of its arguments in resp ect of risks within the meaning of paragraph (b) of 
Article XX, although it referred in general terms to the risks from both the accumulation and disposal 
throughout its written submissions.  We note Brazil's comment that it addressed the disposal risks in 
more detail when discussing available alternativ es because it wanted to avoid redundancy and not 
because disposal risks were not among the risks target ed by the import ban.  However, Brazil made no 
reference, in addressing the existence of a risk unde r paragraph (b) of Article XX, to its discussion on 
the disposal risks in the altern ative measures section during the course of the dispute.  The Panel 
therefore declines to accept Brazil's request, and has re vised footnote 1066 to pa ragraph 7.39 to reflect 
additional support for the Panel's view. 
2. Contribution of the measure to the objective 
6.6 Brazil requested that since it has argued that a retrea ded tyre that is not imported is replaced 
by either a retreaded tyre or a new tyre, capable of future retreading, this be reflected in paragraphs 
7.123 and 7.125. 
6.7 The European Communities disagreed with Brazil's request because according to the 
European Communities, it is incorrect  to say that the parties agreed that an imported retreaded tyre 
would be replaced by a tyre retreaded domestically or  a new tyre, capable of future retreading.  The 
European Communities argued that although it agreed that imported retreaded tyres would, to some 
extent, be in competition both with retreaded tyr es produced domestically, normally using imported 
used tyres, or with new tyres, it disagreed that new tyres sold in Brazil were capable of future 
retreading. 
6.8 The Panel notes that the parties agree that a retreaded ty re that is not imported will, at least to 
some extent, be replaced by either a retreaded tyre or a new tyre.  Where the parties disagree, however, is whether new tyres sold in Brazil are retreadable and if so, whether they are actually 
retreaded.  The Panel has revised paragraphs 7.123 a nd 7.125 to clarify the parties' arguments in this 
regard. WT/DS332/R 
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  3. Preliminary issue:  retreaded tyres 
6.9 Brazil submitted that Brazil did not take a position on whether retreaded tyres themselves 
pose any particular risks to human health.  For Braz il, the safety of retreaded tyres was not a legally 
relevant issue in this dispute.  Therefore, Br azil requested that Brazil's position on this point be 
clarified in paragraph 7.48.  The European Communities did not provide any comments on this 
request. 
6.10 The Panel has revised paragraph 7.48 as requested by Brazil. 
4. Mosquito-borne diseases 
6.11 Brazil recalled that it never suggested that mos quito-borne diseases present "the greatest risk" 
arising from waste tyres as indicated in paragraph 7.56.  Brazil requested to have paragraph 7.56 
changed to reflect that the risks caused by tyres a nd certain disposal options are no less significant.  
The European Communities did not provide any comments on this request. 
6.12 The Panel has made the requested change to paragraph 7.56. 
6.13 Brazil also requested that since it never argued th at mosquito-borne diseases pose a risk to 
plant life or health, the Panel change paragraph 7.92 , which appeared to suggest that Brazil had made 
such an argument.  The European Communities did not provide any comments on this request. 
6.14 In light of Brazil's clarification, the Panel has deleted the last sentence of paragraph 7.92. 
5. Alternative measures 
6.15 Brazil considered that devulcanization could be mo re properly classified as material recovery 
than material recycling.  Brazil thus requested that  the Panel change paragra phs 7.199 and 7.208 in the 
alternative measures section to have this point clarified.  The European Communities did not 
provide any comments on this request. 
6.16 In assessing devulcanization as an alternative to the import ban, the Panel took into account, 
inter alia , Brazil's statement that it was practically  impossible to recycle a tyre because 
devulcanization, which was breaking down of a tyre , was cost-prohibitive, resulted in pollution and 
produced poor-quality rubber with limited demand a nd applications.  The Panel also observes that 
Brazil did not make a distinction, in the course of  the dispute, between material recycling methods 
and other methods that could be more properly cl assified as material recovery.  Accordingly, the 
Panel declines to accept Brazil's request. 
B. B
RAZIL 'S COMMENTS ON SECTION VII.A.2( B) OF THE INTERIM REPORT  
6.17 Brazil considered that it consistently treated the import ban and the MERCOSUR exemption 
as two separate measures, contained in the same le gal instrument.  In Brazil's view, the MERCOSUR 
exemption is not part of the design of the import ba n, although it is part of the design of the same 
legal instrument containing the im port ban.  Brazil also clarified that it did not argue that the 
exemption should not be considered under the chap eau of Article XX.  Therefore, Brazil requested 
that the Panel change pa ragraph 7.237 accordingly. 
6.18 The European Communities disagreed with Brazil and asked that the Panel not accept 
Brazil's request since paragraph 7.237 referred correctly to Brazil's argument during the Panel 
proceeding.  WT/DS332/R 
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  6.19 In paragraph 7.237, the Panel found that Brazil held an inconsistent position with respect to 
the MERCOSUR exemption and its relevance to th e Panel's analysis of the import ban under the 
chapeau of Article XX in light of Brazil's argument that the exemption is not part of the design of the 
import ban , but at the same time is part of the design of the measure rather than part of its application.  
Brazil clarified, however, that its position is not inco nsistent in stating that the exemption was not part 
of the design of the import ban, but it was part of the design of the same legal instrument containing 
the import ban.  The Panel also recalls Brazil's response to Panel question No. 49: 
"There is no defined set of factors on the basis of which it may be determined 
whether a measure is being applied in an arbitrary or unjustifiable manner. ... It is 
concerned with the manner in which the measure  is applied.  Any and all factors that 
would help determine whether the Member acted in good faith and had good cause 
for applying the measure in the manner that it did are relevant. ... Also relevant in this 
case are the reasons and circumstances that led Brazil to exempt MERCOSUR countries from the import ban. ..." 
In light of Brazil's clarifications and given that the Panel's findings in 7.237 are not essential for the 
Panel's analyses in paragraphs 7.238 and 7.239, th e Panel has decided to de lete paragraph 7.237 and 
has added a sentence in the beginning of paragrap h 7.238 to clarify the fact that the MERCOSUR 
exemption is contained in Portaria 14/2004. 
VII. FINDINGS 
A. T
HE BAN ON THE IMPORTATI ON OF RETREADED TYRES  
7.1 The European Communities  claims that Brazil imposes a prohibition on the importation of 
retreaded tyres into Brazil inconsis tent with Article XI of GATT 1994.1038  T h e  
European Communities also submits that its cha llenge extends to any prohibition on the importation 
of used goods to the extent that such prohibitions are applied to retreaded tyres.1039 
7.2 Brazil  presents no arguments in relation to the viol ation of Article XI itself and states that it 
does not contest that the import prohibition is prima facie  inconsistent with Article XI:1.1040  Brazil, 
however, claims that its import prohib ition is justified under Article XX(b). 
7.3 The Panel will thus consider the European Commun ities' claim under Article XI:1 first and 
then, as necessary, the parties' arguments on Braz il's defence under Article XX(b) of GATT 1994.  
                                                      
1038 European Communities' first written submission, paras. 88-91.  In its panel request, the 
European Communities identif ied Portaria SECEX 14/2004 in rela tion to its claim under Article XI:1: 
 
"The imposition of an import ban on retreaded tyres, notably by virtue of 
Portaria No. 14 of 17 November 2004 of the Secretariat of Foreign Trade of 
the Brazilian Ministry of Development, Industry and International Commerce that prohibits the issuance of import licenses for retreaded tyres". 
 
1039 European Communities' first written submission, para. 59 and footnotes 34 and 48. 
1040 Brazil's answer to Panel question No. 33.  Brazil itself refers to Portaria SECEX 14/2004 as "the 
import ban" throughout its written submissions.  See, for example, the legal argument section of Brazil's first 
written submission. WT/DS332/R 
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  1. Does Brazil impose an import prohibitio n on retreaded tyres inconsistent with 
Article XI:1 of GATT 1994? 
7.4 In its panel request, the European Commun ities identifies Portaria SECEX 14/2004 as the 
legal basis of an import ban on retreaded tyres.
1041  The European Communities has also indicated in 
its first written submission that it is challenging Port aria SECEX 14/2004 as the "current legal basis of 
the ban on importation of retreaded tyres into Brazil" .  In this connection, the Panel notes that the 
European Communities also identifies, in its panel re quest, an additional set of measures that it claims 
also constitute an import prohibition on retreaded tyres. 
7.5 The Panel will first examine the European Communities' claim in relation to 
Portaria SECEX 14/20041042, and then turn to the additional set of measures identified by the 
European Communities in its panel request. 
(a) Portaria SECEX 14/2004 
7.6 Under Chapter III of Portaria SECEX 14/2004 (Import Licensing), imports into Brazil are 
divided into three categories: imports exempt from licensing ; imports subject to automatic licensing ; 
and imports subject to non-automatic licensing .  Articles 9 and 35 identify "used materials" as goods 
subject to non-automatic licensing.  Within Chapte r VI, which further addresses the category of "used 
materials", Article 40 specifies that import licences will not be issued for imports of "retreaded and 
used tyres". 
7.7 The relevant provisions of Portaria SECEX 14/2004 read as follows:  
"TITLE I (Importation) CHAPTER III (Import Licensing)  
Section III (Non-Automatic Licensing) 
Article 9 – The following imports are subject to non-automatic licensing: ... II –  when imported in the following situations: ... 
 e) used materials; 
                                                     
 
1041 As noted above in paragraph 2.4 of the descriptive part of this report, the products at issue in this 
case are retreaded tyres classified under HS subheadings 4012.11, 4012.12, 4012.13, and 4012.19 and thus cover all types of retreaded tyres listed under these subh eadings, namely tyres used on motor cars, buses and 
lorries, aircrafts and all other types of retreaded tyre s.  UNECE Regulations No. 108 and 109, which cover 
respectively passenger cars and commercial vehicles and their trailers, provide that  "retreading" means the 
generic term for reconditioning a used tyre by replacing the worn tread with new material and may also include 
renovation of the outermost sidewall surface (Exhibit EC -6, para. 2.37).  Accord ing to the Regulations, 
"retreading" covers three process methods, namely (1) top-capping (replacem ent of the tread), (2) re-capping 
(replacement of the tread and with the ne w material extending over part of th e sidewall) and (3) bead to bead (or 
referred to as remoulding by Brazil) (replacement of th e tread and renovation of the sidewall including all or 
part of the lower area of the tyre).  (See the parties' responses to panel question No.1). 
1042 European Communities' panel request, European Communities' first written submission, paras. 49, 
56, 59, 88, and European Communities' answer to panel question No. 27.    WT/DS332/R 
 Page 145 
 
 
   ... 
CHAPTER VI (Imports of Used Materials) Article 35 – Importing used goods requires a non-automatic license before shipping 
the goods from abroad.  
... 
Article 40 – An import license will not be granted for retreaded and used tyres, 
whether as a consumer produce or feed stock, 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 proceeding from the MERCOSUR Member States under the Economic Complementation Agreement No. 18. 
Sole paragraph – Imports originating in  and coming from MERCOSUR must comply 
with the technical regulations adopted by  the National Institute for Metrology, 
Standardization and Industrial Quality (IN METRO) for the product in question and 
with the regulations under MERCOSUR rul es of origin and regulations of the 
environmental authorities." 
7.8 With respect to how Portaria SECEX 14/2004 opera tes in relation to the imports of retreaded 
tyres, the European Communities argues that Article 40 of Portaria SECEX 14/2004 provides that 
no import licences shall be granted for the importati on of retreaded tyres into Brazil, and since, 
according to Brazilian law, such licences are necessary  in order to import retreaded tyres, Portaria 
SECEX 14/2004 prohibits the importation of retr eaded tyres into Brazil (except for MERCOSUR 
members).  In other words, the European Communities claims that the denial of the right to an import 
licence amounts to a denial of the right to import. 
7.9 To assess the European Communities' claim in this regard, the Panel  will first consider the 
obligations under Article XI:1. 
7.10 Article XI:1 of GATT 1994 provides: 
"No prohibitions or restrictions other than duties, taxes or other charges, whether 
made effective through quotas, import or export licenses or other measures, shall be 
instituted or maintained by any [Member] on the importation of any product of the 
territory of any [Member] or on the exporta tion or sale for export of any product of 
the territory of any [Member]." 
7.11 Article XI:1 prohibits both "prohibitions" and "r estrictions" with respect to the importation of 
any goods from other Members.  There is no am biguity as to what "prohibitions" on importation 
means:  Members shall not forbid the importation of any product of any other Member into their 
markets.  As to "restrictions" on importation, Artic le XI:1 provides that restrictive measures in the 
form of "quotas, import or export licenses or other measures" are "restrictions" on importation within 
the meaning of Article XI.   
7.12 In light of this, we will consider whether Po rtaria SECEX 14/2004 operates to "prohibit or 
restrict" the importation of retreaded tyres in a manner inconsistent with Article XI:1. 
7.13 Although the terms of Portaria SECEX 14/2004 do not provide for an outright prohibition on 
the importation of "retreaded tyres", the language of Article 40 is clear, as confirmed by Brazil, in prohibiting the issuance of import licences for "used and retreaded" tyres, except for remoulded tyres WT/DS332/R 
Page 146  
 
  from MERCOSUR countries.
1043  Brazil has also clarified that this wording should be understood to 
refer to both "used tyres" and "retreaded tyres".1044 
7.14 Reading Article 40 in the overall context of Po rtaria SECEX 14/2004, including Article 9II(e) 
which requires import licences for the importation of u sed materials, and taking into account the fact 
that the category of "used materials" in Portaria SECEX 14/2004 a priori  covers retreaded tyres (so 
that an import licence would in principl e be required to import retreaded tyres)1045, it is clear that 
Portaria SECEX 14/2004 operates so as to prohibi t the importation of retreaded tyres and, thus, 
constitutes a prohibition on importation that falls with in the scope of Article XI:1.  Indeed, as noted 
above, Brazil itself refers to the measure as "the impo rt ban" and, thus, does not contest the fact that 
Portaria SECEX 14/2004 is an import prohibition contrary to Article XI:1.  
7.15 In sum, although Portaria SECEX 14/2004 does not provide for an outright ban on 
importation, by prohibiting the issuance of impor t licences for retreaded tyres, which would be 
necessary for their  importation, it has the effect of prohibiting the importation of retreaded tyres.  The Panel thus finds that Portaria SECEX 14/2004 is in consistent with Article XI:1 of GATT 1994. 
(b) Other measures 
7.16 The European Communities submits that its challenge against Brazil's ban on the 
importation of retreaded tyres also extends to an y prohibition on the importation of "used goods" to 
the extent that such prohibitions  are applied to retreaded tyres.
1046 
7.17 In its panel request, the European Communities identifies a set of other measures relating to 
its claim under Article XI:1 as follows: 
"The adoption of a set of measures banning the importation of used tyres, which are 
sometimes applied against imports of retreaded  tyres, despite the fact that these are 
not used tyres." 
7.18 Then, in a footnote to its panel request, the European Communities lists the following seven 
measures:  (1) Portaria DECEX 8 of 13 May 1991;  (2) Portaria DECEX 18 of 19 July 1992;  (3) Portaria IBAMA 138-N of 22 December 1992;  (4) Portaria MICT 370 of 28 November 1994;  
(5) Interministerial Portaria 3 of 12 September 1994 of the Ministry of Industry, Commerce and 
Tourism and of the Ministry of the Economy;  (6) Resolution CONAMA 23 of 12 December 1996;  and (7) Resolution CONAMA 235 of 7 January 1998.
1047 
                                                      
1043 The European Communities also submits in the factual part of its submission that although 
retreaded tyres are not specifically mentioned in Ar ticles 9 and 35, which require import licences for the 
importation of used goods, the Brazilian authorities in fact apply the same requirement of an import licence also 
to the importation of retreaded tyres.  Thus, accordi ng to the European Communiti es, the prohibition on the 
granting of import licences for retreaded tyre s in Article 40 of Portaria SECEX 14/2004 amounts to a 
prohibition on the importation of "retreaded tyres". (Eur opean Communities' first written submission, paras. 57 
and 90)  See also Brazil's answ er to panel question No. 113. 
1044 Brazil's answer to panel question No. 30.  Throughout the report, the terms "used tyres", "used tyre 
carcasses" and "casings" have the meaning provided by parties in panel question 1. 
1045 Brazil's answer to panel question No. 1.  Brazil has confirmed that "[h]ad imports of used and 
retreaded tyres been permitted, import licences would have been required under Articles 9(II)(e) and 35 of 
Portaria SECEX No. 14/2004.  These provisions provide for "non-automatic licensing" for used goods, which 
means that import licences are required to import these products.  (Brazil's answer to panel question No. 113) 
1046 European Communities' first written submission, para. 59 and footnotes 34 and 48. 
1047 See footnote 1 in the European Communities' panel request.  WT/DS332/R 
 Page 147 
 
 
  7.19 Among these seven measures, the European Comm unities further elaborates on three of them, 
in a footnote to the factual argument part of its first submission: 
"Such measures include the following: Portaria DECEX 8
 of 13 May 1991, today in force in the version of Portaria MICT 
370 of 28 November 1994, which bans th e importation of used consumer goods 
(Article 27), includes used tyres. 
Resolution CONAMA 23  of 12 December 1996 provides in its Article 4 that inert 
waste is not subject to import restrictions , but exempts from this the importation of 
used tyres, which is prohibited."1048  (underline added) 
7.20 It is well established that the complaining party bears the burden of proving, based on 
evidence and arguments, an inconsistency with sp ecific provisions of the covered agreements to 
establish a prima facie  case in respect of its claim.1049  In this regard, the Panel recalls the 
Appellate Body's observation that the evidence and arguments underlying a prima facie  case must be 
sufficient to identify the challenged measure and its basic import, identify the relevant WTO provision 
and obligation contained therein, and explain the ba sis for the claimed inconsistency of the measure 
with that provision.1050 
7.21 Given that the European Communities singles out in its first written submission Portaria 
DECEX 8/1991 as amended by Portaria MICT 370/19941051 and Resolution CONAMA 23/1996, 
among the seven measures on used goods listed in it s panel request, we consider these three measures 
to be the specific legal bases of  the European Communities' claim th at its challenge to Brazil's import 
ban on retreaded tyres is also related to certa in Brazilian measures on importation of used goods.  
Moreover, the European Communities submits the legal texts of these measures as part of its 
exhibits.1052   
7.22 In respect of the other four measures listed in its panel request, however, the 
European Communities has neither identified nor provided any evidence or arguments relating to 
them in the course of its submissions to the Panel, despite its assertion that the 
European Communities' challenge against Brazil's ban on the importation of retreaded tyres also 
relates to "any" prohibition on the importation of used goods.  As recalled above, the European Communities as the party complaining in the present case bears the burden of proving, 
based on evidence and arguments, an inconsiste ncy with specific provisions of the covered 
                                                     
 
1048 European Communities' first written submission, footnote 34 to para. 59.  In its factual argument 
section, the European Communities also refers to two other measures (Portaria 8 of 25 September 2000 and 
Portaria 17 of 1 December 2003) (European Communities' first written submission, para s. 50 and 54) and to a 
draft law of October 2005 (European Communities' first written submission para. 58).  These measures, which 
are not expressly referred to in the European Comm unities' panel request, appear to be mentioned for 
background rather than as legal basis for a claim. 
1049 Appellate Body Report on US – Gambling, para. 138, citing Appellate Body Report on Canada – 
Dairy (Article 21.5 – New Zealand and US II) , para. 66. 
1050 Appellate Body Report on US – Gambling , paras. 140-141, quoting the Appellate Body Report on 
US –Wool Shirts and Blouses, p.16. 
1051 Brazil has confirmed that Portaria DECEX No . 8/1991, as amended by Portaria MICT No. 
370/1994, is currently legally in for ce, with the exception of its Articles 19 to 21 and 29 to 32, which were 
revoked by Article 55(II) of Portaria SECEX No. 17/03.  According to Brazil, the parts revoked do not affect 
trade in used or retreaded tyres. (Brazil's answer to  panel question 111)  As such, the Panel will consider 
Portaria DECEX No. 8/1991 as the measure at issue for th e purpose of this case, sin ce the provisions pertinent 
to the European Communities' claim in this case are not amended by Portaria MICT No. 370/1994. 
1052 Exhibits EC-31, 32, 33. WT/DS332/R 
Page 148  
 
  agreements to establish a prima facie  case in respect of its claim.  We also recall that the evidence and 
arguments underlying a prima facie  case must be sufficient, inter alia , to "identify" the challenged 
measure and its basic import.
1053  We do not consider that the Eu ropean Communities has established 
its prima facie case in respect of its claim on these four measures. 
7.23 We will now proceed to examine whether the European Communities has made a prima facie  
case of its claim that Portaria DECEX 8/1991 and Resolution CONAMA 23/1996 also operate so as 
to constitute a prohibition on the importation of retreaded tyres. 
(i) Portaria DECEX 8/1991  
7.24 As noted above, the European Communities claims that Portar ia DECEX 8/1991 and 
Resolution CONAMA 23/1996, as measures prohibiting th e importation of used goods, also apply to 
the importation of retreaded tyres and, to that extent, these measures are in violation of Article XI:1 of 
GATT 1994. 
7.25 In this connection, Brazil has explained that "used tyres", at least for the purpose of Brazilian 
internal regulations, include "retreaded tyres"1054 and that its measures prohibiting the importation of 
used goods, in particular Portaria DECEX 8/1991, had also been applied to retreaded tyres until it 
clarified the import prohibition on retreaded tyres by introducing Portaria SECEX 8/20001055, which 
now exists in the form of Portaria SECEX 14/2004.1056   
7.26 Portaria DECEX 8/1991 reads, in relevant part, as follows: 
"Article 27 – Imports of used consum er goods shall not be authorised. ..."1057 
                                                      
1053 See above para. 7.20  The Appellate Body in US – Gambling also stated:  "Given that such a 
requirement applies to panel requests at the outset of a pa nel proceeding, we are of th e view that a prima facie  
case – made in the course of submissions to the panel – demands no less of the complaining party."  We also 
note the Appellate Body's observation in US – Carbon Steel : "The party asserting that another party's municipal 
law, as such, is inconsistent with relevant treaty obliga tions bears the burden of introducing evidence as to the 
scope and meaning of such law to substantiate that asse rtion.  Such evidence will typically be produced in the 
form of the text of the relevant legislation or legal instruments, which may be supported, as appropriate, by evidence of the consistent application of such laws, th e pronouncements of domestic courts on the meaning of 
such laws, the opinions of legal experts and the writi ngs of recognized scholars."  (para. 157, citing 
Appellate Body Report on US – Wool Shirts and Blouses , p. 14) 
1054 Brazil's answer to panel question No. 1. 
1055 Portaria SECEX No. 8/2000 provides: 
"Rule no. 8, DATED SEPTEMBER 25, 2000 
(published in the Official Gazette (DOU) of 09/27/2000) 
The BUREAU OF FOREIGN TRADE, em powered under item I of article 
17, Annex I of Decree no. 3405, dated April 6, 2000, resolves: 
Art. 1. No import license will be gr anted for retreaded and used tyres, 
whether as a consumer product or feedstock, classified under the code 4012 of the MERCOSUR Common Nomenclature (NCM). 
Art. 2.  Decree Rule no. 18 dated July 13, 1992 is hereby cancelled. 
Art. 3.  The Rule herein takes effect on the date of its publication." 
(Exhibits BRA-71 and EC-26). 
 
1056 Brazil's answer to panel question 29 and Brazil's fi rst written submission, para. 65.  In response to a 
question from the Panel to explain ho w Brazil clarified its policy that its existing import ban on used consumer 
goods included retreaded tyres, Brazil explains that it clarified the rules by adopting Portaria SECEX 8/2000 to 
explicitly prohibit imports of retreads and used tyres, because some courts and customs authorities erroneously 
concluded that those regulations dealt with used consumer  goods in general and did not apply to retreaded tyres. 
1057 Exhibits EC-31 and 32.  WT/DS332/R 
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  7.27 The text of Article 27 of Portaria DECEX 8/ 1991 is clear in prohibiting imports of used 
consumer goods.  Thus, if the term "used consumer goods" can be proven to include "retreaded tyres", 
then it would follow that Portaria DECEX 8/1991 operates to prohibit the importation of retreaded tyres inconsistently with the requirements of Article XI:1. 
7.28 In this regard, the Panel  recalls Brazil's explanation above  that its measures prohibiting the 
importation of used goods, in particular Portaria DECEX 8/1991, had also been applied to retreaded 
tyres until Portaria SECEX 8/2000 was introduced to specifically prohibit the importation of retreaded 
tyres. 
7.29 In light of the clear language of Portaria  DECEX 8/1991 prohibiting "used consumer goods" 
and Brazil's own admission that it has app lied that measure to retreaded tyres, the Panel finds that 
Portaria DECEX 8/1991 constitutes an import prohi bition inconsistent with the requirements of 
Article XI:1 of GATT 1994. 
(ii) Resolution CONAMA 23/1996 
7.30 Resolution CONAMA 23 of 12 December 1996 provides, in relevant part: 
"Article 4 – Inert waste (Category III) is not subject to import restrictions with the 
exception of used tyres whose importation is prohibited. ..."
1058 
7.31 According to the preamble of Resolution CONAM A 23/1996, the purpose of the regulation is 
to control and prohibit the entry of waste into Br azil due to the real and potential risks of waste 
handling for public health and the environment.1059  Resolution CONAMA 23/1996 then sets out the 
definitions of different categories of waste, such  as hazardous waste (Category I), non-inert waste 
(Category II) and inert waste (Category III) and co ntains provisions on whether the imports of each 
category of wastes are allowed. 
7.32 As shown above, Resolution CONAMA 23/1996 stipul ates in Article 4 that "Inert waste is 
not subject to import restrictions", but "with th e exception of "used tyres" whose importation is 
prohibited."  From an initial reading of the provision , it appears that used tyres are considered as part 
of inert waste that should not be subject to import restrictions.  However, it is followed by a clause 
stating that the importation of used tyres is, by excep tion, prohibited.  Thus, as in the case of Portaria 
DECEX 8/1991 above, if "used tyres" in Resolu tion CONAMA 23/1996 also include "retreaded 
tyres", Resolution CONAMA 23/1996 will be found to  be inconsistent with Article XI:1.   
7.33 In this respect, however, Brazil has clarified that Resolution CONAMA 23/1996 does not 
refer to retreaded tyres because they are not waste, while used tyres are waste as they are traded under 
HS code 4012.20 and expressly referred to in Annex 10 of the Resolution.1060  In light of Brazil's 
clarification to the effect that Resolution CONAMA 23/1996 does not operate to prohibit the 
importation of retreaded tyres and given the absence of evidence showing otherwise, the Panel finds 
that Resolution CONAMA 23/1996 is not in violation of Article XI:1. 
                                                      
1058 Exhibit EC-33.  Brazil has confirmed that Reso lution CONAMA 23/1996 is currently legally in 
force (Brazil's answer to  panel question No. 112). 
1059 Brazil has also confirmed that Resolution CONAMA 23/1996 regulates management and 
importation of wastes into Brazil (Braz il's answer to panel question No. 112). 
1060 Brazil's answer to panel question No. 112. WT/DS332/R 
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  (c) Conclusion 
7.34 For the reasons provided above, the Panel finds that the prohibition on granting of import 
licences under Portaria SECEX 14/2004 is an import prohibition inconsistent with the requirements 
under Article XI:1 of the GATT 1994.  We also find that Portaria DECEX 8/1991, to the extent that it prohibits the importation of retrea ded tyres, is also an import prohibition inconsistent with 
Article XI:1.  We do not find, however, that Re solution CONAMA 23/1996 is inconsistent with 
Article XI:1 in respect of the importation of retreaded  tyres.  As for the other four measures listed in 
the European Communities' panel request, the Panel considers that the European Communities has not 
established a prima facie  case regarding these claims. 
2. Is Brazil's import prohibition justified under Article XX of GATT 1994? 
7.35 Brazil  argues that the import prohibition is justified pursuant to Article XX(b) of 
GATT 1994.
1061  The European Communities  considers that the measure is not justified under that 
provision.1062  
7.36 The European Communities  and Brazil  agree that a responding party invoking an 
affirmative defence bears the burden of demonstrati ng that its measure satisfies the requirements of 
the invoked defence.1063  If Brazil adduces sufficient evidence to raise a presumption that its defence is 
justified, then the burden shifts to the Eur opean Communities to rebut the presumption.   
7.37 The Panel  notes that as outlined by the Appellate Body in the US – Gasoline  case, a two-
tiered test must be presented under Article XX:  it must be demonstrated that the measure (i) falls 
under at least one of the ten exceptions listed under Article XX, and (ii) satisfies the requirements of 
the preamble.  These are cumulative requirements and as confirmed by the Appellate Body in the 
US – Shrimp  case, this sequence of steps "reflects, not inadvertence or random choice, but rather the 
fundamental structure and logic of Article XX".1064  Moreover, in the US – Gasoline  case, the 
Appellate Body found that the bur den of showing that a measure complies with the requirements of 
the introductory clause of Article XX falls on the de fending party, even after that party has established 
that the measure qualifies under one of  the paragraphs of Article XX.1065   
7.38 Therefore, Brazil, as the party invoking an exception under Article XX, is required to show 
first, that the measure1066 falls within the scope of paragraph (b) of Article XX, and second, that the 
measure is applied in a manner that is c onsistent with the chapeau of Article XX.1067 
                                                      
1061 Brazil's first written submission, para. 83. 
1062 European Communities' first written submission, para. 116. 
1063 Brazil's first written submission, para. 89; Eu ropean Communities' first written submission, 
para. 95. 
1064 Appellate Body Report on US – Shrimp , para. 119. 
1065 Appellate Body Report on US – Gasoline , p. 21. 
1066 We recall our earlier findings that two measures , Portaria SECEX 14/2004 and DECEX 8/1991, are 
inconsistent with Article XI, in that they prohibit the importation into Brazil of retr eaded tyres.  We understand 
Brazil's defence under Article XX to relate to both of thes e measures.   Therefore, references to the "measure at 
issue" in this section of the findings should be understood  to refer to the import prohibition on retreaded tyres, as 
it is contained in both of these instruments.   
1067 European Communities' first written submission,  para. 95; Brazil's  first written submission, 
para. 89.  WT/DS332/R 
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  (a) Is Brazil's import prohibition justified under paragraph (b) of Article XX? 
7.39 Brazil  argues that the measure is justified unde r Article XX(b) because it is necessary to 
protect "human health and the environment"1068 against risks arising from the accumulation of waste 
tyres.1069 
7.40 Article XX(b) covers measures "necessary to prot ect human, animal or plant life or health".  
As outlined by the Panel in US – Gasoline , two elements must exist for a measure to be justified 
under paragraph (b): 
(a) the policy in respect of the measures for wh ich the provision is invoked falls within 
the range of policies designed to protect human, animal or plant life or health; and  
(b) the inconsistent measure for wh ich the exception is invoked is necessary  to fulfil the 
policy objective.1070 
7.41 The European Communities  and Brazil agree that Brazil, as the party invoking 
Article XX(b), must prove, first, that the policy pur sued falls within the range of policies designed to 
protect human, animal or plant life or health and, secondly, that the inconsistent measures for which 
the exception is invoked are necessary to fulfil the policy objective.  We will therefore consider both 
aspects in turn.  
(i) "To protect human, animal or plant life or health" 
7.42 As recalled above,  a party invoking Article XX(b) as a defence needs to establish, inter alia , 
that "the policy in respect of the measures for which the pr ovision was invoked fell within the range of 
policies designed to protect human, animal or plant life or health."1071  To address this question, the 
                                                      
1068 Brazil defines "the environment", in this context, as comprising animal or plant life or health.  See 
para. 7.46.  
1069 Brazil's first written submission, paras. 6, 94; Brazil' s second written submission, paras. 1, 3, 4, 10.  
We note in this regard that Brazil claims that its import ban is necessary to protect human health and the 
environment against risks arising from both accumulation and disposal of waste tyres.  However, in identifying 
a risk within the meaning of Article XX(b) (i.e. "to protect human, animal or plant life or health"), Brazil has 
substantiated only its arguments relating to the risks arising from the accumulation of waste tyres (See Brazil's 
arguments in Section II.A of its second written submission (section on policies designed to protect human, 
animal, and plant life and health) in which Brazil has provided only its arguments on the accumlation risks 
(paras. 17-34)  For example, the subh eadings of this section are as follows: 1. Accumulation of waste tyres 
creates a risk of dengue, yellow fever, and other danger ous diseases in Brazil; 2. Accumulation of waste tyres 
creates a risk of tyre fires and toxi c leaching, which have substantial a dverse effects on human haealth and the 
environment; and 3. The import ban is designed to reduce  the risks of waste tyres accumulation and disposal).  
On the other hand, Brazil had addressed its arguments on the disposal risks in the context of the reasonable 
availability of alternative measures (See Brazil's ar guments on alternative measures in its first written 
submission, paras. 122-124 and in its second written subm ission, paras. 41-100).  We note that the third sub-
heading of Section II.A of Brazil' s second written submission noted above addresses both the accumulation and 
disposal risks.  However, despite Brazil's reference to the disposal risks in that heading, Brazil addresses only 
the risks associated with the accumulation of waste tyres in the main text following that sub-heading.  Brazil 
starts its argument by stating that "the import ban on retreaded tyres is designed to reduce the risks of mosquito-
borne diseases and tyre fires by reducing the accumulation of waste tyres in Brazil". (emphasis added) (Brazil's 
second written submission, para. 34).  Therefore, our analys is of whether there exists a risk in relation to the 
product at issue will be limited to th e parties' arguments on the risks that  allegedly arise from the accumulation 
of waste tyres.  We will address the risks arising from th e disposal of waste tyres in the context of our analysis 
of proposed alternative measures below. 
1070 Panel Report on  US – Gasoline , para. 6.20.  See also  US – Tuna (EEC) , para. 5.29. 
1071 Panel Report on US – Gasoline , para. 6.20. WT/DS332/R 
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  Panel in EC – Asbestos considered it necessary first to determine the existence of a health risk , i.e. 
whether the product at issue (i.e. chrysotile-asbestos in  that case) posed a risk to, in that case, human 
life or health.
1072  Once such a risk is found to exist, the objective of the measure should be assessed to 
determine whether the policy underlying the measure is to reduce such a risk and thus falls within the 
range of policies covered by Article XX(b). 
7.43 Therefore, to determine whether Brazil's policy in respect of its import prohibition for which 
Article XX(b) is invoked falls within  the range of policies designed to protect human, animal or plant 
life or health, the Panel will examine first whether a risk exists to "human" and "animal or plant" life 
or health respectively and, if so, whether the objectiv e of the import ban, as declared by Brazil, is to 
reduce such risk.  Before turni ng to these issues, however, the Panel will address some preliminary 
issues. 
Preliminary issues  
7.44 First, the Panel  considers it necessary to clarify the scope of interests to be protected under 
Article XX(b).  As noted above, Article XX(b)  allows WTO Members to introduce a measure 
necessary to protect "human, animal or plant life or h ealth".  Thus, the risk to be identified within the 
meaning of Article XX(b) is that posed to "human, animal or plant life or health".  Brazil , however, 
has used the term "environment" throughout its subm issions in the context of this provision, and 
claims that its import ban is justified by Article XX(b) because it is a measure necessary to protect "human life and health and the environment ".  Brazil further submits that the exceptions embodied in 
Article XX(b) preserve the ability of Members to pr ohibit imports that endange r human life or health 
and the environment .  
7.45 Concerning Brazil's use of the term "environment"  in the context of its arguments relating to 
Article XX(b), the European Communities submits that Article XX(b) is not a provision which 
covers measures designed to protect the environment in general.
1073  According to the 
European Communities, a measure designed to protect other concerns, including issues of environmental protection not related to human, animal or plant life or  health, cannot be justified under 
Article XX(b).  The European Communities emph asizes that a justification under Article XX(b) 
requires a sufficiently close link between the measure at issue and the protection of health, as general 
references to environmental protection are not suffi cient to meet the threshold of Article XX(b). 
7.46 In this regard,  the Panel notes that Brazil has clarified that it uses the term "environment" to 
refer to "animal or plant life or health" within the meaning of Article XX(b).
1074  The Panel thus 
understands that Brazil uses the term  "environment" in this case as s horthand for "animal or plant life 
or health".  In our view, therefore, to the extent th at Brazil is invoking the existence of a risk to animal 
or plant life or health within the meaning of Article  XX(b), it has to establish the existence not just of 
risks to "the environment" generally, but specifica lly of risks to animal or plant life or health.1075  This 
is consistent with the terms of Article XX(b).  We will therefore examine in the following sections 
whether Brazil's import prohibition is designed to protect "human, animal or plant life or health." 
                                                      
1072 Panel Report on EC – Asbestos, para. 8.170.  The panel in that case said that "the use of the word 
"protection" implies the existence of a risk." See Panel Report on EC– Asbestos, para. 8.184. 
1073 European Communities' first oral statement, paras. 12-16, 20. 
1074 Brazil's first written submission, footnote 1; Brazil's second written submission, footnote 1. 
1075 We note in this regard the scope of "animal" and "plant" provided in the footnote to Annex A 
("Definitions") of the SPS Agreement.  It states, "['animal'] includes fish and wild fauna ; 'plant' includes forests 
and wild flora ..." (emphasis added)  Although addressed in th e context of the SPS Ag reement, we will keep 
these scopes in mind in examining the evidence before us on the existence of risks to animals and plants within 
the meaning of Article XX(b); the SPS Agreement, in its preamble, sets out that th e SPS Agreement elaborates 
rules for the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary 
measures, in particular the provisions of Article XX(b).  WT/DS332/R 
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  7.47 The second preliminary issue relating to the identification of the risk concerns the product 
affected by Brazil's import prohibition.  In this instance, Brazil argues that its ban on retreaded tyres 
is justified in order to address risks arising from the accumulation of waste  tyres.  The 
European Communities submits that the product at issue in the measure is not waste tyres, but 
retreaded tyres, which do not create any particular risk, and thus the ban imposed on retreaded  tyres 
cannot be justified under Article XX(b).1076  The European Communiti es argues that the health 
concerns identified by Brazil are not caused directly by retreaded tyres and thus the ban has no direct 
relationship with life and health protection. 
7.48 First, the Panel recognizes that retreaded tyres are not the same as waste tyres.  Retreaded 
tyres1077 are products that are intended to be utilized on vehicles.  They differ both from new tyres, in 
that they are produced using used tyre casings and thus are not "new" to that extent, and from waste 
tyres1078, which are tyres that have reached the end of their useful life and must be managed as waste.  
We also note that neither party has suggested that retreaded tyres in themselves pose any particular 
risks, provided they comply with appropriate safety standards.1079  In the present case, the product 
subject to the import ban (i.e. retreaded tyres) is not the product (i.e. waste tyres) generating the risks 
to human, animal or plant life or health that th e import ban purports to address.  The European 
Communities' argument appears to assume that a measure regulating a given product can only be justified under Article XX(b) if that product directly gives rise to the risk concerned.  
7.49 We note that there have been other cases in wh ich the characterization of the risk being 
addressed through the measure did not necessarily invo lve the exact product affected by the measure.  
For example, the type of risks found to ex ist within the meaning of Article XX(b) in US – Gasoline 
was health risks that did not, strictly speaking, directly relate to gasoline itself (i.e. the product 
targeted by the measure) but rather to air polluti on caused by the consumption of gasoline.  We also 
note that, in its Report on EC – Approval and Marketing of Biotech Products , the Panel states that 
"there is nothing in the text of Annex A(1) [to the Agreement on the Application of Sanitary and 
Phytosanitary Measures (SPS)] to suggest that the pr oduct subject to an SPS measure – in this case, a 
GM plant to be released into the environment – ne ed itself be the pest which gives rise to the risks 
from which the measure seeks to protect."
1080   
7.50 In respect of the specific measure before us, we note that Brazil claims that it seeks to prevent 
further generation of waste tyres as much as possible,  in order to address the problems associated with 
the accumulation of waste tyres, in particular the a lleged risks caused by waste tyres.  While retreaded 
tyres are distinct from waste tyres, we note that wa ste tyres are nothing other than tyres that have 
reached the end of their lifecycle as tyres.  In these circumstances, we see no reason to assume at this 
stage of our analysis that a measure relating to retr eaded tyres is incapable of bearing a relationship to 
risks arising from the accumulation of waste tyres. 
7.51 In light of these clarifications, the Panel  will now proceed to the question of whether Brazil 
has provided sufficient evidence to de monstrate the existence of  risks to human, animal or plant life 
or health in relation to the accumulation of waste tyr es.  In this regard, we recall the statement by the 
Appellate Body that the panel is entitled, in the exer cise of its discretion as the trier of facts, to 
                                                      
1076 European Communities' first written submission, pa ras. 102-103; European Communities' first oral 
statement, paras. 16-18; European Communities' answer to panel question 34. 
1077 For the definition and scope of retreaded tyres, see footnote 1041 above. 
1078 Both parties submit that "waste tyres" are includ ed in a category of "used tyres", classified under 
HS subheading 4012.20 (The parties' responses to panel question No. 1). 
1079 European Communities' first written submission, paras. 32-34; Brazil's first written submission, 
para. 62; European Communities' first oral statement, para s. 3, 17; Brazil's first oral statement, paras. 6-7; 
European Communities' answer to panel question No. 34. 
1080 Panel Report on EC – Approval and Marketing of Biotech Products , para. 7.258. WT/DS332/R 
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  determine that certain elements of evidence should be accorded more weight than other elements and 
that that is the essence of th e task of appreciating evidence.
1081   
7.52 We will address first the aspects relating to " human life or health", and then the aspects 
relating to "animal or plant life or health". 
Risks posed to human life or health  by the accumulation of waste tyres  
7.53 Brazil submits that the accumulation of waste tyres creates a risk of mosquito-borne diseases 
such as dengue and yellow fever in Brazil because waste tyres create perfect breeding grounds for 
disease carrying mosquitoes and that these diseases are also  spread through inters tate transportation of 
waste tyres for disposal operations.1082  Brazil also argues that the accumulation of waste tyres creates 
a risk of tyre fires and toxic leaching and that this  risk has substantial adverse effects on human health 
and the environment.1083 
7.54 The European Communities  does not dispute the existence of health risks to humans in 
connection with mosquito-borne diseases.1084  The European Communiti es argues, however, that 
Brazil has not demonstrated that there is a speci fic link between the spread of mosquito-borne 
diseases or the harmful effects of tyre fires and the accumulation of waste tyres.  The European 
Communities is also of the view that not all wast e tyres cause health risks, but only incorrectly 
managed waste tyres.1085 
7.55 The Panel notes that Brazil identifies mosquito-bor ne diseases and toxic emissions from tyre 
fires as health risks po sed by the accumulation1086 of waste tyres to humans.  The Panel will address 
these risks in turn, starting with the alleged hea lth risks associated with mosquito-borne diseases. 
                                                      
1081 Appellate Body Report on EC – Asbestos , para. 161.   The Appellate Bo dy also stated in that case: 
"In justifying a measure under Article XX(b) of the GATT 1994, a Member 
may also rely, in good faith, on scientific sources which, at that time, may represent a divergent, bu t qualified and respected, opinion.  A Member is 
not obliged, in setting health policy, automatically to follow what, at a given 
time, may constitute a majority scientific opinion.  Therefore, a panel need not, necessarily, reach a decision under  Article XX(b) of  the GATT 1994 on 
the basis of the "preponderant" weight of the evidence." (Appellate Body 
Report on EC – Asbestos , para. 178) 
1082 Brazil's first written submission, paras. 22-28; Braz il's first oral statement, paras. 13-20; Brazil's 
second written submission, paras. 15-33, 94; Brazil's second oral statement, para. 8.   
1083 Brazil's second written submission, paras. 33, 61. 
1084 European Communities' second oral statement, para. 16; European Communities' answer to panel 
question No. 34. 
1085 European Communities' response to panel question 34. 
1086 Although Brazil does not define th e term "accumulation" of waste tyres, it refers to the following 
concepts throughout its submissions:  "dumped or stockpiled"; "discarded or stockpiled"; "widespread dumping and stockpiling and landfilling"; "abandoned on the side of the road or stockpiled in a large tyre dump"; 
"stockpiled and illegally dumped"; "in stockpiles and in the countryside"; and "tyres discarded into the 
environment" (Brazil's first written submission, paras. 3, 17, 18, 20, 22; Brazil's first oral statement, paras. 11, 
27; Brazil's second written submission, paras, 17, 33).  The European Communities also refers, for example, to 
both "abandoned or negligently placed in monofills" (E uropean Communities' resp onse to panel question 
No. 34). 
 Thus, in light of the parties' descriptions of various forms of "accumulated" waste tyres, we 
understand that "accumulation" of waste tyres in the contex t of the present case refers to  the fact that waste tyres 
may accumulate.  The term "accumulate" is commonly defi ned as "heap up; gradually get an increasing number 
or quantity of; form an increasing mass or quantity " and "accumulation" as "the action of accumulating 
something; the process of growing in  amount or number; an accumulated ma ss; a quantity formed by successive  WT/DS332/R 
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  Mosquito-borne diseases 
7.56 As noted above, Brazil identifies mosquito-borne  diseases, notably dengue, yellow-fever and 
malaria, as a major risk to human health and life cau sed by the accumulation of waste tyres.  We will 
thus now examine whether Brazil has demonstrated the existence of each of these mosquito-borne diseases in Brazil and, if it has, whether it has also  demonstrated the link between the accumulation of 
waste tyres and such diseases. 
7.57 First, as regards dengue, Brazil submits that the WHO has recognized dengue as "the most 
important emerging tropical viral disease" and "a major interna tional public health concern."
1087  A 
WHO fact sheet states that dengue is found in tropical and sub-tropical regions around the world, including the Americas.
1088  We also note that Brazil's current  dengue epidemic, which is country-
wide, escalated from 1994 to 2002, and, in partic ular the complications resulting from the disease 
(e.g. dengue haemorrhagic fever (DHF)) in Brazil r esulted in a 4.3 per cent fatality rate, which is eight 
times the rate in South-East Asia, and accounted fo r 70 per cent of all cases reported in the Americas 
between 1998 and 2002.1089  The European Communities does not c ontest these facts.  Thus, based on 
the evidence before us, we find that Brazil has demons trated the existence of health risks relating to 
dengue in Brazil. 
7.58 Brazil also submits that other mosquito-borne diseases such as yellow fever and malaria are 
endemic in Brazil.1090  We note that the WHO fact sheet does indicate that Brazil is one of the 
countries in South America with the greatest risk of  yellow fever, which is transmitted by mosquitoes 
and has a higher fatality rate than dengue.1091  The fact sheet also states that yellow fever causes a wide 
spectrum of diseases ranging from mild symptoms to  severe illness and death and that 15 per cent of 
yellow fever patients enter into a "toxic phase" and ha lf of the patients in the "toxic phase" die within 
10-14 days.  Thus, we find that the evidence subm itted by Brazil supports its argument that yellow 
fever is an endemic disease transmitted by mosquitoes in Brazil. 
7.59 The evidence before us also shows that ma laria is one of the diseases transmitted by 
mosquitoes and that Brazil is included in the WH O list of the countries where malaria occurs.1092  In 
fact, the 2005 World Malaria Report by the WHO st ates that, in 2002, Brazil reported approximately 
40 per cent of the total number of malaria cases in the Americas.1093  According to the evidence, 
malaria can cause not only variable clinical featur es such as fever, chills, headache, muscular aching 
and weakness, vomiting, cough, dia rrhoea and abdominal pain, but also other symptoms related to 
organ failure such as acute renal failure, generalized convulsions, ci rculatory collapse, followed by 
                                                                                                                                                                     
additions" ( The Shorter Oxford English Dictionary , L. Brown (ed.) (Oxford University Press, 2002), Vol. 1, 
p. 16). 
1087 Brazil's first written submission, para. 23; Exhibits  BRA-13-14.  See also, exhibits BRA-15, 16, 17, 
19, 20, 92, 109, 112, 113, 118, 119, 120, 121 and 145.  
1088 WHO Fact sheet No. 117, "Dengue and dengue haemorrhagic fever" (April 2002) 
(Exhibit BRA-13). 
1089 Brazil's first written submission, para. 24, referring to exhibits BRA-13, 16, 18; Brazil's first oral 
statement, paras. 13-16. 
1090 Brazil's first written submission, paras. 27, 28; Braz il's first oral statement, paras. 17-20; Brazil's 
second written submission, para. 21; Braz il's second oral statement, para. 8. 
1091 WHO Fact Sheet N°100, "Yellow Fever" (Decem ber 2001) (Exhibit BRA-2 2).  Also, "Update on 
Yellow Fever in Americas" by Pan American Health Organi zation states that "yellow fever continues to be an 
important public health problem in the Americas," and that "the overwhelming spread of the Aedes aegypti 
mosquito threatens to re-urbanize the disease" (Exhibit BRA-23).  See also exhibits BRA-17, 92, 109, 111, 145.   
1092 WHO, "International Travel and Health" (January 2005) (Exhibit BRA-21).  Also, 
Exhibits BRA-24, 119, 145.  
1093 WHO, "2005 World Malaria Report," p. 1  (Exhibit BRA-24). WT/DS332/R 
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  coma and death.
1094  Thus, we find that Brazil has also dem onstrated that health risks relating to 
malaria exist in Brazil.1095 
7.60 The European Communities does not contest that these diseases pose health risks that 
potentially fall within the scope of Article XX(b).1096  However, the European Communities considers 
that health risks may arise from waste ty res only in case of incorrect management.1097  We therefore 
now consider whether the accumulation of waste tyres plays a role in the dissemination of the 
mosquito-borne diseases identified above, as claimed by Brazil.   
7.61 Brazil submits that accumulated waste tyres provi de a particularly fer tile breeding ground for 
disease-carrying mosquitoes and thus contribute to th e spread of the disease.  According to Brazil, 
these disease-carrying mosquitoes breed in receptacles that  collect rainwater, in particular used tyres.  
Furthermore, Brazil argues that a single tyre can  spawn thousands of mosquitoes in just one 
summer.1098  Various studies as well as the exhibits submitte d by Brazil suggest that there is indeed a 
correlation between the spread of dengue and the accumulation of waste tyres1099, in particular in 
                                                      
1094 WHO, "International Travel and Health," pp. 132-133, 150 (January 2005) (Exhibit BRA-21).  
According to this paper,  P. falciparum , one of the four different species of the protozoan parasite causing 
malaria (i.e. Plasmodium falciparum , P. vivax , P. ovale and P. malariae ), causes the most severe form of illness 
as indicated in para. 7.59 above.  It  also states, "[i]n endemic areas it is estimated that about 1 per cent of 
patients with P. falciparum  infection die of the disease... Th e forms of malaria caused by other Plasmodium  
species are less severe and rarely life- threatening."  It also explains that Brazil is one of the countries with 
malicious areas where the risk is not limited to P. vivax  only:  this shows that all four forms of malaria, 
including the most severe form – P. falciparum – exist in Brazil. 
1095 In this regard, the Panel notes that Brazil has not provided in its submissions any argument on the 
existence in Brazil of health risks posed to humans by West  Nile virus and refers to West Nile virus only in its 
response to a question from the Panel on the exact environmental risks posed by the disposal of tyres:  Brazil 
has responded that stockpiling leads to propagation of mosquitoes that carry diseases, such as dengue, yellow fever, malaria, and West Nile virus and that these diseases impact both humans and animals (emphasis added) 
(Brazil's answer to panel question No. 34 bis).  In light of the fact that Braz il has not provided any arguments on 
West Nile virus and any health risks posed by it to humans in Brazil, the Panel does not consider that Brazil has 
demonstrated the existence of health risks posed by West Nile virus in Brazil. 
1096 European Communities' first written submission, para. 16; European Communities' second written 
submission, para. 16. 
1097 European Communities' answer to panel question No. 34. 
1098 Brazil's first written submission, para. 25; Braz il's second written submission, paras. 22-25; 
Exhibits BRA-13, 19; Brazil's second oral statement, para. 8.   
1099 Brazil's second written submission, paras. 19-24:  (a) a 1997 study in the region of Sao Paulo 
documenting the presence of disease-bearing mosquitoes most ly in tyres ("Tires were the main culprits for the 
passive spread of mosquito, which occurs through in tense tire commerce conducted among the municipalities of 
the region, between the region and other municipalities of  the state of Sao Paulo ... with the presence of 
mosquitoes that transmit both dengue and yellow fever, the region began to undergo the risk of epidemics"); (b) a 2005 study also in the region of Sao Paulo also showing tyres as a favoured breeding ground ("the average 
positivity of the types of containers presented significant differences, being the highest value for tyres ..."); and 
(c) various studies in the state of Paraná, showing the presence of mosquitoes capable of transmitting yellow 
fever in tyres, as a "preferred" breeding site.  Furthermor e, the fact sheet of the WHO provides that in Asia and 
the Americas, dengue-spreading mosquito, in particular, Aedes aegypti , breeds primarily in man-made 
containers like earthenware jars, metal drums and concrete cisterns..., used automobile tyres and other items that 
collect rainwater (Exhibit BRA-13).  The Panel also notes the following:  "Tire dumps provide excellent 
breeding grounds for mosquitoes, and elevated incidents of mosquito-borne diseases have been noted near large 
tire piles" (Ohio Department of Natural Resources, "Recycling Tyres: Introduction" (2005) (Exhibit BRA-7)); "it is well known among mosquito entomologists and mosquito abatement personnel that scrap automobile and 
truck tires often support large populations of certain mosquito species.  In southern U.S. two exotic species 
predominate in tires.  These two species...are known to be the principle vectors of Yellow Fever and Dengue, 
diseases which afflict millions of people in the tropic s. ... eliminating scrap tires will eliminate a prolific 
mosquito habitat and the associated di sease risks..." (University of Rhode Island, Office of Mosquito Abatement  WT/DS332/R 
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  countries with tropical climates such as Brazil.1100  For example, the Basel Convention Technical 
Guidelines on the Identification and Management of Used Tyres provide: 
"Under certain specifically defined clim atic conditions waste tyres dumps or 
stockpiles can become the breeding grounds for insects, such as  mosquitoes, which 
are capable of transmitting diseases to humans.  This is of particular concern in 
tropical or sub-tropical regions."1101 
7.62 We also note the Australian Environmental Depa rtment's observation that "tyres trap water, 
and this in turn provides a breeding site for mosquito es.  In tropical areas, particularly, this can pose a 
significant threat to human health due  to diseases carried by mosquitoes."1102 
7.63 In this connection, we recall the European Co mmunities' argument that health risks associated 
with waste tyres could arise only if waste tyres are incorrectly managed.1103  T h e  
European Communities submits that waste tyres themselves are considered inert in Brazilian 
legislation and non-hazardous in the European Co mmunities' legislation and that only abandoned 
tyres or tyres negligently placed in monofills1104 may become breeding places for mosquitoes.  In 
response, Brazil submits that the European Communities' argument in this respect is without merit 
because stockpiles are frequently dangerous and th e European Communities itself recognizes the risks 
and actively promotes the clearing of stockpiles.1105  In the view of Brazil, stockpiling also provides 
breeding grounds for mosquitoes and as provided in the Basel Tyre Guidelines, even with proper 
control, stockpiling can be used only for temporary stor age before an end-of-life tyre is forwarded to a 
recovery operation.1106 
7.64 The Panel recalls in this regard the Appellate Body's observation in EC– Hormones that the 
risk being addressed encompasses "risk in human socie ties as they actually exist, in other words, the 
                                                                                                                                                                     
Coordination, Mosquitoes, Disease and Scrap Tires  (Exhibit BRA-92)).  See also exhibits BRA-1, 5, 8, 10, 11, 
15, 19, 20, 26, 40, 92, 109, 111, 114, 115, 116, 117, 119, 120, 125, 130, 145. 
1100  "Brazil is mostly tropical, extensively covered by rain forests such as the Amazon" and that "the 
climate in most of the country is tropical with a la rge diversity of flora and fauna, suitable enough for the 
dissemination of zoonosis caused by arthropod-borne viru ses" (WHO Dengue Bulletin, "Dengue in Brazil:  Past, 
Present and Future Perspective by Luiz Tadeu Moraes Figueiredo," p. 25 (2003) (Exhibit BRA-17)); "Most of Brazil has a tropical climate" (João Bosco Siqueira et  al., "Dengue and Dengue Hemorrhagic Fever, Brazil, 
1981-2002, Emerging Infectious Diseases" (2003) (Exhibit BRA-16)).  See also Brazil's first written 
submission, paras. 22, 69.
 
1101 Basel Convention Technical Guidelines on the Identification and Management of Used Tyre (1999) 
(Exhibit BRA-40). 
1102 Commonwealth Department of Environment (Australia), "A National Approach to Waste Tyres 
(2001)" (Exhibit BRA-8). 
1103 European Communities' answer to panel question No. 34. 
1104 Regarding monofills, OECD Environm ent Directorate (2005) explains: 
"A scrap tyre monofill is a landfill that  only stores tyres. ... Monofills are 
more desirable than landfills as they facilitate material and energy recovery in the future. ... monofills form a te mporary solution in those European 
countries where capacities for processing used tyres are limited.  The 
potential advantage of such monofills is that they can be reconsidered as 
future used tyre collection sites an d distribution centres. ..." (Exhibit 
BRA-58). 
The Panel also notes the following explanation:  "A vari ation of landfilling is monofilling, which means that 
scrap tires are not mixed with other waste materials, but stored at a dedicated, licensed location..." (Kurt 
Reschner, "Scrap Tyre Recycling:  A Summary of Prevalent Scrap Tire Recycling Methods," p.3 (2006) 
(Exhibit BRA-5)). 
1105 Brazil's second written submission, paras. 33, 64-66. 
1106 Brazil's first written submission, para. 42, citing exhibit BRA 40.  WT/DS332/R 
Page 158  
 
  actual potential for adverse effects on human health in  the real world, where people live and work and 
die."
1107  We believe that the observation, although made in the context of the SPS Agreement, is also 
applicable to the situation in the present case.   
7.65 First, as noted above, the European Communities does not dispute that health risks associated 
with waste tyres could arise if waste tyres are "incorrectly mana ged" by being abandoned or being 
negligently placed in monofills.  In this connection, the evidence submitted by Brazil1108 suggests that 
in reality, waste tyres do get abandoned and accu mulated.  We also note that the European 
Communities itself agrees that health risks associated with waste tyres ex ist in Brazil to the extent that 
such health risks arise from tyres th at "litter the countryside" in Brazil.1109  Specifically, the 2004 TBR 
Report of the European Communities' states: 
"Clearly, waste tyres that litter the countryside pose a significant environmental and 
public health problem in Brazil, notably in that they can collect rain water and thus 
potentially provide breeding grounds for mosquitoes ( aedes aegypti ) that can spread 
dengue and in some circumstances urban yello w fever.  In 1999, before the current 
destruction programme started, the administration estimated that the backlog of waste 
tyres was around 100 million , although no accurate figures existed..."1110 (emphasis 
added) 
7.66 Furthermore, we note that one of the objectives of the "Paraná Rodando Limpo" – a 
programme created by the Brazilian state of Paraná – is to collect, inter alia , all existing unusable 
tyres currently found inappropriately discar ded throughout the territory of Paraná.1111  The Brazilian 
government also states in the preamble of Resolution CONAMA 258/1999 that "the dumping or 
inappropriate disposal of scrap tyres is an envi ronmental liability resulting in serious environmental 
and public health hazards."1112 
                                                      
1107 Appellate Body Report on EC – Hormones , para. 187. 
1108 See exhibits BRA-1, 5, 6, 8, 19, 36, 38, 39, 56 , 58, 119, 125, 129, 132.  For example, the Panel 
notes the following:  "in most countries illegal dumping is a common way to get rid of a cumbersome waste at no financial cost" ("OECD Environmental Directorate," p. 124 (Exhibit BRA-58)); "Out of the way ravines and 
woods became the sites of illegal dumpi ng, often without the property owner' s knowledge.  In time these illegal 
dumps could contain upwards of several thousand tires each.... it is estimated that US tire stockpiles contain 
between 700-800 million scrap tires..." (John Serumgard, "Internalization of Scrap Tire Management Costs:  A 
Review of the North American Experience," p.6 (1998) (Exhibit BRA-125)); "the EU has millions of used tyres that have been illegally dumped or stockpiled.  These historic stockpiles can, in some cases, pose a potential 
threat to human health (fire risk, haven for rodents or other pests such as mosquitoes...).  The current estimate 
for these historic stockpiles throughout the enlarged EU stands at 5.5 million tons..." (European Tyre & Rubber 
Manufacturers' Association, "End-of-Life Tyres: A Valuable Resource w ith a Wealth of Potential," p. 4 (Exhibit 
BRA-126); and "In New Jersey, there are estimated to be  15 million tires deposited in 24 locations – called 
orphan tire dumps because the ownership is unclear – mo st of them in sparsely populated pockets of South 
Jersey.  Untold more are thrown along roadways or st ored in yards..." (Kathleen Cannon, "Where Mosquitoes 
And Tires Breed," New York Times (8 July 2001) (Exhibit BRA-130)). 
 
1109 Brazil's second written submission, para. 15, quoting a statement in the European Communities' 
TBR Report, which is attached as exhibit EC-2.   
1110 Report to the Trade Barriers Re gulation Committee, p. 13  (2004) (Exhibit EC-2).  Brazil itself has 
also stated, "When, in the 1990s, Brazil set out to combat dengue and other mosquito-borne diseases by, among other things, collecting the used tyres that were scattered over its vast territory ..." (emphasis added) (Brazil's 
answer to panel question No. 88).  
1111 Description of the Programme "Parana Rodando Limpo," p.3 (Exhibit EC-49).  
1112 Resolutions CONAMA 258 of 26 August 1999 and. 301 of 21 March 2002 (Exhibit BRA-4; 
Exhibit EC-47).  WT/DS332/R 
 Page 159 
 
 
  7.67 Therefore, it may be that health risks associat ed with waste tyres can be significantly reduced 
with proper management of waste tyres.1113  However, that does not negate the reality that waste tyres 
get abandoned and accumulated and that risks associated  with accumulated waste tyres exist in Brazil.  
7.68 Moreover, the evidence before the Panel do es not suggest that only illegally dumped or 
mismanaged waste tyres can cause mosquito-borne diseases.  The risk of mosquito-borne diseases, 
albeit to different extents, seems to exist in relatio n to all types of accumulated waste tyres.  Indeed, 
this situation does not appear to be limited to Br azil, as some of the evidence presented to the Panel 
makes clear.  For example, we note, inter alia ,  the following: 
"Scrap tyres disposed of in landfills pose increased environmental and public health 
risks ... and create a favourable environment for insects, which increases the risk of 
mosquito-borne diseases"1114; and 
"The EU has millions of used tyres that ha ve been illegally dumped or stockpiled.  
These historic stockpiles can, in some cases,  pose a potential threat to human health 
(fire risk, haven for rodents or other pests such as mosquitoes...)..."1115 
7.69 We thus find that Brazil has demonstrated th at accumulated waste tyres provide a fertile 
breeding ground for mosquitoes and consequentially contribute to the transmission of dengue, yellow-
fever and malaria. 
7.70 Further, Brazil argues that tran sportation of used tyres to collection points also disperses 
mosquitoes that could not otherwise fl y more than 100 meters on their own.1116  Brazil submits that 
transportation of such waste tyres cannot be avoided in some cases even though Brazil promotes disposal of tyre waste in a place close to its origin.
1117  Various studies submitted by Brazil indeed 
show that these mosquito-borne diseases get transm itted through transportation of waste tyres for 
disposal operations.1118   
7.71 Therefore, the Panel finds that Brazil has demonstrated th at risks posed by mosquito-borne 
diseases such as dengue, yellow fever and malaria to hum an health and life exist in Brazil in relation 
to the accumulation as well as transportation of waste tyres. 
                                                      
1113 See paras 7.173-7.207 below for a detailed analysis of measures to improve the management of 
waste tyres.  
1114 OECD Environmental Directorate, Improving Recycling Market , p. 127 (2005) (Exhibit BRA-58). 
1115 European Tyre and Rubber Manufacturers' Association, End-of-Life Tyres (2006) (Exhibit EC-84). 
1116 Brazil's first written submission, para. 22; Brazil's fi rst oral statement, paras. 17, 36; Brazil's second 
written submission, paras. 26-32; Brazil's second oral statement, para. 9.   
1117 For example, Brazil states, "as most waste tyre di sposal sites and facilities are situated out of the 
Amazon region and its fragile ecosystem, the wastes generated in that part of the country frequently have to be 
transported to other regions to be disposed of, thus creating a serious risk of spreading mosquitoes and the diseases they carry" (Brazil's first written submission, para. 27). 
1118 Brazil submits various studies on the risks of wast e tyre transportation including the following:  (a) 
a health official in the UK illustrates that through the internal movement of these tyres, the movement of these mosquitoes through the interstate highway systems can be monitored (Exhibit BRA-119); (b) a 2002 Japanese 
study showing that tyres transported to disposal operations could be infested with mosquitoes (Exhibit 
BRA-120); (c) a study by the US Center for Disease Control and Prevention that "..the postulated relationship between dispersal and major transportation routes would be expected for a species transported largely by human 
activities such as the commercial movement of scrap tir es for retreading, recyclin g, or other purposes..." 
(Exhibit BRA-121); and (d) the Environmental Health Committee of Québec's comment  that "interregional 
transport of used tyres has been identified as the principal factor behind Aedes Albopictus propagation in the 
United States.  Its distribution, for the moment, remains limited to tyre deposits" (Exhibit BRA-122). WT/DS332/R 
Page 160  
 
  Toxic emissions from tyre fires 
7.72 Brazil also identifies tyre fires and their con sequential negative impact on human health and 
life as another type of risk posed by accumulated waste tyres.
1119  Brazil argues that tyre fires produce 
highly toxic and mutagenic emissions such as a noxious plume1120 with numerous hazardous 
compounds such as carbon monoxide, dioxins and furans that pose a significant potential health 
hazard; pyrolytic oil that contai ns naphthalene, anthracene, ben zene, and various metals; and ash 
containing various heavy metals including lead, arsenic, and zinc.1121  Brazil also refers to a number of 
tyre fire incidents in Brazil.1122  
7.73 Brazil explains that highly toxic and mutageni c emissions produced by tyre fires result in a 
number of health problems, including,  inter alia , the loss of short-term memory, learning disabilities, 
immune system suppression, cardiovascular problems, and that a noxious plume comprising dioxins 
emitted by tyre fires produces significant short- and long-term health hazards, including inter alia,  
cancer, premature mortality, reduced lung function, suppression of the immune system, respiratory effects, heart and chest problems.
1123   
7.74 The European Communities has not provided any direct counter-arguments in relation to 
these alleged health risks associated  with tyre fires.  Rather, th e European Communities argues that 
the adverse consequences arising from tyre fire s depend on variables such as location, cause, 
dimension and duration of the fires and that the risk  for tyre fires is not the same between different 
countries.1124  The Panel first notes that the evidence submitted by Brazil suggests that the smoke, 
pyrolytic oil and ash generated by a tyre fire  contain numerous hazardous compounds that pose a 
significant potential health hazard to workers and r esponders to a tyre fire as well as residents in 
nearby areas.1125    
                                                      
1119 Brazil's first written submission, paras. 29-36; Br azil's second written submission, para. 33.  Brazil 
cites exhibits BRA-10, 27, 28, 29.  Also, see exhibits BRA-8, 10, 29, 44, 137. 
1120 According to Brazil, numerous compounds contained in a noxious plume produce significant short-
and long-term health hazards, including premature mortality, reduced lung function, suppression of the immune 
system, respiratory effects, heart and chest problems, depression of the central nervous system, and skin, eye, 
and mucous membrane irritation. 
1121 Specifically, Brazil submits that heavy metals contained in pyrolytic oil and ash are highly toxic 
and produce a range of adverse health effects, includi ng the loss of short term memory, learning disabilities, 
immune system suppression, cardiovascular problems, ki dney damage, reproductive problems, muscle wasting, 
partial blindness, deformities in children, and skin cancer.   
1122 For the tyre fire incidents in Brazil, see paragraph 7.76. 
1123 Brazil's first written submission, paras. 29-33; Br azil's second written submission, para. 33; Brazil's 
answer to panel question 88. 
1124 European Communities' comment on Brazil's answer to panel question No. 88. 
1125 California Environmental Protection Agency (US), Integrated Waste Management Board, "Tire Pile 
Fires: Prevention, Response, Remediation," pp. 9-1, 9-2. 9-3 (2002) (Exhibit BRA-29).  See also, for example, 
the US Environmental Protection Agency ("EPA") research paper, "Air Emissions from Scrap Tire Combustion", provides:   
"Air emissions from open fires have been shown to be more toxic (e.g. 
mutagenic) than those of a combustor, regardless of fuel... emissions from an open fire can represent significant acute (short-term) and chronic (long-
term) health hazards to firefighters and nearby residents.  Depending on the 
length and degree of exposure, these health effects could include irritation of the skin, eyes, and mucous membranes, respiratory effects, central nervous 
system depression, and cancer...  Open tir e fire emissions are estimated to be 
16 times more mutagenic than residential wood combustion in a fireplace, and 13,000 times more mutagenic than coal-fired utility emissions with 
good combustion efficiency and add-on controls."  (Exhibit BRA-26)    WT/DS332/R 
 Page 161 
 
 
  7.75 We turn now to the European Communities' argument that Brazil has not met its burden of 
proof because it has not demonstrated the exis tence of any risks posed by tyre fires within Brazil.  
7.76 The European Communities submits that a genera l reference to waste tyre fires in Brazil 
without providing more specific information, including an assessment of their actual negative effects on health, is not enough to meet Brazil' s burden of proof under Article XX(b).
1126  We first note, in 
this regard, that Brazil identifies a number of incide nts of tyre fires in Brazil:  338 tyre fires in Minas 
Gerais since 2000; 64 fires in the Federal District since 2002; and 63 fires in the State of Paraná in 2005 alone.
1127  However, Brazil has not been able to pr ovide any evidence on the dimension of these 
tyre fires or an assessment of their specific negativ e effect on human, animal or plant life or health.1128  
Brazil nevertheless submits that it is not necessary to  assess the negative health effects of tyre fires 
specifically in Brazil and that evidence of the risk s resulting from tyre fires from other countries is 
sufficient.1129   
7.77 The question before us therefore is whether Brazil was required to present more detailed 
information on tyre fires in Brazil such as thei r location, causes, dimension and duration as suggested 
by the European Communities as well as specific eviden ce of the actual negative health effects of tyre 
fires within Brazil.1130  There may be situations in which su ch specific evidence would be required to 
demonstrate the existence of a risk.  In this  case, however, accepting th e European Communities' 
argument would imply that a WTO Member can never prove the existence of health risks from a tyre fire until a tyre fire does in fact take place a nd the government of that country conducts its own 
assessment of the consequences of such a fire.  The Panel does not consider  that detailed proof of 
actual tyre fires and associated negative impact on hea lth within the territory of Brazil is required in 
this case.  This is because potential harmful effect s caused by tyre fires on human health can be 
assessed on the basis of incidents that have occurred in  other countries.  The Panel is thus of the view 
that the incidence of such fires in Brazil, when  considered in combination with evidence of the 
harmful impact of tyre fires on human health
1131 and the evidence of specific incidents of such fires in 
other countries1132, is sufficient in this case to prove the ex istence of potential health risks relating to 
tyre fires in Brazil. 
                                                                                                                                                                     
See also exhibits BRA-1, 8, 10, 27, 29, 44, 137. 
1126 European Communities' second written submission, paras. 60-61; European Communities' 
comments on Brazil's answer to panel question No. 88. 
1127 Brazil's first written submission, para. 36. 
1128 Brazil's answer to panel question No. 88. 
1129 Brazil's answer to panel question No. 88. 
1130 See the European Communities' comments on  Brazil's answer to panel question No. 88. 
1131 See paras. 7.74 and footnote 1125 above. 
1132 Exhibits BRA-10, 26, 36, 37, 38, 139.  Among the tyre fire incidents provided in these exhibits are 
the following:  (1) A tyre fire ignited in Wales, UK involving 10 million waste tyres lasted for 14 years as of 2003 since it started in 1989 and resulted in, among others, thick black smoke releasing benzene, dioxins and 
particulates (Health Protection Agen cy (UK), "Chemical Hazard and Pois ons Report" (2003) (Exhibit, BRA-
10)); (2) a tyre fire at the Filbin waste tire site in Westley and one at the Royster waste tire site in Tracy, 
California burned more than 12 million waste tires, resulting in considerable environmental damage to the 
region and significant adverse impacts to local residents (California Environmental Protection Agency, 
"Integrated Waste Management Board, Five-Year Plan for the Waste Tire Recycling Management Program" (2003) (Exhibit BRA-36)); (3) a tyre fire ignited by lighting strike in California, US involved seven million 
scrap tires piled on the site as well as most of the tire pile areas and resulted in widespread concern of potential 
health affects from exposure to the tremendous smoke emissions.  It took 30 days to extinguish the fire (Daniel M. Shane, "US EPA Region IX, "Westley Tire Fire" (undated, circa 2000) (Exhibit BRA-37))
; and (4) a tyre fire 
ignited by arsonists in Ohio, US involved 26 million ty res piled over 140 acres at the Tyre collection facility 
over 5 days and produced a black column of smoke that could be seen more than 60 miles away (Ohio Department of Natural Resources, "Recycling Tyres: Prob lems with wasting scrap tires: Fire" (2005) (Exhibit 
BRA-38) ). WT/DS332/R 
Page 162  
 
  7.78 The European Communities also argues that even  if the negative consequences on health were 
important in the case of a tyre fire, the fire risk ar ising from waste tyres is low, given that tyres are 
very difficult to ignite.
1133  In the Panel's view however, the low probability of tyre fires occurring 
negates neither the fact that tyre fires do actua lly occur, as shown by the evidence presented in 
relation to tyre fires that have occurred in other countries,1134 nor the fact that health risks exist in 
relation to tyre fires and that once they occur,  tyre fires are very difficult to extinguish.1135 
7.79 Finally, the European Commun ities argues that tyre fires are related to an incorrect 
management of end-of-life tyres1136:  only accidents or arson in badly designed or uncontrolled 
monofills cause smoke plumes.1137  Brazil responds that the European Communities' argument is 
without merit because stockpiles are frequently dangerous and the European Communities itself 
recognizes the risks and actively promotes the clearing of stockpiles.1138  Brazil further argues that 
stockpiling poses substantial fire hazards.1139  
7.80 Our analysis above with respect to the simila r argument made by the European Communities 
concerning mosquito-borne diseases is also applicable here:  the current reality in Brazil is that tyres 
do accumulate and these accumulations do in practice generate health risks arising from tyre fires as 
identified above.1140  It may be that such risks can be si gnificantly reduced with proper management.  
However, this does not negate the fact that waste tyres do accumulate and that, consequently, a risk of 
tyre fires exists in Brazil. 
7.81 Furthermore, as in the case of mosquito-bor ne diseases, the evidence before the Panel 
indicates that a risk of tyre fires is not necessar ily limited to badly designed or uncontrolled waste 
tyres:  the risk, albeit to different extents, exis ts in relation to various types of accumulated waste 
tyres.  For example, as cited by Brazil, th e Basel Convention Technical Guidelines on the 
Identification and Management of Used Tyres provide that:  
"Stockpiling facilities require investments in transport, handling and fire prevention.  
Stockpiling with proper control can be used only for temporary storage before an end-
of-life tyre is forwarded to a recovery op eration. ... Precautions must be taken against 
the deliberate or accidental igniting of tyre st ockpiles.  The major risk is that a fire 
could gather pace without it being possible to  prevent it from spreading to all of the 
                                                      
1133 European Communities' second written submission, para. 61. 
1134 For example, the evidence shows eleven tyre fires that had occurred in the UK for the period of 
1972 to 1999 (see Table 1, p. 8 of Exhibit BRA-10).  We also note the evidence showing two incidents of tyre 
fires in California and Ohio, US in 1999 (see exhibits BRA-37, 38) and eight major tyre fires in the US for the 
period of 1983 to 1997 (see Exhibit 1, p. 6 of Exhibit BRA-139). 
1135 California Environmental Protection Agency (US) , "Tire Pile Fires: Prevention, Responses, 
Remediation", at 6.3.3 and 8.2 (2002) (Exhibit BRA-29).  It also explains that the tyre's ability to absorb heat 
makes them more difficult to ignite than wood fires, but this same quality makes tyre fires more difficult to extinguish than wood fires.  British Health Protectio n Agency states in "Mosquito-Borne Illnesses and 
Prevention Techniques" (Exhibit BRA-10):  "tyre fires ar e notoriously difficult to put out owing to their own 
structure (no shortage of air), heat retention allowing easy reignition and the fact that water is deflected off 
owing to their very shape... Tyres contain highly combustible and pollutant materials."  Also, Massachusetts 
Department of Environmental Protection states in its "Fact Sheet – Best Management Practices for Automotive 
Recyclers: Waste Tyres" (Exhibit BRA-137): "although tires are difficult to ignite, once they are lit the fire is 
almost impossible to extinguish..." 
1136 European Communities' first written submission, para. 103; European Communities' answer to 
panel question 34. 
1137 European Communities' answer to panel question No. 34; European Communities' second oral 
statement, para. 17. 
1138 Brazil's second written submission, paras. 33, 64-66. 
1139 Brazil's first written submission, para. 42, citing exhibit BRA 40.  
1140 See paras. 7.64-7.67 above.  WT/DS332/R 
 Page 163 
 
 
  tyres being stored... Their scale will depe nd upon the quantity of the tyres being 
stored..."1141   
In the Panel's view, this tends to indicate that the ri sk for tyre fires is not necessarily limited to badly 
designed or uncontrolled monofills, given that precautions against the deliberate or accidental igniting of tyre stockpiles are also required in stockpiling facilities. 
7.82 In light of the foregoing, the Panel  is of the view that Brazil has demonstrated that the 
accumulation of waste tyres poses a risk of tyre fires and the associated health risks arising from such 
tyre fires. 
7.83 In conclusion, the Panel finds that Brazil has demonstrated the existence of risks to human 
life and health within the meaning of Article XX (b) in connection with the accumulation of waste 
tyres.
1142 
Risks posed to animal or plant life or hea lth arising from the accumulation of waste tyres  
7.84 Brazil submits that the types of health risks po sed by the accumulation of waste tyres to 
humans are also posed to animals and plants.1143  Specifically, Brazil submits that mosquito-borne 
diseases also pose health risks to an imals.  Numerous toxic chemicals and heavy metals contained in 
pyrolytic oil released from tyre fires harm animal  and plant life and health , and hazardous substances 
contained in toxic plumes emitted from tyre fires harm not only humans but also animals.1144 
7.85 The European Communities submits that Brazil has provided only very general arguments 
in relation to animal and plant life or health.  According to the European Communities, Brazil has 
demonstrated neither how mosquito-borne diseases aff ect the life and health of any specific animal or 
                                                      
1141 Exhibit BRA-40, p. 12.  Among other relevant evidence are as follows:  "Stockpiled tyres, illegally 
dumped tyres and other stores are a fire risk. ... Stockp iles of tyres and landfill sites containing predominantly 
tyres pose a fire risk ..."(British Environment Agency, Tyres in the Environment (1998) (Exhibit BRA-1) ); 
"Impacts due to the uncontrolled disposal of tyres to land  are similar to those for stockpiles. ... Tyre stockpile 
fires pose a major environmental th reat.  The fires produce thick toxi c smoke... Due to the large size of 
stockpiles and the intensity of tyre fire s they pose a significant hazard to pers ons. ... Tyres trap water, and this in 
turn provides a breeding site for mosquitoes.  In tropical  areas, particularly, this can  pose a significant threat to 
human health due to diseases carried by mosqu itoes..." (Commonwealth Department of Environment 
(Australia), A National Approach to Waste Tyres (2001) (Exhibit BRA-8) ); and "All tire and rubber storage 
facilities should be considered high-risk storage facilitie s and as such a pre-incident fire management plan 
should be developed..." (California Environmental Protection Agency (US), Integrated Waste Management Board, Tire Pile Fires: Prevention, Response, Remediation (2002) (Exhibit BRA-29
)). The Panel notes in this 
regard a statement in the OECD En vironment Directorate (Exhibit BRA-58 ):  "the improper disposal of used 
tyres often results in health and environmental hazards...  they present a fire hazard when improperly stored."  
This tends to support the European Communities' view th at only improperly stored waste tyres are susceptible to 
fire hazards.  However, the evaluation of the overall evid ence before the Panel, including those cited above, lead 
the Panel to conclude that health risks (i.e. mosquito-bor n diseases and tyre fires) exist in relation all forms of 
accumulated waste tyres.   
1142 The Panel notes that Brazil also claims that the accumulation of waste tyres creates toxic leaching 
(Brazil's second written submission, para. 33).  For the arguments and supporting evidence pertinent to its claim 
relating to toxic leaching, however, Brazil refers to its arguments on stockpiling under the section on the 
alternative measures. (See Brazil's first written submi ssion, para. 42; Brazil's second written submission, 
para. 61).  Brazil also presents its argument on toxic leaching in relation to land filling (Brazil's first written 
submission, paras. 39, 41)  Thus, we will address Brazil's argument on toxic leaching in relation to landfilling 
and stockpiling. 
1143 Brazil's answer to panel question No. 114.   
1144 Brazil's answer to panel question No. 114.  Brazil also refers to the brief submitted by Humane 
Society International, paras. 15, 22 , 24 (attached as Exhibit BRA-98).  WT/DS332/R 
Page 164  
 
  plant species nor how hazardous emissions arising from tyre fires affect animal or plant life or 
health.
1145   
7.86 The Panel  notes that regarding risks to animal or pl ant life or health, Brazil points to health 
risks caused by tyre fires and also, to  a lesser extent, mosquito-borne diseases.1146  Both aspects are 
considered in turn. 
7.87 With respect to tyre fires , Brazil identifies numerous toxic chemicals and heavy metals 
contained in pyrolytic oil released from tyre fi res that it argues pose risks to plant life through 
contamination of the ground as well as fish and other life through contamination of waterways.1147  It 
also adds that the pollutants from pyrolytic oil ar e passed on to animals that drink the contaminated 
water.  Brazil also submits that toxic plumes emitted from tyre fires contain various hazardous 
substances, including dioxins and furans, that ha rm animals in the same way as they do humans 
resulting in cancers, reproductive problems, and reduced immune infection.  The European Communities, however, questions Brazil's unclear delimitation of the interests protected in 
this case and argues that Brazil has not explained w ith specific evidence the negative consequences of 
tyre fires on the life and health of animals and plants in Brazil.
1148 
7.88 The evidence before the Panel shows that there is  a risk that the oil released from tyre fires 
could contaminate the local soil as well as watercourse and nearby aquifers.1149  Although the evidence 
is less explicit in explaining the risk to animal and pl ant life or health than that to human health or life, 
the evidence before us suggests that contamination of water and soil leads to an inevitable negative 
impact on animal and plant life and health.  For ex ample, we note that a tyre fire in Ohio (US) 
resulted in the killing of thousands of fish in a ne arby creek due to the o il released from the tyre 
fire.1150  In this regard, we recall our earlier findi ng in paragraph 7.77 that specific evidence on the 
negative impact of tyre fires on human health or lif e within the territory of Brazil is not necessary to 
prove the existence of the risk of tyre fires in Braz il.  The same reasoning also applies here.  We also 
note the evidence indicating that the rural location of  many tyre piles provides great potential for tyre 
fires to spread into wooded areas, incl uding heavy bush, forest and wild land.1151  We therefore find 
that Brazil has demonstrated that tyre fires po se risks to animals and plant life or health.  
7.89 Regarding the risk of mosquito-borne diseases , Brazil submits that the mosquito-borne 
diseases identified above in the context of health risk s to humans also affect animals.  The European 
Communities agrees with Brazil to the extent that based on the evidence provided by Brazil1152, certain 
animals, specifically monkeys, seem to be infect ed by mosquito-borne diseases such as dengue and 
yellow-fever.  The European Communities points ou t, however, that as for yellow fever, monkeys 
seem to get infected with it in their natural envi ronment, independently of the presence of waste 
                                                      
1145 European Communities' second oral statement, para. 19; European Communities' answer to panel 
question No. 110. 
1146 Brazil's first written submission, para. 35; Braz il's answer to panel question No. 114; brief 
submitted by Humane Society International, para. 15, 22, 24. 
1147 Brazil's first written submission, paras. 30, citing exhibit BRA-29. 
1148 European Communities' second oral statement, para. 19; European Communities' answer to panel 
question No. 110. 
1149British Health Protection Agency, "Chemical Hazar d and Poisons Report, pp.7-8 (2003) (Exhibit 
BRA-10). 
1150 Ohio Department of Natural Resources, Recycling Tires  (2005) (Exhibits BRA-7, 38).  Both 
exhibits refer to the same fire incident. 
1151 Rubber Manufacturers Association & International Association of Fire Chiefs, "The Prevention and 
Management of Scrap Tyre Fires," Ch. 3 (Exhibit BRA-27). 
1152 Exhibits BRA-13, 22.  WT/DS332/R 
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  tyres.1153  Also, the European Communities argues th at these mosquito-borne diseases do not pose any 
threat to plant life or health.   
7.90 The Panel  recalls its finding above relating to the health risks posed by mosquito-borne 
diseases to humans.  Although not as extensive as the h ealth risks posed to huma ns, the same evidence 
tends to show that mosquito-borne diseases, speci fically "dengue", also affect animals such as 
monkeys, through the same vectors as humans.1154  This suggests that risks may arise for animal life or 
health from the accumulation of waste tyres.   
7.91 However, as for "yellow fever", which is al so one of the mosquito-borne diseases, the 
evidence shows that the mosquitoes acting as a vector of yellow fever to monkeys are wild mosquitoes rather than urban mosquitoes that breed in, inter alia , waste tyres as argued by the 
European Communities.
1155  We also note the argument contained in the brief by the Humane Society 
International, attached by Brazil to its second subm ission, that the mosquito-borne diseases that can 
put at risk the health of both humans and animal s include malaria, filarosis, canine heartworm, 
dengue, yellow fever and West Nile virus.1156  However, no specific element is provided in support of 
this assertion, showing how each of these diseases aff ects animals, in particular in relation to the 
accumulation of waste tyres.1157   
7.92 In light of the above, the Panel finds that Braz il has demonstrated the existence of risks to 
animal health or life in relation to a cer tain mosquito-borne disease (dengue).   
                                                      
1153 European Communities' answer to panel question No.  110. 
1154 The evidence shows that "The spread of dengue is attributed to expanding geographic distribution 
of the four dengue viruses and of their mosquito vectors, the most important of which is the predominantly 
urban species Aedes aegypti .  Humans are the main amplifying host of the virus, although studies have shown 
that in some parts of the world monkeys may become infected [with dengue]" ; and "[i]n Asia and the Americas, 
dengue-spreading mosquito, in particular, Aedes aegypti , breeds primarily in man-made containers like 
earthenware jars, metal drums and concrete cisterns..., used automobile tyres and other items that collect 
rainwater (emphasis added) (WHO Fact Sheet No. 11 7, "Dengue and Dengue Haemorrhagic Fever," (2002) 
(Exhibit BRA-13)).  The Panel also notes the evidence su ggesting that some animals such as horses and birds 
are affected by West Nile virus, another type of mosquito-born diseases, in some countries including the United States.  For example, the Panel notes the following:  (1) "[mosquitoes] then pass this [West Nile Virus] on when 
they feed on animals and humans... The [West Nile] vi rus can also be transmitte d to horses..." (Exhibit 
BRA-119); and (2) "the [West Nile] virus was also detected in mosquitoes, horses, crows and other birds..:" 
(Exhibit BRA-130).  We, however, are not in the position on  the basis of the evidence before us to determine 
whether there is potential for Brazil to be subject to the spread of West Nile virus. 
Also, see " Mosquito-Borne Illness and Prevention Techniques " (Illinois Environmental Protection 
Agency (US), Exhibit BRA-11).  It states, "... [T]he design of tires makes them ideal breeding sites for several 
species of mosquitoes, some of which are very important v ectors of disease. ... they provide an ideal "incubator" 
for mosquito larvae.  Of the mosquito problems associated with waste tires, it probably is safe to say that 20 per 
cent of the tires are responsi ble for 80 per cent of the problem.  If we  can eliminate scrap tire dumps and ensure 
processors comply with used tire management standard s (statutes/regulations), we will eliminate a prolific 
mosquito habitat and the associated disease risks. ..." 
1155 European Communities' answer to panel question No. 110.  See also "WHO, 'Yellow Fever Fact 
Sheet'", p. 2 (2001) (Exhibit BRA-22). 
1156 Brief submitted by Humane Society International, p. 8 (Exhibit BRA-98). 
1157 Specifically, Humane Society International submits that Brazil has previously suffered from 
infestations of a mosquito species called Aedes albopictus and that this mosquito species attacks livestock, 
amphibians, reptiles and birds, as well as humans.  Howe ver, it neither explains wh ether Brazil still suffers or 
has potential to suffer from infestations of this mosqu ito species nor provides any specific evidence to support 
its argument.  It also states that Aedes albopictus has been known to transmit yellow and dengue fever, as well 
as Japanese Encephalitis and West Nile virus.  Again,  we do not find sufficient explanation or evidence 
supporting this argument. WT/DS332/R 
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  7.93 In conclusion, for the above reasons, the Panel finds that Brazil has demonstrated the 
existence of risks to animal and pl ant life or health in relation to to xic emissions caused by tyre fires.  
It also finds that risks to animal life or health  posed by at least one mosquito-borne disease (dengue) 
exist in connection with the accumulation of waste tyres.   
To protect human, animal or plant life or health 
 
7.94 Brazil  submits that the sole policy objective be hind Brazil's measures is the protection of 
human health and the environment.1158  Brazil argues that as in the case of French ban on asbestos-
containing products in EC – Asbestos, Brazil's import ban is designed to prevent the generation of 
additional waste tyres in Brazil and con sequently to reduce the incidence of, inter alia, dengue, 
yellow fever and other risks associated with waste tyres.1159  Accordingly, Brazil submits that its ban 
on retreaded tyre imports is a restriction intended to protect human health and the environment from 
these well-recognized risks, which falls squarely w ithin the range of policies designed to protect 
human, animal or plant life or health. 
7.95 The European Communities  does not contest that measures designed to prevent the 
incidence of such diseases as dengue and yellow fe ver among humans potentially falls within the 
scope of Article XX(b)1160 and that the protection of life and health, and of human life and health in 
particular, is important.1161  The European Communities also states that it recognizes the right of a 
WTO Member to establish, within the limits of its WTO obligations, the level of protection of human health and safety that it aims to achieve for its citizens.  The Europ ean Communities, however, 
submits that measures intended to protect the envir onment as such are not covered by Article XX(b) 
and thus the frequent references made by Brazil to th e implications of waste tyres for the environment 
are irrelevant for the purposes of a justification of its measure under Article XX(b).
1162  The 
European Communities also claims th at the real aim of Brazil's import ban is not the protection of life 
and health but the protection of Brazil's domestic industry.1163 
7.96 Having determined that a risk to human, an imal or plant life within the meaning of 
Article XX(b) exists, the Panel must determine whether the policy objective of the measure to address 
this risk, as declared by Brazil, falls under the rang e of policies covered by Article XX(b).  In this 
regard, we recall the Appellate Body's clarification in US – Shrimp  that "the legitimacy of the 
declared policy objective of the measure, and the rela tionship of that objective with the measure itself 
and its general design and structure", are examined under a specific paragraph (paragraph (g) in that 
case) of Article XX.1164 
7.97 As a preliminary matter, we note that we are not, in our view, required to examine the 
desirability of the declared policy goal as such.1165  In other words, we are not required to assess the 
policy choice declared by Brazil to protect human, anim al or plant life or health against certain risks, 
nor the level of protection that Brazil wishes to achie ve.  We also recall in this respect that in the EC – 
                                                      
1158 Brazil's first written submission, para. 19.  As to  Brazil's reference to th e term "environment", see 
paragraphs 7.44-7.46 above. 
1159 Brazil's first written submission, paras. 95-96. 
1160 European Communities' first written submission, para. 16. 
1161 European Communities' second written submission, para. 12. 
1162 European Communities' second written submission, para. 11. 
1163 European Communities' answer to panel question No. 34, referring to its first written submission, 
paras. 130-133, 164-166 and second written submission, para. 178; and European Communities' second oral 
statement, paras. 9-13. 
1164 See Appellate Body Report on US – Shrimp , para. 149. 
1165 Panel Report on US – Gasoline , para. 7.1, see also para. 6.22.    WT/DS332/R 
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  Asbestos  case, the Appellate Body asserted clearly that it was each WTO Member's "(…) right to 
determine the level of protection of health that [i t] consider[s] appropriate in a given situation".1166   
7.98 We note that a number of policies aimed at reducin g risks to human health or life have been 
found, in previous panel and Appella te Body reports, to fall within the range of policies designed to 
protect human, animal or plant life or health.1167  We note in particular the finding of the Panel in EC –
 Asbestos , that "in principle, a policy that seeks to re duce exposure to a risk should fall within the 
range of policies designed to protect human life or health, insofar as a risk exists".1168   Measures 
specifically designed to avoid the generation of further risk, thereby contributing to the reduction of exposure to the risk, fall, in our view, within that category. 
7.99 In this instance, Brazil submits that the policy objective behind the import ban is the 
protection of human life and health and the envi ronment and that it is designed to prevent the 
generation of additional amounts of waste tyres in Br azil and, by so doing, to reduce the incidence of 
cancer, dengue, yellow fever, respiratory di seases, reproductive problems, environmental 
contamination, and other risks associated with waste tyres.
1169   
7.100  In our view, Brazil's declared policy of reducin g exposure to the risks to human, animal or 
plant life or health arising from the accumulation of  waste tyres falls within the range of policies 
covered by Article XX(b).  In this respect, we find further confirmation for our view in the evidence 
presented to us showing that policies to address "w aste" by non-generation of  additional waste are a 
generally recognized means of addressing waste management issues.1170 
                                                      
1166Appellate Body Report on EC – Asbestos , para. 168. 
1167 Under GATT 1947, in the Thailand – Cigarettes  case, the panel acknowledged, in accordance with 
the parties to the dispute and the expert from the World Health Organisation (WHO), that "smoking constituted 
a serious risk to human health and that consequently measures designed to reduce the consumption of cigarettes fell within the scope of Article XX(b)" ( Thailand – Cigarettes , Panel Report on para. 73).  More recently, in the 
WTO context, in the US – Gasoline  case, the panel and the parties agreed that "the policy to reduce air pollution 
resulting from the consumption of gasoline was a policy within the range of those concerning the protection of human, animal and plant life or health mentioned in Article XX(b)" (Panel Report on on US – Gasoline , 
para. 6.21).  In the EC – Asbestos  case, the Appellate Body observed that "the objective pursued by the measure 
is the preservation of human life or health through the elimination, or reduction, of the well-known, and life-
threatening, health risks posed by asbestos fibres" (Appellate Body Report on EC – Asbestos , para. 172). 
1168 Panel Report on EC – Asbestos , para. 8.186. 
1169 Brazil's first written submission, para. 96.  
1170 See the parties' answers to panel question No. 37.  In this regard, the Panel notes the European 
Communities' answer that the reduction principle has only  been recognized in Article 4(2)(a) Basel Convention 
with respect to hazardous waste and households waste s ubject to taking into accoun t social, technological and 
economic aspects.  However, the Panel is  presented with the followi ng evidence, which, in its view, is sufficient 
to support the conclusion that policies to address "was te" by non-generation of additional waste are indeed a 
generally recognized means of addressing waste manageme nt issues: "The most efficient way of dealing with 
waste is to find ways to prevent or reduce its produc tion in the first place. ... th ere are ways to reduce the 
number of tyres we use and therefore the quantity of waste generated." (British Environment Agency, Tyres in the Environment, at §4.1, Exhibit BRA-1
); "Waste avoidance is reducing the number of tyres that are disposed 
by reducing the number of tyres generated..." (Commonwealth Department of Environment (Australia), "A 
National Approach to Waste Tyres," p. xv (2001) (Exhibit BRA-8 )); "Tire pile fires can be prevented simply by 
not creating waste or scrap tire piles in the first pl ace." (California Environmenta l Protection Agency (US), 
Integrated Waste Management Board, Tire Pile Fires:  Prevention, Response, Remediation (2002), Exhibit 
BRA-29); " ... assigns prevention of waste the first priority, followed by reuse and rec overy and finally by safe 
disposal of waste; ... the Council reiterated its conviction th at waste prevention should be  the first priority of any 
rational waste policy in relation to minimising waste production and the hazardous properties of waste" (EU 
Directive 2000/76/EC of the European Parliament and of the Council,  of 4 December 2000, on the incineration 
of waste, Recital (8), Exhibit BRA-34 ); "Whereas both the quantity and h azardous nature of waste intended for 
landfill should be reduced where appropriate" (EU C ouncil Directive 1999/31/European Communities, of 26 WT/DS332/R 
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  7.101  We note the European Communities' argument th at the real objective of Brazil's import ban 
on retreaded tyres is to protect Brazil's domestic retr eading industry, not to protect human, animal or 
plant life and health.
 1171   However, the Panel does not consider that this factor needs to be addressed 
in determining under paragraph (b) of Article XX wh ether the declared policy objective of a measure 
falls within the range of policies under that paragraph.   In the Panel's view, what is relevant at this 
stage of the analysis is the existence of a risk a nd whether the policy objectiv e to reduce such a risk, 
as declared by the Member taking the measure, fall s within the scope of policies to protect human, 
animal or plant life or health. 
7.102  Therefore, the Panel  finds that Brazil's policy of reduc ing exposure to the risks to human, 
animal or plant life or health arising from the accu mulation of waste tyres falls within the range of 
policies covered by Article XX(b). 
(ii) Is the measure "necessary" within the meaning of paragraph (b) Article XX? 
7.103  The Panel notes that Article XX(b) allows, subject to  the conditions of the chapeau, measures 
"necessary to protect human, animal or plant life or h ealth" (emphasis added).  Having determined 
that the protection of human, animal or plant life or health against risks arising from the accumulation 
of waste tyres constitutes a policy that falls within the scope of paragraph (b) of Article XX, we must 
now determine whether the specific measure at issue is necessary  within the meaning of the same 
paragraph.  
7.104  The Panel notes that the term "necessary", as contained in paragraphs (b) and (d) of 
Article XX of GATT 1994 and paragra ph (a) of Article XIV of the GATS1172, has been interpreted in a 
number of previous cases by the Appellate Body:1173  the necessity of a measure should be determined 
through "a process of weighing and balancing a series of factors", which usually includes the 
assessment of the following three factors:  the rela tive importance of the interests or values furthered 
by the challenged measure, the contribution of the measu re to the realization of the ends pursued by it 
and the restrictive impact of the measure on international commerce.1174  Once all those factors have 
been analyzed, the Appellate Body said a compar ison should be undertaken between the challenged 
measure and possible alternatives.  In perform ing this comparison, the Appellate Body also  stated that 
the weighing and balancing process of the factors informs the determination of whether a WTO-
                                                                                                                                                                     
April 1999, on the landfill of waste, Recital (8), Exhibit BRA-42 ); "In order to implement the precautionary and 
preventive principles and in light with the Community strategy for waste management, the generation of waste 
must be avoided as much as possible" (EU Directive 2000/53/European Communities of the European 
Parliament and of the Council, of 18 September 2000, on end-of-life Vehicles, Recital (4), Exhibit BRA-43 ); 
"...prevention of the generation of waste shall remain the first priority, followed by the recovery of waste and finally by the safe disposal of waste" (EU Community  Strategy for Waste Management, COM(96)399 final, 30 
July 1996, para. 20, Exhibit BRA-106
); and "... Achieving a significant overall reduction in the volumes of 
waste generated through waste prevention initiatives, better resource efficiency and a shift towards more sustainable production and consumption patterns; a significant reduction in the quantity of waste going to 
disposal ..." (EU Decision n° 1600/2002 /CE of the European Parliament and of the Council, of 22 July 2002, 
laying down the Sixth Community Environment Action Programme, Art. (8), Exhibit BRA-107
).  Also, Exhibits 
BRA-8, 9, 108. 
1171 European Communities' second oral statement, paras. 10-13. 
1172 Article XIV(a) of the GATS reads: "necessary to protect public morals or to maintain public order". 
1173 E.g. Korea – Various Measures on Beef , EC – Asbestos,  Dominican Republic – Imports and Sales 
of Cigarettes and US – Gambling . 
1174 Appellate Body Report on Korea – Various Measures on Beef , para. 164;  Appellate Body Report 
on EC – Asbestos , para. 172;  Appellate Body Report on US – Gambling,  para. 306;  Appellate Body Report on 
Dominican Republic – Import and Sale of Cigarettes , para. 70.  WT/DS332/R 
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  consistent alternative measure, or a less WTO-in consistent measure, which the Member concerned 
could reasonably be expected to employ, is available.1175 
7.105  The Panel notes that both parties agreed that the elements identified by the Appellate Body 
were relevant to this case (including the assessment of the three factors, i.e. trade impact of the 
measure, importance of the interests protected and c ontribution of the measure to the realization of the 
end pursued).  The Panel will be gui ded by this approach in its analysis of the necessity of Brazil's 
measure.1176  Given that the three factors should be ta ken into account in the assessment of whether a 
WTO-consistent, or less WTO-inconsistent, alterna tive measure exists, the Panel will first consider 
those factors in more detail, and then examine, in light of this analysis, the alternatives identified by 
the European Communities.1177   
7.106  Before turning to the examination of these fact ors, the Panel notes that, as stated by the 
Appellate Body in US – Gasoline , what is to be reviewed, under the paragraph of Article XX that is 
being invoked, is the specific measure that has been found inconsistent with other GATT provisions 
in the first place.1178  In the present case, the specific measure1179 that has been found inconsistent with 
Article XI is the import ban on retreaded tyres.  The Panel will focus its analysis in the following 
sections on this measure. 
7.107  The Panel will not therefore examine here th e manner in which the measure is implemented in 
practice , including any elements extraneous to the me asure itself that could affect its ability to 
perform its function (i.e. the court injunc tions leading to imports of used tyres)1180, or consider 
situations in which the ban does not apply (i.e. the exemption of MERCOSUR imports).1181  These 
elements will, however, be relevant to later pa rts of the Panel's assessment, especially under the 
chapeau of Article XX, where the focus will be, by  contrast, primarily on the manner in which the 
measure is applied. 
Importance of the objective pursued  
7.108  As outlined by the Appellate Body in Korea – Various Measures on Beef  1182 and recalled in 
US – Gambling  1183, in its assessment of the measure claimed to be "necessary" to protect human, 
animal or plant life or health, the Panel  may take into account the impor tance of the common interests 
or values that the measure is intended to protect.  The Panel notes Brazil's argument that few interests 
are more "vital" and "important" than protecting huma n beings from health risks, and that protecting 
the environment is no less important.1184  WTO Members have the right to determine the level of 
protection of health that they consider appropr iate in a given situation, as acknowledged by the 
European Communities.1185  The Panel notes that Brazil's chosen level of protection is the reduction of 
the risks of waste tyre accumulation to the maximum extent possible.1186   
                                                      
1175 Appellate Body Report on Dominican Republic – Import and Sale of Cigarettes , para. 70. 
1176 Brazil's first written submission, para. 99; Br azil's first oral statement, para. 45;  
European Communities, second oral statement,  para. 7; first oral statement, para. 10. 
1177 Brazil adopts the reverse approach in its second wr itten submission, discussing first the alternatives 
proposed by the European Communities, and then the e ffectiveness of its chosen measure, the import ban. 
1178 See Appellate Body Report on US – Gasoline , p. 13.  
1179 Portaria SECEX 14/2004.   
1180 See e.g. European Communities, first written submission, para. 127. 
1181 See e.g. European Communities' answer to Panel Question 118. 
1182 Appellate Body Report on Korea – Various Measures on Beef , para. 162. 
1183 Appellate Body Report on US – Gambling , para. 306. 
1184 Brazil's first written submission, para. 101. 
1185 European Communities' second written submi ssion, para. 12.  Appellate Body Report on EC – 
Asbestos , para. 168.  The European Communities claims however that the real objective of Brazil's import ban WT/DS332/R 
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  7.109  The Panel recalls its findings in the previ ous section that Brazil has demonstrated the 
existence of risks to human, animal and plant lif e and health posed by mosquito-borne diseases and 
tyre fires.  In relation to risks to human health and life , the Panel notes that the human pathologies 
which Brazil identified as being associated with the accumulation of waste tyres are of a very serious nature.  They relate to: (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.
1187   
7.110  We note in this respect that the WHO has recognized dengue as "t he most important emerging 
tropical viral disease" and "a major international public health concern"1188 and that malaria can cause 
not only variable clinical features such as feve r, chills, headache, muscular aching and weakness, 
vomiting, cough, diarrhoea and abdominal pain, but al so other symptoms related to organ failure such 
as acute renal failure, generalized convulsions, ci rculatory collapse, followed by coma and death.1189  
Protection against such serious diseases is clearly an important objective.   
7.111  The importance of a number of risks to human lif e or health has already been recognized in 
past cases.  In EC – Asbestos , the Panel identified two pathologies associated with chrysotile, namely 
lung cancer and mesothelioma, which is also a form of cancer.1190  The Appellate Body found that the 
objective pursued by the measure was the pres ervation of human life and health through the 
elimination, or reduction, of the health risks posed  by asbestos fibres and that the value pursued was 
both vital and important in the highest degree.1191  To the extent that this same value is being protected 
here, the same reasoning would apply.  Therefore, the Panel is of the view that the objective of 
protecting human health and life against life-threaten ing diseases, such as dengue fever and malaria, is 
both vital and important in the highest degree. 
7.112  The objective pursued is also the protection of animal and plant life and health .  The risks at 
issue relate to:  (i) the exposure of animals and plan ts to toxic emissions caused by tyre fires;  and 
(ii) the transmission of a mosquito-borne disease (d engue) to animals.  The Panel acknowledges that 
the preservation of animal and plant life and h ealth, which constitutes an essential part of the 
protection of the environment, is an important va lue, recognized in the WTO Agreement.  The Panel 
recalls that in US – Shrimp1192, the Appellate Body underlined th at the preamble of the Marrakesh 
Agreement establishing the WTO showed that the si gnatories to that Agreement were, in 1994, fully 
aware of the importance and legitimacy of envi ronmental protection as a goal of national and 
international policy.1193  Therefore, the Panel  finds that the objective of protection of animal and plant 
life and health should also be considered important. 
                                                                                                                                                                     
on retreaded tyres is to protect Brazil's domestic retreading industry, not to protect human, animal or plant life 
and health (European Communities, second oral statement, paras. 10-13).  The Panel is of the view that this 
question relates to the question whether the measure is a disguised restriction on international trade under the 
chapeau of Article XX and, more specifically, to the examination of the intent of the measure. 
1186 Brazil's second written submission, para. 43;   Answer to question Nos. 36 and 73. 
1187 See paragraphs 7.53-7.83 above. 
1188 Brazil's first written submission, para. 23; Exhibits BRA-13-14.  
1189 WHO, "International Travel and Health," pp. 132-133, 150 (January 2005) (Exhibit BRA-21).   
1190 Appellate Body Report on EC – Asbestos , para. 167. 
1191 Appellate Body Report on EC – Asbestos , para. 172. 
1192 Appellate Body Report on US – Shrimp , para. 129. 
1193 The preamble of the Marrakech Agreement establishing the WTO reads in its relevant part: 
"Recognizing that their relations in the field of trade an d economic endeavour should be conducted with a view 
to raising standards of living, ensuring full employment and a large and steadily growing volume of real income 
and effective demand, and expanding the production of and trade in goods and services, while allowing for the  WT/DS332/R 
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  Trade-restrictiveness of the measure  
7.113  Brazil recognizes that an import ban, by definition, has a restrictive effect and claims that 
such an effect is necessary for Brazil to avoid imports of shorter-lifespan tyres.1194  T h e  
European Communities  contends that an import ban is the me asure with the highest negative impact 
on international trade.1195   
7.114  The Panel  recalls that Article 40 of Portaria SECEX  14/2004 is the principal current legal 
basis of the ban on the importation of retreaded tyres into Brazil.1196  This provision prohibits the 
issuance of import licences for retr eaded tyres, thereby prohibiting imports of retreaded tyres, except 
for retreaded tyres originating from MERCOSUR countries. Article 40 targets different types of retreaded tyres:  for passenger car, bus, truck an d aircraft.  The Panel notes, as outlined by the 
Appellate Body in US – Shrimp
1197, that an import prohibition is, ordinarily, the heaviest "weapon" in 
a Member's armoury of trade measures.  Therefore, Brazil's measure is as trade-restrictive as can be, as far as retreaded tyres from non-MERCOSUR count ries are concerned, since it aims to halt 
completely their entry into Brazil.   
Contribution of the measure to the objective
 
7.115  In the previous section, the Panel  found that Brazil's declared policy of reducing exposure to 
the risks to human, animal and plant life and health arising from the accumulation of waste tyres fell within the range of policies covere d by paragraph (b) of Article XX.
1198  For that purpose, the Panel 
also assumed that a measure relating to retreaded tyre s is capable of bearing a relationship to the risks 
arising from the accumulation of waste tyres.  The Panel recalls the Appellate Body's statement that in the assessment of the necessity of a measure one of th e factors that should be taken into account in the 
analysis is the contribution of the measure to the realization of the end pursued.
1199  The question 
before the Panel now is whether the import ban on re treaded tyres 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.   
7.116  The European Communities  argues that the contribution of the measure cannot be a purely 
theoretical or potential contribution and that it must  be demonstrated that the measure makes a real 
and verifiable contribution.1200  The European Communities argues that  Brazil is required to quantify, 
                                                                                                                                                                     
optimal use of the world's resources in accordance with the objective of sustainable development, seeking both 
to protect and preserve the environment and to enhance the means for doing so  in a manner consistent with their 
respective needs and concerns at different levels of eco nomic development". (emphasis added)  Moreover, in the 
1994 Ministerial Decision on Trade and Environment, Ministers took note, inter alia , of the Rio Declaration on 
Environment and Development and Agenda 21.1193  Of particular relevance is paragraph 4.19 of Agenda 21, 
which states, in part:  " (...) society needs to develop effective ways of dealing with the problem of disposing of 
mounting levels of waste products and materials.  Governments, together with industry, households and the 
public, should make a concerted effort to reduce the generation of wastes and waste products (...)".  The 
European Communities referred to the Rio Declaration and Agenda 21 in its response to question 37 by the Panel and in paragraph 138 of its first written submission. 
1194 Brazil's second written submission, para. 107; second oral statement, para. 103. 
1195 European Communities' first written submission, para. 115;  European Communities' first oral 
statement, para. 49. 
1196 Exhibit BRA-84.  See also Exhibit EC-29. 
1197 Appellate Body Report on US – Shrimp , para. 171. 
1198 See paragraphs 7.94-7.102 above. 
1199 Appellate Body Report on Korea – Various Measures on Beef , para. 164;  Appellate Body Report 
on EC – Asbestos , para. 172;  Appellate Body Report on US – Gambling,  para. 306;  Appellate Body Report on 
Dominican Republic – Import and Sale of Cigarettes , para. 70. 
1200 European Communities' answer to Panel question 118. WT/DS332/R 
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  as precisely as possible, how its ban contributes to the reduction of waste tyres in Brazil.
1201  
Specifically, the European Communities considers that  Brazil should be able to provide information 
on "by how many tyres the import ban reduces the number of waste tyres accruing in Brazil".1202  In 
the European Communities' view, such quantification of the impact of the import ban is a 
precondition in the contribution analysis required by Article XX(b).1203  The European Communities 
argues that Brazil must prove its assertion that removing the import ban would result in "higher 
volumes of waste tyres" having to be disposed of in Brazil.1204  In the European Communities' view, 
"higher volumes" is clearly a quantitative concept,  and therefore requires a quantification of the 
volumes of waste tyres at issue.1205 
7.117  Brazil replies that not every risk can be expressed in  strictly numeric terms and that this is 
exactly why the Appellate Body in EC – Asbestos has noted that "a risk may be evaluated either in 
quantitative or qualitative  terms".1206  Brazil contends that the Appella te Body categorically rejected 
the argument that a "quantification" of risk s is necessary, and held that "there is no requirement under 
Article XX(b) ... to quantify, as such, the risk to human life or health".1207  Brazil also contends that 
the contribution analysis may involve both an evaluation of the measure's capacity, by design, to 
contribute to the desired objective and an evalua tion of the actual contribution of the measure.1208 
7.118  The Panel  notes that the European Communities ' argument concerns the issue of 
quantification of the reduction of waste tyres in  Brazil while Brazil's answer to that argument 
concentrates on the quantification of the risk to hum an health and life.  As noted above, the Panel 
needs to assess here whether the import ban contribut es to the reduction of the number of waste tyres 
to be disposed of in Brazil.  In the Panel's view, this demonstration could be made through a 
quantification, where feasible, but it could also  be made through any other means that might 
sufficiently demonstrate whether the measure can c ontribute to the reduction of the number of waste 
tyres.  Therefore, the Panel does not consider that  Brazil is necessarily required to quantify exactly the 
impact of the import ban on the reduction of the number of waste tyres. 
7.119  In the Panel's view, a determination of a measu re's contribution to a particular objective is 
primarily an analysis of the pertinence and relevan ce of the chosen means for the achievement of the 
aim pursued.  In other words, our assessment at this  stage of the analysis relates essentially to the 
"relationship of ends and means"1209 between the objective pursued and the chosen measure.  This 
assessment relates to the capacity of the chosen measure to contribute to the realization of the 
objective.   
7.120  Brazil  claims that the import ban contributes in  a significant manner to the reduction of the 
health and environmental risks that flow from waste tyre accumulation, transportation, and 
                                                      
1201 European Communities' second written submission, para. 25. 
1202 European Communities' second written submission, para. 29. 
1203 European Communities' second written submission, para. 30. 
1204 European Communities' second written submissi on, para. 28, referring to Brazil's second 
concluding oral statement, para. 8. 
1205 European Communities' second written submission, para. 28. 
1206 Brazil's first concluding oral statement, para. 8;  Brazil's second written submission, para. 112, 
quoting the Appellate Body Report on EC – Asbestos, at para. 167 (emphasis added). 
1207 Brazil's first concluding oral statement, para. 8;  Brazil's second written submission, para. 112, 
quoting the Appellate Body Report on EC – Asbestos, at para. 167 (emphasis added). 
1208 Brazil's answer to Panel question 118. 
1209 See in the context of Article XX(g), Appellate Body Report on US – Shrimp , para. 136.  In referring 
to this notion, we are mindful of the fact that our analys is under Article XX(b) differs from that to be conducted 
under Article XX(g), as it involves, overall, an assessmen t of whether the measure is "necessary" and not merely 
whether it is a measure "relating to" the interest to be protected.   WT/DS332/R 
 Page 173 
 
 
  disposal.1210  Brazil argues that imports of retreaded tyres increase waste tyre volumes, and with them 
the associated risks and that without the import ban, Brazil could not effectively eliminate these risks.
1211   
7.121  The European Communities claims that Brazil has not shown that the ban on the 
importation of retreaded tyres contributes to the protection of human, animal or plant life or health.1212  
The European Communities argues that the importa tion of retreaded tyres does not in any way 
increase the number of waste tyres to be disposed of in Brazil.1213   
7.122  The Panel  notes that both parties have linked the question of whether the import ban 
contributes to the reduction of the risks to human health, animal and plant life and health to its impact on the reduction of the number of waste tyres in Brazil.  The Panel agrees that this approach 
constitutes, overall, the relevant benchmark for th e assessment of the measure's contribution to the 
objective pursued.  Therefore, the Panel will assess:  (a) whether the import ban can contribute to the 
reduction of the number of waste tyres generated in Brazil;  and (b) whether the reduction of the 
number of waste tyres can in turn contribute to the reduction of the risks to human, animal and plant 
life and health arising from waste tyres.  
Contribution of the import ban to the reduction of the number of waste tyres 
7.123  Brazil  argues that, by prohibiting the importation of re treaded tyres that are at the end of their 
useful life – and therefore are not suitable for fu rther retreading, Brazil is encouraging the local 
producers to retread the used tyres that are alread y in its territory, and t hus avoiding the unnecessary 
generation of additional waste.
1214  Brazil argues that every retreaded tyre that is not imported will be 
replaced by a locally retreaded tyre that would not have been retreaded otherwise and that any 
reduction in the importation of these short lifespan products necessarily also leads to a 
corresponding reduction in the volume of wast e tyres generated in the importing country.1215  Brazil 
also argues that when imported retreaded tyres di splace new tyres, they increase the waste tyre 
volumes.1216  Brazil claims that it actively promotes retreading of the tyres it consumes and that the 
country has a robust and well-established retreadi ng industry, dating back to the early 1950s.1217     
7.124  The European Communities  claims that the import ban on retreaded tyres does not reduce 
the rate of the accumulation of waste tyres for the following two reasons.1218  First, imported retreaded 
tyres and domestic new tyres contribute equally to  the accumulation of tyre waste, given that most 
new passenger tyres are not even suitable for retread ing after a first life cycle on Brazilian roads and 
that not all retreadable passenger car tyres are in fact retreaded in Brazil.  The European Communities 
argues that the import ban would only make a cont ribution to the reduction of the number of waste 
tyres arising in Brazil if it could be shown that new tyres are actually being retreaded after having 
been used in Brazil.1219  Second, it can be assumed that practically every potential sale of an imported 
retreaded tyre is currently, due to the import ban, substituted for by a sale in Brazil of a new (domestic 
                                                      
1210 Brazil's, second written submission, para. 109. 
1211 Brazil's first concluding statement, para. 13. 
1212 European Communities' first oral statement, para. 48. 
1213 European Communities' first written submission, para. 109. 
1214 Brazil's first written submission, para. 106. 
1215 Brazil's answer to panel question No. 40.  
1216 Brazil's second oral statement, para. 80. 
1217 Brazil's first written submission, para. 79. 
1218 European Communities' first written submission, para. 127. 
1219 European Communities' second written submission,  para. 34;  European Communities' answer to 
panel question No. 11, para. 30. WT/DS332/R 
Page 174  
 
  or imported) tyre or of a domestic retreaded tyre, most likely manufactured from an imported used 
tyre, neither of which will, in the case of a passenger car tyre, be retreaded again.
1220 
7.125  The Panel  notes that Brazil's explanation of the c ontribution of the import ban to the objective 
of reduction of waste tyres assumes that imported retreaded tyres would be replaced by domestically retreaded tyres made from tyres used in Brazil or new tyres capable of future retreading.   The 
European Communities, however, suggests that the import ban on retreaded tyres does not contribute 
to reducing the number of waste tyres because imported retreaded tyres are likely to be replaced either 
by new tyres not suitable for retreading or by domestic retreaded tyres most likely manufactured from imported used tyres.  Brazil has acknowledged that  imported retreaded tyres compete on the Brazilian 
replacement tyre market not only with domestic  retreaded  tyres but also with new (domestic or 
imported ) tyres.
1221  Therefore, we must consider both of  these possibilities in order to determine 
whether the import ban on retreaded tyres can cont ribute to the reduction of the number of waste 
tyres.  
Substitution of new tyres for imported retreaded tyres 7.126  The question the Panel  must consider here is whether the import ban on retreaded tyres will 
be able to contribute to the reduction of the number of waste tyres in Brazil, if the imported retreaded 
tyres are replaced on the market by new tyres.  
7.127  The Panel notes Brazil's argument that imported retreaded tyres become waste sooner than 
new tyres, and thereby increase the waste volumes.
1222  The Panel recalls that the parties agree that 
under international standards, passenger car tyr es may be retreaded only once, while commercial 
vehicle and aircraft tyres may be retreaded more than once.1223  Therefore, the Panel notes that tyres of 
passenger cars  can have a maximum of two "useful lives":  (i) as new tyres; and (ii) as retreaded 
tyres.  Thereafter, all passenger car tyres necessarily  become waste.  It is understood, however, that 
not all passenger car tyres have the capacity of having two useful lives;  some of them may not be capable of being retreaded and become waste after one life only.   
7.128  Assuming that on average a tyre, whether new or retreaded, can only be utilized on a 
passenger car for five years
1224, the cumulative useful life of a new tyre that has been retreaded after 
five years is ten years, while the useful life of an al ready retreaded tyre is only five years.  Therefore, 
the fact that a new tyre has the potential to last tw ice as long as an already retr eaded tyre implies that 
overall less tyres could fulfil the needs of the market, thereby reducing the overall number of tyres becoming waste, if imported retreaded tyres are replaced by new tyres.
1225   
                                                      
1220 European Communities' first written submission, para. 127. 
1221 Brazil's answer to panel question No. 108.  The Pane l notes also that new cars are not allowed to be 
fitted with retreaded tyres. 
1222 Brazil's first written submission. para. 76; Brazil' s second written submission, para. 111;  Brazil's 
second oral statement, para. 81. 
1223 See UNECE Regulation No. 108 (1998), para. 6.2.  European Communities' first oral statement, 
para. 33.  Brazil's first written submission, para. 16. 
1224 See the answers of Brazil and the European Communities to panel question No. 90 on the average 
life of a passenger car tyre.  Brazil esti mates that a 175/30 passenger car tyre lasts about 60,000 km or about six 
years and a 165/70 tyre lasts about 40,000 km or four years.  The European Communities indicates that, in 
Europe,  the average number of kilome tres which are driven with a passenge r car tyre before it is replaced  is 
between 60.000 and 75.000 kilometres and that the average lifespan of a passenger car tyre may be assumed to 
be between four and five years.  The European Comm unities argues that the lower mileage of Brazilian tyres 
would appear to reflect the rougher road conditions in Brazil and the accordingly higher wear of tyres. 
1225 In its Arbitral Award of 25 October 2005 in the dispute between Argentina and Uruguay concerning 
the import ban on remoulded tyres, the MERCOSUR Tribunal provided a similar analysis:   WT/DS332/R 
 Page 175 
 
 
  7.129  The Panel notes further Brazil's argument that "a retreaded tyre, no matter the type [passenger 
car, truck, or airplane retreaded tyre], will alwa ys have fewer remaining lifecycles and a shorter 
lifespan than a retreadable new tyre".1226  The European Communities also contends that passenger car 
tyres can only be retreaded once, while commercial ve hicle tyres can be retreaded up to three to four 
times and aircraft tyres up to eight times.1227  Therefore, parties agree that tyres of buses, trucks and 
aircraft  may be retreaded more than once.1228  Following the same reasoning as applied to passenger 
car tyres,  a new tyre for commercial vehicles and ai rcraft similarly has more useful lives than an 
already retreaded tyre;  this implies that overall less tyres could fulfil the needs of the market of 
commercial and aircraft tyres, thereby reducing the overall number of tyres becoming waste.  Brazil also argues that a commercial vehicle retreaded tyre th at is imported closer to the end of its useful life 
could have less than 20 per cent of its useful life left.
1229  However, by the same token, the Panel notes 
that an imported commercial vehicle retreaded tyre could have up to 80 per cent of its useful life 
remaining.   
7.130  To conclude on this point, the Panel  is of the view that all types of retreaded tyres (i.e. for 
passenger car, bus, truck and aircraft) have by definiti on a shorter lifespan than new tyres.  Therefore, 
an import ban on retreaded tyres may lead to a re duction in the total number of waste tyres because 
imported retreaded tyres may be substituted for by new tyres which have a longer lifespan.  
Consequently, while the extent of the reduction ma y vary in respect of commercial tyres depending on 
the stage at which they might be imported, in al l cases, overall less tyres would be necessary to fulfil 
the needs of the market.1230    
Substitution of retreaded tyres made from domes tic used tyres for imported retreaded tyres 
7.131  The Panel notes Brazil's argument that the contribution of the import ban to the reduction of 
the number of waste tyres lies in its capacity to promote retreading of domestic used tyres because imported retreaded tyres may be substituted for by re treaded tyres made from domestic used tyres that 
would not have been retreaded otherwise.
1231   
7.132  The Panel needs here to determine whether a link exists between the replacement of imported 
retreaded tyres by domestically retreaded tyres and a reduction in the number of waste tyres in Brazil.  
For Brazil, the import ban on retreaded tyres is a way of encouraging domestic producers to collect and retread the used tyres that are already in its territory thereby extending the life cycle of domestic 
                                                                                                                                                                    
 
"Using simple arithmetic and on the basis of the optimistic expectation that a remoulded tyre 
could run the same distance as a new tyre, i.e. 60,000 km, it may be concluded that, after 
120,000 km, a four-wheel vehicle that has used new tyres, subsequently remoulded, will have consumed four tyres;  on the other hand, an identical vehicle that has used remoulds over the 
same period will have consumed eight tyres.  Clearly, if the total service life of a remoulded 
tyre is less than that of a new tyre (since the latter can be remoulded once and the former not at all), the introduction into the domestic market of tyres remoulded abroad will over time 
create a greater environmental burden." (E xhibit EC-43, para. 98, translation by the 
WTO Secretariat) 
1226 Brazil's first concluding statement, para. 9. 
1227 European Communities' first written submission, para. 26. The European Communities also argues 
that the age of a casing for a passenger car tyre may not  exceed 7 years when it is being retreaded, whereas no 
similar restriction exists for commercial vehicle and airc raft tyres. See European Communities' answer to panel 
question No. 4. 
1228 Brazil's first written submission, para. 16. 
1229 Brazil's answer to panel question No. 5. 
1230 In its answer to panel question No. 117, Brazil provides some data on the imports of retreaded tyres 
by type of tyres in 2002/2003.  According to these data , it seems that in practice most imports of retreaded tyres 
in the past have been passenger car retreaded tyres (i.e. 99,8 per cent). 
1231 See Brazil's answer to panel questions Nos. 6 and 26. WT/DS332/R 
Page 176  
 
  used tyres.
1232  This argument therefore assumes that an augmentation in the number of domestic used 
tyres being retreaded will contribute to the reduction of waste tyre accumulation.   
7.133  The Panel is of the view that if a domestic re treaded tyre is manufactured from a tyre used in 
Brazil, the retreading of this domestic tyre cont ributes to the management and reduction of the 
number of waste tyres in Brazil, by ensuring that a tyre already used in Brazil gets a "second life" as a 
retreaded tyre.  Therefore, the Panel agrees that  if the domestic retreading industry retreads more 
domestic used tyres, the overall number of waste tyr es will be reduced by giving a second life to some 
used tyres, which otherwise would have become waste immediately after their first and only life. 
7.134  The Panel will consider next whether an im port ban on retreaded tyres is capable of 
promoting  the retreading of domestic used tyres.  The di rect effect of an import ban on retreaded tyres 
is to compel consumers of imported retreaded tyr es to switch either to retreaded tyres produced 
domestically or to new tyres.  Assuming that domestic used tyres are the only raw material available to retreaders in Brazil and that at least part of the domestic demand is satisfied by domestic retreaded 
tyres (as opposed to new tyres), an increase in the demand for domestic retreaded tyres can be 
expected to lead to a corresponding supply response,  and hence to an increase in the retreading of 
domestic used tyres.
1233  Therefore, the Panel finds merit in the argument that an import ban on 
retreaded tyres can encourage domestic retreaders to re tread more domestic used tyres than they might 
have done otherwise.1234 This will be possible if domestic used tyres can be retreaded in Brazil.1235  
The Panel will now assess whether this assumption can be verified.   
7.135  The parties provided and discussed a number of doc uments and data to illustrate their views 
on whether domestic used tyres were retreadable and being retreaded such as:  Retreadability figures 
prepared by a Brazilian company, Mazola1236;  the LAFIS report and the IPT study1237;  a report 
                                                      
1232 Brazil's first written submission, paras. 106-107. 
1233 We note Brazil's argument that the fact that "local retreaders are desperately seeking to circumvent 
the import ban through court injunctions demonstrates ... th at the ban is necessary to  induce local retreaders to 
collect waste tyres accumulated in Brazil for retreading, rather than importing used tyres" (Brazil's answer to 
panel question 19).   
1234 Brazil's first written submission, para. 106. 
1235 Brazil's first written submission, para. 108. 
1236 Brazil's first written submission, para. 79 and Exhibit BRA-93.  Europ ean Communities' second 
written submission, para. 36.  Brazil claims that according to Mazola, a company that selects retreadable casings 
for leading tyre retailer, about 30 per cent of passenger car tyres found in Brazil are suitable for retreading.  On the other hand, the European Communities argues that the Mazola figures contain a number of uncertainties, e.g. 
whether the table excludes only tyres which are "retread able", or whether it also excludes tyres which can be 
used for other purpose, including mid-life tyres, or tyres th an can be used for material recycling.  According to a 
letter from the director of Mazola (E xhibit BRA-160), the activity of this company is to commercialize "usable 
(retreaded) tyres" in contrast to "unusable tyres" that are "forwarded to their final destination".  It is not entirely 
clear whether this table excludes only retreadable tyres.     
1237 European Communities' second written submission, para. 45 and Exhibit EC-92, p. 11.  Brazil's 
second oral statement, para. 72.  The European Communities argues that a recent overview of the Brazilian Tyre 
market – the LAFIS Report – indicates that the rate of retreading of tyres in Brazil in 2005 is 9.9 per cent.  
Brazil replies that this figure comes from a study, entitled "Identifying Final Destinations of Unusable Tires" 
(the IPT study, Exhibit BRA-159).  Brazil contends that the IPT study is "controversial" as it only surveyed 
"retailers and tyre repair shops" and did not account for retreadable tyres that were retained by owners neither 
did it account for a large part of commercial tyres becaus e, according to Brazil, these tyres do not typically pass 
through the retailers or tyre repair shops.  On the other hand, the European Communities argues that the 
retreading rate is an aggregate figure fo r all types of tyres, including truck tyres:  this means that the percentage 
of passenger car tyres which are being retreaded must be considerably lower than 9.9 per cent and most likely de 
minimis .     WT/DS332/R 
 Page 177 
 
 
  prepared by the Association of Brazilian Retreaders (ABR)1238;  a video produced by BS Colway1239;  a 
Technical Note by INMETRO1240;  a table on the retreadability and the retreading rate of Brazilian 
used tyres1241;  and retreadability figures in other countries.1242  There are differences of view among 
the parties as to the relevance and accuracy of th e evidence submitted, with respect to the level of 
retreadability of tyres in Brazil, as well as on the ex tent to which tyres used in Brazil are actually 
                                                      
1238 Brazil's second written submission, para. 116, Exhibit BRA-95 and 157.  European Communities' 
second oral statement, para. 29.  Brazil argues that, acc ording to the information provided by ABR, more than 
84 million tyres were retreaded in Brazil between 2001 an d 2005.  In the same period , Brazil argues that just 
27 million used tyres were imported.  For Brazil, many imported casings are not suitable for retreading, but even 
if all imported casings had been retreaded between 2001  and 2005, 57 million retreads would have still been 
manufactured from domestic casings.   The European Communities notes that the ABR’s report indicates that the large majority of passengers car casings retreaded in  Brazil are imported.  The Panel notes that the report 
prepared by ABR also states that:  "the large majority, but not the totality, of passenger car casings reformed in 
Brazil are imported" and that it "is unable to precise the pe rcentage of casings that is  effectively obtained in the 
local market".  This means,  therefore, that, according to this report , Brazilian retreaders, even if to a small 
extent, use domestic casings. 
1239 European Communities' answer to panel question No. 21 and Exhibit EC-72.  Brazil's answer to 
panel question No. 96 of the Panel.  The European Communities contends that in the video produced by the 
Brazilian retreaders association ABIP  and ABR, which documents the ongoing debate on the prohibition of the 
importation of used tyres, several Brazilian retreaders tes tify that they require the importation of used tyres in 
order to be able to carry out their retreading business in  Brazil.  On the other hand, Brazil submits that the video 
states: "Nowadays, 60 per cent of the raw material used by the Brazilian retreaders are domestic casings".  The 
European Communities replies that the video contains no such statement and that it states:  "National casings are 
already being used. Due to the bad conditions of the country's roads and highways, we have only been able to 
use enough to meet 60 per cent of our need, that is, our segment operates with 40 per cent idleness".  The Panel notes that there is a disagreement between parties as to the coverage of the figure "60 per cent".  The video 
nevertheless contains a statemen t indicating that domestically used tyres are being retreaded.  
1240 European Communities' first written submission,  para. 81 and Exhibit EC-45.  Brazil's second 
written submission, para. 115.  The European Communities submits that the 2000 INMETRO Technical Note 
states that "The national tyre reconditioning industry, mainly the remoulded tyre industry, needs to import used 
tyres in order to use the carcasses as raw material.  It  is widely confirmed that using domestic used tyres to 
obtain the carcasses is economically unviable given our conditions of use".  On the other hand, Brazil argues 
that the note spoke of economic viability, not of the actual suitability.  Moreover, Brazil argues that the final 
rule issued by INMETRO as Technical Note No. 001/2006 (Exhibit No. 163) on the injunction for retreaded tyres does not contain a reference to economic viabilit y.  However, it recommends that used tyres not be 
imported for retreading, since the number of used tyres that need to be discharged from the domestic market 
already meets the demand of retreaders. 
1241 Brazil's second oral statement, paras. 57-61, Brazil's answer to panel questions Nos. 107 and 117 
and Exhibit BRA-162.  European Communities'  answer to panel question No. 107.  Brazil submits several tables that show the number of tyres retreaded in Braz il made from domestic casings during the years 2001 to 
2005 and the rate of retreading from dom estic casings.  Brazil explains that the tables set forth two scenarios:  (i) 
the conservative scenario assumes that all imported casing s were retreadable and were, in fact, retreaded;  (ii) 
the realistic scenario is based on the estimates by the Brazilian retreaders that approx imately two-thirds of the 
imported casings are retreaded.  Brazil argues that both scen arios show that tyres used in Brazil are retreaded in 
very high numbers.  Brazil submits that the overall retreading rate from domestic casings (including truck, bus and passenger car tyres) peaked in 2003 at some 44 per ce nt under the realistic scenario, or 35 per cent under the 
conservative scenario.  According to Braz il, this means that of all potentially retreadable used tyres in Brazil, as 
much as 44 per cent were not only suitable for retrea ding, but were, in fact, retreaded.  The European 
Communities contends that with the exception of the number of imported used tyres, the calculations contained 
in Exhibit BRA-162 are fu ll of inaccuracies and unproven assump tions.  For the European Communities, 
Exhibit BRA-162 is inadequate for the purpose of establishing the rate of retreading of passenger car and truck tyres as well as the share of domestic casi ngs in retreads manufactured in Brazil. 
1242 Brazil provided some example of retreadability figures for other countries:  in the United Kingdom, 
10-30 per cent of used tyres are suitable for retreading; in the United States, less than 12 per cent;  in Australia, 15-20 per cent; in France, 33 per cent.  Brazil's first wr itten submission, para. 79.  Brazil also argued that no 
country, including Brazil, can provide a precise suitability  figure.  Brazil's answer to panel question No. 17. WT/DS332/R 
Page 178  
 
  retreaded.  Brazil claims that about  30 per cent of Brazilian casings are retreadable and that the overall 
rate of retreading (i.e. including passenger car, tr uck and bus tyres) in Brazil is as high as 
44 per cent.
1243  The European Communities claims that Br azilian used tyres are generally not suitable 
for retreading and that the rate of retreading of domestic casings in Brazil is no higher than 
9.9 per cent.  The European Communities notes however  that this figure includes truck tyres and that 
the retreading rate of domestic passenger car tyres is even lower.1244   
7.136  The reports and studies mentioned in the previo us paragraph indicate that at least some 
domestic used tyres are being retreaded in Brazil.  For instance, the ABR report states that "the large 
majority, but not the totality, of passenger car casings reformed in Brazil are imported"1245;  or the 
INMETRO Technical Note 001/2006 recommends that used  tyres are not imported in order to be used 
for retreading, since "the number of used tires that  need to be discharged from the domestic market 
already meets the demand of retreaders".1246 
7.137  The Panel notes further that Brazil argued that it had taken a number of measures to facilitate 
the access of domestic retread ers to good quality used tyres.1247  The Panel is of the view that such 
measures could indeed positively contribute to Brazil' s capacity to retread its own tyres.  First, 
according to Brazil, Resolution CONAMA 258/1999, as amended in 2002, provides for a collection 
and disposal scheme in Brazil1248 and forces manufacturers and importe rs of new tyres to collect and 
dispose of waste tyres to a proportion of five waste tyres for every four new tyres.1249  Brazil also 
indicates that Resolution CONAMA  258/1999 ex empts domestic retreaders from disposal 
obligations, as long as they process tyres c onsumed within the country's territory.1250  Moreover, Brazil 
claims that it has adopted demanding technical regula tions for manufacturing of new tyres, which help 
produce better-quality tyres and,  subsequently, better casings.1251  The Panel notes the 
European Communities' claim concerning the exis tence in Brazil of cheap low-quality new tyres.1252  
Brazil replies that new tyres sold in Brazil (whether manufactured domestically or imported) are high-quality tyres that comply with strict techni cal and performance standards that are based on 
international standards and that tyres manufactur ed in accordance with these standards have the 
                                                     
 
1243 Brazil's second oral statement, para. 61. 
1244 European Communities' first written submission, para. 82; European Communities' answer to panel 
question No. 20;  European Communities' second written su bmission, paras. 44-46;   European Communities' 
second oral statement, para. 30.   
1245 Exhibit BRA-95, para. 6. 
1246 Exhibit BRA-163, p. 10. 
1247 Brazil's first written submission, para. 81. 
1248 Brazil's first written submission, paras. 71-72;  Brazil's second oral statement, para. 86.  
Exhibit BRA-4. Article 1 of this regulation states: "Tire manufacturers and importers are obliged to collect and 
definitively dispose of scrap tires in Brazil, in a proper manner, in the proportion stated herein with regard to 
quantities of manufactured and/or imported tires".  Article  3.IV states: "a) manufacturers and importers should 
definitively dispose of five scrap tyres  for every four new tyres  manufactured in Brazil or new imported tires, 
including those fitted to imported vehicles; b) importers should definitively dispose of four scrap tyres  for every 
three imported recycled [i.e. retreaded] tyres  of any kind." [emphasis added]  A scrap tyre is defined in 
Article 2 as a tyre "which can no longer be restored to permit further travel use".  See also Resolution CONAMA 301/2002 (Exhibit Bra-68). 
1249 The Panel also notes that Brazil contends that it has enforced these obligations and imposed 
substantial fines in this regard;  it has helped private companies set up collection centres (" ecopontos ");  and it 
has intensified its own collection efforts.   
1250 Brazil's first written submission, para. 81. 
1251 Brazil's first written submission, para. 81. 
1252 European Communities' first oral statement, para. 28; European Communities' answer to panel 
question No. 11.  WT/DS332/R 
 Page 179 
 
 
  potential to be retreaded.1253  Therefore, the Panel has no reason to believe that new tyres sold in Brazil 
are low-quality tyres. 
7.138  Brazil has also indicated that automotive inspec tions are an important instrument to increase 
the number of retreadable casings in the country1254 and that it continues to promote better tyre care to 
increase the collected tyres' suitability for retreading.1255  However, the European Communities claims 
that currently there are no rules at the federa l level, which would establish a mandatory vehicle 
inspection system.1256  Brazil argues that the National Code of Traffic (Law 9503), enacted in 19971257, 
mandates annual safety inspections of all vehicles1258 and Bill 5979/2001, currently before the 
National Congress, establishes general rules to be applied by the states in these safety inspections.1259  
Brazil contends further that because the general rul es to be applied by the Brazilian states are still 
under consideration of the National Congress, the st ates are applying their own technical guidelines in 
mandatory inspections, which occur when a vehicle is first licensed or when the ownership of a 
vehicle changes.1260  Therefore, it appears that mandatory inspections are taking place in Brazil and 
that more frequent inspections are to be  expected once Bill 5979/2001 is approved.  
7.139  Furthermore, the Panel  notes that both parties agreed that if imports of both used and 
retreaded tyres were banned, waste volumes would be at their lowest.1261  For the ban on retreaded 
tyres to contribute to the objective of a reduction of waste tyres, it should not lead to a substitution of imported used tyres for imported retreaded tyres.   The Panel notes that Article 40 of Portaria 
SECEX 14/2004 bans the importation of both used and re treaded tyres to Brazil.  Therefore, the Panel 
observes that the import ban on used tyres supports the effectiveness of the import ban on retreaded 
tyres regarding the reduction of waste tyres.   
7.140  The Panel notes further the European Communitie s' argument that in fact it can be assumed 
that practically every potential sale of an imported re treaded tyre is currently, due to the import ban, 
substituted by a sale in Brazil of a new tyre or of a domestic retreaded tyre most likely manufactured 
from an imported used tyre.
1262  The Panel notes that a number of preliminary injunctions have 
temporarily allowed local retreaders to import casi ngs, thereby making it possible for domestically 
retreaded tyres to be made from such imported casi ngs despite the prohibition of such imports in 
Article 40 of Portaria SECEX 14/2004.1263  The Panel notes Brazil's explanation that the used tyre 
imports through injunctions are not part of the d esign of the measure and are rather an attempt to 
undermine the measure's design and application.1264  As noted earlier, our analysis at this stage focuses 
on the measure itself, rather than on elements rela ting to the manner in which it is being applied, 
                                                      
1253 Brazil's answer to panel questions No. 12 and 91. 
1254 Brazil's answer to European Communities question No. 8. 
1255 Brazil's first written submission, para. 82. 
1256 European Communities' answer to panel question No. 87. 
1257 Exhibit BRA-102. 
1258 Brazil's first written submission, para. 82. 
1259 Brazil's answer to European Communities question No. 8. 
1260 Brazil's answer to European Communities question No. 9. 
1261 Brazil's second written submission, para. 120. Second  oral statement, para. 79.  See expert Report 
of Plinio M. Nastari, M.Sc., Ph.D., July 2006, at  para. 39 ("Nastari Report") (Exhibit BRA-146).  
European Communities, second oral statement, para. 36. 
1262 European Communities' first written submission, para. 127. 
1263 Brazil also argues that the fact that "local retreaders are desper ately seeking to circumvent the 
import ban through court injunctions demonstrates ... that the ban is necessary to induce local retreaders to 
collect waste tyres accumulated in Brazil for retreading, ra ther than importing used ty res".  Brazil's answer to 
panel question 19. 
1264 Brazil's answer to Panel question 118. WT/DS332/R 
Page 180  
 
  which will be relevant in the context of our  analysis under the chapeau of Article XX.
1265  We will 
therefore reserve our examination of this element for that later stage. 
7.141  Finally, it appears to the Panel that the Br azilian retreading industry has the production 
capacity to retread domestic used tyres at the end of their life.  This conclusion can be drawn from the ABR report which shows that the production of the domestic retreading industry in 2005 was 
10.8 million retreaded passenger car tyres and 7.8 million truck and bus tyres.
1266  This means that in 
total 18.6 million retreaded tyres were produced dom estically in 2005.  Brazil indicates also that, in 
2005, 33.4 million new tyres (all types included) were sold in Brazil (either domestically produced or 
imported).1267   
7.142  In light of the above, the Panel  is of the view that Brazil has established that it has the 
production capacity to retread domestic used tyres, th at domestic used tyres are suitable for retreading 
and are being retreaded.  Therefore, the Panel concl udes that the import ban is capable of contributing 
to the reduction of the overall amount of waste tyres generated in Brazil.  Havi ng determined this first 
aspect of the contribution, the Panel now turns to a consideration of whether such a reduction will, in 
turn, lead to a reduction of the risks to human life or health that Brazil seeks to address.  
Contribution of the import ban to the reduction of the risks to human, animal and 
plant life and health 
7.143  Brazil  argues that it has demonstrated that the import ban contributes in a significant way to 
the reduction of the health and environmental risks that flow from waste tyre accumulation, transportation, and disposal.
1268  For Brazil, by reducing the volumes of waste tyres, and consequently 
the amount of tyres that will be stockpiled or illegally dumped, the ban also reduces mosquito 
breeding grounds1269 and the health risks caused by tyre fires and toxic leaching.1270  For Brazil, the 
more waste tyres there are, the higher these risks.1271  Brazil points out that in addition to collecting 
tyres, Brazil's campaign against dengue targets othe r key containers, educat es the public about dengue 
prevention, carries out mosquito surveillance, monitors  mosquito resistance to insecticides, and offers 
guidance on treatment of dengue patients.1272  Brazil also argues that the level of risk from commercial 
vehicle retreaded tyres is higher than that fro m passenger car retreaded tyres because commercial 
vehicle retreads are substantially h eavier and, thus, produce more waste.1273   
7.144  The European Communities  argues that, even if Brazil had established that its ban makes a 
contribution to the reduction of waste tyres, it has fa iled to demonstrate that this leads to a reduction 
of the risks to human life or health.1274  In the European Communities' view, the problems arising from 
waste tyres are not attributable to imports of retreaded tyres but to the 100 million waste tyres 
scattered around the country, and the health pr oblems continue since the ban was enacted.1275   
                                                      
1265 See para. 7.107 above. 
1266 Exhibit BRA-157, para. 2.  The ABR report also indicates that "[t]here are 1257 tyre reforming 
companies operating with truck/bus tyres;  120 in the field of passenger car tyres;  100 in the field of 
agriculture/earthmoving tyres;  100 in the field of motorcycle tyres.  That totals 1577 tyre reforming 
companies". Exhibit BRA-157, para. 1. 
1267 Brazil's answer to panel question No. 99 by the Panel. 
1268 Brazil's second written submission, para. 109. 
1269 Brazil's second written submission, para. 123. 
1270 Brazil's second written submission, para. 132. 
1271 Brazil's second oral statement, para. 78. 
1272 Brazil's answer to panel question No. 89. 
1273 Brazil's answer to panel questions Nos. 5, 100-102. 
1274 European Communities, first oral statement, para. 42. 
1275 European Communities,' second written submission, para. 55.  WT/DS332/R 
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  7.145  In the Panel 's view, it cannot be reasonably expected that the specific measure under 
consideration would entirely eliminate the risk to human health or life arising from the accumulation 
of waste tyres in Brazil, 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, especially when a 
number of factors beyond the specific product targ eted by the measure (retreaded tyres) also 
contribute to the realization of the hazard.   
7.146  The question here is whether a measure that contributes to the reduction of the amount of 
waste tyres in Brazil will contribute to the reduction of the risks arising from such accumulation.  In 
this respect, the Panel considers it significant th at the very essence of the problem is the actual 
accumulation of waste in and of itself.  To the extent  that this accumulation has been demonstrated to 
be associated with the occurrence of the risks at issue, including the providing 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.  The Panel also notes th at the measure at issue is intended to operate in 
conjunction with a number of other measures taken by  Brazil domestically to reduce the risks arising 
from the accumulation of waste tyres (such as tyre collection) as well as measures targeting mosquito-
borne diseases, including measures intended to address key containers other than waste tyres that may 
act as breeding grounds for mosquito-borne diseases.1276   
7.147  In this context, the Panel finds it reasonable to consider that a measure that contributes to the 
reduction of the amount of waste tyres in Brazil also  will contribute to the reduction of the risks to 
human, animal and plant life and health arisi ng from the accumulation of waste tyres in Brazil. 
Conclusion 
7.148  In light of the above, the Panel concludes that  the prohibition on the importation of retreaded 
tyres is capable of making a contribution to the obj ective pursued by Brazil, in that it can lead to a 
reduction in the overall number of waste tyres gene rated in Brazil, which in turn can reduce the 
potential for exposure to the specific risks to human, animal, plant life and health that Brazil seeks to 
address.  
Availability of alternative measures  
Approach by the Panel 
7.149  Having reviewed the relevant factors identifie d by the Appellate Body, the Panel will now 
undertake a comparison between the challenged measure and possible alternatives.  In this connection, 
the Panel recalls the Appellate Body's finding that a measure cannot be considered "necessary" within 
the meaning of Article XX if a WTO-consistent alternative measure, or less WTO-inconsistent 
measure, is "reasonably available" that would achieve the same end.1277  
                                                      
1276 See Brazil's response to Question No. 89 of  the Panel; Brazil's second written submission, 
para. 126. 
1277 Appellate Body Report on Korea – Various Measures on Beef , paras. 165-166 and Appellate Body 
Report on  EC – Asbestos, paras. 170-172.  The Appellate Body, in addressing the "necessity" of the measures 
respectively under Articles XX(b) and XX(d) concerned in both cases, found that the standard set forth by the 
GATT panel in US – Section 337 of the Tariff Act of 1930 was correct.  The panel in US – Section 337 of the 
Tariff Act of 1930 stated: 
"In was clear to the Panel that a contracting pa rty cannot justify a measure inconsistent with 
another GATT provision as "necessary" in terms of Article XX(d) if an alternative measure 
which it could reasonably be expected to employ and which is not inconsistent with other 
GATT provisions is available to it.  By the sa me token, in cases where a measure consistent WT/DS332/R 
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  7.150  As stated by the Appellate Body in Dominican Republic – Import and Sale of Cigarettes, the 
weighing and balancing process of the factors that  we have considered above should inform the 
determination of whether a WTO-consistent alterna tive measure, or a less WTO-inconsistent measure, 
which the Member concerned could reasonabl y be expected to employ, is available.
1278 
7.151  In this instance, we have determined above th at the objective of protecting human health and 
life is both vital and important in the highest de gree and the objective of protection of animal and 
plant life and health can also be considered impor tant.  We have also observed that the challenged 
measure, a complete import ban, is particularly rest rictive of trade, but also that it is capable of 
contributing to the objective pursued,  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, plant life and health that Brazil seeks to address. 
7.152  We must therefore now consider whether any alternative measure, less inconsistent with 
GATT 1994, that is, less trade-restrictive than a co mplete import ban, woul d have been reasonably 
available to Brazil to achieve the same objective,  taking into account Brazil's chosen level of 
protection.1279  The challenged measure could not be consider ed to be necessary if such an alternative 
measure was available.   
7.153  The European Communities  submits that the onus is upon Brazil to prove that there are no 
reasonably available alternatives to the import ban on retreaded tyres.1280  According to the 
European Communities, once the complaining party id entifies the universe of alternative measures, it 
is the responding party that has the burden of proof to show that the alternative measures identified by 
the complaining party are not reasonably available.1281 
7.154  Brazil argues that the complaining party, no t the respondent, bears the burden of 
demonstrating that a less trade-restrictive measure  is reasonably available and that only if the 
complaining party raises a WTO-consistent alterna tive measure that is reasonably available, the 
burden of proof would shift to the responding party.1282 
7.155  The Panel recalls that the Appellate Body in US – Gambling  found that the respondent only 
needs to make a prima facie  case of the necessity of a measure a nd does not need to identify less 
WTO-inconsistent measures.  Th e Appellate Body stated that: 
"[i]t is for a responding party to make a  prima facie  case that its measure is 
'necessary' by putting forward evidence a nd arguments that enable a panel to assess 
the challenged measure in the light of th e relevant factors to be 'weighed and 
                                                                                                                                                                     
with other GATT provisions is not reasonably available, a contracting party is bound to use, 
among the measures reasonably available to it, that which entails the least degree of 
inconsistency with other GATT provisions." (Panel report on US – Section 337 of the Tariff 
Act of 1930 , BISD 36S/345, para. 5.10.) 
1278 Appellate Body Report on Dominican Republic – Import and Sale of Cigarettes , para. 70.  Brazil 
also agrees to this approach.  See Brazil' s first written submission, paras. 112-113. 
1279 In this respect, we recall the Appellate Body's statement in EC – Asbestos  that, given the value 
pursued in that case – the preservation of human life and health through elimination, or reduction, of the health risks posed by asbestos fibres – was both vital and important in the highest degree, the remaining question was 
whether there was an alternative measure that would achi eve the same end and that is less restrictive of trade 
than a prohibition (the measure in that case) (Appellate Body Report on EC – Asbestos, para. 172 ). 
1280 European Communities' first written submission, para. 110.   
1281 European Communities' second written submission, paras. 69-71, citing Appellate Body Report on 
US – Gambling , paras. 309-311. 
1282 Brazil's first written submission, paras. 116-117, citing Appellate Body Report on US – Gambling , 
at paras. 311, 320; Brazil's second written submission, para. 39.  WT/DS332/R 
 Page 183 
 
 
  balanced' in a given case.  The responding party may, in so doing, point out why 
alternative measures would not achieve  the same objectives as the challenged 
measure, but it is under no obligation to do so in order to establish, in the first instance, that its measure is 'necessary'"
1283 
7.156  The Appellate Body then found that once the complaining party comes forward with a WTO-
consistent alternative measure, the respondent has to demonstrat e why the measure at issue is 
necessary in light of the alternative measure raised by the complainant or why the proposed 
alternative is not "reasonably available": 
"If, however, the complaining party raises a WTO-consistent alternative measure that, 
in its view, the responding party should ha ve taken, the responding party will be 
required to demonstrate why its challenged measure nevertheless remains 'necessary' 
in the light of that alternative or, in othe r words, why the proposed alternative is not, 
in fact, 'reasonably available'.  If a responding party demonstrates that the alternative is not 'reasonably available', in the light of the interests or values being pursued and the party's desired level of protection, it follows that the challenged measure must be 
'necessary' ..."
1284 
7.157  Following the same approach, we will first ex amine whether the European Communities has 
identified a measure, other than the import ban, that  is compatible, or less incompatible, with the 
WTO Agreement and at the same time, in its view, was reasonably available to Brazil to achieve its 
policy objective.  If the Panel finds that the European Communities has done so, we will then examine whether, in light of the alternative measures id entified by the European Communities, Brazil has 
demonstrated why the import ban nevertheless remain s necessary (i.e. why these alternative measures 
are not, in fact, reasonably available).  We unders tand this assessment to involve in particular a 
consideration of the relative trade-restrictiveness of the proposed alternatives compared to that of the 
measure at issue, taking into account also the impor tance of the objective pursued and the ability of 
the proposed alternative measure  to achieve this objective.  
7.158  As to the elements that may guide our assessment  as to whether such alternative measure is 
reasonably available, we find useful the fo llowing statement of the Appellate Body in US – Gambling : 
"An alternative measure may be found not to be 'reasonably available', however, 
where it is merely theoretical in nature, for instance, where the responding Member is 
not capable of taking it, or where the measure imposes an undue burden on that 
Member, such as prohibitive costs or substa ntial technical difficulties.  Moreover, a 
'reasonably available' alternative measure must be a measure that would preserve for 
the responding Member its right to achieve its  desired level of protection with respect 
to the objective pursued...".
1285   
                                                      
1283 Appellate Body Report on US – Gambling , para. 310. 
1284 Appellate Body Report on US – Gambling , para. 311. 
 1285 Appellate Body Report on US – Gambling , para. 308.  We also note that in Korea – Various 
Measures on Beef , the Appellate Body endorsed the approach taken by the panel in that case: 
"Having found that possible alternative enforcement measures, consistent with the WTO 
Agreement, existed in other related product areas, the Panel went on to state that: 
'... it is for Korea to demonstrate that such an alternative measure is not reasonably available 
or is unreasonably burdensome, financially or  technically, taking into account a variety of 
factors including the domestic costs of such alte rnative measure, to ensu re that consumers are 
not misled as to the origin of beef'" (original footnote omitted) WT/DS332/R 
Page 184  
 
  Alternative measures identified by the European Communities 
7.159  The European Communities has identified various  measures as alternatives to Brazil's import 
prohibition.  More specifically, the European Communities has presented these measures in two 
categories – alternative measures to reduce the nu mber of waste tyres accumulating in Brazil and 
those to improve the management of waste tyres in Brazil. 
7.160  First, the European Communities suggests that Br azil has not done "all it could" to reduce the 
accumulation of waste tyres in Brazil because there exist various other measures that Brazil could 
reasonably have been expected to employ to achie ve the same objective.  The European Communities 
argues that Brazil should have taken the following  domestic measures:  me asures to encourage or 
ensure the retreading of domestic passenger cars, in cluding, for example, measures such as education 
campaigns or the use of government procurement to  require the installation of retreaded tyres on 
government vehicles; measures to improve the low suitability of Brazilian passenger car tyres for retreading
1286; measures that would reduce the use of cars in Brazil, for example through the 
promotion of public transport in urban areas1287; as for tyres that have already been retreaded, any 
policy aiming at a longer safe use of retreaded tyr es, such as better vehicles maintenance, including 
technical inspection, and educationa l campaigns on better driving habits1288; and measures to prevent 
the constant and growing flow of used tyres into Brazil.1289   
7.161  Second, as alternative measures to improve the management of waste tyres, the 
European Communities first argues that Brazil already has a measure in its legislation that can achieve 
its policy objective, namely the collecting and dispos al system such as that wh ich has already been set 
up by CONAMA Resolution 258/1999, as amended in 2002.  Similarly, the European Communities 
argues that Brazil should have adopted at the fe deral level voluntary programmes such as "Paraná 
Rodando Limpo" and other equivale nt programmes implemented in some other States in Brazil.  
Finally, according to the European Communities,  main disposal methods such as controlled 
landfilling, stockpiling, energy rec overy and material recycling cons titute alternative measures to the 
import ban. 
Reasonable availability of alternative measures to Brazil 
7.162  As noted above, the European Communities has id entified the alternative measures consistent 
with the WTO Agreement that in its view would achieve Brazil's policy objective.  We will now 
proceed to examine whether Brazil has demonstrated  that these measures are not reasonably available 
to it.  
7.163  Thus, bearing in mind the guidance provided by the Appellate Body, we will consider in turn 
the two different sets of measures suggested by the European Communities as alternatives to the 
import ban – first, measures to reduce the number of waste tyres and secondly, measures to improve 
the management of waste tyres. 
Measures to reduce the number of waste tyres 
7.164  The European Communities argues that Brazil does not seem to have taken measures to 
encourage domestic retreading or improve the retreadability of tyres , such as those listed in 
paragraph 7.160 above. 
                                                      
1286 European Communities' first oral statement, paras. 58-61. 
1287 European Communities' answer to Panel question No. 38. 
1288 European Communities' answer to Panel question No. 38. 
1289 European Communities' first oral statement, paras. 62-68.  WT/DS332/R 
 Page 185 
 
 
  7.165  Regarding the alternative measures suggested by the European Communities to prevent the 
generation of waste, Brazil first responds that it actively promotes retreading of the tyres and has 
already implemented a number of measures that en courage non-generation and is in the process of 
implementing others.1290  Brazil further submits that government procurement is not necessary in 
Brazil since Brazil already has a high demand for retreaded tyres.1291  Furthermore, according to 
Brazil, in developing countries such as Brazil, th e promotion of public transport is hardly necessary 
since most of the population do not own cars and already use public transportation. 
7.166  In any event, Brazil submits that none of th ese measures can replace the import ban because 
they do not allow Brazil to achieve its goal of preven ting tyre waste to the maximum extent possible.  
Brazil asserts that the non-generation solutions pr oposed by the European Communities could be 
alternatives only if Brazil sought to reduce waste tyre volumes by a particular amount and that these 
suggested measures are not alternatives within the meaning of Article XX(b), but rather additional 
measures, because without the import ban, some tyre waste that could have been prevented would not, 
in fact, be prevented.1292 
7.167  The Panel first notes that the measures suggested by  the European Communities to encourage 
domestic retreading or to improve the retreadability of domestic used tyres are less trade-restrictive 
than the import ban, in that they operate on the domestic market for importe d and domestic tyres alike 
and do not involve any a priori  import restrictions.  Furthermore, they could contribute to the 
reduction in the number of waste tyres generated by domestic used tyres in Brazil by maximizing their 
overall lifespan. 
7.168  However, as pointed out by Brazil, the pr omotion of domestic retreading and enhanced 
retreadability of locally used tyres in Brazil would not lead to the reduction in the number of waste 
tyres additionally generated by "imported  short-lifespan retreaded tyres". 
7.169  We also observe that Brazil has already impl emented or is in the process of implementing 
such domestic measures.1293  Indeed, the positive impact of both measures – i.e. the ban on imported 
short-lifespan retreaded tyres and domestic measure s on domestic used tyres – could be cumulative 
rather than substitutable.  We thus do not agree w ith the European Communiti es that the institution of 
domestic measures to encourage timely domestic re treading and to improve the retreadiblity of 
domestic used tyres would achieve the same out come as the import ban on retreaded tyres.  
7.170  Finally, the European Communities also argues that Brazil has not taken measures to prevent 
the constant and growing flow of used tyres  into Brazil  due to the imports through court 
injunctions.1294 
7.171  In this respect, we note that by law, imports of used tyres are already prohibited, so that if the 
"alternative measure" proposed by the European Comm unities is the prohibition of used tyres, it could 
be said that Brazil actually already imposes that measure.  Indeed, as noted above, this prohibition 
actually supports the effectiveness of the measure at issue.1295  Further, this will be an issue relevant in 
our consideration of "whether the import ban is being applied in a ma nner consistent w ith its objective 
under the chapeau". 
                                                      
1290 Brazil's second written submission, para. 104. 
1291 Brazil's second written submission, para. 104. 
1292 Brazil's answer to Panel question No. 122. 
1293 See paragraphs 7.137-7.138 above for such examples.  
1294 European Communities' first oral statement, paras. 62-68. 
1295 See paragraph 7.139. WT/DS332/R 
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  7.172  Therefore, in the Panel's  view, Brazil has successfully demonstrated that the alternative 
measures identified by the European Communities to  avoid the generation of waste do not constitute 
alternatives that could apply as a substitute for  the import ban on retreaded tyres to achieve its goal of 
preventing the generation of waste tyres to the maxi mum extent possible.  Rather, they would appear 
to be complementary measures that Brazil in fact already applies, at least in part. 
Measures to improve the management of waste tyres 
7.173  We will now examine the waste tyre management measures identified by the 
European Communities to determine whether Braz il has demonstrated that these measures do not 
constitute reasonably available altern ative measures to the import ban. 
Resolution CONAMA 258/1999 and "Paraná Rodando Limpo" 
7.174  First, the European Communities submits that the Brazilian legislation itself contains one 
alternative to the import ban:  the system for th e final disposal of tyres adopted by Resolution 
CONAMA 258/1999 which makes it mandatory for domestic producers of new tyres and tyre importers to provide for the safe disposal of waste tyres ("unusable tyres" in the terminology of the 
Resolution) in specified proportions.  The Eur opean Communities also suggests that a second 
alternative measure could exist in a prog ramme put in place in the State of Paraná
1296;  it is a voluntary 
multi-sector programme called "Paraná Rodando Lim po" ("Paraná Rolling Clean"), in which more 
than 10 million old tyres have so far been disposed of , thus eliminating the waste tyre problem in that 
State.1297  The European Communities also indicates that equivalent programmes are now being 
implemented in Pernambuco and Paraíba and suggest s that Brazil could apply such a programme to 
the whole Union.1298  The European Communities claims that su ch a disposal scheme is an alternative 
measure to the import ban and that the scheme, if enforced correctly, would eliminate the eventual 
health hazards created by waste tyres.1299  According to the European Communities, schemes like 
these are even more effective than an import ban, si nce they cover all waste tyres; this would also 
correspond to the modern waste management policies adopted around the world. 
7.175  Brazil argues, however, that collection schemes such as Resolution CONAMA 258/1999 and 
"Paraná Rodando Limpo" are only one component of Brazil's comprehensive waste management 
programme, which complements – but ca nnot substitute for – the import ban.1300  This is because the 
Resolution, which is a measure dealing with the fi nal disposal of waste tyres, by itself, does not 
achieve the desired "level" of protection sou ght by the import ban – i.e. non-generation of 
unnecessary additional tyre waste.  Moreover, accord ing to Brazil, even when the collection and 
disposal methods conform to the environmental le gislation in force, in accordance with Resolution 
CONAMA 258/1999 and "Paraná Rodando Limpo", they pose health and environmental risks 
themselves, which are the very risks that Brazil seeks to prevent in the first place.  Therefore, Brazil 
submits that its import ban is necessary because no le sser measure could contribute so effectively to 
the policy objective of protecting human life or health and the environment through the avoidance of the additional and unnecessary generation of waste tyres. 
7.176  The Panel notes that, as Brazil explains, Reso lution CONAMA 258/1999 imposes an 
obligation on importers of retreaded tyres to collect  and ensure the "environmentally appropriate final 
disposal of four unusable tyres in Brazil" for every three retreaded tyres imported.
1301  We agree with 
                                                      
1296 European Communities' first written subm ission, para. 113. See Exhibit EC-49. 
1297 European Communities' first written submission, para. 113. 
1298 European Communities' first written submission, para. 113. 
1299 European Communities' first written submission, para. 112. 
1300 Brazil's first written submission, para. 119. 
1301 Brazil's first written submission, para. 118.    WT/DS332/R 
 Page 187 
 
 
  the European Communities that the obligation to co llect four waste tyres for every three retreaded 
tyres imported would seem to contribute to reducing the accumulation of waste tyres and consequently to reducing the types of the risks id entified earlier in relation to the accumulation of 
waste tyres.  Also, it is clearly less trade-restrictiv e than the import ban.  Thus, it would seem, at least 
initially, that the Resolution could constitute an  alternative measure to the import ban.   
7.177  At the same time, however, we recall that Brazil's chosen level of protection is the reduction 
of the risks associated with waste tyre accumulatio n to the maximum extent possible and that Brazil 
purports to achieve this goal by reducing the "genera tion" of tyre waste as much as possible.  Thus, 
insofar as the level of protection pursued by Brazil involves the "non-generation" of waste tyres in the 
first place, the Resolution would not seem able to achieve the same level of protection as the import 
ban.  Furthermore, we also note Brazil's concern th at collection schemes such as the Resolution do not 
even address, let alone eliminate, the very disposal risks that Brazil seeks to avoid.
1302  We consider 
the Appellate Body's observation in EC – Asbestos  useful in this respect:  "France could not 
reasonably be expected to employ any alterna tive measure if that measure would involve a 
continuation of the very risk that the measure seeks to halt."1303 
7.178  In sum, the Panel is of the view that Brazil has demonstrated that collection and disposal 
schemes such as Resolution CONAMA 258/1999 as amended by Resolution CONAMA 301/2002 
and Paraná Rodando Limpo have al ready been implemented in Brazil and that the overall objective of 
these schemes is, as recognized by  the European Communities, ensuring environmentally appropriate 
collection and final disposal of waste tyres.1304  The Panel is also of th e view that, for the reasons 
expressed in the previous paragraphs, these schemes are not reasonably available to Brazil as an 
alternative  to the import ban in light of the level of pr otection Brazil pursues in relation to the health 
                                                                                                                                                                     
Article 3 of the Resolution, as amended by the Resolution of 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." 
1302 For the discussion on the risks from the disposal of waste tyres, see the section on disposal methods 
below, paragraphs 7.179-7.208. 
1303 Appellate Body Report on EC – Asbestos, para. 174. 
1304 European Communities' first written submission, para. 110, 112, 113, 137; European Communities' 
second written, para. 109. WT/DS332/R 
Page 188  
 
  risks concerned and since such disposal schemes do not  address the risks associated with the disposal 
of waste tyres. 
Disposal methods
1305 
7.179  The European Communities has identified several disposal methods that, in its view, are 
reasonably available alternatives to the import ban on retreaded tyres.  These methods are controlled 
landfilling and stockpiling; incineration of waste ty res in cement kilns and similar facilities; and 
material recycling.1306 
7.180  Brazil submits that every known disposal method capable of dealing with the existing 
volumes of waste tyres generated in Brazil, whic h amount to over 40 million waste tyres every year, 
carries with it serious risks and adverse eff ects to human health and the environment.1307  Although 
Brazil recognizes that landfilling, stockpiling and ty re incineration may handle existing volumes of 
waste tyres1308, it claims that these waste management  methods present significant health and 
environmental risks.1309  In relation to material recycling a lternatives, Brazil argues that even if 
generally these are considered safer than stockpiling and incineration, such methods can only dispose 
of a small fraction of the waste tyres currently generated in Brazil.1310  Thus, Brazil argues that the 
European Communities cannot expect Brazil to rely solely on disposal if the risks associated with 
disposal are the very risks that Brazil seeks to eliminate. 
7.181  The Panel will now examine the specific disposal methods suggested by the 
European Communities as alternative measures. 
7.182  Concerning landfilling , Brazil argues that it is not safe and among the least preferable of the 
waste tyre management options.1311  Brazil submits that landfilling of waste tyres damages the 
structure of landfills1312 and can leach harmful contaminants into the environment.1313  Brazil also 
refers to the EC-commissioned report on implementation of the La ndfill Directive, which lists a 
number of problems associated with the landfilling of tyres, including, inter alia , potential risks of 
combustion and fires.1314  The European Communities does not disagree that landfilling1315, in 
                                                      
1305 The Panel notes that the parties do not define the term "disposal" and disagree on whether a certain 
method is a "disposal" method for waste tyres, which is beyond the scope of the Panel's review in this case.  As such, the Panel's reference to the term "disposal" in this Report is only in general sense and not by any means a 
judgment on whether a specific method dealing with waste tyres qualifies as a disposal method for waste tyres. 
1306 European Communities' second written submission, paras. 106, 107, 113 and 133. 
1307 Brazil's first written submission, paras. 4, 17, 21;  Brazil's first oral statement, para. 80; Brazil's 
second written submission, paras. 41-42.  
1308 Brazil's first written submission, para. 4; Brazil' s first oral statement, para. 2; Brazil's second 
written submission, paras. 42, 73-77.  
1309 Brazil's first written submission, paras. 3, 4, 18 , 43, 44; Brazil's first oral statement, para. 28; 
Brazil's answer to panel question No. 35.. 
1310 Brazil's second written submission, para. 94. 
1311 Brazil's first written submission, paras. 18, 20, 39-41. 
1312 "Landfill" is explained as "a disposal site for the deposit of waste onto or into land, including 
internal waste disposal (i.e. landfill where a producer of waste carries out its own waste disposal at the place of 
production) and excluding facilities where waste is unloaded in order to permit its preparation for further transport for recovery, treatment or disposal elsewhere, and temporary (i.e. less than one year) deposit of waste 
prior to recovery, treatment or disp osal" (Basel Convention Technical Gu idelines on the Identification and 
Management of Used Tyres, p. 16  (1999) (Exhibit BRA-40)). 
1313 Brazil's first written submission, paras. 4, 39. 
1314 Brazil's first written submission, para. 39, citing Golder Europe EEIG, "Report on Implementation 
of the Landfill Directive in the 15 Member States of the European Union" (2005) (Exhibit BRA-41).  More 
specifically, the report lists the following as the problems  associated with landfilling waste tyres:  (i) Tyres in 
large volumes can cause instability by rising to the surf ace of the site...; (ii) older landfill sites where large  WT/DS332/R 
 Page 189 
 
 
  particular randomly stacking tyres, poses a risk of tyre fires.1316  However, the European Communities 
argues that "controlled" landfilling, by which the European Communities seems to mean landfilling of 
only shredded tyres, poses no environmental risk.1317 
7.183  An examination of the evidence before the Pa nel suggests that the problems related to the 
landfilling of waste tyres include, inter alia , instability of sites that will affect future land reclamation, 
long-term leaching of toxic substances, and the risk of tyre fires and mosquito-borne diseases.1318  For 
example, the OECD Environmental Directorate explai ns that waste tyres disposed of in landfills pose 
increased environmental and public health risks related to possible leakage and the danger of 
                                                                                                                                                                     
quantities of tyres had been disposed of in an uncontrolled manner experienced wash-through of soil and fine 
particles leading to inward collapse and surface failures; (iii) rubber materials cont ain proportions of organic 
chemicals and little is known about the long-term leaching e ffects of these materials; (i v) tyres in landfills have 
also been associated with combustion and fires; and (v) during degradation the steel reinforcement within some 
tyres may cause damage to the geo-membrane liners.  
1315 The European Communities describes "landfilling" as different from stockpiling in that landfilling 
consists in discarding large amounts of waste tyres dire ctly on or into the ground   (European Communities' 
second written submission, para. 104, citing Exhibits BRA-1, 10, 18, 25).  
1316 European Communities' second written submission, paras. 104, 105.  The European Communities 
itself submits that "landfilling has been normally done by tossing waste into piles, a method that, ... 'requires 
little effort or handling by a site operator but also requ ires the most storage space' and where 'randomly stacked 
tires are a greater fire risk... '" (European Communities' second written submission, para. 104, citing "the Tires 
Pile Fires report by Environmental Engineer ing & Contracting Inc." (Exhibit BRA-29)).  
1317 European Communities' second written submission, paras. 107-110. 
1318 Evidence on the health risks linked to the landfilling of waste tyres include the following:  "If 
disposed of in large volumes tyres in landfill sites can lead  to fires and instability by rising to the surface.  This 
affects long-term settlement and may cause problems for future use and land reclamation.  Tyres buried in 
landfill sites are a fire hazard,  and there have been a number of fires invol ving tyres at landfill sites... Little is 
known about the long-term leaching of organic chemical s from tyres in landfill s ites" (British Environment 
Agency, "Tyres in the Environment" (1998) (Exhibit BRA-1 )); "[I]t must be acknowled ged that there is limited 
experience with long-term impacts… Tyres in landfills ar e also associated with fire risks... Tyres reportedly 
destabilise a landfill and may impact on the useability of the landfill area for future use." (Commonwealth Department of Environment (Australia), "A national Approach to Waste Tyres," p. 29 of Part I (2001) (Exhibit 
BRA-8)); "Even those that were dumped in sanitary landfills created environmental problems.  Sometimes 
landfilled tires work their way back to the surface, ca using expensive damage to liners and liquid collection 
systems and compromising their ability to keep landfill contaminants from mixing with local groundwater and 
surface water" (Ohio Department of Natural Resources, Recy cling Tires: Problems with wasting scrap tires: Fire 
(2005) (Exhibit BRA-38)); "When dispos ed of in landfill sites, a number of  potential occurrences are perceived 
to lead to possible problems as follo ws: Tyres in large volumes can cause instability by rising to the surface of 
the site (generally on sites where there is insufficient capping and restoration cover materials, affecting its long 
term settlement and therefore posing problems for future use and land reclamation) … Rubber materials contain 
proportions of organic chem icals and little is known about the long-t erm leaching effects of these materials" 
(Golder Europe EEIG, Report on Implementation of the Landfill Directive in the 15 Member States of the European Union (2005) (Exhibit BRA-41)); and "A fourth environmental risk, which is not part of common 
practice, but merely can be considered a calamity, is th e incidence of tyre fires.  Tyres do not ignite by 
themselves, but may occur in landfills where whole tyres are disposed in large quantities in combination with an 
ignition source.  A tyre fire is very difficult to extinguish, results in incomplete combustion of the tyres and 
subsequently an uncontrolled releases of toxic fumes… When disposed of in landfills, scrap tyres occupy a large 
space and remain intact for decades posing increased envi ronmental and public health  risks related to possible 
leakage and the danger of uncontrolled burning.  Furthermore, when whole tyres are buried in a landfill they 
trap air and have tendency to migrate to the top of a cl osed landfill breaking the landfill cap and causing costly 
damages to the landfill cover that increases the instability of sites.  Also, used tyres easily trap rainwater and 
therefore create a favourable environm ent for insects, which increases the risk for mosquito-borne diseases" 
(PRé Consultants, "Life Cycle Assessment of an Average European Car Tyre" (2001) (Exhibit BRA-45)). WT/DS332/R 
Page 190  
 
  uncontrolled burning of tyres and create a favourable  environment for insects, which increases the risk 
of mosquito-borne diseases.
1319 
7.184  In this regard, we note the European Commun ities' argument that landfilling of shredded 
tyres, namely controlled landfilling according to the European Communities, does not pose 
environmental risks (i.e. potential leaching of harmful organic chemicals and heavy metals).1320  The 
European Communities, however, does not specifically  dispute the alleged health risks that Brazil 
argues are posed by general landfills of waste tyr es.  Furthermore, the evidence on the health and 
environmental risks posed by landfills of waste tyres does not make a clear distinction between 
"uncontrolled" and the so-called "controlled" landfills .  Therefore, in light of the evidence submitted 
by the parties, it is not possible to conclude that controlled landfills do not pose risks similar to those 
linked to other types of waste tyre landfills.  Also, as noted earlier1321, in reality, tyres do accumulate 
in various forms, including landfills of whole tyr es, and any related risks should be assessed on the 
basis of such reality. 
7.185  In addition, evidence suggests that while landf illing has traditionally been the most common 
method for disposal of waste tyres, mainly due to low investment and running costs1322, landfilling of 
waste tyres in many countries has substantially d eclined in the past decade and seems likely to 
continue decreasing.1323  We also note that the European Co mmission itself also accepted a directive 
that bans the disposal in landfills of whole tyr es by 2003 and shredded tyres by 2006 in response to 
the health and environmental risks identified in pr evious paragraphs in rela tion to landfilling of waste 
tyres.1324 
7.186  The Panel  is thus of the view that Brazil has provi ded sufficient evidence to demonstrate that 
the landfilling of waste tyres may pose the very ri sks Brazil seeks to reduce through the import ban 
and thus cannot constitute a reasonably av ailable alternative to the import ban. 
7.187  Regarding stockpiling , Brazil argues that stockpiling is not a disposal method and can only be 
used for temporary storage until effective disposal  is available as it poses health risks related to 
mosquito-borne diseases as well as toxic emissions from tyre fires.1325  On the other hand, the 
                                                      
1319 OECD Environmental Directorate, "Improving Recycling Market" p. 127 (2005) (Exhibit BRA-58). 
1320 European Communities' second written submission, para. 109. 
1321 See paragraphs 7.65-7.67 above. 
1322 OECD Working Group on Waste Prevention and Recycling, "Improving Recycling Markets 
(Excerpts)," p. 127 (Exhibit EC-16) and Technical Working Group of the Basel Convention, "Technical 
Guidelines on the Identification and Management of Used Tyres," p.12 (Exhibit EC-18). 
1323 Exhibits EC-18 and 84; Exhibit BRA-38, p. 1. 
1324 The Council Directive 1999/31/EC of 26 April 1999 (Exhibit BRA-42) states: 
"Article 1:  ... the aim of this Directive is, by way of stringent ope rational and technical requirements 
on the waste and landfills, to provide for measures, pr ocedures and guidance to prevent or reduce as far 
as possible negative effects on the environment, in particular the pollu tion of surface water, 
groundwater, soil and air, and on the global environment, including the greenhouse effect, as well as 
any resulting risk to human health, from landfilling of  waste, during the whole life-cycle of the landfill: 
Article 5 (Waste and treatment not acceptable in landfills): ... 3. Member  States shall take measures in 
order that the following wastes ar e not accepted in a landfill: ... (d) whole used tyres from two years 
from the date laid down in Article 18(1), ... and shredded used tyres five years from the date laid down 
in Article 18(1)..." (emphasis added) 
See also Golder Europe EEIG, "Report on Implemen tation of the Landfill Directive in the 15 Member 
States of the European Uni on" (2005) (Exhibit BRA-41). 
1325 Brazil's first written submission, paras. 3, 4, 42; Brazil's second written submission, paras. 61, 
63-70, 76.  See also Exhibit BRA -40 (Basel Convention Technical Guidelines on the Identification and 
Management of Used Tyres (1999)) stating:  "[s]tockp iling facilities require investments in transport, handling 
and fire prevention.  Stockpiling with proper control can be used only for temporary storage before an end-of-
life tyre is forwarded to a recovery operation."  In  addition to the evidence above, Brazil also refers to , inter  WT/DS332/R 
 Page 191 
 
 
  European Communities contends that Brazil's argum ent relating to the types of risk identified by 
Brazil in relation to stockpiling is only a descripti on of the hazards arising from improperly managed 
installations and that "controlled stockpiling" through implementing site design requirements and 
guidelines for the prevention of waste tyres as provide d in the Basel Convention Technical Guidelines 
reduces those risks.1326 
7.188  As Brazil observes, stockpiling of waste tyr es is the practice whereby waste tyres are 
concentrated in central locations.1327  In other words, stockpiling as such does not "dispose of" waste 
tyres in the sense that the material  itself (i.e. waste tyres) still physically exists in a stockpiled form.1328  
In this connection, we recall our finding above that  the accumulation of waste tyres in general poses 
health risks relating to mosquito-borne diseases as we ll as tyre fires.  The Panel also recalls that the 
evidence shows that even the so-called "controlled st ockpiling" that is to say stockpiles designed to 
prevent the risk of fires and pests may still po se considerable risks to human health and the 
environment.1329  We found that these risks exist, although to differing degrees, in relation to 
accumulated waste tyres in general, be they illegall y dumped waste tyres or waste tyres stockpiled in 
designated sites.1330      
7.189  Thus, in our view, Brazil has provided sufficient evidence to prove that stockpiled waste tyres 
pose similar types of risks such as mosquito-bor ne diseases and tyre fires to those posed by the 
accumulation of waste tyres in general and thus cannot constitute an alternative to the import ban:  the 
risk may be lower for controlled, in particular if well-managed, stockpiled waste tyres, but that does 
not eliminate such risks.1331   
                                                                                                                                                                     
alia, the following evidence with respect to the risks of stockpiling (Brazil's second written submission, paras. 
64 and 68):  "[e]n France métropolitaine, Aedes albopictus  avait été identifié sur plusieurs sites ce stockage de 
pneus uses entre 1999 et 2004" (Institut de Recherche pour le Développement, Le Tour du Monde d'un 
Moustique, Sciences Au Sud, No. 34 (2006) (Exhibit BRA-134)); "Tyre dumps attract vermin and the standing 
water from rain collected in the inner rim of the tyre prov ides an excellent breeding gr ound for mosquitoes...  in 
the UK the major hazard of tyre dumps to public health re lates to the toxic plumes of smoke released if they are 
set alight..." (Health Protection Agency (UK), Chemical Hazard and Poisons Report  (2003) (Exhibit BRA-10)); 
and "The EU has millions of used tyres that have been illegally dumped or stockpiled.  These historic stockpiles 
can, in some cases, pose a potential threat to human health (fire risk, haven for rodents or other pests such as mosquitoes...)..." (European Tyre & Rubber Manufacturers' Association, End-of-Life Tyres  (2006) (Exhibit 
European Communities-84)). 
1326 European Communities' first oral statement, para . 75, citing Exhibits EC-18 and BRA-40 and also 
referring to Exhibit BRA-29; European Communities'  second written submission, paras. 104, 106. 
1327 Brazil's second oral statement, para. 30.  The Panel also notes the following in this respect:  
"Stockpiles were created as a means of disposing of tir es outside the normal landfill destination for most solid 
waste...  In some locations, many tires went to landf ills, and some states still allow the practice, at least for 
shredded or cut tires.  Stockpiles were an alternate disposal option..." (John Serumgard, "Internalization of Scrap Tire Management Costs:  A Review of the North American Experience," p.6 (1998) (Exhibit BRA-125)). 
1328 See also "Fact Sheet – Best Management Practi ces for Automotive Recyclers: Waste Tyres" by 
Massachusetts Department of Environmental Protection (2006) (Exhibit BRA-137).  It states, "Stockpiles  of waste tires can cause safety and health problems...  Stockpiling is not a disposal option and speculative 
accumulation of tires is more likely to result in costs than profits." 
1329 See paragraph 7.68 above. 
1330 We recall in particular the terms of the Basel Co nvention Technical Guidelin es on the Identification 
and Management of Used Tyres (1999), stating:  "[s] tockpiling facilities require investments in transport, 
handling and fire prevention.  Stockpiling with proper control can be used only for temporary storage before an end-of-life tyre is forwarded to a re covery operation."(Exhibit BRA-40).  
1331 For instance, according to the study Tire Pile Fires: Prevention, Respons e, Remediation (2002) 
issued by the California Environmental Protection Agency  (US), Integrated Manageme nt Board, "[a]ll tire and 
rubber storage facilities should be cons idered high-risk storage facilities" (Exhibit BRA-29).  Pointing to the 
same direction, the Commonwealth Department of Envi ronment of Australia concludes: "[i]mpacts due to the WT/DS332/R 
Page 192  
 
  7.190  In connection with waste tyre incineration
, Brazil submits that disposing waste tyres in 
cement kilns and similar facilities produces harmful em issions including dioxins, furans and lead that 
cause cancer, affect the immune system, and lead to reproductive and other health problems.1332  Brazil 
argues that since these harmful emissions can only be reduced, but not eliminated, even in properly 
operated, state-of-the-art cement kilns, it is necessar y to reduce, as much as possible, the volume of 
tyres that must be incinerated.1333  On the other hand, the Eu ropean Communities argues that 
incineration of waste tyres is safe since the risks Brazil alleges in relation to incineration of waste 
tyres are not significant, as operational conditions, technical requirements and the emission limit values for plants incinerating waste guarantee a high level of environmental and human health 
protection.
1334  Thus, the parties seem to agree to the exte nt that harmful emissions such as dioxins and 
furans produced by the incineration of waste tyres cannot be entirely eliminated although the degree 
of emissions may vary depending on emission st andards and the technologies used to control 
emissions.   
7.191  Bearing these considerations in mind, the evidence before the Panel suggests that 
incineration1335 of waste tyres, in particular incineration in cement kilns, is a common practice in many 
countries including Brazil1336 and that strict emission standards and technical regulations can 
significantly reduce toxic chemicals that are emitt ed from the combustion of waste tyres.  For 
example, the Basel Convention Technical Guidelines state that  waste tyres represent an alternative 
supplementary non-fossil fuel and the addition of waste tyres is environmentally safe and does not 
produce additional emissions of sulphur oxides an d nitrogen oxides into the atmosphere when 
appropriate emission control devices ar e properly installed and maintained.1337  Also, the British 
Environment Agency reports that the trial burns in  most cases have shown either no change in the 
concentration of pollutants or a decrease when burning tyres.1338  
                                                                                                                                                                     
uncontrolled disposal of tyres to land are similar to th ose for stockpiles" ("A National Approach to Waste Tyres" 
(Exhibit BRA-8)). 
1332 Brazil's first written submission, paras. 18, 20, 21, 43 -47; Brazil's first oral statement, paras. 30-31; 
Brazil's second written submission, paras.  72, 76, 77, 78-93. 
1333 Brazil's second written submission, para. 78;  Brazil's answer to panel question No. 97. 
1334 European Communities' second written submission, paras. 114-119; European Communities' 
second oral statement, para. 84; European Communities' answer to panel question No. 48, citing Exhibits EC-84-87. 
1335 The Panel notes that incineration of waste tyres referred to by the parties in the context of 
discussing various disposal methods in this case mainly concerns incinerating waste tyres with other 
conventional fuels in cement kilns and in other similar facilities as a means of energy recovery, namely as "Tyre 
Derived Fuel (TDF)", rather than mere combustion of waste tyres without any energy recovery.  Thus, unless specified otherwise, the Panel's reference to incinerati on of waste tyres in this Report means incineration in 
cement kilns and in similar facilities.  A discussion paper prepared by Atech Group for Australian Department 
of Environment lists cement kilns, other co-firing applications (paper mills, power plants), direct combustion (for electricity or steam) and pyrolysis as the four main options for energy recovery using tyres ("A National 
Approach to Waste Tyres" (2001) (Exhibit BRA-8)). 
1336 See, for example, the following:  "Tyres are already used in cement kilns in many countries" 
(Figure 4.7, Exhibit BRA-1); "Energy recovery is growing as a reprocessing option due to the ability to deal 
with large quantities of tyres..." (A.B. Hird et al., "T yre Waste and Resource Management :  A Mass Balance 
Approach," p. 1 (2002) (Exhibit BRA-56)); "Tire-Derived Fuel Market:  Oldest and largest market for scrap tires..." (John Sheerin, "Markets & Trends in the US Scrap Tire Industry," p. 8 (2004) (Exhibit BRA-63)); 
"Since 1985, TDF has been the largest single market se gment for scrap tires in the United States..." (John 
Serumgard, "Internalization of Scrap Tire Management Costs:  A Review of the North American Experience," p.7 (1998) (Exhibit BRA-125)).   
1337 Basel Convention Technical Guidelines on the Identification and Management of Used Tyres 
(1999) (Exhibit BRA-40). 
1338 British Environment Agency, "Tyres in the E nvironment" (1998) (Exhibit BRA-1). Additional 
evidence includes the following:  "While uncontrolled fires cause substantial air and ground pollution, the  WT/DS332/R 
 Page 193 
 
 
  7.192  At the same time, the Panel is presented w ith evidence suggesting that the question still 
remains whether toxic chemicals emitted by incinera tion of waste tyres, regardless of the level of 
emission, may potentially pose health risks to humans.1339  In particular, we note that emission levels 
can vary largely depending on the operating conditi ons of, and the emission control technology used 
by, the facilities:   
                                                                                                                                                                     
incineration of whole tires or tire ch ips in a controlled furnace is environm entally safe.  On average, the BTU 
value of scrap tires or TDF exceeds that of coals, while the sulphur content is  in the same order of magnitude or 
even lower..." (Kurt Reschner, "Scr ap Tyre Recycling:  A Summary of  Prevalent Scrap Tire Recycling 
Methods" (2006) (Exhibit BRA-5)); "Air emissions data from the use of tires as fuel [well-designed combustors] 
are discussed... with the exception of zinc emissions, potential emissions from TDF are not expected to be very much different than from other conventional fossil fuels, as long as combustion occurs in a well-designed, well-
operated, and well-maintained combustion device... In ge neral, the results indicate that properly designed 
existing solid fuel combustors can supplement their normal fuels ... with 10 to 20 per cent TDF and still satisfy environmental compliance emission limits... it is possible to have emissions much lower than produced by 
existing solid-fuel-fired boilers (on a heat input basis), when properly designed and the facility is controlled" 
(Environmental Protection Agency (US), "Air Emissions from Scrap Tire Combustion" (1997) 
(Exhibit BRA-26));"burning tyres in cement kilns often has a net environment benefit when compared to 
conventional fuels, which are usually coal and petroleum coke.  The emissions of nitrogen oxides (a major pollutant from cement kilns) have been shown to be  lower when using tyres..." (Used Tyre Working Group 
(UK), "Sixth Report of the Used Tyre Working Group" (2003) (Exhibit BRA-55)); and "The fact that tire fuel-
using facilities have been permitted in at least 34 states and several Canadian provinces illustrates that tires can meet these requirements... The driving forces behind the current and anticipated use of TDF are: improved 
emissions; increased producti on; and decreased fuel cost s..." (John Serumgard, "Int ernalization of Scrap Tire 
Management Costs:  A Review of the North Ameri can Experience," pp.8-9 (1998) (Exhibit BRA-125)). 
1339 For example, the Panel notes the following:  "Stable operating conditions and a high incineration 
efficiency cannot be guaran teed during co-incineration of waste ...  emissions of toxic organics such as 
polyhalogenated dioxins and furans, benzene and polycyclic aromatics cannot be effectively controlled.  In contrast to what is stated in the EIA, compliance with the EU directive 94/67 on waste incineration is highly 
questionable..." (Okopol Institute fur Okologie and 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 
(undated circa 1998) (Exhibit BRA-46)); "For tire-burning in cement kilns, the risk calculations have typically 
shown increase in risk that is still below the levels that  local air pollution control districts consider "significant."  
However, opponents have not been convinced by determinations that risk is not significant, and point to important sources of uncertainty, some of which are acknowledged by kiln operators and risk assessors..." 
(Seymour Schwartz et al., "Domestic Markets for California's Used and Waste Tires, Attachment A: 
Environmental and Health Consequences from Usin g Tires as Fuel: Health Risk Assessment" (1998) 
(Exhibit BRA-48)); "Virtually nothing is known about the dose-response functions for important categories of 
health effects, particularly disruptions to the hormone systems of humans, which could produce life long damage in developing infants.  Also, virtually nothing is known about the health effects caused by combinations 
of toxic chemicals that are emitted wh en burning tires...  Without such sc ientific knowledge, and because some 
toxic pollutants increase from burning tires, there is no sc ientific basis for the Board to conclude that burning 
waste tires in cement kilns is safe..." (Letter from Se ymour I. Schwartz, Professor of Environmental Science and 
Policy at University of California Integrated Waste Management Board (21 January 1998) (Exhibit BRA-49)); 
"However, burning the tyres produces emissions that have to be carefully controlled to ensure they do not enter the environment.  Gases therefore filte red and cleaned ... so that the final emissions are within limits set by the 
Environment Agency (EA)" (The Environment Council, "The Stakeholders' Guide to Sustainable Waste 
Management Tyres," p. 4 (Exhibit BRA-57)); "Although there have been recent positive developments in 
recycling, compliance with the European Commun ities Directives on land-filling and waste combustion 
emissions will require considerable investment in new retreating and recycling fac ilities for used tyres. ... The 
overall objective of the EU waste strategy is to preven t waste generation. ... Retreating and recycling of tyres 
should be encouraged and increased, in preference to com bustion and energy recovery...  and if no other outlet is 
possible the tyre should be used for energy recovery... Use in wet cement kilns is not an optimal environmental 
solution; moreover this outlet will be limited by the stricter emission standards imposed from 2008 by the Directive on waste incineration ..."  (European Environment Agency, "Was te from Road Vehicles" (2001) 
(Exhibit BRA-108)). WT/DS332/R 
Page 194  
 
  "Emissions can include dioxins and furans , which are carcinogenic, as well as oxides 
of nitrogen and sulphur...  Studies on the use of tyres in cement kilns have generally concluded that the impacts are either pos itive or neutral compared to the combustion 
of other fuels.  However this needs to be considered on a case-by-case basis as it is dependent on good operating prac tice as well as the particular characteristics of the 
tyres used and the kiln..."
1340; and  
"Very little data exist for devices that ar e not well-designed and use scrap tires for 
fuel...  Air emissions from these types of devices are likely between that of open burning and a combustor.  However, there is serious concern that the emissions are 
much more similar to those of an open tire fire than a combustor... "
1341   
We are also presented with evidence that casts doubt  on the credibility of trial burns in cement 
kilns.1342 
7.193  The above evidence demonstrates that toxic emissions from the incineration of tyres cannot 
be eliminated, although emission levels may vary depending on the level of technology used to 
control emissions in TDF-driven1343 facilities.  The evidence sugg ests that the most up-to-date 
technology that can control toxic emissions to mini mum levels is not necessarily readily available, 
mostly for financial reasons.1344  For example, the Panel notes the following observations: 
"The high temperatures within the kilns enab le the tyres to be combusted 'cleanly', 
reducing solid waste. ... If tyres are allo wed to burn in an uncontrolled manner large 
amounts of air pollution can be generated in  the form of black smoke and sulphur 
dioxide.  Costs of controlling these emissions are large and, consequently, investment 
costs for cement kilns/incinerators which can burn tyres are ten times more than those 
burning liquid fuel ..."1345; and  
"For a waste recovery system to be widely adopted it must be economically viable to 
use waste rather than virgin energy sources.  At present, use of tyre waste in cement 
kilns is economical but if emission limits are tightened, the cost of installing 
                                                      
1340 Prepared by Atech Group for Commonwealth Department of Environment (Australia), "A National 
Approach to Waste Tyres" (2001) (Exhibit BRA-8). 
1341 Environmental Protection Agency (US), "Air Emission from Scrap Tire Combustion" (1997) 
(Exhibit BRA-26). 
1342 Brazil's second written submission, para. 82  Fo r example, the West Virginia Environmental 
Council reports that "Tire test burn results vary a lot, some pollutants go up in some tests, the same pollutants go 
down in others. ... Test burns are generally considered a poor indicator of operation on a daily basis:  during trial 
burns when regulatory authorization is at  stake and government offi cials are present, variables such as waste fee, 
temperature, oxygen flow, and pollution control devi ce efficiency are carefully  maintained to optimize 
performance.  On a day to day  basis, there are upset conditions that result in considerably higher emissions.  
How well a facility maintains its pollution control equipment, operator error, fuel feed conditions, etc. all affect 
emissions..." (West Virginia Environmental Council, "Gre en Issues: Tire Burning Fact  Sheet," (1998) (Exhibit 
BRA-52)). 
1343 See footnote 1335 above. 
1344 Commonwealth Department of Environment (Australia), "A National Approach to Waste Tyres" 
(2001) (Exhibit BRA-8); Environmental Protection Agency (US), "Air Emissions from Scrap Tire Combustion" (1997) (Exhibit BRA-26); A. B. Hird et al., "Tyre Waste and Resource Management: A Mass Balance 
Approach" (2002) (Exhibit BRA-56); "The Environment Co uncil, The Stakeholders' Guide to Sustainable Waste 
Management, Tyres" (Exhibit BRA-57). 
1345 A.B. Hird et al., "Tyre Waste and Resource Management: A Mass Balance Approach," p. 18 (2002) 
(Exhibit BRA-56).  WT/DS332/R 
 Page 195 
 
 
  purification equipment may outweigh the cost saving of using tyre waste as a 
fuel...".1346   
Further, there are still doubts as to the exact level of toxic emissions, in particular since the emission 
results of the trial burns may not accurately reflect actual emission levels.1347   
7.194  We thus find 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 signi ficantly reduced through 
strict emission standards. 
7.195  In sum, the Panel  finds that Brazil has demonstrated th at the currently available disposal 
methods capable of handling the existing volumes of  waste tyres, namely landfilling, stockpiling and 
tyre incineration, even if performed under contro lled conditions, pose risks to human health and 
cannot constitute an alternative to the import ban. 
7.196  Lastly, the European Communities claims that material recycling  is one of the best waste 
management practices and therefore, another reasona bly available alternative to the import ban.  In 
the European Communities' view, material recycling of rubber includes the use of waste tyres in civil 
engineering projects, in other construction activ ities such as rubber asphalting, and in the production 
of a wide variety of rubber goods.1348  The European Communities submits that material recycling 
methods do not pose substantial risks to human or anim al health or the environment, and that they are 
able to dispose of substantial amounts of waste tyres.1349 
7.197  Brazil submits that it is "practically impossi ble to recycle a tyre" due to its physical 
characteristics that make it a highly stable and ri gid product.  According to Brazil, the existing 
                                                      
1346 The Environment Council, "The Stakeholders' Guide to Sustainable Waste Management, Tyres" 
(Exhibit BRA-57). 
1347 For instance, Brazil has submitted evidence stating:  "the test data [of a scale-down simulation 
performed by the US Environment Pr otection Agency] is not an accurate measure of the actual day-to-day 
emissions of a given plant.  As reported by Greenpeace, 'T rial burns are generally cons idered a poor indicator of 
operation on a daily basis: during trial burns when regulatory authorization is at stake and government officials 
are at the site, variables such as wastefeed, temperature, oxygen flow, and pollution control device efficiency are 
carefully maintained to optim ize performance.  On a day-to-day basis,  emissions may be considerably higher'... 
The aforementioned EPA test was not even performed on an actual operating plan but rather on a scaled-down 
simulator.  Such devices are obviously bound to be more st able than large industrial in cinerators that are used on 
a daily basis over a period of years.  Importantly, the EPA simulator isn't even designed to represent the type of 
incinerators typically used in paper mills, which often use Tire Derived Fuel" (Energy Justice Network, "What 
is 'Tire Derived Fuel' and Why Is It Dangerous" (Exhibit BRA-50)). 
1348 European Communities' first written submission, para. 112.  The EC did not provide the Panel with 
an exhaustive list of activities that should be considered as material recycling.  However, the EC seems to 
include within this category the following activities: civil engineering projects such as reusing discarded tyres to 
create artificial reefs, boat bumpers, sl ope stabilisers, irrigation channels and erosion layers on dams; the use of 
shredded and ground tyres as a base material in asphalt paving and road construction; and the use of rubber 
granulates in the production of new tyres, adhesives, wire and pipe insulation, brake linings, conveyor belts, carpet padding and hose pipes (European Communities' first oral statement, paras. 81-82) . 
1349 European Communities' second written submission, paras. 133 and 139.  The EC claims on the 
basis of the document titled Panorama dos Residuos Sólidos  no Brasil that in 2004 "17.65 per cent of waste 
tyres in Brazil were rolled into sheeting" and "19.65 per cent were transformed into goods and raw material" 
(Exhibit EC-114).  The European Communities suggests  that these figures demonstrate the considerable 
disposal potential of material recycling already used  in Brazil.  Additionally, according to the evidence 
submitted by the EC, the ground rubber applications market in certain countries is able to consume nearly 10 per 
cent of the scrap tires generated (European Commun ities' second written submission, para. 135).  The 
European Communities also submits that in countries such as Australia the market for civil engineering is of the order of 200,000 tyres per year and that ground rubber applications market in the US "consumed over 28 million 
tires in 2003, or nearly 10 per cent of th e scrap tires generated" (Exhibit EC-113). WT/DS332/R 
Page 196  
 
  methods of material recovery are not able to pr oduce high-quality rubber that may be reused in the 
production of new tyres.
1350  Brazil also argues that material recycling of tyres should not be 
considered as recycling "in its true sense" si nce the material is not reused in new tyres.1351 
7.198  Brazil acknowledges nevertheless that waste ty re recycling is desirable and should be 
encouraged because the activities usually denominated  as material recycling are generally safer than 
other disposal methods such as stockpiling and in cineration and extract the greatest environmental 
benefit from the waste tyres, next to retreading.1352  Brazil also submits that it actively promotes the 
development of new recycling applications for w aste tyres and the improvement of the safety aspects 
and market acceptance of the existing ones.1353  However, according to Brazil, material recycling of 
tyres cannot be an alternative to the import ban because, on the one hand, it poses certain risks to 
human health and the environment,  and, on the other hand, this pr ocess can absorb only a fraction of 
the waste tyres annually generated in Brazil due to its frequent economical and technical 
unfeasibility.1354 
7.199  The Panel will now examine whether various ma terial recycling methods identified by the 
European Communities can constitute an  alternative to the import ban. 
7.200  In relation to civil engineering , we note that the evidence before  us shows that there is a wide 
variety of engineering applications for waste tyres involving different levels of material 
transformation and recycling.  These applications include the use of whole and shredded waste tyres to protect the margins of ravines in urban areas
1355; to build drainage layers for leakage management in 
landfills, or coastal or riverbank protection projects such as artificial reefs, erosion barriers, sea-walls, 
off-coast breakwaters and sea base.1356 
7.201  The majority of the evidence supports the view that civil engineering applications of waste 
tyres are expected to become mo re widespread in the future.1357  However, the evidence before us also 
                                                      
 1350 Brazil's first written submission, para. 52.  In suppor t of this assertion, Brazil quotes from a report 
by California Environmental Protection Agency (US): 
“Generally, the use of recycled tire material in  new tires is challenged by the fact that unlike 
paper, metals, plastics and glass, it is not currently possible to obtain materials from tires that 
have properties adequately similar to the original  materials use in manufacturing tires.  Tire rubber materials are highly engineered, with specific qualities... designed to optimize wet and 
dry traction, long life, low rolling resistance, comfortable ride responsive handling and 
performance characteristics, at an affordable cost.  Unfortunately, the products currently 
available from recycled tires do not provide performance” ("Integrated Waste Management 
Board, Increasing the Recycled Conten t in New Tyres," (Exhibit BRA-59)). 
1351 Brazil's second written submissions, para. 94. 
1352 Brazil's second written submissions, para. 94;  Brazil's second oral statement, paras. 47-49. 
1353 Brazil's second written submissions, para. 95; Brazil's second written submissions, para. 97. 
1354 Brazil's second oral statement, para. 48; Brazil's second written submissions, para. 94; Brazil  First 
written submission, para. 123.  In suppor t of this argument Brazil presents the Panel with several studies that 
recognizes that the amount of post-consumer recycled ma terial obtainable from a used tyre is "necessarily ... 
very limited" (Brazil's first written submission, para. 53 ) and that "material recycling uses remain limited and 
unable to absorb the existing volumes of wastes tyres" (Exhibit BRA-108). 
1355 Antonio J. Andrietta, "Pneus e Meio Ambiente: Um Grande Problema Requer Uma Grande Solção" 
(2002) (Exhibit BRA-6). 
1356 Technical Working Group of the Basel Convention, "Technical Guide lines on the Identification and 
Management of Used Tyres" (Exhibit EC-18); UK Environment Agency, "Tyres Report" (Exhibit EC-15). 
1357 For instance the Panel notes the following statemen ts: "[c]ivil engineering applications of scrap 
tires are expected to become more wide spread as more an more applications can be proven to be technically and 
economically viable," (Kurt Reschner, Scrap Tyre Recycling: A Summary of Prevalent Scrap Tire Recycling 
Methods  (Exhibit BRA-5, p. 4));  "[t]he use of scrap tires  in civil engineering applications, with its major 
problems apparently behind us, should increase significantly" (John Serumgard, Internalization of Scrap Tire  WT/DS332/R 
 Page 197 
 
 
  shows that  the current demand for these applications is  fairly limited partly due to their high cost and 
that for this reason they are only capable of  disposing of a small number of waste tyres.1358 
7.202  Moreover, it is not clear whether some of these engineering applications are sufficiently safe.  
The evidence suggests that the u se of waste tyres in civil engi neering projects may produce wire 
exposure, tyre fires, or leakages of toxic chemical s such as zinc and polycyclic aromatic hydrocarbons 
into the surrounding environment that may pose a ri sk to humans, cattle and aquatic life, including 
fish and microscopic plants.1359  
7.203  Regarding rubber asphalt, Brazil submits evid ence indicating that roads incorporating 
granulate rubber have the potential to catch fire  under certain conditions or to release dangerous 
fumes generating occupational hazards.1360  In response, the European Communities points out that a 
                                                                                                                                                                     
Management Costs: A Review of the North American Expe rience, in Proceedings of the Second Joint Workshop 
of the Secretariat of the United Nations Conference on Trade and Development (UNCTAD) and the 
International Rubber Study Group on Rubber and the Environment (1998) (Exhibit BRA-125));  "[o]nly a small 
number of applications have been developed to use recycled rubber, but many more will emerge as the costs of 
environmental compliance escalate" Human Resources and Social Development Canada, Rubber Industry (circa 
1999) (Exhibit BRA-131). 
1358 For instance the Panel notes the following pieces  of evidence:  "This ma rket [referring to civil 
engineering applications] is for the moment confined to single projects and therefore fairly small scale.  It is  an 
application which is under-utilised and could represent a significant growth area for end-of-life tyres." (2006 
Report by the European Tyre & Rubber Manufacturers'  Association (Exhibit EC-84));  "Without significant 
expansion of existing markets for waste tires (such as rubberized asphalt concrete, playground mats and other 
surfacing, civil engineering applications, tire-derived fuel, and the development of new technologies that use 
waste tires), tire stockpiles and the environmental th reat they pose, will conti nue to grow" (California 
Environmental Protection Agency (US), Integrated Waste Management Board, Five-Year Plan for the Waste 
Tire Recycling Management Program  (2003) (Exhibit BRA-36)); "Shredded tyres have a pretty limited 
application ... There are only so many playground surfa ces that need soft pads, landfills that need drainage 
material, and roads that need resurfacing – some of the va riety of reused tire.  Burn ing tires as an energy source 
is also problematic" (Kathleen Cannon, Where Mosquitoes And Tires Breed , New York Times, 8 July 2001 
(Exhibit BRA-130, p. 2)). 
1359 "When used on silage clamps tyres last between 10 and 15 years, after which they begin to degrade.  
Degradation manifests itself in the breakdown of the ru bber compound, resulting in the rubber crumbling and 
exposure of the reinforcement wires.  The wire is a direct danger to livestock, and the crumb gets into the silage 
and, in larger pieces, can also pose  a risk to cattle" (UK Environment Agency, Tyres Report (Exhibit EC-15, 
p. 21));  "As a fill material, rubber has the advantage that it is lightweight which can reduce the cost of some 
civil structures particularly on slopes.  The occurrence of fires in a num ber of such applications in the US has 
prompted concern over this application.  Investigation of the fires suggests that while  the tyres ultimately 
provided the fuel they were unlikely to be the source of ignition." (Commonwealth Department of Environment (Australia), A National Approach to Waste Tyres (2001)  (Exhibit BRA-8, p. 70, Part I));  "HA oils are not 
chemically bound to the rubber.  They tend to leach from the mixture and migrate into the surrounding 
environment.  Studies recently undertak en at the Zoological Institute at Go thenburg University showed that fish 
exposed to tyre pieces in running water activate their very specific de fence against polycyclic aromatic 
compounds... A new study from the Institute of Applied Environmental Research at Stockholm University 
found a high acute toxicity to wate r-dwelling organism in the waters ar ound Stockholm.  A strong effect has 
been pointed out for non-migratory fish in the Stockholm area, where the toxicity is due mostly to PCAs.  A 
significant proportion of these polyaromatics can originate from tyre wear." (Projekt Grön Kemi, HA Oil in 
Tyres (Exhibit BRA-44, pp. 1-2)). 
1360 For instance:  "[w]ith the exception of one site (California 1), results from  the area air samples and 
PBZ [personal breathing-zone] samples indicated exposure s to a variety of analyses were greater on the CRM 
[crumb-rubber modified] paving days.  The confidence intervals generally show that exposures can be considerably higher on CRM paving days and that some of  these differences were st atistically significant... 
Also, in general, the reported number of symptoms was greater on the CRM paving days, including four paving 
workers who had a pattern of PEFR  [peak expiratory flow rate] va riability suggesting work-related 
bronchoreactivity only during CRM paving days.  Furthermore, benzothiazole , found predominately only during 
CRM paving, may induce metabolic pathways that may not otherwise be active in these workers, thus exposing WT/DS332/R 
Page 198  
 
  study submitted by Brazil and prepared by the Nati onal Institute of Occupati onal Safety and Health 
concludes that "no definitive results were obtaine d indicating that rubber asphalt exposures are more 
hazardous than conventional aspha lt exposures."  Moreover, the European Communities argues that 
Brazil has recognized that rubber asphalt, rubber products and appliances are among the disposal 
methods usually approved by Brazilian environmental authorities
1361 and that according to a recent 
press article, two companies are actually applying rubber asphalt in the Brazilian states of São Paulo 
and Minas Gerais.1362 
7.204  Brazil replies to these arguments by recognizi ng that it authorizes rubber-surfacing activities 
in Brazil and that it actually "funds research on rubber asphalt and has hosted an international summit 
on the subject."1363  However, Brazil submits that due to th e disadvantageous cost-benefit relationship, 
the demand for this product is very limited.1364  Based on a study by the British Environment Agency, 
Brazil argues that roads incorporating granulate rubb er last about twice as long as conventional roads, 
"but they cost about twice as much to produce."1365 
7.205  The Panel is of the view that whereas the evid ence is inconclusive on whether rubber asphalt 
exposures are more hazardous than  conventional asphalt exposures1366, the information provided by 
the parties consistently shows that the use of rubbe r asphalt results in higher costs.  Consequently, the 
demand for this technology is limited and its waste disposal capacity is reduced.1367 
7.206  We also note that the ev idence suggests that the use of rubber granulates to produce many 
different products such as adhesives, wire and pipe insu lation, brake linings, conveyor belts, carpet 
                                                                                                                                                                     
them to potential new hazards" (National Institute for Occupational Safety and Health, Crumb-Rubber Modified 
Asphalt Paving: Occupational Exposures and Acute Health  Effects (2001) (Exhibit BRA-6 4));  "There are also 
reports that such roads have the potential to catch fire under certain conditions, for example the hot temperatures 
found in the USA, and have a slippery surface.  Danger ous fumes may also be generated when the road surface 
is removed" UK Environment Agency, (Tyres Report (Exhi bit EC-15));  "Unlike all other results, the 'Material 
recycling in football fields' is however clearly the worst scenario when looking at cooper, zinc, iron, mercury 
and PAH.  These leaching emi ssions are much larger in the football field than in the landfill and the noise banks.  
The reason is that in the football field, the amount of water that drains through the tyre granulate layer is much larger per tons of tyre granulate than the amount of wa ter per tons of tyre cuts in the landfill and the noise 
banks" (Study by IVL Swedish Environmenta l Research Institute Ltd (Exhibit EC-87)). 
1361 European Communities' second written submission, para. 137. 
1362 European Communities' second written submission, para. 137. 
1363 Brazil's second written submission, para. 97. 
1364 Brazil's first oral statement.  To illustrate th e limited disposal capacity of rubber asphalt, Brazil 
points out that road surfacing helps the EC to dispose of "slightly more than one quarter of one percent of its 
waste tyres" and that in the US it helps to dispose of le ss than two percent of waste tyres (Brazil's first written 
submission, para. 55 citing Serge Palard, BLIC: European Association of the Rubber Industry, Rubber 
Recycling Activities in Europe: Trends and Challenges (2004) (Exhibit BRA-60). 
1365 Brazil's first written submission, para. 56. 
1366 The study by the National Institute for Occupatio nal Safety and Health, Crumb-Rubber Modified 
Asphalt Paving: Occupational Exposures and Acute Heal th Effects (2001) concludes (Exhibit BRA-64):  "no 
definitive results were obtained indicating that CRM [crumb-rubber modified] e xposures are more hazardous 
than CONV [conventional] exposures". 
1367 For instance the report of the OECD Work ing Group on Waste Prevention and Recycling, 
Improving Recycling Markets (Excerpts) states that:  "In view of its environmental performance, grinding is an energy-intensive process and has relatively high dust emissions. The economic and environmental advantage of 
grinding is that it generates recyclable rubber and useful by-products such as steel and textile, which can also be 
recycled. The most common application of granulate is in rubberised asph alt. Although this seems to be a 
promising outlet for recycled rubber because rubberised asphalt lasts longer than conventional asphalt, its 
relatively high cost prevents its widespread application" (Exhibit EC-16).  WT/DS332/R 
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  padding, hose pipes, sporting goods, wheels of roller blades, rubber boots and suitcases may dispose 
of only a limited amount of waste tyres.1368 
7.207  Finally, as regards devulcanization , which according to Brazil is the only true recycling 
method with respect to tyres, Brazil claims that it is cost-prohibitive,  results in pollution, and produces 
poor-quality rubber with limite d demand and applications.1369  Therefore, according to Brazil, tyre 
rubber devulcanization is not a feasible alternative for the disposal of huge volumes of tyre wastes.1370  
Although we do not find evidence showing that devulcani zation or other forms of chemical or thermal 
transformation such as pyrolisis pose substantial health  or environmental risks, most of the evidence 
indicates, as submitted by Brazil, that under current  market conditions, the economic viability of these 
options has yet to be demonstrated.1371 
7.208  For these reasons and based on the evidence before it, the Panel  finds that it is not clear that 
material recycling applications are entirely safe.  Fu rthermore, even if these various material recycling 
methods were completely harmless, Brazil has demonstrated that 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 r easonably available alternative to the import ban.
1372 
Conclusion on the necessity of the measure  
7.209  As stated above, the Panel 's assessment of the necessity of the measure under Article XX(b) 
will be the result of a "weighing and balancing" pr ocess, taking into account the factors considered 
                                                      
1368  On this issue we note the following pieces of evidence:  "[o]f the other markets for scrap tires, 
indications are that export, cut, stamped and punched pr oducts, agricultural and other uses will not increase to 
any great extent over the next several years" (John Serumgard, Internalization of Scrap Tire Management Costs: 
A Review of the North American Experi ence, in Proceedings of the Second Joint Workshop of the Secretariat of 
the United Nations Conference on Trade and Development (UNCTAD) and the International Rubber Study 
Group on Rubber and the Environment (1998) (Exhibit BRA-125)); "Environmental concerns over the proper disposal of scrap tires represent a continuing challenge to the industry.  While tire producers have received most 
of the attention thus far, all rubb er product manufacturers w ill ultimately face the prob lems of dealing with 
waste and discarded material.  Rubber products are more difficult to recycle than plastics because they cannot be 
reprocessed by the simple application of heat and pres sure.  Recycling processes are based on mechanical 
desegregation of the article, separation, recovery of the rubber component and incorporation of the resultant 
"crumb" rubber into another manufacturing process. ... Only a small number of applications have been 
developed to use recycled rubber, but many more w ill emerge as the costs of environmental compliance 
escalate.  Some existing, limited uses  of recycled rubber include rubberised asphalt, athletic flooring,  and 
rubber mats and carpet underlay" (Human Resources and Social Development Canada, Rubber Industry (circa 
1999) (Exhibit BRA-131)). 
1369 Brazil's first written submission, para. 52. 
1370 Brazil's first oral statement, para. 34. 
1371 For instance: Tyres Report "[t]echnology also exists to use microwaves to break down tyres into oil, 
steel and carbon black, but this has not had much im pact on the market as yet" (UK Environment Agency 
(Exhibit EC-15));  "The pyro-oil may be used as fuel or mixed in equal proportion with diesel oil.  After 
refining, the 'pyro-carbon' may be us ed as a semi-reinforcing  filler or as an active carbon.  Even if recent 
technological advances have improved product quality, it is still unclear whether there is a market demand for this product" (Technical Working Group of the Basel Convention, Technical Guidelines on the Identification 
and Management of Used Tyres (Exhibit EC-18));  "[i]t is  also likely that the thermal distillation (pyrolisis) of 
scrap tires will not be a technology which will have an impact on the market for scrap tires" (John 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 Conference on Trade and Development 
(UNCTAD) and the International Rubber Study Group on Rubber and the Environment (1998) (Exhibit BRA-125, p. 15)). 
1372 Brazil's first oral statement, para. 54. WT/DS332/R 
Page 200  
 
  above and the availability of a less trade-restric tive alternative measure, to determine whether the 
measure at issue is "necessary" within the meaning of Article XX(b).
1373   
7.210  We first recall that we have found the protecti on of human, animal, and plant life and health 
against risks arising from the accumulation of waste ty res to be an important objective.  Specifically, 
we have found that the objective of protecting human life and health against life-threatening diseases, 
such as dengue fever and malaria, is both  vital and important in the highest degree.1374  This factor 
must be taken into account in assessing the challenged  measure.  At the same time, we agree with the 
European Communities that the importance of human life and health in and of itself is not sufficient to 
establish that a measure is necessar y for the purposes of Article XX(b).1375  Rather, we are required to 
assess whether the challenged measures, i.e. the specific measures chosen by Brazil in order to 
address this important objective, is necessary.  In making this assessment, we must consider in 
particular the trade-restrictiveness of the challenge d measure and its contribution to the achievement 
of the objective, in light of the availability  to Brazil of any alternative measures.   
7.211  In this instance, we have found that the ch allenged measure, being an import ban, was by 
design as trade-restrictive as can be in  respect of the products that it c overs, i.e. retreaded tyres.  We 
note that the European Communities argued that this, in itself, made it "impossible to consider the 
challenged measure as "necessary"".1376  We do not exclude, however, that there may be circumstances 
in which a highly restrictive measure is necessary,  if no other less trade-restrictive alternative is 
reasonably available to the Member concerned to achieve its objective.1377  
7.212  The Panel recalls the Appellate Body's statement that a "necessary" measure is located 
significantly closer to the pole of "indispensable" than to the opposite pole of simply "making a 
contribution to".1378  As we have determined above, an im port ban on retreaded tyres has the potential 
to reduce the amount of waste tyres generated on Brazi l's territory and, hence, can contribute to the 
realization of the stated objective, i.e. the protection of human, animal and plant life and health from the risks posed by the accumulation of waste tyres.  Moreover, our examination of the alternatives 
identified by the European Commun ities suggests that no alternative measure is reasonably available 
that could avoid the generation of the specific risks arising from imported retreaded tyres.  
Alternatives that would involve management or dis posal of the tyres once imported do exist, but raise 
their own concerns, either because they  lead to the type of risks that Brazil seeks to avoid in the first 
place (unsafe stockpiling and emissions from incinera tion) or because they would not meet the level 
of protection sought by Brazil.  The safest methods (m aterial recycling) are useful but insufficient on 
their own to absorb the entire amount of waste from end-of-life tyres.  
7.213  In "weighing and balancing" these elements, the Panel is mindful of the specific 
circumstances of this case.  First, based on the elemen ts presented by the parties, it appears to us that  
non-generation  measures, i.e. measures that avoid the generation of waste tyres in the first place, are a 
pertinent way of addressing the risks arising from the accumulation of waste tyres.  Secondly, it is clear from the submissions of both parties that in addressing such risks, including through the 
management of waste tyres, a combination of measures may be appropriate, so that the question of a 
specific measure's justification does not necessarily pr esent itself in terms of simple alternatives or the 
replacement of one specific measure by another, as it is possible that different measures may address different aspects of the same risk and complement each other towards addressing this risk.   
                                                     
 
1373 Appellate Body Report on US – Gambling,  para. 307. 
1374 See paragraphs 7.108-7.112 above. 
1375 European Communities' second written submission para. 13. 
1376 European Communities' first written submission paras. 114-115. 
1377 Indeed, the European Communities itself successf ully defended an import ban on importation under 
Article XX, in the EC – Asbestos  case. 
1378 Appellate Body Report on Korea - Various Measures on Beef , para. 161.  WT/DS332/R 
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  7.214  In this instance, the chosen measure only addresses a specific component of the overall risk 
arising from the accumulation of waste tyres in Brazil, namely the importation of tyres that have already exhausted part of their useful life by the time they enter Brazil, and it is applied by Brazil in 
combination with other measures addressing other aspects of the overall risk.  The European Communities has suggested a number of al ternative ways to address the challenges arising 
from the management and disposal of waste tyres.  None of these methods, by hypothesis, involve 
avoiding the entry of the imported retreaded tyres in to Brazil in the first place.  Rather, they would 
aim to address the management and disposal of such  tyres, as part of Brazil's overall management and 
disposal strategy for waste tyres in general.  Ou r examination of these alternatives suggests that none 
of these, either individually or collectively, would be such that the risks ar ising from waste tyres in 
Brazil would be safely eliminated, as is intended under the current import ban.  In fact, it appears that 
Brazil already implements some of the alternativ e measures identified by the European Communities 
in order to address the challenges arising from the ma nagement of waste tyres.  The imposition of an 
import ban on retreaded tyres thus appears to be cons istent with other efforts by Brazil to control the 
risks arising from the accumulation and disposal of waste tyres.    
7.215  In light of these elements and of our analysis of the different factors above, the Panel  
concludes that Brazil has demonstrated that the alternative measures identified by the 
European Communities do not constitute reasonabl y available alternatives to the import ban on 
retreaded tyres that would achieve Brazil's objectiv e of reducing the accumulation of waste tyres on 
its territory and find that Brazil's import ban on retreaded tyres can be considered "necessary" within 
the meaning of Article XX(b) and is thus provisionally justified under Article XX(b). 
7.216  We wish to stress that we reach  this conclusion on the basis, inter alia , of a consideration of 
the import ban on retreaded tyres as designed, and in light of the considerations reflected in paragraphs 7.125-7. 142 in relation to the circumstances in wh ich such an import ban would apply.  
We make no determination, at this stage of our anal ysis, as to how this measure actually is applied by 
Brazil.  This question will be considered hereafte r in the context of our examination of whether the 
challenged measure is applied cons istently with the requirements of the chapeau of Article XX.   
(b) Is the measure applied consistently with th e requirements of the chapeau of Article XX? 
7.217  The European Communities  submits that the import ban does not satisfy the requirements of 
the chapeau of Article XX.
1379  Brazil  responds that the import ban is applied in a reasonable, 
consistent and predictable manner a nd that it constitutes neither a means of "arbitrary or unjustifiable 
discrimination" between countries where the same conditions prevail nor a disguised restriction on 
international trade.1380 
(i) General considerations 
7.218  Brazil  argues that Members of the WTO have th e right under Article XX to adopt and 
enforce measures which constitute general exceptions  to the provisions of the GATT, provided that 
those measures are applied in good faith.1381  Brazil claims that the manner in which Brazil applies the 
import ban on retreaded tyres constitutes neither a means of arbitrary or unjustifiable discrimination 
between countries where the same conditions preva il, nor a disguised restriction on international 
trade. 
7.219  The European Communities  submits that in US – Gasoline , the Appellate Body stated that 
"the purpose and object of the introductory clauses of  Article XX is generally the prevention of abuse 
                                                      
1379 European Communities' first written submission, para. 142. 
1380 Brazil's first written submission, para. 130. 
1381 Brazil's first written submission, quoting the Appellate Body Report on US – Shrimp , at para. 158. WT/DS332/R 
Page 202  
 
  of the exceptions of [Article XX]",
1382 and in US – Shrimp  the Appellate Body added that the 
"chapeau" is:  (i) a balancing principle to medi ate between the right of a Member to invoke an 
Article XX derogation and its obligation to respect the right of other Members1383;  (ii) a qualification 
making the Article XX exempti ons limited and conditional1384;  and (iii) an expression of the principle 
of good faith in international law.1385  The European Communities claims that the import ban on 
retreaded tyres adopted by Brazil do es not fulfil any of these requirements.1386 
7.220  The Panel  first observes that, as the Appellate Body noted in US – Gasoline , "[t]he chapeau 
by its express terms addresses, not so much the questioned measure or its specific contents as such, but rather the manner in which that measure is applied".
1387  Therefore, pursuant to the chapeau of 
Article XX, we will need to address whether, a lthough the measure itself falls within the terms of 
Article XX(b),  the application  by Brazil of its import ban on retreaded tyres is such as to constitute "a 
means of arbitrary or unjustifiable discrimina tion between countries where the same conditions 
prevail" or "a disguised restriction on international trade".   
7.221  In proceeding with our analysis, we also have  in mind the guidance provided in earlier panel 
and Appellate Body rulings with respect to the ch apeau of Article XX of GATT 1994.  In particular, 
we note the Appellate Body's indication that "the fundamental theme – when interpreting the chapeau 
– is to be found in the purpose and object of avoidi ng abuse or illegitimate use of the exceptions to 
substantive rules available in Article XX";1388 and that the task of inte rpreting this introductory 
paragraph is essentially the "delicate one of locati ng and marking out a line of equilibrium "between 
the rights of the Member invoking the exception and those of other WTO Members.  This line of 
equilibrium is not fixed and unchanging and move s "as the kind and the shape of the measures at 
stake vary and as the facts making up specific cases differ."1389 
7.222  We also recall that, as clarified by the Appe llate Body, the burden of demonstrating that a 
measure provisionally justified under one or more of the exceptions set out in the individual 
paragraphs of Article XX does not, in its applica tion, constitute abuse of such exception under the 
chapeau, rests on the party invoking the exception.  In  this case, therefore, Brazil bears the burden of 
demonstrating that its import ban on retreaded tyr es is not applied in a manner that would constitute 
"arbitrary or unjustifiable" discrimination or a "disguised restriction on international trade".1390   
7.223  As set out by the Appellate Body, in US – Shrimp  and US – Shrimp (Article 21.5) , three types 
of situations regarding the  application  of measures provisionally justified under a specific paragraph 
of Article XX might lead to an incons istency with the chapeau of Article XX;1391   
(a) arbitrary discrimination between countries where the same conditions prevail;   
(b) unjustifiable discrimination between countri es where the same conditions prevail; and 
                                                      
1382 European Communities' first written submission, para. 144. 
1383 European Communities' first written submission, para. 144, quoting the Appellate Body Report on 
US – Shrimp , para. 156. 
1384 European Communities' first written submission, para. 144, quoting the Appellate Body Report on 
US – Shrimp , para. 157. 
1385 European Communities' first written submission, para. 144, quoting the Appellate Body Report on 
US – Shrimp , para. 158. 
1386 European Communities' first written submission, para. 145. 
1387 Appellate Body Report on US – Gasoline , p. 21. 
1388 Appellate Body Report on  US – Gasoline , p. 25. 
1389 Appellate Body Report on  US – Shrimp , para. 159. 
1390 Appellate Body Report on US – Gasolin e, pp. 22-23. 
1391 Appellate Body Report on  US – Shrimp , para. 150 and  Appellate Body Report on  US – Shrimp 
(Article 21.5 – Malaysia) , para. 118.  WT/DS332/R 
 Page 203 
 
 
  (c) a disguised restriction on international trade.  
7.224  The existence of one of these situations would lead to the measure not being justified under 
Article XX.1392   
7.225  The first two elements ("arbitrary" and "unjustif iable" discrimination), bot h of which relate to 
the existence of discrimination, will be considered together1393 in light of the close relationship 
between them.  The existence of a "disguised restric tion on international trade" is then considered 
separately. 
(ii) Arbitrary or unjustifiable discrimination 
7.226  As clarified by the Appellate Body in previous  rulings, a measure should be considered to be 
applied in a manner which constitutes a means of "a rbitrary or unjustifiable discrimination between 
countries where the same conditions prevail", if three conditions are met:   
(a) First, the application of the measure results in discrimination ;  
(b) Second, the discrimination is arbitrary or unjustifiable in character;   
(c) Third, this discrimination occurs between countries where the same conditions 
prevail .1394 
7.227  We will therefore first consider whether Brazi l's application of its import ban on retreaded 
tyres results in discrimination.  If that is the ca se, then we will need to consider whether such 
discrimination is "arbitrary or unjustifiable" and, if so, whether it occurs between countries where the 
same conditions prevail.   
Is the import ban on retreaded tyres applied in a manner that results in discrimination?  
7.228  Brazil  recalls the Appellate Body's explanation that the standard of discrimination 
contemplated in the chapeau of Article XX is diffe rent from the standard of discrimination in the 
treatment of products under other s ubstantive obligations of the GATT.1395   
7.229  The Panel  agrees that, as clarified by the Appellate Body, the "nature and quality" of the 
discrimination referred to in the chapeau of Artic le XX is different from the discrimination in the 
treatment of products that might already have b een found to be inconsistent with one of the 
substantive obligations of the GATT 1994.  In this instance, the initial violation identified in relation 
to this measure is a prohibition or restriction on importation within the meaning of Article XI.  This 
type of measure (an import ban in this instance), does not necessarily ipso facto  result in 
discrimination, as an inconsistency with Articles I or III would.  Thus, any discrimination alleged to 
exist in the application of the measure would arise, in this case, in addition to  the restriction that is 
inherently present in the measure by its very nature.  
7.230  Brazil  claims that the manner in which it applies this measure is reasonable and in strict 
observance of the express terms of Portaria SECEX 14/2004.1396  
                                                      
1392 Appellate Body Report on  US – Shrimp , para. 184. 
1393 This approach has been followed in various previous cases. See the Appellate Body Report on US – 
Gasoline , the Appellate Body Report on  US – Shrimp  (Article 21.5 – Malaysia) , the Appellate Body Report on  
US – Gambling , and the Panel Report on US – Gambling , the Panel Report on EC – Tariff Preferences  and the 
Panel Report on EC – Asbestos . 
1394 Appellate Body Report on US-Shrimp , para. 150. 
1395 Brazil's first written submission, para. 133. WT/DS332/R 
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  7.231  The European Communities, however, identifies different sources of discrimination arising 
from Brazil's application of its import ban on retreaded tyres.  First, it argues that discrimination arises 
from the fact that the ban does not apply to retreaded tyres imported into Brazil from other MERCOSUR countries, even though they prod uce the same environmental externalities.
1397  Secondly, 
the European Communities argues that the fact that the import ban on used tyres has been 
"suspended" by Brazilian courts has allowed Brazilian manufacturer s of retreaded tyres to use 
imported casings, which in the opinion of the Eur opean Communities also constitutes discrimination 
against retreaded tyres imported  from the European Communities.1398  Finally, in relation to new tyres, 
the European Communities claims that there is discrimination because Brazil has not adopted any 
measure to ensure that new tyres consumed in its  territory are retreaded when they become used 
tyres1399 and because Brazil does not restrict the importation and sale of non-retreadable tyres.1400 
7.232  It is worth highlighting in this context th at the European Commun ities has also clearly 
indicated that it is not alleging that the non-application of the ban to retreaded tyres made from 
domestic  used tyres constitutes arbitrary or unjustifiable discrimination.1401  
7.233  We will consider in turn the different elements  of discrimination identified by the European 
Communities in the application of Brazil's import ban on retreaded tyres. 
Does discrimination arise from the exemption of imports of remoulded tyres 
originating in MERCOSUR countries from the import ban on retreaded tyres (the "MERCOSUR exemption")? 
7.234  Turning first to the difference in tr eatment between MERCO SUR and non-MERCOSUR 
countries, the Panel notes that discrimination is alleged to ex ist in favour of countries benefiting from 
the MERCOSUR exemption.  It is useful to recall in this respect that the Appellate Body has clarified 
that "discrimination" within the meaning of th e chapeau could occur between different exporting 
Members, as well as between exporting Memb ers and the importing Member concerned."
1402   
7.235  In this instance, Brazil does not deny that the exemption of imports of remoulded tyres 
originating in MERCOSUR countries gives rise to di scrimination between those imports and those of 
the European Communities (and other WTO Members).1403   Indeed, the exemption, by its very nature, 
allows imports originating from other MERCOSUR c ountries to enter Brazil while the same products 
are not authorized for importation, if they originat e in other WTO Members.  The exemption therefore 
gives rise to discrimination, between MERCOSUR countries and other WTO Members.   
7.236  The MERCOSUR exemption is contained in Port aria SECEX 14/2004, which is also the very 
instrument that provides the legal basis for the import ban.  We recall that in our consideration of the 
provisional justification of the im port ban under paragraph (b), we focused our analysis on the import 
ban itself, i.e. on the measure that had been found to be inconsistent with Article XI.1 of GATT 1994 
                                                                                                                                                                     
1396 Brazil's first written submission, para. 134. 
1397 European Communities' first written submission, para. 147. 
1398 European Communities' first written submission, para. 147. 
1399 European Communities' first written submission, para. 149. 
1400 European Communities' second oral statement, para. 92. 
1401European Communities' first oral statement, para. 94. 
1402 Appellate Body Report on US – Gasoline , p. 24; see also the Appellate Body Report on US – 
Shrimp , para. 150. 
1403 Brazil's first written submission, para. 136 and European Communities' first written submission, 
para. 147.  WT/DS332/R 
 Page 205 
 
 
  in the first place.  At this stage of our anal ysis, however, we are required to focus on the manner  in 
which the measure is applied . 1404    
7.237  The fact that the MERCOSUR exemption is foresee n in the very legal instrument containing 
the import ban itself does not, in our view, prevent us from taking it into consideration in the context of our examination, under the chapeau, of the manner in  which the measure is applied.  In its ruling in 
US – Shrimp , the Appellate Body clarified that "the application of a measure may be characterized as 
amounting to an abuse or misuse of an exception of Article XX not only when the detailed operating 
provisions of the measure prescribe the arbitrary or unjustifiable activity, but also where a measure, 
otherwise fair and just on its face, is actually applied in an arbitr ary or unjustifiable manner"(emphasis 
added)
1405.  This clearly supports the view that an unj ustifiable discrimination can arise from elements 
actually prescribed in the measure itse lf.  This was in fact the case in US-Gasoline , where the 
Appellate Body examined the contents of the statut ory baselines for different suppliers in the context 
of the chapeau, rather than under paragraph (g).1406 
7.238  The Panel  finds therefore that the MERCOSUR exemp tion can be considered to form part of 
the manner in which the import ban imposed by Br azil on retreaded tyres – the measure provisionally 
justified under Article XX(b) – is applied and that it  gives rise to discrimination within the meaning of 
the chapeau of Article XX, between ME RCOSUR and non-MERCOSUR countries.   
Does discrimination arise from the importation of used tyres through court 
injunctions? 
7.239  The European Communities  also alleges that discrimination arises from the fact that the 
import ban imposed by Brazil on used tyres (also contained in Portaria SECEX 14/2004) has been, in 
the words of the European Communities, "suspended"  through the grant of court injunctions allowing 
such imports in spite of the ban.   
7.240  Brazil  considers that the import ban on used tyres is not "suspended" and is both in force and 
enforced.1407  Brazil has recognized, however, that "lim ited quantities" of used tyres are being 
imported under court injunctions.  Brazil has also clar ified, in response to questions by the Panel, that 
these court injunctions have been granted as a result of challenges to the lega lity and constitutionality 
of the ban enacted through Portaria SECEX 14/2004 and that the Federal Supreme Court has already 
rejected three of the four arguments typically raised  in these proceedings.  Brazil also indicated that it 
anticipates that the same court will soon reject al so the fourth argument, namely that the ban 
"interferes with the constitutional principle of fr ee enterprise because it rest ricts access to supplies of 
raw material necessary for domestic retreaders to carry on their business".1408 
7.241  The Panel  first observes that it is undisputed that co urt injunctions have been granted, which 
have enabled the importation of used tyres, from the European Communities and elsewhere, and that 
at least some of these injunctions are presently in place.  The European Comm unities argues that this 
discriminates in favour of domestic retreaded tyr es made from imported used tyres, which generate 
the same waste as that arising from imported retreads.1409  
7.242  It has not been suggested that there is any si gnificant difference between retreaded tyres made 
in Brazil from imported casings and imported retreaded tyres.  Further, Brazil has not disputed that 
                                                      
1404 Appellate Body Report on US – Gasoline , p.22. 
1405 Appellate Body Report on US – Shrimp , para. 160. 
1406 Appellate Body Report on US – Gasoline , p. 23.  
1407 Brazil's second written submission, para. 151. 
1408 See Brazil's answer to panel question No. 14. 
1409 European Communities' first oral statement para. 94. WT/DS332/R 
Page 206  
 
  retreaded tyres made from imported used tyres w ould produce the same environmental externalities 
and waste management issues as imported retreads. 
7.243  In light of these elements, the Panel  finds that to the extent that  it enables retreaded tyres to 
be produced in Brazil from imported casings while retreaded tyres using the same casings cannot be imported, permitting imports of used tyres through court injunctions results in discrimination in 
favour of tyres retreaded in Brazil using importe d casings, to the detriment of imported retreaded 
tyres.  
Does discrimination arise from the absence of comparable measures in relation to 
new tyres? 
7.244  Finally, the European Communities has argued that in relation to new tyres, there is 
discrimination because Brazil has not adopted any meas ure to ensure that new tyres consumed in its 
territory are retreaded when  they become used tyres
1410 and because Brazil does not restrict the 
importation and sale of non-retreadable new tyres.1411  We consider these two aspects in turn. 
Retreading of new tyres consumed in Brazil 
7.245  The European Communities  argues that discrimination exists since Brazil effectively 
imposes on other WTO Members a requirement that imported tyres have the capacity of being 
retreaded once in order to be allowed into Brazil, while its domestic industry does not need to ensure 
that the tyres it produces will be retreaded.  
7.246  Brazil  replies that it actively promotes retreading of the tyres it consumes1412 and has 
implemented a number of measures to realize the full promise of retreading.1413  Brazil argues that the 
ban on used and retreaded tyre imports forces dom estic retreaders to use casings collected at home, 
even if it raises production costs.1414  CONAMA Resolution 258/1999 exempts domestic retreaders 
from disposal obligations, as long as they process tyres consumed within the country's territory.1415  
Finally, Brazil continues to promote better tyre car e to increase the collected tyres' suitability for 
retreading (e.g. the 1997 National Code of Traffic).1416 
7.247  The Panel  notes that, even assuming, as the European  Communities argues, that the "capacity 
of being retreaded once" were a requirement eff ectively placed by Brazil on imported tyres, this 
would not be equivalent to ensuring that tyres produced domestically " will be retreaded" (emphasis 
added).  Rather, the "equivalent" requirement fo r domestic tyres would be that they have the capacity 
to be  retreaded in Brazil.  We recall in this resp ect our earlier conclusion that Brazil has established 
that it has the production capacity to retread domestic  used tyres and that domestic used tyres are 
suitable for retreading and are being retreaded.1417  Thus the Panel concludes that Brazil has 
established that, prima facie, the tyres produced dom estically have the capacity to be retreaded in 
Brazil, and that the European Communities has faile d to demonstrate that these tyres are not suitable 
for retreading. 
                                                      
1410 European Communities' first written submission, para. 149. 
1411 European Communities' second oral statement, para. 92. 
1412 Brazil's first written submission, para. 79. 
1413 Brazil's first written submission, para. 81. 
1414 Brazil's first written submission, para. 81. 
1415 Brazil's first written submission, para. 81. 
1416 Brazil's first written submission, para. 82. 
1417 See paragraphs 7.135-7.142above.  WT/DS332/R 
 Page 207 
 
 
  Retreadability of new tyres sold in Brazil 
7.248  The European Communities  argues that not all new tyres are, by virtue of the way in which 
they are constructed, necessarily suitable for being retreaded after their firs t use.  The European 
Communities argues that the fact that Brazil restri cts the importation of retreaded tyres, whereas it 
does not take similar measures against low-quality  new tyres is further evidence that the ban 
constitutes arbitrary and unjustifiable discrimination against imported retreaded tyres.1418  T h e  
European Communities also submits that new tyr es that are not retreaded produce the same public 
health and environmental externa lities as imported retreaded tyres.1419 
7.249  Brazil  has responded that new tyres sold in Braz il (whether manufactured domestically or 
imported) are high-quality tyres that comply with strict technical and performance standards that are 
based on international standards.1420  Brazil contends that tyres ma nufactured in accordance with these 
standards have the potential to be retreaded and ne w tyres sold in Brazil are not "cheap low quality 
new tyres" with no potential for future retreading.1421   
7.250  In light of the elements before it, the Panel concludes that Brazil has established that, prima 
facie, the new tyres it allows onto the market are of  retreadable quality meetin g relevant international 
standards, and that the European  Communities has failed to demonstr ate that new tyres sold on the 
Brazilian market (whether produced in or imported in to Brazil) are low-quality tyres not suitable for 
retreading, such that this would constitute discrimination against imported retreaded tyres.1422 
Conclusion 
7.251  The Panel has determined above that discrimination ar ises in the application of the measure 
at issue from two sources: discrimination arising fr om the exemption from the measure at issue of 
imports of remoulded tyres originating in ME RCOSUR and discrimination arising from the 
importation of used tyres under court injunctions.  In  light of the above determinations, we need to 
consider further whether such discrimination is "arb itrary or unjustifiable" within the meaning of the 
chapeau of Article XX and arises between countries wh ere the same conditions prevail.  As stated by 
the Panel in EC – Asbestos , "if the application of the measure is found to be discriminatory, it still 
remains to be seen whether it is arbitrary and/or unjustifiable  between countries where the same 
conditions prevail".1423  
Is the discrimination in the application of th e measure "arbitrary" and/or "unjustifiable"?  
7.252  We have determined above that two elements result in discriminat ion in the application of the 
measure: the MERCOSUR exemption and the allowa nce, through court injunctions, of imports of 
used tyres.  We will therefore consider in turn whet her either source of discrimination is "arbitrary" or 
"unjustifiable".  Before turning to this assessment,  we first consider the meaning of these terms.  
Approach of the Panel 
7.253  In the view of the European Communities , the terms "arbitrary" and "unjustifiable" both 
qualify decisions or conducts that are not reasona ble.  The European Communities submits that the 
term "arbitrary" has its "centre of gravity" in th e lack of consistency and predictability in the 
application of the measure, while the term "unjustifia ble" refers more to the lack of motivation and 
                                                      
1418 European Communities' answer to panel question No. 11. 
1419 European Communities' first written submission, para. 149. 
1420 Brazil's answer to the panel question Nos. 12 and 91. 
1421 Brazil's answer to panel question No. 12. 
1422 Exhibit BRA-95. 
1423 Panel Report on EC – Asbestos , para. 8.226. WT/DS332/R 
Page 208  
 
  capacity to convince.
1424  Moreover, the European Communities submits that what is arbitrary and 
unjustifiable discrimination must be established in rela tion to the objectives of the measure at issue, in 
the present case, the protection of human life and health.1425 
7.254  According to Brazil , the term "arbitrary" is defined as "dependent on will or pleasure", 
"discretionary", "based on mere opinion or prefer ence", "capricious, unpredictable, inconsistent", 
"unrestrained in the exercise of will or authority", "despotic, tyrannical."1426  Brazil also submits that 
the word "unjustifiable" denotes that which cannot be "legally or morally justified", or shown to be 
"just, reasonable, or correct", or "defensible."1427  Based on these definitions, Brazil submits that the 
only question that the Panel must examine is whet her Brazil's measures are applied reasonably and in 
good faith.1428 
7.255  As required by Article 3.2 of the DSU, the Panel  must interpret these terms in accordance 
with the customary rules of interpretation of pub lic international law.  As noted earlier, these 
customary rules are reflected in Articles 31 and 32 of the Vienna Convention on the Law of Treaties 
(VCLT).  
7.256  In accordance with Article 31.1 of that conventi on, we must consider "the ordinary meaning 
to be given to the terms of the treaty in their cont ext and in the light of its object and purpose".  We 
therefore consider the ordinary meaning of the te rms "arbitrary" and "unjustifiable", read in their 
context and in light of the object and purpose of the treaty.   
7.257  We first observe that definitions of "arbitrary", as set out in The Shorter Oxford English 
Dictionary , provide some guidance as to the ordinary meaning of the term:  
"arbitrary  1 Dependent on will or pleasure; 2  Based on mere opinion or 
preference as opp. to the real nature of things; capricious, 
unpredictable, inconsistent; 3  Unrest rained in the exercise of will or 
authority; despotic, tyrannical."1429 
7.258  In US – Shrimp (Article 21.5 – Malaysia) , the Panel similarly considered "the ordinary 
meaning of the word 'arbitrary', i.e. 'capricious, unpredictable, inconsistent'".1430  In the same case, the 
Appellate Body highlighted two factors that it found,  in that case, to be relevant to an assessment of 
whether the measure was arbitrary within the meani ng of the chapeau of Article XX, namely "rigidity 
and inflexibility" of the application of the measure;  and the fact that the measure is imposed without 
inquiring into its appropriateness for the c onditions prevailing in the exporting countries.1431   
7.259  As to the term "unjustifiable", definitions set out in The Shorter Oxford English Dictionary , 
provide some guidance on its ordinary meaning:  
"unjustifiable     Not justifiable, indefensible."1432 
                                                      
1424 European Communities' first written submission, para. 152. 
1425 European Communities' first oral statement, para. 92; European Communities' second written 
submission, para. 152. 
1426 Brazil's first written submission, para. 135. 
1427 Brazil's first written submission, para. 135. 
1428 Brazil's first oral statement, para. 62. 
1429The Shorter Oxford English Dictionary , Vol. I, p. 109. 
1430 Panel Report on US – Shrimp (Article 21.5 – Malaysia) , para. 5.124. 
1431 Appellate Body Report on US – Shrimp , para. 177.   
1432The Shorter Oxford English Dictionary , Vol. II, p. 3450.  WT/DS332/R 
 Page 209 
 
 
  "justifiable   2   Able to be legally or morally jus tified; able to be shown to be just, 
reasonable, or correct; defensible."1433 
7.260  Read in the context of the chapeau of Article XX, these definitions suggest, overall, the need 
to be able to "defend" or convincingly explain th e rationale for any discrimination in the application 
of the measure.   
7.261  In its ruling on US – Gasoline , the Appellate Body found that discrimination that could have 
been "foreseen" and that was not "merely ina dvertent or unavoidable" would be unjustifiable.1434  Two 
specific elements for the justification of discrim ination can also be identified in the Panel and 
Appellate Body reports in US – Shrimp and US – Shrimp (Article 21.5 - Malaysia) :  first, a serious 
effort to negotiate with the objective of concl uding bilateral and multilate ral agreements for the 
achievement of a certain policy goal, and secondly, the flexibility of the measure.  These examples 
provide useful illustrations on what might render discr imination "unjustifiable" within the meaning of 
the chapeau of Article XX.   
7.262  We do not assume, however, that exactly the same  elements will necessarily be determinative 
in every situation, in assessing whether discrimination in  a given case is "arbitrary" or "unjustifiable".  
We recall in this regard the Appellate  Body's observation, in its ruling in US – Shrimp , that the 
"location of the line of equilibrium [between th e right of a Member to invoke an exception under 
Article XX and the rights of the other Members unde r varying substantive provisions], as expressed in 
the chapeau, is not fixed and unchanging; the line m oves as the kind and the shape of the measures at 
stake vary and as the facts making up specific cases differ".1435    
7.263  Against this background, the Panel will assess whether the discrimination resulting from the 
manner Brazil has applied its import ban on retreaded tyres may be described as "arbitrary" and 
"unjustifiable" within the meaning of the chapeau of Article XX.  
Is the discrimination arising from th e MERCOSUR exemption "arbitrary" or 
"unjustifiable"? 
7.264  The European Communities  submits that the discrimination between retreaded tyres 
imported from MERCOSUR member States and t hose imported from non-MERCOSUR countries is 
unreasonable, and therefore arbitrary, because all re treaded tyres, irrespective of their country of 
origin, produce the same environmental externalities.1436  The European Communities also considers 
that the same reasons make the discrimination "u njustifiable".  The European Communities further 
argues that retreaded tyres coming from its territory and those coming from other MERCOSUR countries differ in no way and that in fact, the latt er are largely produced with casings imported from 
the European Communities and other non-MERCOSUR countries.
1437 
7.265  Brazil recalls that the exception of remoulded tyres coming from other MERCOSUR 
countries was introduced through Portaria SECEX 2/2002, after Uruguay prevailed in the proceedings 
against Brazil under the MERCOSUR dispute settlement system.1438  Therefore, Brazil claims that its 
                                                      
1433 The Shorter Oxford English Dictionary , Vol. I, p. 1474. 
1434 Appellate Body Report on US – Gasoline , p. 27. 
1435 Appellate Body Report on US – Shrimp , para. 159. 
1436 European Communities' first written submission, para. 154 
1437 European Communities' second written submission, para. 151. 
1438 Brazil's first written submission, para. 138.  Br azil identifies the following provisions as those 
requiring compliance with the MERCOSU R arbitral tribunal's decision: Brazil was thus required, under the 
Treaty of Asuncion and its Protocols of Brasilia and Ou ro Preto, the Brazilian implementing legislation, the 
Decision CMC No. 22/00 and the ar bitral award of the MERCOSUR tr ibunal, to exem pt the MERCOSUR 
countries from the import ban (see Brazil' s first written submission, para. 137). WT/DS332/R 
Page 210  
 
  decision to exempt the MERCOSUR countries from th e ban was thus made in compliance with its 
international law obligations
1439 and that far from being either arbitrary or unjustifiable, it is an 
expression of Brazil's adherence to the rule of law.1440 
7.266  Brazil further argues that the very language of  the regulation that the European Communities 
challenges explicitly provi des for the MERCOSUR exception.  Acco rding to Brazil, assuming that the 
exemption is permitted under Articl es XXIV and XX(d), "there is not hing arbitrary about applying the 
WTO-consistent law as it is written."1441 
7.267  The European Communities  further submits that the existen ce of an international agreement 
to which Brazil is a party or the fact that the a pplication of the import ban is mandated by law cannot 
justify the introduction of unjustifiable and arbitr ary discrimination; otherwise, the European 
Communities submits, it would be very easy for any WTO Member to circumvent the requirements of 
the chapeau of Article XX by simply concludi ng agreements with other WTO Members or by 
providing for a discriminatory application in the law itself".1442 
7.268  Finally, the European Communities claims that the discrimination in the present case is all the 
more unreasonable because Brazil is at least par tially responsible for the obligation it now invokes.1443  
According to the European Communities, Brazil consciously chose not to defend itself against 
Uruguay on grounds related to human health and safety, whereas it is now invoking this defence 
against the European Communities.  In the view of the European Communities, this behaviour by 
itself constitutes arbitrary and unjustifiable di scrimination between countries where the same 
conditions prevail.1444 
7.269  In response, Brazil  explained that the dispositive ques tion in the case against Uruguay was 
whether or not Portaria 8/00 was a new import restriction, in violation of the Decision CMC 22/2000.  
Brazil claims that its attorneys believed that they n eeded only to show that the import ban had been in 
effect since 1991, and that the 2000 regulation me rely clarified the scope of that prohibition.1445 
7.270  The Panel  first notes that there has been no suggestion that remoulded tyres imported from 
MERCOSUR countries would differ in any significant way from their European counterparts.1446  The 
health impact of both types of tyres can thus be expected to be comparable.  Indeed, Brazil does not 
seek to justify the discrimination on the basis of any difference in the impact of the products in 
relation to the achievement of its policy objectiv e of reducing the accumulation of waste tyres.  
Rather, Brazil argues that the MERCOSUR exemption is  neither arbitrary nor unjustifiable because it 
finds its origin in Brazil's obligation to implem ent a ruling of a MERCOSUR tribunal, which required 
it to allow MERCOSUR imports of remolded tyres. Brazil also argues that "Brazil's different 
                                                      
1439 Brazil's first written submission, para. 137. 
1440 Brazil's first written submission, para. 137.  Br azil clarifies that it implemented the MERCOSUR 
ruling in the most narrow way possible.  It exempted from the import ban only remolded tyres (a subcategory of 
retreaded tyres) from MERCOSUR coun tries, because the MERCOSUR case re ferred only to that category of 
retreaded tyres. 
1441 Brazil's first oral statement, para. 64. 
1442 European Communities' second written submission, paras. 154, 157-58.  The European 
Communities also claims that Brazil's argument would also  run against the spirit of Article 34 of the Vienna 
Convention on the Law of Treaties, whic h precludes a treaty, in this case th e Treaty of Asuncion, from affecting 
the rights and obligations of a third State without its consent, European Communities' first oral statement, para. 93. 
1443 European Communities' second oral statement, para. 96. 
1444 European Communities' second written submission, para. 165. 
1445 Brazil's answer to the European Communities' question No. 18. 
1446 As noted in footnote 1041 above, remoulded tyres are one of three types of retreaded tyres.  WT/DS332/R 
 Page 211 
 
 
  treatment of its MERCOSUR partners is explic itly authorized under Article XXIV of GATT 1994 
and, therefore, cannot be arbitrary and unjustifiable".1447   
7.271  The key factual circumstances that ultimately led to the exemption of remoulded tyres 
originating in other MERCOSUR countries are undisputed .  Both parties agree that the import ban, as 
it was originally designed in Portaria 8/2000, applie d to all retreaded tyres regardless of their country 
of origin, and that it was only after a disput e settlement tribunal established under MERCOSUR found 
Brazil's restrictions on the importation of a certain t ype of retreaded tyres (remoulded tyres) to be in 
violation of its obligations under MERCOSUR that Br azil exempted that particular kind of retreaded 
tyres from the application of the import ban.  This ruling arose in the context of a challenge initiated 
by Uruguay against Brazil's import ban on remoulde d tyres, on the grounds that it constituted a new 
restriction on trade prohibited under the MERCOS UR agreements. We also note that MERCOSUR 
rulings are res judicata  for the parties involved and that the European Communities does not dispute 
that Brazil had an obligation, under MERCOSUR, to implement the ruling. 
7.272  The exception of remoulded tyres originating in MERCOSUR therefore does not seem to be 
motivated by capricious or unpredictable reasons.  It was adopted further to a ruling within the 
framework of MERCOSUR, which has binding legal effects for Brazil, as a party to MERCOSUR.  
7.273  We also note that this ruling was adopted specifi cally in the context of an agreement intended 
to liberalize trade among its members.  This type of agreement inherently provides for preferential 
treatment in favour of its members, thus leading to discrimination between those members and other 
countries.  To the extent that th e existence of some discrimination in favour of other members of a 
customs union is an inherent part of its operation, the possibility that such discrimination might arise 
between members of MERCOSUR and other WTO Members as a result of the implementation of the 
MERCOSUR Agreement is not, in our view, a priori  unreasonable.   
7.274  We note that this type of agreement is expressly recognized in Article XXIV, which provides 
a framework for WTO Members to di scriminate in favour of their partners in customs unions or free 
trade areas, subject to certain conditions.  In maki ng this observation, we make no determination as to 
whether MERCOSUR meets the requirements of Article XXIV in respect of customs unions.1448    
7.275  The European Communities submits, however, that Brazil is at least partially responsible for 
the obligation it now invokes.1449  According to the European Co mmunities, Brazil consciously chose 
not to defend itself against Uruguay on grounds  related to human health and safety under 
Article 50(d) of the Montevideo Treaty, whereas it is  now invoking this defence against the European 
Communities.  Brazil has acknowledged that it di d not invoke the relevant exceptions in the 
Montevideo treaty before the MERCOSUR tribunal, but has explained that, in light of the legal issues 
                                                      
1447 Brazil's second oral statement, para. 107. 
1448 In this part of our analysis, we do not consider whether the exemption is in conformity with 
Article XXIV, as a measure taken within a customs union complying with the requirements of Article XXIV.  
At this stage, we merely observe that the fact that the MERCOSUR exemption was enact ed in the context of an 
agreement that establishes further liberalization among its partners provides support for the proposition that there is a rational basis for it.  We recall that Brazil has also specifically argued that its "different treatment of 
MERCOSUR partners cannot be consid ered arbitrary or unju stifiable under Article XX, if it is explicitly 
authorized under Article XXIV".  However, we do not consider that the fact that the measure may be authorized  
under Article XXIV dispenses Brazil from complying w ith the requirements of Article XX, including the 
requirements of the chapeau.  In pa rticular, we note that Article XXIV:8 (a)(i) provides members of a customs 
union sufficient flexibility to eliminate or not eliminate restrictive regulations of commerce as necessary in relation to measures taken under, inter alia , Article XX.   
1449 European Communities' second oral statement, para. 96. WT/DS332/R 
Page 212  
 
  raised by the case, it had seemed, at the time, that defences based on other grounds were more 
appropriate.
1450  
7.276  We do not consider that we are in a position to assess in detail the choice of arguments by 
Brazil in the MERCOSUR proceedings or to second-gu ess the outcome of the case in light of Brazil's 
litigation strategy in those proceedings.  Nor would it be appropriate for us to engage in such an 
exercise.  We need only consider the details of t hose proceedings to the exte nt necessary to determine 
the consistency of the MERCOSUR exemption with the requirements of the chapeau of Article XX, 
and specifically, at this stage of our analysis, wh ether as a result the import ban on retreaded tyres is 
being applied as a means of "arbitrary" or "unjustifiabl e" discrimination.  In this respect, we note that, 
although the litigation strategy chosen by Braz il during the MERCOSUR proceedings failed to 
persuade the MERCOSUR tribunal, it does not, in it self, seem unreasonable or absurd.  Brazil has 
explained that it chose to defend its measures in c onsideration of the specific legal claims raised 
against it in the proceedings.  Furthermore, while the particular litigation strategy followed in that 
instance by Brazil turned out to be unsuccessful, it is not clear th at a different strategy would 
necessarily have led to a different outcome.1451  
7.277  The European Communities also  argues that the MERCOSUR Arbitral Tribunal simply 
decided that Portaria 8/00 was incompatible w ith Brazil's obligations under MERCOSUR and did not 
require it to discriminate between MERCOSUR and other WTO Members.1452  Brazil, for its part, 
argued that it was required under the Treaty of Asunci ón and its Protocols of Brasilia and Ouro Preto, 
the Brazilian implementing legislation, the Deci sion CMC 22/00 and the arbitral award of the 
MERCOSUR  Tribunal, to exempt MERCOSUR countries from the import ban.1453  
7.278  Here again, we consider Brazil's obligati ons under the ruling by the MERCOSUR tribunal 
only to the extent necessary to determine whet her the application by Brazil of the MERCOSUR 
exemption is "arbitrary" or "unjustifiable" within the meaning of the chapeau of Article XX.  We note 
that the text of the decision itself only indicates that Brazil is required to adapt its internal legislation 
in light of the inconsistency found by the arbitral  body.  The decision did not expressly provide for a 
particular course of action to implement the ruling.   
7.279  Brazil has argued that the exemption of MERCO SUR imports was effectively the only course 
of action available to it for the implementation of the ruling.1454 We also note Brazil's indication that 
eliminating the import ban altogether was not a reasonable option for the implementation of the 
ruling, "because it would have forced Brazil to abandon its policy objective and its level of protection, 
which is to reduce unnecessary generation of tyre  waste to the maximum extent possible".1455 We note 
further Brazil's indication that it implemented the exemption in the most narrow way possible, taking 
                                                      
1450 Brazil has explained that it argued before the tribunal that it was entitled to maintain the ban against 
all imports of retreaded tyres, regardless of the country of origin, including on imports from MERCOSUR 
countries, because the ban was merely a continuation of an existing measure.  Braz il also explains that the 
tribunal did not agree with Brazil's arguments and decided instead that th e application of the import ban to 
MERCOSUR countries pursuant to Portaria No. 8/00 was contrary to Decision CMC No. 22 of 29 June 2000, 
which prohibits the adoption of new trade re strictive measures by MERCOSUR countries inter se  (Brazil's first 
written submission, para. 137).  
1451 In a similar case between Argentina and Uruguay, the tribunal also reached the conclusion that the 
restriction was unjustified, despite the invocation of the relevant exception by Argentina in those proceedings.  
1452 European Communities' first written submission, para. 72. 
1453 Brazil's first written submission, para. 137. 
1454 See Brazil's answer to panel question No. 73 ("Apart from non-compliance, the only alternative 
available to Brazil was to exempt MERCOSU R member states from the import ban"). 
1455 Brazil's response to Panel question No. 73.  WT/DS332/R 
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  into account all of its international law obligations , and limited the exemption to the exact product that 
had been the object of the MERCOSUR ruling, namely remoulded tyres.1456 
7.280  Whether or not this was the only course of action for Brazil to follow, it does not appear to us 
to be a capricious or unpredictable action, in light of Brazil's obligation to comply with the 
MERCOSUR ruling.   
7.281  In light of the above, the discrimination r esulting from the MERCOSUR exemption cannot, in 
our view, be said to be "capricious" or "random".  To that extent, the measure at issue is not being 
applied in a manner that would constitute arbitrary  discrimination.   
7.282  The European Communities argues that what constitutes an arbitrary or unjustifiable 
discrimination must be established in relation to th e objectives of the measure at issue, in the present 
case, the protection of human life and health,1457 and that to rule otherwise would mean that WTO 
Members could discriminate in the application of  measures simply by concluding international 
agreements providing for discriminatory applicatio n of such measures.  The European Communities 
also argues that this is also contrary to Article  XXIV:8(a), which specifically excludes measures taken 
under Article XX from the need to liberalize "substan tially all trade" within a customs union or free 
trade area.1458  
7.283  However, in observing that the MERCOSUR ruling provided a reasonable basis for Brazil to 
enact an exemption from the import ban in favour of  remoulded tyres originating in MERCOSUR, we 
are not suggesting that the invocation of any inte rnational agreement would be sufficient under any 
circumstances, in order to justif y the existence of discrimination in  the application of a measure under 
the chapeau of Article XX.  Rather, we have co nsidered the specific circumstances of the case, 
including the nature of the international agreemen t and of the ruling on the basis of which Brazil has 
acted, and concluded that in the circumstances, this  provided a reasonable basis for Brazil to enact an 
exemption from the import ban in fa vour of its MERCOSUR partners. 
7.284  We also do not consider that it is contrary to th e terms of Article XXIV:8(a) for us to take into 
account, in our assessment of the measure under Artic le XX, the fact that the MERCOSUR exemption 
was adopted as a result of Brazil's obligations unde r MERCOSUR.  As noted by the Appellate Body, 
Article XXIV:8(a) provides "some flexibility" to the members of the members of a customs union to maintain certain restrictive regulations of commerce.
1459  In this instance, Brazil has not maintained the 
import ban vis-à-vis  its MERCOSUR partners, and this has r esulted in discrimination towards other 
WTO Members.  Our task under the terms of the ch apeau of Article XX is to consider whether this 
discrimination is arbitrary or unjustifiable.  This is a distinct assessment from that which might arise 
under Article XXIV:8(a) as to whether restrictive re gulations of commerce have been eliminated on 
"substantially all the trade" in a manner cons istent with the terms of that provision. 
                                                      
1456 Brazil's second written submission para. 149.  
1457 See European Communities' first oral statement, para. 91. 
1458 See European Communities' first oral statement, paras. 92 and 93.  The European Communities also 
argues in the same paragraph that this would "run agai nst the spirit of" Article 34 of the Vienna Convention on 
the Law of Treaties, which precludes a treaty from affecting the rights and obligations of a third state without its 
consent.  We note that the European Communities does not suggest that it would actually be contrary to the terms of that provision, which provides that "[a] treaty does not create obligations or rights for a third State 
without its consent".  Indeed, in taki ng account, in the context of our asse ssment of the consistency of Brazil's 
measure under Article XX, the fact that Brazil is a me mber of MERCOSUR and has incurred obligations under 
that agreement, we do not believe that we are affectin g the rights or obligations of the European Communities 
under the WTO Agreement, and more specifically under Article XX.   Nor does this amount, in our view, to a 
situation in which the MERCOSUR agreement would have created rights or obligations for the European Communities without its consent. 
1459 See Appellate Body Report on Turkey – Textiles , para. 48. WT/DS332/R 
Page 214  
 
  7.285  However, the fact that we give due consider ation to the existence of Brazil's commitments 
under MERCOSUR in our assessment does not imply that the exemption must necessarily be justified.  Rather, we must now examine the manne r in which the import ban is applied, taking into 
account the existence of an exemption for MERCOSU R members, in order to determine whether the 
discrimination arising from the MERCOSUR exem ption is arbitrary or unjustifiable.   
7.286  The MERCOSUR exemption entails that certain imports of retreaded tyres may take place.  
We also note that Brazil has confirmed that under the MERCOSUR exemption, it is quite possible for 
retreaders from MERCOS UR countries benefiting from the exem ption to source casings from abroad 
(for example from the European Communities), retread them locally, and then export the retreaded tyre to Brazil under the MERCOSUR exemption.
1460  This means that casings from non-MERCOSUR 
countries, as well as casings originally used in  MERCOSUR, may be retreaded in a MERCOSUR 
country and exported to Brazil as originating in ME RCOSUR.  This further increases the potential for 
imports of retreaded tyres to enter in to Brazil through the MERCOSUR exemption. 
7.287  If such imports were to take place in such am ounts that the achievement of the objective of 
the measure at issue would be significantly u ndermined, the application of the import ban in 
conjunction with the MERCOSUR exemption w ould constitute a means of unjustifiable 
discrimination.  The more imports enter Brazilian te rritory through the exemption, the more Brazil's 
declared policy objective of reducing the unnecessar y accumulation of waste tyres to the greatest 
extent possible will be undermined, thereby affec ting the justification for the maintenance of the 
import ban vis-à-vis  non-MERCOSUR WTO Members.  This is a matter of preserving the "line of 
equilibrium" between Brazil's right to invoke Artic le XX and the rights of other WTO Members under 
the Agreement.   
7.288  As of the time of the Panel's examination, however, volumes of imports of retreaded tyres 
under the exemption appear not to have been signi ficant.  The European Communities has indicated 
that such imports had increased tenfold sin ce 2002, from 200 to 2,000 tons per year by 2004.1461  That 
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.1462  Even if all the retreaded tyres imported from 
MERCOSUR countries were made from used tyres of  EC origin, the import ban would still have 
resulted in eighty six percent of the previous imports from the European Communities not taking 
place, for the year 2004.  Thus, the measure's abilit y to fulfil its objective does not appear to have 
been significantly undermined by the occurrence of imports from other sources, even in the presence 
of an exemption for MERCOSUR imports.  
7.289  The Panel finds, therefore, that, as of the time of the Panel's ruling, the operation of the 
MERCOSUR exemption has not resulted in the m easure being applied in a manner that would 
constitute arbitrary or unjustifiable discrimination.   
Is the discrimination arising from the im portation of used tyres through court 
injunctions "arbitrary"  or "unjustifiable"? 
7.290  The European Communities  submits that the import ban is also applied in an arbitrary and 
unjustifiable manner because, due to th e injunctions granted to importers of used tyres, retreaded tyres 
continue to be produced in Brazil using imported carcasses.1463  According to the European 
                                                      
1460 See Brazil's answer to panel question No. 72 ("it is possible for tyres used in the EC to be remolded 
in a Mercosul country and then export ed to Brazil because Brazil has no c ontrol over remolded tyre production 
in other Mercosul members"). 
1461 European Communities' first written submission, para. 83. 
1462 European Communities' first written submission, para. 80. 
1463 European Communities' second written submission, para. 169.   WT/DS332/R 
 Page 215 
 
 
  Communities the discrimination is not reasonable, a nd therefore it is arbitrary, because all retreaded 
tyres, made from used tyres not originating in Brazil produce the same environmental externalities in 
Brazil irrespective of the country where they are produced.1464  It also argues that the same reasons 
could be referred to in order to fi nd the discrimination "unjustifiable". 
7.291  Brazil  clarifies that the import ban on used tyres has not been suspended in any way and that 
the government of Brazil has consistently opposed in court the injunctions granted to used tyre 
importers.1465  Brazil agrees that the used tyres imported into Brazil on the basis of the preliminary 
injunctions have the same environm ental externalities in its territory irrespective of the country where 
they are produced.  However, Brazil adds that th is is precisely the reason why it has consistently 
opposed them.1466 
7.292  The Panel  first notes that the importation of used tyres into Brazil is prohibited, under the 
terms of Article 40 of Portaria SECEX 14/2004.  There is no disagreement between the parties that 
used tyres have been imported into Brazil in recen t years only as a result of injunctions granted by 
Brazilian courts in specific cases.1467  Furthermore, Brazil has provided evidence that it has judicially 
challenged such injunctions, with a certain degree of success.  Ther efore, the fact that Brazilian 
retreaders are still able to use imported casings to manufacture their products does not seem to be the 
result of a capricious or unpredictable action of Br azil.  Rather, it was the result of successful court 
challenges to the import ban and finds its basis in the customs authorities' need to give effect to 
judicial orders authorizing the introduction into Brazil of products, the importation of which would 
otherwise be legally impossible. 
7.293  Brazil has provided the Panel with informati on concerning the arguments submitted by the 
used tyres importers when requesting the preliminary injunctions1468 and the Brazilian authorities' 
challenges to such injunctions.  As in the c ontext of our earlier examination of the MERCOSUR 
ruling that led to the MERCOSUR exemption, our cons ideration of these elements is limited to what 
is necessary in order for us to determine whether th e measure is being applied in a such manner as to 
result in arbitrary or unjustifiable discrimination with in the terms of the chapeau of Article XX.  Here 
again, we consider that nothing in the evidence be fore us suggests that the decisions of the Brazilian 
courts granting these injunctions were capricious or  unpredictable.  Moreover, the decision of the 
Brazilian administrative authorities to comply with the preliminary injunctions does not seem irrational or unpredictable either.  
7.294  In light of the above, the discrimination resu lting from the importation of used tyres into 
Brazil resulting from the injunctions granted to domestic  tyre retreaders cannot, in our view, be said to 
be the result of "capricious" or "random" action.  To  this extent, the measure at issue is not being 
applied in a manner that would constitute arbitrary  discrimination.    
7.295  Nonetheless, the existence of such discrimina tion leads to a situation in which the very 
casings that Brazil seeks to prevent from entering Braz ilian territory, i.e. used tyres that have been 
first used in other (non-MERCOSUR) countries, are in fact entering Brazil through the court 
injunctions.  As noted earlier, the measure's capac ity to contribute to the objective of reducing the 
number of waste tyres accumulating in Brazil is premised on imports of used tyres being prohibited, so that "second-life" tyres do not enter Brazilian territory, be it as used tyres or as retreaded tyres.  
                                                     
 
1464 European Communities' first written submission, para. 155.  The European Communities claims 
that in fact, retreading in Brazil should be more problematic, since Brazil also has to deal with some degree of 
industrial losses which inevitably occur, European  Communities' second written submission, para. 169. 
1465 Brazil's first written submission, para. 76; Brazil' s second written submission, paras. 152 and 153. 
1466 Brazil's second written submission, para. 153. 
1467 See the European Communities' answer to panel question Nol. 22 and Br azil's answers to panel 
question Nos. 13 and 98. 
1468 Brazil's answer to panel question No. 14. WT/DS332/R 
Page 216  
 
  The granting of injunctions allowing used tyres to be imported, however,  runs directly counter to this 
premise, as it effectively allows the very used  tyres that are prevented from entering into Brazil after 
retreading to be imported before  retreading.   
7.296  This has the direct potential to undermine th e objective of the prohibition on importation of 
retreaded tyres.  Indeed, to the extent that some of these used ty res are not retreaded and end up as 
waste in Brazil without being used further at all, the adverse impact of these imports is greater than 
the importation of the same casi ngs after retreading would be.
1469  If these imports were to take place 
in volumes so as to significantly undermine the achie vement of Brazil's declared objective of avoiding 
the unnecessary generation of waste tyres to the great est extent possible, this would lead to the 
measure being applied in a manner that would c onstitute a means of unjustifiable discrimination. 
7.297  Indeed, the volumes of imports of used tyres that have actually taken place under the court 
injunctions confirm that the objective of the import ban on retreaded tyres, i.e. prevent the entry of 
short-life tyres into Brazil, has been significantly undermined.  
7.298  Brazil describes the amount of imports of u sed tyres into Brazil as "limited quantities"1470  and 
claims that with the exception of 2004 and 2005, imports of used tyres through preliminary 
injunctions have not been "particularly high".1471   It has not been able, however, in the course of 
the proceedings, to clarify exactly how many in junctions remain in place and what volumes of 
imports they represent.1472  One of the exhibits submitted by Brazil identifies 24 companies benefiting 
from one or more injunctions authorizing them  to import used tyres, as of 15 September 2006.1473   
7.299  The European Communities presents the following  figures for imports of used tyres into 
Brazil, citing as source the Brazilian development Ministry's database:1474 
2000 2001 2002 2003 2004 2005 
1,407,618 2,396,898 2,659,704 4,240,474 7,564,360 10,478,466
 7.300  Brazil has not disputed these figures.  The European Communities also provides figures 
showing volumes of imports of used and retreaded  tyres from the European Communities, as follows: 
                                                     
 
1469 See Brazil's answer to panel question No. 16: "in 2005, Brazilian retreaders imported almost 
11 million casings, of which only 6 million were retreaded or stocked for later use by the importers" and that 
"the remaining casings were either illegally sold or disp osed of." (Exhibit BRA-94, however suggests a figure of 
1 million imported used tyres a year are rejected as indust rial losses). See also Brazil' s answer to question 93 by 
the Panel ("at least nine percent [1 million] of the used tyres imported as raw material for retreading are sold to the general public as part-worn (used) tyres" although such sales are illegal in Brazil). Brazil also adds, based on 
Exhibit BRA-69, that domestic retreaders have been fine d for reselling imported used tyres as part-worns.  The 
EC suggests that the figures are much smaller (EC comment to Question 93).  
1470 Brazil's second written submission, paras. 151-152. 
1471 Brazil's answer to panel question No. 18, para. 65. 
1472 In response to a question from the Panel as to how many injunctions are currently in force and what 
volumes of imports this represents, Brazil replied that to obtain the information required by the Panel, the 
Brazilian Government would need to consult Brazil's five Appeals Courts (Brazil's answer to question 18 by the 
Panel).  Brazil stated later in the proceedings that in 20 06, until July, out of sixteen preliminary injunctions filed 
requesting authorizations to import used tyres, thirteen had been denied ad portas , while the remaining three 
have been appealed and will be adj udicated by the High Courts (Regional Federal Tribunals) (Brazil's second 
written submission, para.137).   
1473 Exhibit BRA-168. 
1474 European Communities' an swer to panel question No. 118.  Braz il has also indicated that according 
to the industry data, 27 million used tyres were imported between 2001 and 2005 (Brazil's answers to panel questions Nos. 20 and 41, Brazil's second written submission, para. 135
).  Brazil states that a total of 272,017 
units of retreaded tyres were imported in 2002-2003 (Brazil's answer to panel question No. 117).  WT/DS332/R 
 Page 217 
 
 
  Brazil imports of used and retreaded tyres
in kg from the EU
Database: ALICE, extracted 21/04/2006
010,000,00020,000,00030,000,00040,000,00050,000,00060,000,00070,000,00080,000,000
1999 2000 2001 2002 2003 2004 2005Retreaded tyres
imported from the EU
Used tyres importedfrom the EU
  
Table showing the evolution of Braz il's imports of used and retreaded 
tyres from the EU. [Source: Brazilian trade data base Alice, 
http://aliceweb.desenvolvimento.gov.br/ ]1475 
7.301  The European Communities furt her states that in 2005, Brazil imported, largely for the 
purposes of domestic retreading, 10.5 million used tyres (out of which 8.4 million came from the 
European Communities)1476, while the total number of retreaded  tyres imported annually to Brazil, 
from all sources, was 2-3 million prior to the import ban.1477   
7.302  These figures suggest that imports of used ty res have taken place in significant amounts.  
More specifically, the figures before us, as cited above , show that in 2005 (the last year for which we 
have complete figures, and also the last full year pr ior to establishment of this Panel), 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 in, at the time, Portaria 8/00.  This means that 
imports of used tyres to Brazil have not only contin ued, but increased, by 2005, to reach levels (i.e. 
10.5 million) representing approximately three times the amount of retreaded plus used tyres (2 
million1478 plus 1.4 million) that were annua lly imported in the year 2000.   
7.303  The result of the court injunctions is therefore that used tyres of foreign origin from which 
retreaded tyres are made are in fact allowed to enter Brazil, with at best the same adverse impact or, at 
worse, a more negative impact on the objective Braz il asserts than the importation of retreaded tyres 
themselves would have, directly defeating the objectiv e of the import ban itself.  Such imports have 
taken place in  significant amounts. 
7.304  We take note of the Brazilian government's e fforts, within the Brazilian domestic legal 
system, to prevent the grant, or seek reversal, of co urt injunctions for the importation of used tyres.  
We also take note of the initiative taken in the c ourse of these proceedings to resolve the matter in a 
definitive manner through the initiation of  proceedings at the federal level.1479  However, we also note 
                                                      
1475 European Communities' first written submission, para. 84. 
1476 European Communities' first oral statement, para. 39.  Brazil does not contest the validity of this 
figure, i.e. 10.5 million used tyres imported in 2005 (Brazil's answer to panel questions No. 26).  In response to 
panel question No. 16, Brazil states that  in 2005, Brazilian retreaders imported " almost 11 million casings". 
1477 European Communities' answer to panel question No. 118. 
1478 The European Communities has provided that the amount of Brazil's retreaded tyre imports in 2000 
is between 2 and 3.3 million (European Communities' answ er to panel question No. 118).  For the purpose of 
our analysis, we have referred to the more conservative figure, 2 million. 
1479 See Brazil's comments on question 118 of the Panel. WT/DS332/R 
Page 218  
 
  that, while it hopes to succeed in halting the flow  of imports of used tyres arising from such 
injunctions, the Government has not been able, so far, to ensure that no such imports occur.  It is also 
not in a position to guarantee that such imports will cease in the near future.  
7.305  While the Panel appreciates the practical di fficulties that may be associated with the 
prevention of such imports within Brazil's domestic legal system, it is of the view that it remains 
incumbent upon Brazil to ensure that it applies its measure in a manner that is consistent with the 
requirements of Article XX.  The fact that the imports arise from court rulings does not exonerate 
Brazil from its obligation to comply with the requir ements of Article XX.  Rather, as noted by the 
Appellate Body in US – Shrimp , a Member of the WTO "bears responsibility for acts of all its 
department of government, including its judiciary".
1480 
7.306  The Panel  finds, therefore, that, since used tyre imports have been taking place under the 
court injunctions in such amounts that the achi evement of Brazil's declared objective is being 
significantly undermined, the measure at issue is bein g applied in a manner that constitutes a means of 
unjustifiable discrimination.   
Does the discrimination occur between count ries where the same conditions prevail?  
7.307  Having determined that the measure is being a pplied in a manner that constitutes a means of 
unjustifiable discrimination, the Panel  must now consider whether such discrimination occurs 
between countries where the same conditions prevail.   
7.308  We first recall that the discrimination at i ssue, which arises from the importation through 
court injunctions of used tyres, favours tyres retreaded in Brazil using imported casings, to the 
detriment of imported retreaded tyres made from the same casings.   The discrimination thus arises 
between Brazil and other WTO Members, including the European Communities.    
7.309  The European Communities has argued that "it is  manifest that a casing originating in the 
Euopean Communities is not more problematic from a waste management point of view just because it is retreaded in the Euopean Co mmunities rather than in Brazil".
1481  In this respect, we recall our 
earlier observation that it has not been suggested by either party that there was any significant 
difference between retreaded tyres made in Brazil from imported casings and imported retreaded 
tyres.1482  We also note that Brazil has not identified any difference between the conditions prevailing 
in Brazil and in other WTO Members, that would be  pertinent in the context of considering whether 
the discrimination between retreaded tyres made in Brazil from imported casings and imported retreaded tyres occurs between c ountries where the same conditions pr evail.   In light of these 
elements, we conclude that this discrimination occurs between countries wh ere the same conditions 
prevail.  
                                                     
 
1480 See the Appellate Body Report on US – Shrimp,  para. 173 and the references cited in the footnote 
177 to that paragraph.  See also Article 4 of the International Law Commission's Articles on Responsibility of States for Internationally Wrongful Acts (2001), which provides that "The conduct of any State organ shall be 
considered an act of that State under international law, whether the organ exercises legislative, executive, 
judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a te rritorial unit of the State".  The Panel also notes in this 
context the provisions of Article XVI:4 of the WTO Agre ement, requiring that : "Each Member shall ensure the 
conformity of its laws, regulations and administrative proc edures with its obligations as provided in the annexed 
agreements", and the terms of Article XXV:12 of GATT 1994, which foresees that "Each Member shall take 
such reasonable measures as may be available to it to ensure observance of  the provisions of this Agreement by 
the regional and local governments and authorities within its territories".  
1481 European Communities' second written submission, para. 169. 
1482 See paragraph 7.242 above.  WT/DS332/R 
 Page 219 
 
 
  7.310  Consequently, the Panel  also concludes that since used ty re imports have been taking place 
under the court injunctions in such amounts that th e achievement of Brazil's declared objective is 
being significantly undermined, the measure at issu e is being applied in a manner that constitutes a 
means of unjustifiable discrimination where the same conditions prevail. 
(iii) Is the measure applied in a manner that constitu tes a disguised restriction on international 
trade? 
7.311  The application of a measure "in a manner that would constitute … a disguised restriction on 
international trade" is the third situation envisaged  by the chapeau of Article XX, which would lead a 
measure otherwise provisionally justified under one of the paragraphs of Article XX to be in violation 
of that provision.   
7.312  In this instance,  Brazil  considers that though the import ban imposes restrictions on 
international trade, these restrictions are not "dis guised" because there is not hing disguised, deceptive 
or concealed about the ban's application.1483  
7.313  The European Communities , however, argues that the import ban on retreaded tyres 
constitutes a disguised restriction on international trade, to the benefit of new tyre manufacturers 
located in Brazil, and to the benefit of Brazilian and other MERCOSUR retreaders.   
7.314  The Panel first turns to the notion of "disguised rest riction on international trade" within the 
meaning of the chapeau of Article XX, before cons idering whether, in this instance, the import ban 
imposed by Brazil on retreaded tyres is applied in a ma nner that constitutes such disguised restriction.   
Approach by the Panel  
7.315  Under the very terms of the provision, three elements would need to exist for a violation to 
arise under this part of the chapeau: 
(a) first, this assessment, like those considered  above in relation to other aspects of the 
chapeau, relates to the manner in which the measure is applied ; 
(b) secondly, the measure is applied in a manner that would constitute a restriction on 
international trade ; and 
(c) thirdly, a violation arises if this restriction on international trade is disguised . 
7.316  As far as the first element is concerned, we note that the observations made above in the 
context of the chapeau in general remain pertin ent in this context.  As expressed by the 
Appellate Body, the chapeau by its express terms addr esses, not so much the questioned measure or its 
specific contents as such, but rather th e manner in which that measure is applied.1484 
7.317  With respect to the second element, namely th e existence of a "restriction on international 
trade", we agree with Brazil that, just as the standa rd of "arbitrary or unjustifiable discrimination" 
under the chapeau of Article XX di ffers from that applied to the determination of the type of 
discrimination that leads to a violation of Articles I or III, the standard of "disguised restriction" under 
the chapeau also differs from the standard of "prohi bition or restriction" referred to in Article XI.1.1485  
In this instance, the existence of a restriction on in ternational trade is inherent in the very notion of 
                                                      
1483 Brazil's first written submission, para. 146. 
1484 Appellate Body Report on US – Gasoline , p. 23 (original footnote omitted).  
1485 See Brazil's first written submission, para. 144. WT/DS332/R 
Page 220  
 
  import ban, and this restriction is the basis on which the measure has initia lly been found to be 
inconsistent with Article XI.1. What we are required to  examine in this part of our analysis is whether 
the import ban, which by its very nature invol ves a restriction on international trade, is applied in a 
manner  that constitutes a disguised  restriction on international trade.  This assessment goes beyond a 
consideration of the existence of the type of restriction inherent in an import ban as such. 
7.318  As to what constitutes such a "disguised restri ction" within the meaning of the chapeau, the 
Appellate Body has clarified that: 
"'Arbitrary discrimination', 'unjustifiable discr imination' and 'disguised restriction' on 
international trade may ... be read side-by-side ;  they impart meaning to one another.  
It is clear to us that 'disguised restriction' includes disguised discrimination  in 
international trade.  It is equally clear that concealed  or unannounced  restriction or 
discrimination in international trade does not exhaust the meaning of 'disguised 
restriction'."
1486  
7.319  From the above, we understand that a restrict ion need not be formally "hidden" or 
"dissimulated" in order to constitute a disguised r estriction on international trade within the meaning 
of the chapeau.  We also note that the existence of  a restriction on international trade could be derived 
from "the kinds of considerations" that are otherwis e also relevant under other parts of the chapeau.  
We therefore do not exclude that the elements we have considered earlier in determining whether the 
application of the import ban amounts to "arbitrary or unjustifiable discrimination", may also be pertinent in determining the existence of a "disgu ised restriction" on international trade in the 
application of the import ban.   
7.320  More generally, we observe that these terms,  as interpreted by the Appellate Body, do not 
suggest that a single test might uniformly apply in  all cases to determine the existence of a "disguised 
restriction on international trade".  Rather, the Appellate Body's understandi ng of the terms suggests 
that the existence of a "disguised r estriction on international trade" might be derived from a variety of 
situations where a restriction on international tr ade, arising in the application of a measure 
provisionally justified under a spec ific paragraph of Article XX, w ould lead to that exception being 
abused or illegitimately used.   
7.321  As to the elements that might indicate the existence of such disguised restriction on 
international trade in a given case, both parties highli ghted, in response to a qu estion by the Panel, the 
Appellate Body's observation that the chapeau is  "but one expression of the principle of good 
faith".
1487  The European Communities suggests that "all aspects of the relevant measure have to be 
considered in order to prevent the abuse of the exceptions under Article XX".1488 Brazil agrees with 
the European Communities that both the intent and the effect of a measure can play a valuable role in 
the analysis of a measure under the chapeau, and notes that their relative value will depend on the 
nature of the specific measure at issue and that the specific facts of the case should determine factors 
that are most relevant to the "disguised restriction" analysis under the chapeau.1489 Brazil considers 
that there is no "ready formula to help determin e whether a measure is applied in a manner which 
would constitute a disguised restriction on international trade".1490   
                                                      
1486 Appellate Body Report on US – Gasoline , p. 25. 
1487 See responses to Panel  Question No. 127. 
1488 European Communities' answer to panel question No. 127. 
1489 Brazil's answer to panel question No. 127. 
1490 Brazil's answer to panel question No. 127.  WT/DS332/R 
 Page 221 
 
 
  7.322  Bearing in mind our earlier observations and th e Appellate Body's ruling as cited above, we 
agree that no single element will necessarily be dete rminative in each and every case, and that a range 
of factors may be relevant to our determination.   
7.323  With these considerations in mind, we turn to  an examination of the application of the 
measure at issue in this case.   
Assessment by the Panel  
7.324  The European Communities  argues that "the import ban of retreaded tyres was not adopted 
in 2000 with the intention of protecting the public h ealth or the environment.  On the contrary, its 
disguised purpose  as well as its effect  was to protect the Brazilian industry through a restriction of 
international trade in violation of the objec tives of the WTO Agreements" (emphases added).1491    
7.325  Brazil  considers, however, that there is nothing deceptive or concealed about the application 
of the ban1492, and that Brazil protects neither its domestic new tyres manufacturers nor domestic and 
MERCOSUR retreaders.  Brazil further submits that it has imposed collection and disposal 
obligations on new tyre importers and manufacturers that demonstrate that there is no protectionist 
intent behind the import ban.1493  
7.326  The Panel  first recalls its earlier observation that a restriction need not be formally concealed 
in order to constitute a disguised restriction on inte rnational trade within the meaning of the chapeau 
of Article XX.  In this instance, Portaria SECEX 14/2004, which constitutes the current legal basis for 
the ban (as well as SECEX 8/2000, the initial inst rument in which an express prohibition on the 
importation of retreaded tyres was imposed) has been published.  It is therefore not "concealed" in any 
formal sense.  However, this is not in itself de terminative of whether it might nonetheless be applied 
in a manner that would constitute a disguised restriction on international trade.  
7.327  As described earlier in the justification of the measure under Article XX(b), Brazil  has 
explained that the object of the measure was to reduce as much as possible the further accumulation of waste tyres in Brazil, and we have found such a policy to fall within the terms of Article XX(b). 
7.328  The European Communities  argues, however, that the import ban on retreaded tyres "has, as 
main objective, to protect the Brazilian tyre industr y from the competition of the foreign industry, by 
restricting international trade".
1494  The European Communities argues that the protective application 
of the ban is apparent from the fact that it emanat es from the Ministry responsible for Development, 
Industry and Foreign Trade by means of the measur es challenged in this case, which, none of them, 
make any link to the legislation adopted by the Ministry in charge of the environment.1495  It also 
refers to various statements made in the course of a domestic proceeding "against the lifting of the 
retread import ban for MERCOSUR", and to a draft decree introduced by three Brazilian senators to 
abrogate Portaria SECEX No.8/2000.  The European  Communities concludes that "the structure of the 
Brazilian legislation and the statements described a bove prove that the import ban of retreaded tyres 
was not adopted in 2000 with the intention of pr otecting the public health or the environment".1496  
7.329  Brazil  responds that regardless of any statement that  may have been made by a trade official 
before the Brazilian National Congress, and wro ngly used by the Europ ean Communities in these 
                                                      
1491 European Communities' first written submission para. 167. 
1492 Brazil's first written submission, para. 146. 
1493 Brazil's second written submission, para. 155. 
1494 European Communities' first written submission, para. 160. 
1495 European Communities' first written submission, para. 162. 
1496 European Communities' first written submission, paras. 164-167. WT/DS332/R 
Page 222  
 
  proceedings, what is relevant in this case is that Br azil clearly demonstrated that there is a legitimate 
environmental and health rationale behind the impor t ban.  It argues that today, there can be no 
question that the purpose behind the import ban is to  protect public health and the environment from 
harms caused by waste tyre accumulation and disposal.
1497   
7.330  The Panel  agrees that an examination of intent may be helpful in determining whether a 
measure is applied in a manner that constitutes a disgui sed restriction, in that it may reveal whether "a 
restriction which formally meets the requirements of Article XX(b)" "is in fact only a disguise to conceal the pursuit of trade-restrictive objectives".
1498  We are mindful, however, that, as the Appellate 
Body noted in Japan – Alcoholic Beverages II , "the aim of a measure may not be easily ascertained".   
7.331  We first note that Portaria SECEX 14/2004 was adopted by the Ministry of Development, 
Industry and Foreign Trade, Secretariat for Foreign Trade, inter alia  "with a view to consolidating the 
rules governing import operations...".1499  It contains, in Article 40, a general prohibition on the 
granting of import licences for both used and retreaded tyres.1500  The design of the measure is 
therefore consistent with Brazil's declared objec tive of reducing the further accumulation of waste 
tyres in its territory by avoiding the importation of short-lifespan tyres.1501 The fact that it has been 
adopted by the Ministry of Development, Industr y and Foreign Trade in an instrument regulating 
import licensing does not, in our view, imply that the specific prohibition it contains in relation to retreaded tyres could not have reflected health and environmental objectives.   
7.332  In support of its argument that Brazil's import ban on retreaded tyres was not adopted with the 
intention of protecting the public health or the en vironment, the European Communities refers to a 
number of statements made in the course of judicial  and other proceedings in Brazil.  We agree that 
certain statements, in particular those made in an official capacity, may provide useful indications on 
the intent of the legislator or regulator in adopting a specific measure.  We are mindful, however, that each statement should be carefully assessed in consider ation of the context and capacity in which it is 
being made.
1502  
7.333  The European Communities points to a statemen t by a representative of the Ministry of 
Development, Industry and Foreign Trade, in a public hearing of the Consumer, Environment and 
Minority Protection Committee of the House of Representatives on 10 April 2002 to discuss the 
application of CONAMA No 258/1999, to the effect that:  
"the aim of this decision [the genera l ban on the importing of used goods] which 
dates from 1990 – precisely the time when Brazil opened up its market to imported goods – was, and I believe still is, the protection of the nation's industry."
1503   
                                                      
1497 Brazil's answer to panel question No. 129.  Brazil re fers to a statement by the International Court of 
Justice ( Namibia (Legal Consequences)) , cited by the Appellate Body in US – Shrimp , at paragraph 130, fn 109: 
"[a legal] instrument has to be interpreted and applied within the framework of the entire legal system prevailing at the time of the interpretation".   
1498 Panel Report on EC – Asbestos , para. 8.236. 
1499 See Preamble of Portaria  14/2004, Exhibit EC-29. 
1500 See Exhibit EC-29. SECEX 8/2000, also issued by the Secretariat for Foreig n Trade of the Ministry 
of Development, industry and Foreign Trade, also contained no specific motivation for the prohibition it 
instituted on the granting of import licenses for retreade d and used tyres "for use as consumer goods or raw 
materials" (See Exhibit EC-26). 
1501 See the section on contribution above, esp. paras. 7.123-7.142. 
1502 See Panel Report on Mexico – Taxes on Soft Drinks , para. 8.91, and the reports cited in footnotes 
293 and 294. 
1503 Exhibit EC-52.  WT/DS332/R 
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  This statement, however, relates generally to a prohibition on the importation on used goods enacted 
in 1990, rather than to the specific measure unde r consideration in this proceeding, namely the 
prohibition on the importation of retreaded tyres.  With  respect to the specific is sue of used tyres, the 
same official explained in detail the concerns asso ciated with their importation, including disposal  
concerns consistent with those that have been exposed in these proceedings by Brazil.1504  
Representatives of the Environment Ministry also detailed at the same hearing a number of concerns 
relating to the importation of used tyres, stressing  in particular the environmental concerns and 
disposal challenges associated with the disposal of unserviceable tyres.    This statement therefore does 
not, in our view, support the proposition that Brazil adopted its import ban on retreaded tyres solely 
with a view to protecting the industry. 
7.334  The European Communities also cites a statem ent by the Union's Advocate General in Porto 
Alegre, in the context of a domestic dispute concer ning the exemption of imports of retreaded tyres 
from MERCOSUR countries from fines otherwise app licable to the importation of retreaded tyres.1505  
In that case, the Union prevailed, thereby ensuri ng that the fines at issue would not apply to 
MERCOSUR imports.   
7.335  The European Communities notes that in that laws uit, "SECEX stated that the importation of 
used tyres, which is understood to comprise retreade d tyres, was harmful to the level of employment 
in Brazil by creating disloyal competition vis-à-vis  domestic tyre manufacturers and by reducing the 
incentive to invest in the country"1506  We first note that, again, these allegations relate to the 
imposition of a ban on the importation of used tyres, rather than on retreaded tyres.1507  We also note 
that the SECEX technical note cited by the Europ ean Communities indeed identifies the protection of 
employment as one of the reasons for prohibiting imports  of used tyres.  This motivation is, however, 
expressed in final position, and only as an additional reason, after the id entification of serious harm to 
the environment and public health as the primary reasons .1508  Indeed, we note that while the 
prohibition on importation of used tyres may be be neficial to the new tyre industry, it is, on the 
contrary, opposed by the retreading industry, as illustra ted by the court injunctions examined above.    
7.336  With respect more specifically to the import ban on retreaded tyres, the submission of the 
Union's Advocate General in Porto Alegre and th e related SECEX documentation appear to provide 
somewhat inconsistent indications.  The Union's Advocate General's brief, as pointed out by the 
European Communities, asserts that SECEX Portaria No8/2000 "prohibits the importation of "retreaded tyres not for the defence of public health  and the environment, but to protect national trade 
                                                     
 
1504 "[the] problem is that we are importing tyres from Europe without adding value, without providing 
employment on the Brazilian market, without generating an advantage from the economy but solving the environmental problems of all of these other countries while we overload our own environment with problems, 
because these tyres, apart from the f act that they will be remoulded and ma y possibly have another 20 thousand, 
30 thousand or 40 thousand kilometres' life in them, w ill run for another five thousand kilometres and rapidly 
become waste in the environment." (Statement by Mr. Henrique Augusto Gabriel, Legal Adviser, representing 
the Minister of State for Development, Industry and Foreign Trade, Exhibit EC- 120, p 22).   
1505 In this proceeding, the Federal Prosecutor's office launched a "Public Civil Action" in Porto Alegre 
to seek the prohibition of importation of used or reconditioned tyres nationwide, for the protection of public 
health and the environment.  In this  dispute, the Union, as the defend ant, argued that the harm to the 
environment was not significant, in light in particular of the small volumes of remoulded tyres imported from MERCOSUR, that CONAMA 258/1999 provides the basis for ensuring respect for environmental requirements, 
and emphasized Brazil's obligation to comply with the MERCOSUR ruling as the basis for the need to exempt 
MERCOSUR remoulded tyre imports from the fines.  See Exhibit EC-52. 
1506 European Communities' first written submission, para. 164. 
1507 It is not clear that, in this note, SECEX equate s used tyres and retreaded tyres, as argued by the 
European Communities.  Indeed, in other parts of the same brief, it is clearly indicated that the issue of allowing imports of remoulded tyres from MERCOSUR is not to be confused with imports of used tyres.  
1508 See Exhibit EC-52, p. 50 of the English translation. WT/DS332/R 
Page 224  
 
  and industry."
1509 This statement is, however, not explaine d.  The supporting documentation provided 
by SECEX and referred to by the Advocate General suggests a different motivation. It indicates under 
the heading "Economic aspects" that "[t]he prohibition on SECEX issuing licences in 2000 for retreaded tyres was due to the concern with possibl e avoidance of licensing controls on used tyres, 
which were indeed banned from being imported by trade and environmental legislation".
1510  Such 
motivation has not been alluded to by Brazil in these proceedings.   
7.337  The European Communities draws further support for the view that the measure was adopted 
with a protectionist intent from the fact th at CONAMA Resolution N°258/1999, which foresees 
specific disposal obligations in respect of imported retreaded tyres, was adopted in 1999 and subsequently amended,.
1511   As noted earlier, this resolution provides for the progressive 
implementation of a recovery programme for unusable tyres, including inter alia , as of January 2004, 
an obligation for importers to ensure final dispo sal of five unusable tyres for every four imported 
reconditioned tyres, and as of 1 January 2005, final disposal of four unusable tyres for every three 
reconditioned tyres imported.1512  Similar but less onerous disposal requirements are imposed on 
importers of new tyres.    
7.338  We understand the European Communities to be  arguing essentially that the adoption of  
CONAMA Resolution 258/99 and its disposal scheme,  which do not involve a ban on importation of 
retreaded tyres, reflected the environmental polic y of Brazil, while the subsequent adoption of 
SECEX 8/2000 by the Ministry in charge of foreign trade was motivated only by protectionist intent.
1513     
7.339  We first note that at the time that CONAMA  Resolution 258 was adopted, in 1999, neither 
Portaria 8/2000 nor Portaria SECEX 14/2004 (both e xpressly prohibiting the importation of retreaded 
tyres) had yet been enacted.  It was therefor e pertinent for CONAMA Resolution 258 to foresee 
disposal obligations in respect of such importa tions, on the assumption that they were not expressly 
banned1514.  The preamble of CONAMA Resolution 258 highlights the environmental and public 
health risks associated with unusable  tyres, and the need to ensure th at such tyres are disposed of, as 
motivation for the measure. If anything, the more onerous obligations placed on importers of 
retreaded as opposed to new tyres in that m easure suggest a measure of recognition by the 
environmental agency, before the enactment of Po rtaria 8/00 or Portaria SECEX 14/2004, that the 
importation of retreaded tyres presents particular disposal challenges.1515 
                                                      
1509 See Exhibit EC-52, para. 51, p. 11 of the English version. 
1510 Exhibit EC-52, p. 29 
1511 European Communities' first written submission, para. 162. 
1512 See Resolution CONAMA 258, Articles 3: III(b) and 3:IV(b).(Exhibit EC-68).  
1513 The European Communities cites in particular th e supporting documents by SECEX in the domestic 
lawsuit referred to above, which re fer to Resolution CONAMA 258/1999 as representing "environmental law", 
and suggest that environmental law does not prohibit the importation of used tyres.  However, the fines on 
importation which are the object of th at dispute, and which do undisputedly relate to importation, are also 
described as being part of "environmental law".  Even assuming that this would constitute a reliable indication of the underlying motivation of the measure, it is not clear that a valid distinction can be drawn between 
environmental law and foreign trade law to the effect that  the measure has a protectionist intent (see p. 33, para. 
100, Exhibit EC 52). 
1514 Although we note, at the same time, that this is not consistent with Brazil's indication that its 
previous measures on used tyres also encompassed retreaded tyres.  
 1515 It is less clear how the disposal obligations in relation to retreaded tyres contained in CONAMA No 
258/1999 are to be reconciled with the ban on the impo rtation of such tyres as of the entry into force of 
PORTARIA 8/2000, except to the extent that they may apply to imports of retreaded tyres from MERCOSUR 
countries.  We note the explanation provided by the representative of the Ministry of Development, Industry and Foreign Trade in the hearing of the Congressional committee referred to earlier, that if someone manages to 
import used tyres in spite of the ban (in particular through court injunctions), "he will not win twice" by first  WT/DS332/R 
 Page 225 
 
 
  7.340  The European Communities also refers to a draft decree presented by three members of 
parliament in order to revoke Portaria 8/2000, in wh ich the suggestion is made that this measure (i.e. 
the ban on retreaded tyres) was adopted as a result of lobbying by new tyre manufacturers in Brazil fearing competition from cheaper imports, despite CONAMA's assessment that a prohibition was not 
necessary to ensure environmental protection.
1516  These assertions were made by individual 
legislators in the context of an action to revoke the le gal instrument at issue.  They identify an interest 
of the tyre industry in seeking a prohibition on im ports of retreaded tyres.  However, we do not 
consider that they provide suffici ent evidence of the inte ntion of the legislator as a whole in enacting 
such a prohibition for us to conclude that Br azil's intention in enacting Portaria 8/2000 or 
subsequently Portaria SECEX 14/2004, which is the ob ject of the present dispute, was protectionist.   
7.341  Overall, we are not persuaded that the elements presented to us conclusively demonstrate that 
Brazil did not adopt the prohibition on importation of retreaded tyres with the intention of protecting 
the public health or the environment.   
7.342  We note that a representative of the federal govern ment appears to have argued in court, in 
defending the implementation of the MERCOSUR ex emption in respect of fines, that the 
environmental impact of imports of retreaded ty res from MERCOSUR would be  minimal, especially 
considered in light of Brazil's obligation to resp ect its obligations under MERCOSUR.  We also note 
that in that context, the Union's Advocate Genera l suggested that the ban on retreaded tyres was 
adopted for the protection of the national industry.   However, the supporting documents provided by 
SECEX itself in that same lawsuit do not confirm such intent, so that it is not clear on what basis this 
argument was made by the Advocate General.  Ot her statements referred to by the European 
Communities also do not provide, in our view, a conclu sive confirmation of a protectionist intent in 
banning the importation of retreaded tyres.   
7.343  Further, the design of the measure, which bans  both used and retreaded tyre imports, is 
consistent with Brazil's declared objective of reducing to the greatest extent possible the unnecessary accumulation of short-lifespan tyres, and by banning the import of used as well as retreaded tyres, 
Portaria SECEX 14/2004 in principle deprives Braz ilian retreaders of the opportunity to source 
casings from abroad.  While, under this measure, as designed, domestic retreaders would not face 
competition from imported retreads, they would al so not benefit from the opportunity to source 
casings from abroad for their own retreading activity. 
7.344  The European Communities  also argues that the trade of retreaded tyres from the European 
Communities (and other WTO Members) has ceased to  the benefit of retreaded tyre manufacturers 
located in Brazil and in other MERCOSUR countries,  who do not have to face competition from a 
product with the same characteristics.   The Eur opean Communities further argues that "due to the 
MERCOSUR exemption and the imports in Brazil of u sed tyres to be retreaded, the export flow from 
the European Communities on tyres has been radically  altered.  The European Communities no longer 
exports retreaded tyres to Brazil.  This trade has be en replaced by exports of used tyres to Brazil and 
the other MERCOSUR countries, which are used to produce retreaded tyres ...".
1517 
                                                                                                                                                                     
bringing the goods in and then escaping disposal obligations (see Exhibit EC-120, p. 23).  Also, to the extent 
that this would be a source of contradiction between "environmental law" and "trade law", the same contradiction appears to exist also within the realm of "environmental law" between the disposal obligations in 
CONAMA No 258/1999 and the fines in relation to the importation of retreaded tyres that were the object of the 
dispute cited by the European Communities.
 
1516 See Exhibit EC-54. 
1517 European Communities' second written submission, para. 97. WT/DS332/R 
Page 226  
 
  7.345  Brazil  responds that the prohibition on used tyr es has on the contrary significantly increased 
production costs for Brazilian retreaders, as they are de prived of cheap raw material for the domestic 
retreading industry.
1518   
7.346  The Panel  first notes that the fact that the Europ ean Communities no longer exports retreaded 
tyres to Brazil is, in itself, inherent in the existen ce of an import ban.  This fact alone, which is an 
inevitable consequence of the very existen ce of the measure provisionally justified under 
Article XX(b), could not be, in this instance, the so le basis for a finding of "disguised restriction on 
international trade" within the meaning of the ch apeau.  More specifically however, the European 
Communities argues that this trade has been replaced  by trade in used tyres to Brazil and other 
MERCOSUR countries, due to the MERCOSUR exemp tion and the imports of used tyres to be 
retreaded.  The European Communities further argues that the ban protects new tyre manufacturers in 
Brazil, who benefit from not facing competition from imported retreads, and that the import ban is 
applied in a manner that amounts to a disguised rest riction on international trade, to the benefit of 
Brazilian and other MERCOSUR retreaders.  As  we understand the European Communities' 
argument, the existence of a disguised restriction on international trade in Brazil's application of the 
import ban on  retreaded tyres arises as a result of the same circumstances that we have considered in 
section (c) above, namely, the importation of used ty res through court injunctions, and the application 
of the MERCOSUR exemption.  We thus  consider both aspects in turn.  
Imports of used tyres through court injunctions 
7.347  The Panel first recalls its  earlier conclusion that the import ban on retreaded tyres can 
contribute to the reduction of accumulation of waste tyres inter alia  when applied in conjunction with 
an import ban on used tyres.1519  As noted above, Portaria SECEX 14/2004 does indeed ban both 
imports of used tyres and imports of retreaded tyr es.  In practice, however , as also noted above, a 
number of injunctions have been requested and grante d, in order to import used tyres despite the ban 
imposed on their importation.  It is undisputed that, as a result, imports of used tyres have taken place 
under these injunctions, and both parties agree that a ll imports of used tyres that have occurred since 
the imposition of the ban have taken place under these injunctions.1520    
7.348  We have already found above that the im portation of used tyres through these court 
injunctions results in the measure at issue bei ng applied in a manner that constitutes unjustifiable 
discrimination.  The granting of court injunctions fo r the importation of used tyres has also in effect 
meant that, contrary to the intended design of the measure, domestic retreaders have been able to 
continue to benefit from the importation of used tyres as material for their own activity in significant 
amounts,1521 while their competitors from non-MERCOSUR countries have been kept out of the 
Brazilian market.  The restriction on internationa l trade inherent in the banning of imports of 
retreaded tyres has thus operated to the benefit of  domestic retreaders, while the fulfilment of the 
purpose for which it has been justified is being significantly undermined.   
7.349  In light of the above, we find that, since imports of used tyres take place in significant 
amounts under court injunctions to the benefit of the domestic retreading industry, the import ban on 
retreaded tyres is being applied in a manner that constitutes a disguised restriction on international 
trade.   
                                                      
1518 Brazil's first oral statement, para. 52 and Brazil's second oral statement, para. 63. 
1519 See paragraph 7.139 above. 
1520 European Communities Answer to Panel Question No 22 and Brazil's Answer to Panel Question 
Nos 13 and 98 
1521 See above paragraphs 7.297-7.303 on the volumes of imports of used tyres that have occurred 
through the injunctions.  WT/DS332/R 
 Page 227 
 
 
  The MERCOSUR exemption 
7.350  The European Communities  argues that the MERCOSUR exemption results in the 
application of the measure in a manner that constitut es a disguised restriction on international trade, as 
it alters trade flows in a manner that benefits, in addition to Brazilian retreaders, retreaders from other 
MERCOSUR countries.   
7.351  The Panel  understands the European Communities'  argument in respect of the MERCOSUR 
exemption to entail that MERCOSUR retreaders do not have to face competition from the European 
Communities or other non-MERCOSUR retreaded tyr es on the Brazilian market (since, under Portaria 
SECEX 14/2004, such imports are prohibited), while they  at the same time have  access to this market 
and can source used casings from the European Communities and elsewhere for importation into 
Brazil.   
7.352  We agree that, to the extent that they are ab le to import remoulded tyres into Brazil through 
the MERCOSUR exemption without facing competition from any non-MERCOSUR country, retreaders from other MERCOSUR countries benef it from the application of the import ban on 
retreaded tyres originating in other countries.  We also recall that under the MERCOSUR exemption, 
it is quite possible for retread ers from MERCOSUR countries benefiting from the exemption to 
source casings from abroad (for example from the Eu ropean Communities ), retread them locally, and 
then export the retreaded tyre to Brazil under the MERCOSUR exemption
1522.  As noted earlier, this 
further increases the potential for imports of retr eaded tyres to enter into Brazil through the 
MERCOSUR exemption. 
7.353   If such imports were to occur in significant amounts, they would have the potential to 
undermine the achievement of the stated objective of  the prohibition on the importation of retreaded 
tyres, while protecting the retreading industry in th e beneficiary countries.  If this were the case, the 
measure would be being applied in a manner that constitutes a disguised restriction on international 
trade. 
7.354  To date, it appears, however, that the volume of imports of remoulded tyres that has actually 
taken place under the MERCOSUR exemption has not been significant.1523  In these circumstances, we 
find that the MERCOSUR exemption, to the extent that it results only in volumes of imports that do not significantly undermine the ability of the gene ral import ban on retreaded tyres to fulfil its 
intended objective, does not result in the measure being applied in a manner that constitutes a 
disguised restriction on international trade.  
7.355  In conclusion, the Panel finds that, since imports of used tyres are taking place to the benefit 
of the Brazilian retreading industry in such quan tities as to seriously undermine the achievement of 
the stated objective of avoiding the further accumulati on of waste tyres in Brazil, the measure at issue 
is being applied in a manner that constitutes a disg uised restriction on international trade.  We also 
find that the MERCOSUR exemption, although it also  has the potential to similarly undermine the 
achievement of the stated objective of the measure , has not been shown to date to result in the 
measure at issue being applied in a manner that would constitute such a disguised restriction on 
international trade. 
                                                     
 
1522 See Brazil's answer to panel question No. 72 ("it is possible for tyres used in the 
European Communities to be remolded in a Mercosul country and then exported to Brazil because Brazil has no control over remolded tyre production in other Mercosul members"). 
1523 See paragraph 7.288 above. WT/DS332/R 
Page 228  
 
  (c) Overall conclusion 
7.356  In conclusion, the Panel  finds that the importation of used tyres through court injunctions 
results in the import ban being applied in a manner that constitutes a means of unjustifiable 
discrimination and a disguised restriction to trade with in the meaning of the chapeau of Article XX.    
7.357  In light of this conclusion, we find that the me asure at issue is not justified under Article XX 
of GATT 1994.   
B. F
INES ON IMPORTATION , MARKETING , TRANSPORTATION , STORAGE , KEEPING OR 
WAREHOUSING OF RETREADED TYRES  
7.358  The European Communities  claims that the fines imposed  under Presidential Decree 3.919 
of 14 September 2001 ("Presidential Decree 3.919") are import restrictions inconsistent with 
Article XI:1, or alternatively , a measure affecting internal sale inconsistent with Article III:4 of the 
GATT 1994 to the extent that some aspects of th e measure are found not to constitute a prohibited 
import restriction within the meaning of Article XI:1.1524   
7.359  Brazil  describes these measu res as anti-circumvention fines that support the import ban.1525  
Brazil states that it does not contest that the fi nes embodied in Presidentia l Decree 3.919 are prima 
facie  inconsistent with Article XI:1.  However, Br azil does not acknowledge any inconsistency of the 
fines with Article III:4.1526  Brazil however argues that the measu re is justified under paragraphs (b) 
and (d) of Article XX.   
1. Preliminary issue:  fines as an enforcement measure 
7.360  Presidential Decree 3.919 provides: 
"Art. 1. The following article is added to Decree no 3.179 of September 21, 19991527: 
"Article 47-A .  Importing used or retreaded tyres: 
Fine of R$ 400.00 (four hundred reais) per unit. 
                                                      
1524 In its request for a panel, the European Communities refers to the following: 
 
"Brazil's imposition, by virtue of  Presidential Decree No. 3919 of 
14 September 2001, of a fine of 400 BRL per unit on the importation, as 
well as the marketing, transportation, storage, keeping or keeping in deposit or warehouses of imported, but not of domestic retreaded tyres". 
 
In its first submission, the European Communities slightly modifies the description of the contents of 
the measure and refers to it as "the importation, selling, tr ansporting, storing, keeping or warehousing of used or 
reconditioned tyres imported under such conditions" (European Communities' first written submission, 
para. 60). 
1525 Brazil's first written submission, para. 157. 
1526 Brazil's answer to panel question No. 33. 
1527 Presidential Decree 3.179 dated 21 September 1999 is a regulation addressing the sanctions against 
an environmental administrative violation.  See Article 1 of Presidential Decree 3.179 
(Exhibit BRA-73).Article 47-A, which is  added, through Presidential Decree 3.919, to Presidential Decree 3.179 
comes under Section III (entitled "Sanctions Applicable to Pollution and Other Environmental Violations") of 
Presidential Decree 3.179.  Brazil ha s confirmed that Presidential Decree 3.179, as amended by Presidential 
Decrees No. 3.919 and 4.592, is currently legally in  force (Brazil's answer to  panel question No. 111).  WT/DS332/R 
 Page 229 
 
 
  Sole paragraph :  The same penalty shall apply to whosoever trades, 
transports, stores, keeps or maintains in a depot a used or retreaded tyre imported under such conditions." (NR) 
Article 2.  This Decree herein enters in to force on the date of its publication."
1528 
7.361  In respect of its claim on the fines, the European Communities  distinguishes two aspects of 
the measure:  (1) a fine of R$ 400 per unit on the importation of retreaded tyres ("fine on 
importation"); and (2) a fine of R$ 400 per unit on the marketing, transportation, storage, keeping or 
warehousing ("fine on marketing") of such imported retreaded tyres.  Nonetheless, the European 
Communities describes both fines as ancillary to the import ban, which they complement and 
reinforce, so that they both violate Article XI :1 of the GATT 1994 as "a punitive measure intended to 
sanction a violation of the import ban imposed by Brazil.1529  At the same time, the European 
Communities argues alternatively that to the extent the fine on marketing is not found to be an import 
restriction inconsistent with Artic le XI:1, it should be found to be a measure affecting internal sale in 
a manner inconsistent with Article III:4. 
7.362  Brazil  describes the fines as a whole as an anti-ci rcumvention measure that safeguards the 
integrity of the import ban by penalizing traders th at circumvent import controls through fines and 
argues that the fines are thus a measure to enforce the import ban.1530  Further, in response to a Panel 
question on the implication on the fines of the Pane l's possible finding of an inconsistency of the 
import prohibition with the GATT 1994, Brazil responds  that if the fines can be considered as 
ancillary to the import prohibition, the fines would, then , likewise be inconsistent with the          
GATT 1994.1531  To Brazil, the anti-circumvention fines are an ancillary enforcement measure that 
must stand or fall with the ban.1532 
7.363  Brazil further submits that it does not acknow ledge any inconsistency of the fine on 
marketing with Article III:4 to the extent that the European Communities claims that the fine on 
marketing alternatively violates Article III:4.1533  According to Brazil, b ecause the fines are ancillary 
to the import ban, they are, therefore, a prima facie  violation of Article XI:1, not Article III:4.   
7.364  In response, the European Communities submits that since both parties agree that there is a 
prima facie  incompatibility with Article XI:1, the Panel n eed not address the question whether there is 
also a violation of Article III:4.1534 
7.365  In sum, the parties do not dispute the nature of th e fines, i.e. that the fines as a whole come in 
addition to and in support of the prohibition on importation as an enforcement measure.  The Panel 
also considers that the fines are linked to the impor t prohibition to the extent that their purpose is to 
enforce the import ban.  The only raison d'être of the fines is, as Brazil explains, to penalize traders 
that circumvent import controls through fines in th e event that foreign retreaded tyres somehow enter 
into the Brazilian market despite the presence of the import prohibition at the border.   
7.366  We are thus of the view that the fines on importation as well as on marketing should be 
examined as a whole rather than separately in this  case.  Regardless of the types of activities (i.e. 
"importation" or  "marketing") that are subject to the fines, the fines in their entirety operate as an 
                                                      
1528 Exhibit BRA-72.  Also see Exhibit EC-34.  In this  Report, the Panel will refer to the fines described 
in Presidential Decree No. 3.919 as "the fines".   
1529 European Communities' first written submission, paras. 172-174. 
1530 Brazil's first written submission, para. 157. 
1531 Brazil's answer to panel question No. 67. 
1532 Brazil's second written submission, para. 166. 
1533 Brazil's answer to panel question No. 33. 
1534 European Communities' second written submission, para. 185. WT/DS332/R 
Page 230  
 
  enforcement measure of the import prohibition.  The Panel will thus examine the fines in their entirety 
as one measure. 
7.367  We will now proceed to examine whether the fines are prima facie  inconsistent with 
Article XI:1. 
2. Are the fines inconsistent with Article XI of GATT 1994?   
7.368  The European Communities claims that the fines constitute a restriction on imports 
incompatible with Article XI:1.
1535  The European Communities argues th at the level of fines is such 
that "it will exceed the normal per unit value of a typical retreaded tyre" and that "it will therefore restrict any importations of such tyres into Brazil."
1536  Brazil  has confirmed that indeed, the fines are 
intended to exceed the per unit value of most tyres,  because they are "a pun itive measure intended to 
sanction a violation of the import ban imposed by Brazil".1537 
7.369  As noted above in the context of examining th e European Communities' claims in relation to 
the import ban, Article XI:1 prohibits "prohibitions or restrictions" on the importation of any product.  
Thus, any measures prohibiting or restricting the importation of other Members' products will fall 
under the scope of Article XI:1. 
7.370  The Panel notes in this regard that the fines do not per se impose a border restriction on 
importation, but rather act as a disincentive to importation, by penalizing it and making it 
prohibitively costly.  The parties also agree that th e fines are applied in addition to and in support of 
the actual prohibition on importation as an enforcem ent measure of the import prohibition.  The issue 
before the Panel is therefore whether such a meas ure can constitute a restriction on importation within 
the meaning of Article XI:1. 
7.371  In this regard, we recall that the scope of me asures falling under "prohibitions or restrictions" 
under Article XI:1 has been interpreted broadly in GATT/WTO jurisprudence to date.  In particular, 
the Panel in India – Autos  found that "it is the nature of the measure as a restriction in relation to 
importation which is the key factor to consider in de termining whether a measure may properly fall 
within the scope of Article XI:1," and the phr ase "restrictions on importation" does not necessarily 
limit the scope of Article XI:1 to border measures.1538  The same Panel found that "any form of 
limitation  imposed on, or in relation to importation c onstitutes a restriction on importation within the 
meaning of Article XI:1".1539 
7.372  We are also of the view that what is important in considering whether a measure falls within 
the types of measures covered by Article XI:1 is th e nature of the measure.  In the present case, we 
note that the fines as a whole, including that on mark eting, have the effect of penalizing the act of 
"importing" retreaded tyres by subjecting retread ed tyres already imported and existing in the 
Brazilian internal market to the prohibitively expensive rate of fines.  To that extent, we consider that 
the fact that the fines are not admi nistered at the border does not alte r their nature as a restriction on 
importation within the meaning of Article XI:1.  In addition, the level of the fines – R$ 400 per unit, 
which significantly exceeds the average prices of dom estically produced retreaded tyres for passenger 
cars (R$ 100-280) – is significant enough to have a restrictive effect on importation.1540 
                                                      
1535 European Communities' first written submission, para. 170. 
1536 European Communities' first written submission, para. 172. 
1537 Brazil's answer to panel question No. 66. 
1538 Panel Report on India – Autos , paras. 7.254-7.263. 
1539 Panel Report on India – Autos , para. 7.265. 
1540 Brazil's answer to panel question No. 66.  WT/DS332/R 
 Page 231 
 
 
  7.373  Thus, the Panel  finds that the fines impose limiting c onditions in relation to the importation 
of retreaded tyres, and thus act as a restricti on on the importation of retreaded tyres within the 
meaning of Article XI:1.  
7.374  Having found that the fines as a whole are a measu re falling within the scope of Article XI:1 
and contrary to that provision, the Panel need not examine the European Communities' alternative 
claim under Article III:4 in relation to the fines on marketing. 
3. Are the fines justified under Article XX of GATT 1994? 
(a) Article XX(b) 
7.375  Brazil submits that since the import ban is justif ied by Article XX(b), the fines, an anti-
circumvention measure to enforce the import ba n, is likewise justified by Article XX(b).1541  Brazil 
thus argues that the arguments made by Brazil an d the evidence adduced by it to establish that the 
import ban is justified by Article XX(b) also demonstrate that the fines are justified by Article XX(b). 
7.376  The European Communities argues that the fines cannot be justified under Article XX(b) for 
the same reasons that the import ban cannot be justified under Article XX(b).1542 
7.377  The Panel recalls its finding above that the fines are inconsistent with Article XI:1.1543  I n  
reaching this conclusion, we were mindful of the fact that the parties also agree that the fines come in 
addition to and in support of the prohibition on importation of retreaded tyres as an enforcement 
measure of this import prohibition. 
7.378  Regarding Brazil's defence of the fines under Ar ticle XX(b), the parties also seem to agree 
that whether the fines can be justified under Artic le XX(b) depends on whether the import prohibition 
can be justified under Article XX(b).1544 
7.379  In this regard, we have found that although th e import ban falls within the scope of measures 
covered by paragraph (b) of Article XX, it cannot be  justified under Article XX because it is applied 
inconsistently with the requirements under the chapeau of Article XX(b).  Thus, to the extent that the 
fines are a measure that is applied in addition to  and in support of the pr ohibition on importation of 
retreaded tyres, the fines cannot be justified under Article XX(b) for the same reasons as the import 
ban cannot be justified. 
7.380  Therefore, the Panel  is of the view that Brazil has not demonstrated that the fines can be 
justified under Article XX(b). 
(b) Article XX(d) 
7.381  Brazil argues that the fines are also justified by Article XX(d) because they are "necessary to 
secure compliance with" the import ban, which is justified by Article XX(b) and therefore not 
inconsistent with the GATT 1994. 
                                                      
1541 Brazil's first written submission, para. 157; Brazil's first oral statement, para. 66; Brazil's second 
written submission, para. 166. 
1542 European Communities' first written submission, para. 179. 
1543 See above paragraphs 7.370-7.373. 
1544 See paragraphs 7.375-7.376 above.  Brazil's firs t written submission, para. 157; Brazil's first oral 
statement, para. 66; Brazil's second written submissi on, para. 166.  European Communities' first written 
submission, para. 179. WT/DS332/R 
Page 232  
 
  7.382  The European Communities submits that the fines cannot be justified under Article XX(d) 
since Article XX(d) applies only to measures necessary  to secure compliance with laws or regulations 
"which are not inconsistent with the provisions of this Agreement" and the import ban is not such a 
law or regulation which is c onsistent with the GATT 1994.
1545  According to the European 
Communities, therefore, Article XX(d) cannot justify the fines independently of whether the fines are 
"necessary" to secure compliance with the import ban. 
7.383  Article XX(d) provides:   
"Subject to the requirement that such me asures are not applied in a manner which 
would constitute a means of arbitrary or unjustifiable discrimination between 
countries where the same conditions prev ail, or a disguised restriction on 
international trade, nothing in this Agre ement shall be construed to prevent the 
adoption or enforcement by any contracting party of measures: 
... (d) necessary to secure compliance with laws or regulations which are not 
inconsistent with the provisions of this  Agreement, including those relating to 
customs enforcement, the enforcement of  monopolies operated under paragraph 4 of 
Article II and Article XVII, the protection of  patents, trade marks and copyrights, and 
the prevention of deceptive practices;" 
7.384  In this regard, the Appellate Body in Korea – Various Measures on Beef stated that for a 
measure, otherwise inconsistent with the GAT T 1994, to be justified provisionally under 
paragraph (d) of Article XX, the fo llowing two elements must be shown
1546:  
(i) the measure must be one designed to "secure compliance" with laws or 
regulations that are not themselves incons istent with some provision of the GATT 
1994; and 
(ii) the measure must be "necessar y" to secure such compliance. 
The Appellate Body also stated that a Member invoking Article XX(d) as a justification bears the 
burden of demonstrating that these two elements are met.1547 
7.385  Following the same approach, the Panel will first examine whether the fines are designed to 
secure compliance with a GATT-consistent law or regulation. 
7.386  We recall Brazil's argument in this respect th at the fines are necessary to secure compliance 
with the import ban, which is justified by Arti cle XX(b), and thus not inconsistent with the 
GATT 1994.  Brazil thus bases its argument on the assumption that the import ban is justified under 
Article XX(b).   
7.387  As recalled above, the parties do not dispute that  the fines are a measure introduced to enforce 
the import ban.  In light of the parties' agreemen t and our finding above that the fines are indeed a 
measure the existence of which would be meaningl ess without the import ban, we agree with Brazil 
that the fines are "designed to secure compliance with the import ban". 
                                                      
1545 European Communities' first oral statement, para. 105. 
1546 Appellate Body Report on Korea – Various Measures on Beef , para.157. 
1547 Appellate Body Report on Korea – Various Measures on Beef , para.157, citing Appellate Body 
Report on US – Gasoline , at 21; Appellate Body Report on US – Wool Shirts and Blouses , at 335-337; and Panel 
Report on US – Section 337 , para. 5.27.  WT/DS332/R 
 Page 233 
 
 
  7.388  However, for the reasons explained in paragraphs  7.375-7.380, we found that the import ban, 
a measure inconsistent with Article XI:1 of the GAT T 1994, could not be justified by Article XX(b).  
Therefore, the Panel is of the view that the fines cannot be justified under Article XX(d) since they do 
not fall within the scope of measures that are designed to secure compliance with "the laws or regulations that are not themselves inconsistent with some provision of the GATT 1994" (emphasis 
added). 
7.389  Having found that Brazil has failed to demonstrate that the import ban – the domestic measure 
with which the fines are allegedly designed to secu re compliance – is consistent with the GATT 1994 
and thus has failed to show that the fines can be justified under Article XX(d), we do not consider it 
necessary to proceed to examine whether the fi nes are necessary to secure such compliance. 
4. Conclusion 
7.390  For the reasons above, the Panel  finds that the fines as embodied  in Presidential Decree 3.179 
through Presidential Decree 3.919 are inconsistent w ith Article XI:1 of the GATT 1994.  We also find 
that Brazil has not demonstrated that the fines can  be justified either unde r Article XX(b) or under 
Article XX(d) of the GATT 1994. 
C. S
TATE LAW RESTRICTIONS ON THE MARKETING OF IMPORTED RETREADED TYRES  
7.391  The European Communities also challenges certain rest rictions on the importation and 
marketing of retreaded tyres, imposed  by the State of Rio Grande do Sul.1548  The European 
Communities submits that the prohibition of the ma rketing of retreaded tyres produced outside of 
Brazil under Law 12.114 as well as an allegedly discr iminatory disposal obligation under Law 12.381 
are incompatible with Article III:4 of the GATT 1994.1549 
7.392  Brazil  does not address the consistency of these measures and states that it does not contest 
that the measures are prima facie  in violation of Article III:4.  Brazil instead focuses on the 
justification of the measures under Article XX(b) and claims that this state measure does not warrant an independent consideration because it does not rest rict imports of retreaded tyres from the European 
Communities any more than the federal import ban does.
1550   
1. Preliminary issues 
(a) Measures within the scope of the Panel's terms of reference 
7.393  In addition to Law 12.114 of the Brazilian Stat e of Rio Grande do Sul of 5 July ("Law 
12.114") that is identified in the European Communiti es' panel request as the relevant state measure at 
issue, the European Communities also develops, in its first written  submission, arguments in relation 
                                                      
1548 In its Panel request, the European Communities identifies the following relevant measures:  
"the maintenance of measures at the level of Brazilian States which prohibit 
the sale of imported retreaded tyres.  For instance, Law No. 12.114 of 5 July 
2004 of Rio Grande do Sul which bans the commercialisation of used tyres, as which are considered inter alia  retreaded that have been manufactured 
outside of Brazil from the casings of used tyres and imported into Brazil." 
 
1549 European Communities' first written submission, para. 181.   
1550 Brazil's first written submission, para. 186. WT/DS332/R 
Page 234  
 
  to a subsequent Law 12.381 of Rio Grande do Sul of 28 November 2005 ("Law 12.381"), which is not 
identified in its panel request.
1551   
7.394  In this regard, the Panel notes that the en actment of Law 12.381 (28 November 2005) came 
after the European Communities had made its re quest for the establishment of a panel on 18 
November 2005, but prior to the Panel's actual establishment.  While th e European Communities 
generally indicated in its panel request that its request extended inter alia  to amendments to the 
measures identified in the request, this specific me asure was not, and could not have been, identified 
in the European Communities' panel request.1552   
7.395  Brazil  does not take issue with the articulation by the European Communities, in its first 
submission, of claims relating to Law 12.381, a nd understands the European  Communities' challenge 
to relate to Law 12.114 (of 2004), as amended by Law 12.381.1553   
7.396  The Panel considers that Law 12.381 is properly within  the Panel's terms of reference.  The 
Appellate Body has found, in past cases, that lega l acts that occur subsequent to the measures 
identified in the panel request may still be considered  to be within the pane ls' terms of reference, 
insofar as those legal acts do not change th e "essence" of the main measures at issue.1554  As explained 
below, Law 12.381 is directly related to Law 12.114 in that Law 12.381 maintains the original 
provision banning the sale of "imported used tyres"1555, as defined in Law 12.114, while adding 
conditions under which the importation of some of  these used tyres are exceptionally permitted.  
Thus, Law 12.381 cannot be considered as cha nging the essence of the main measure (i.e. 
Law 12.114), which is the general ban on the sale of "i mported used tyres" as defined in Law 12.114.   
                                                      
1551 According to the European Communities, Law 12.381 authorizes the importation of carcasses of 
used tyres and carcasses of a tyre which have been retreaded, remoulded or recapped outside Brazil, subject to the collection and destruction, in an environmentally sound manner, of one used tyre on Brazilian territory for 
each carcass to be imported or ten used tyres for each imported retreade d carcass. (European Communities' first 
written submission, paras. 61, 63) 
1552 As noted above in footnote 1548, the panel request describes the state measures as measures "which 
prohibit the sale of imported retreaded tyres".   
1553 Brazil's first written submission, paras. 186-189;  Brazil's second written submission, paras. 195-
198; Brazil's first oral statement, para. 77; Brazil's answ er to panel question No. 111.  Brazil argues that the state 
measures at issue (i.e. Law No. 12.114 as amended by Law No. 12.381) do not have legal effect but, to the 
extent that they have effect, they ar e not inconsistent with the WTO and jus tified under Article XX(b).  In light 
of Brazil's position, we understand that Brazil does not contest the inclusion by the European Communities of 
Law No. 12.381 within the scope  of the present dispute.   
1554 Appellate Body Report on Chile – Price Band System , paras. 136-139.  The Appellate Body also 
endorsed the approach fo llowed by the panel in Argentina – Footwear , which was to decide to examine 
modifications made to the safeguard measure at issu e during the panel proceedings, considering that the 
modifications did not create a "new" safeguard measure, but were instead modifications of the legal form of the 
original definitive measure which was the subject of the dispute.  Also, referring to the principles under DSU 
Articles 3.7 and 3.4 (i.e. the aim of the dispute settlement  mechanism being a 'positive solution to a dispute'), the 
Appellate Body considered it appropriate to rule on the pri ce band system as currently in  force in Chile, that is, 
as amended by a later regulation, to "secure a positive solution to the dispute" and to make "sufficiently precise 
recommendations and rulings so as to  allow for prompt compliance".   
1555 As set out below in paragraph 7.413, "an imported used tyre" under Law 12.114 is defined to 
include (i) the simple carcass of a used tyre from any othe r country; (ii) the carcass of  a used tyre tha has been 
retreaded by top-capping, remoulding or recapping proce sses abroad and imported in that condition; and (iii) the 
carcass of a used tyre from any other country and retrea ded in Brazil by any of the industrial processes in the 
proceeding item.  WT/DS332/R 
 Page 235 
 
 
  (b) State measures as a "measure" 
7.397  As the European Communities' claim on the marketing restriction by the Brazilian State of 
Rio Grande do Sul concerns a 'state government's  measure', as opposed to measures imposed at the 
federal level, the Panel considers it useful to brie fly consider the status of such measures in the 
context of WTO dispute settlement.  
7.398  The European Communities submits that as Brazil is responsible for the respect of its WTO 
obligations by its federal states, it must, in accordance with Article XXIV:12 of the GATT 1994 and 
as confirmed by paragraph 13 of the Understandi ng on the Interpretation of Article XXIV of the 
GATT 1994, take such reasonable measures as may be available to it to ensure observance of the 
provisions of the GATT by its state.1556  Brazil does not dispute that the consistency of its state 
measures can be reviewed by the Panel. 
7.399  The Panel recalls that the Appellate Body in US – Corrosion-Resistant Steel Sunset Review 
noted that the phrase "measures taken by another Member" in Article 3.3 of the DSU1557 identifies the 
relevant nexus, for purposes of dispute settleme nt proceedings, between the "measure" and a 
Member", and "[i]n principle, any act or omission attributable to a WTO Member can be a measure of 
that Member for purposes of dispute settlement proceedings."1558 
7.400  We consider that the measures of Rio Grande do Sul, a state of the Federative Republic of 
Brazil, are attributable to Brazil as a WTO Member  and therefore should be considered as "measures" 
for the purposes of Article 3.3 of the DSU.   
(c) Relationship between the state measures and the federal measures 
7.401  As regards Law 12.114, Brazil submits that the state measure does not warrant an independent 
consideration because it does not re strict imports of retreaded tyres from the European Communities any 
more than the federal import ban does.1559  Brazil claims that to the extent the state measure conflicts 
with the federal measure by authorizing what the federal measure prohibits or vice-versa , the federal 
measure will prevail and trump the state measure.1560    
7.402  Regarding Law 12.381, however, the Panel notes some evolution in Brazil's position in the 
course of the proceedings.  Brazil first submits in its  first written submission that like the fines at the 
federal level, Law 12.381 works as an anti-circ umvention measure by establishing a disposal 
obligation that may seem disproportionate to th e harm, but is still necessary to thwart  illegal 
                                                      
1556 Article XXIV:12 provides: "Each [Member] sha ll take such reasonable measures as may be 
available to it to ensure observance of the provisions of this Agreement by the regional and local governments and authorities within its territories". 
 Further, paragraph 13 of the Understanding on the Interpretation of Art. XXIV of the GATT 1994 
provides:  "The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute 
Settlement Understanding may be invoked in respect of measures affecting its obse rvance taken by regional or 
local governments or authorities within the territory of a Member. ... "   
1557 Article 3.3 of the DSU provides that: "The prompt settlement of situations in which a Member 
considers that any benefits accruing to it directly or indirectly under the c overed agreements are being impaired 
by measures taken by another Member  is essential to the effective functioning of the WTO and the maintenance 
of a proper balance between the rights and obligations of Members."  (emphasis added) 
1558 In US – Corrosion-Resistant Steel Sunset Review, the Appellate Body stated that they needed not 
consider the extent to which the acts or omissions of regional or local governments, or even the actions of 
private entities, could be attributed to a Me mber in particular circumstance (fn. 78). 
1559 Brazil's first written submission, para. 186. 
1560 Brazil's first written submission, para. 187; Brazil's second written submission, para. 195. WT/DS332/R 
Page 236  
 
  importation and commercialization of imported retreaded tyres.
1561  In other words, Brazil's initial 
position seemed to be that the disposal obligation is complementary to, rather than inconsistent with,  
the marketing prohibition, just as the fines are to the import prohibition. 
7.403   However, in response to a question from the Panel whether the disposal obligation under 
Law 12.381 establishes an exception to the import prohibition set out in Law 12.114, Brazil submits 
that "the amendments introduced by Law 12.381,  permitting imports under cer tain conditions, seem to 
conflict with Article 1 of Law 12.114, which prohibits imports of used tyres. 1562  It is not clear whether 
the amendments intended to lift the import prohibition."1563  Brazil further states that "if importers 
attempted to obtain licenses to import based on Stat e Law 12.381, the federal body responsible for 
granting such licences (DECEX) would deny the re quest, whether the federal import ban existed or 
not, and the likely outcome of this  situation would be a declaration of the unconstitutionality of State 
Law 12.381 by the Federal Supreme Court."1564   
7.404  Despite this clarification of its position on Law 12.381, Brazil's view on the state measures as 
a whole appears to be that the extent of the inc onsistency between the subs tantive provisions of the 
state law and the federal law is irrelevant because th e state measures have no legal effect, in that under 
Brazil's Constitution, only the Federal Government  can regulate importation of products and issue 
import licences and state measures that pur port to regulate imports have no effect.1565  Thus, according 
to Brazil, the Panel need not review the European  Communities' claims on the inconsistency of the 
states measures at i ssue with obligations under the GATT 1994, since the Brazilian federal measures 
either already encompass or trump what the state measures purport to do. 
7.405  The European Communities argues that Law 12.114 is a measure independent of the 
measures adopted at the federal level in Braz il and thus warrants inde pendent consideration.1566  
According to the European Communities, if the ba n at the federal level were lifted following the 
present dispute, but the state law were to remain, th en the state law would continue to restrict the 
marketing of imported retreaded tyres in Rio Grande do Sul.  The European Communities submits that Brazil has not provided any evidence to support it s claim that the federal measure will prevail and 
trump the state measure to the extent that the st ate measure conflicts with the federal measure.   
7.406  The Panel is of the view that, regardless of the re lationship between these states laws and the 
federal laws based on the jurisdictions covered by the respective law within its domestic legal system, 
the Brazilian government is  ultimately responsible for ensuring that its constituent states respect 
Brazil's obligations under the WTO as explained abov e.  In this connection, Brazil acknowledges that 
in order to have the state measure at issue declared  null and void, a specific court ruling – i.e. a ruling 
by the Federal Supreme Court in an unconstitutionality action – is required.
1567  Brazil did not submit 
any evidence that such a ruling has been issued yet, although it provided a legal opinion issued by the 
Office of the Chief of Staff to the President, recommending that the Solicitor General bring a Direct Action of Unconstitutionality with respect to the state measures.
1568  Moreover, Brazil has confirmed 
that the state measures at issue (Law 12.114 as amended by Law 12.381) are formally in force at 
present. 1569  
                                                      
1561 Brazil's first written submission , para. 188. (emphasis added) 
1562 For the definition of "imported used tyres", see footnote 1555 above and paragraph 7.413 below. 
1563 Brazil's answer to panel question No. 57. 
1564 Brazil's answer to panel question No. 61. 
1565 Brazil's first written submission, para. 187, responses to panel questions No. 56, 57, 61-62, 111 and 
Brazil's second written submission, paras.  195, 197. 
1566 European Communities' first oral statement, paras. 107-110. 
1567 Brazil's answer to panel question No. 62. 
1568 Brazil's second written submission,  para. 198 and Exhibit BRA-156. 
1569 Brazil's answer to panel question No. 111.  WT/DS332/R 
 Page 237 
 
 
  7.407  In light of these considerations, our understandi ng is that in the absence of a specific court 
ruling declaring them as null and void, the states measu res at issue are currently legally in force in 
Brazil, although they may not be enforceable if they  have no legal effect as claimed by Brazil due to 
the alleged conflicts w ith the federal laws.1570  The Panel also recalls the Appellate Body's statement in 
US – Upland Cotton  that "whether or not a measure is still in  force is not dispositive of whether that 
measure is currently affecting the operation of any covered agreement."1571 
7.408  On the basis of the foregoing, we have decided to proceed with the analysis of the claims 
made by the European Communities in relati on to Law 12.114, as amended by Law 12.381. 
2. Are the state measures inconsistent with Article III:4 of GATT 1994?  
7.409  Article III:4 provides:  
"The products of the territory of any contr acting party imported into the territory of 
any other contracting party shall be accord ed treatment no less favourable than that 
accorded to like products of national origin  in respect of all laws, regulations and 
requirements affecting their internal sale, offering for sale, purchase, transportation, 
distribution or use..."  
7.410  The Panel notes that the Appellate Body has clarified that three elements must be satisfied to 
establish a violation of Article III:4:  (1) the im ported and domestic products at issue are "like 
products"; (2) the measure at issue is a "law, regulat ion, or requirement affecting their internal sale, 
offering for sale, purchase, transportation, distri bution, or use"; and (3) the imported products are 
accorded "less favourable" treatment than that accorded to like domestic products.1572 
7.411  Based on these elements as set out by the Appe llate Body, we turn to a consideration of 
whether the state measures at issue are inconsiste nt with the requirements under Article III:4.   
(a) Marketing prohibition 
7.412  The European Communities argues that the marketing prohibition in Article 1 of Law 
12.114 ("marketing prohibition") is inconsistent with Article III:4.1573  
7.413  Law 12.114 provides in relevant part: 
"Art. 1.  It is forbidden to sell imported used tyres in the State of Rio Grande do Sul. 
Sole paragraph.  An imported1574 used tyre is considered for the purposes hereof as 
follows: 
I – the simple carcass of a used tyre from any other country; II – the carcass of a used tyre that has been  retreaded by top-ca pping, remoulding or 
recapping processes abroad and imported in that condition; 
                                                     
 
1570 Brazil's answer to panel question No. 62. 
1571 Appellate Body Report on US – Upland Cotton , para. 262. 
1572 Appellate Body Report on Korea – Various Measures on Beef , para. 133. 
1573 European Communities' first written submission, paras. 182-188. 
1574 Brazil clarified that the terms "imports" and "im portation" in Law 12.114 and Law 12.381 refer to 
the importation from other countries into Brazil and do not apply to trade among Brazilian states (Brazil's 
answer to panel question No. 58.) WT/DS332/R 
Page 238  
 
  III – the carcass of a used tyre from any othe r country and retreaded in Brazil by any 
of the industrial processes men tioned in the preceding item. ..."
 1575 
(i) Like products 
7.414  Brazil clarified that Law 12.114 is intended to apply to "retreaded tyres" imported from every 
country.1576  As such, for the purposes of the present an alysis, the terms used in Law 12.114, in 
particular in its Article 1, Sole paragraph II, cove r the same product scope of imported retreaded tyres 
as the import ban at the federal level.  Law 12.114 thus prohibits the sale of "imported used tyre 
carcasses"; "domestic retreaded tyres made from imported used tyre carcasses" and "imported retreaded tyres", and only allows the sale of " domestic retreaded tyres made from domestic used tyre 
carcasses " in the market. 
7.415  The European Communities submits that impor ted retreaded tyres are "like" domestic 
retreaded tyres made from domestic used tyre carcasses.  The parties agree that there is no difference between imported and domestic retreaded tyres with  respect to the "likeness" within the meaning of 
Article III:4.
1577  The Panel also considers that imported retreaded tyres and domestic retreaded tyres, 
either made with domestic used tyre carcases or with  imported used tyre carcasses, are indeed "like":  
the same physical characteristics (produced by rec onditioning used tyres through one of the three 
types of processes)1578; the same end uses (to be used for resp ective vehicle types, such as passenger 
cars, buses and trucks, and air planes)1579; the same tariff headings (i.e. NCM headings 4012.11.00, 
4012.12.00, 4012.13.00 or 4012.19.00); and no evidence of any difference in consumers' perceptions 
and behaviour in respect of imported and domestic retreaded tyres. 
7.416  The Panel thus concludes that imported retread ed tyres can be considered "like" domestic 
retreaded tyres made from domestic used tyre carcasses. 
(ii) A law, regulation or requirement affecting the internal sale 
7.417  The European Communities argues that the prohi bition on the "marketing" of retreaded tyres 
is a measure affecting the internal sale of retreaded  tyres, since it makes th e internal sale of these 
products in fact impossible. 
7.418  The Panel considers that the marketing prohibition on imported used tyres, which include 
imported retreaded tyres, as codified in Law 12.114 constitutes a measure affecting the internal sale of 
retreaded tyres, because the measure, on its face, provi des that "it is forbidden to sell imported used 
tyres in the State".  The measure, in banning the act ion of selling, clearly affects the sale of retreaded 
tyres in the territory of Rio Grande do Sul. 
7.419  Therefore, we conclude that the marketing proh ibition at issue affects the internal sale of 
retreaded tyres within the meaning of Article III:4.  
                                                      
1575 Exhibit BRA-80.  See also Exhibit EC-35.  Brazil has clarified that Law 12.114, as amended by 
Law No. 12.381, is formally in force at present; that it is intended to apply to retreaded tyres imported from every country; and that the words "imports" and "importation" used in both laws refer to the importation of 
retreaded tyres from other countries into Brazil. (Braz il's responses to panel questions 58, 59, 111)  Brazil has 
also clarified that these state laws seem to have been passed in reaction to the exemption of MERCOSUR 
countries from the national import ban. (Brazil's answers to panel questions Nos. 55 and 59). 
1576 Brazil's answer to panel question No. 58. 
1577 Brazil's answer to panel question No. 6. 
1578 See the parties answers to panel question No. 1. 
1579 See the parties' answers to panel question No. 4.  WT/DS332/R 
 Page 239 
 
 
  (iii) Less favourable treatment  
7.420  As shown above, the marketing prohibition under Law 12.114 applies to imported  retreaded 
tyres.  It foresees no comparable limitation on the marketing of domestic retreaded tyres made from domestic used tyre carcasses.  
7.421  The Panel considers, therefore, that the marketing prohibition imposed by Law 12.114 
accords to imported retreaded tyres "less favourable treatment" than to domestic retreaded tyres which 
should be considered like products with in the meaning of GATT Article III:4. 
7.422  For the above reasons, we find that Law 12.114 is inconsistent with the obligations under 
Article III:4 of the GATT 1994 in that it provides less favourable treatment to imported retreaded 
tyres than to like domestic products. 
(b) Disposal obligations 
7.423  The European Communities submits that the requirement of having to dispose of ten used 
tyres (for the importation of one retreaded tyre), rather than one used tyre (for the production of one 
retreaded tyre in Brazil using an imported us ed tyre), under Law 12.381 is an additional 
discrimination and clearly constitutes less favour able treatment of imported retreaded tyres.
1580 
7.424  Law 12.381 of 28 November 2005 provides: 
"Amending Art. 1° of the Law N° 12.114  of 5 July 2004, prohibiting the sale of used 
tyres imported into the State and from other Sources. 
... Article 1 – The sole paragraph of Article 1 of Law N° 12.114
 of 5 July 2004, 
prohibiting the sale of used tyres imported into the State and from other sources 
becomes paragraph 1, and the following paragraphs 2 and 3 are added: 
"Article 1° ...  §2° – The following shall be permitted: 
I – the import of a used tyre carcass where importers can demonstrate 
that they will collect on Brazilia n territory and destroy, in an 
environmentally-adequate manner, 1 (one) existing used tyre on the 
domestic territory for each used tyre carcass to be imported; 
II – the import of a carcass of a tyre retreaded by means of top-
capping, remoulding, or recappi ng, outside of Brazil, where 
importers can demonstrate that they will collect within the domestic territory and destroy, in an environmentally-adequate manner, 10 
(ten) existing used within the dom estic territory for each used tyre 
carcass to be imported. ... 
§3° - tyre retreaders shall have the right to import one used tyre carcass for 
each used or retreaded tyre exported without having to comply with the 
                                                     
 
1580 European Communities' first written submission, para. 187. WT/DS332/R 
Page 240  
 
  environmental counterpart referred to in part I of paragraph 2 of this 
Article."
1581 
7.425  According to the European Communities, unde r the amendment (Law 12.381) now, the state 
of Rio Grande do Sul seems to be allowing the marketing of " domestic retreaded tyres made of 
imported carcasses " upon satisfying the disposal obligations.1582   
7.426  The Panel recalls that the marketing prohibition under Law 12.114 applied to three types of 
tyres:  "imported used tyre carcasses"; "domestic  retreaded tyres made from imported used tyre 
carcasses" and "imported retreaded tyres", and so only allowing " domestic retreaded tyres made from 
domestic used tyre carcasses " in the market.  Law 12.381, however, appears to amend this outright 
marketing prohibition on these three types of tyres by adding certain disposal obligations to Law 
12.114, which appear to operate as an exception to the marketing prohibition under Article 1. 
7.427  In response to a question from the Panel on whether Law 12.381 establishes an exception to 
the import prohibition set out in Law 12.114, Brazil submits that the amendments introduced by Law 
12.381, permitting imports under certa in conditions, "seem to conflict with Article 1 of Law 12.114, 
which prohibits import of used tyres."1583  Brazil also states that "it is not clear whether the 
amendments intended to lift the import prohibition," but  that "in any event, this is irrelevant because 
these state measures have no legal effect." 
7.428  The Panel notes in this regard that regardless of the underlying inten tion behind Law 12.381 
and its constitutionality due to its potential conflic t with the existing federal laws prohibiting the 
importation of retreaded tyres, Law 12.381 explicitly pr ovides that importing will be authorized if ten 
used tyres are disposed of for each imported retread ed tyre and one used tyre for each imported used 
tyre carcass. 
7.429  In this respect, we note that the language of  the amendment does not specifically permit the 
marketing of "domestic retreaded tyres made from imported carcasses" in the state of Rio Grande do Sul.  Thus, the European Communities' argument s eems to be that by permitting the importation of 
used tyre carcasses, the amendment ef fectively allows the sale of "ret readed tyres produced in Brazil 
using those imported used tyre carcasses ", which are otherwise prohibited from being sold in the state 
of Rio Grande do Sul.  We agree with the Eur opean Communities that allowing under Law 12.381 the 
importation of the very material (i.e. used tyre car casses) used in the production of domestic retreaded 
tyres, which was originally prohibited from mark eting, amounts to allowing now the marketing of 
domestic retreaded tyres made from such material.
1584  Thus, for the purpose of examining the 
European Communities' claim on Law 12.381 under Article III:4, we will consider whether the 
alleged discriminatory treatment exists between "i mported retreaded tyres" and "domestic retreaded 
tyres made from imported used tyre carcasses" the marketing of which seems to be allowed as a result of the amendment to Law 12.114. 
7.430  We will now proceed to examine whether this  disposal obligation embodied in Law 12.381 
("disposal obligation") is inconsistent with  Article III:4 of the GATT 1994 based on the three 
elements set out by the Appellate Body: (1) the imported and domestic produc ts at issue are 'like 
products'; (2) the measure at issue is a 'law, regulat ion, or requirement affecting their internal sale, 
                                                     
 
1581 Exhibit BRA-81.  See also Exhibit EC-37. 
1582 European Communities' first written submission, para. 64. 
1583 Brazil's answer to panel question No. 57. 
1584 We recall our observation above that 6 million out of almost 11 million used tyre casings imported 
in 2005 were retreaded or stocked for later use by the importers.  (See footnote 1469 above)  WT/DS332/R 
 Page 241 
 
 
  offering for sale, purchase, transportation, distribut ion, or use'; and (3) the imported products are 
accorded 'less favourable' treatment than that accorded to like domestic products.1585 
(i) Like products 
7.431  As explained above, the disposal obligati on under Law 12.381 makes a distinction between 
domestic retreaded tyres made from imported used tyre carcasses and imported retreaded tyres.   
7.432  The European Communities submits that impor ted retreaded tyres are "like" domestic 
retreaded tyres made from imported used tyre carcasses.  The Panel recalls that the parties do not 
dispute that imported retreaded tyres are "like" domestic retreaded tyres within the meaning of 
Article III:4 of the GATT 19941586, and the Panel also recalls its earlier conclusion1587 that domestic 
retreaded tyres, regardless of the origin of used  tyre carcasses used in producing them, are "like" 
imported retreaded tyres within the meaning of Artic le III:4.  The Panel thus concludes that for the 
purposes of analysing the disposal obligation, domestic retreaded tyres made from imported used tyre carcasses are "like" imported retreaded tyr es within the meaning of Article III:4. 
(ii) A law, regulation or requirement affecting the internal sale  
7.433  Further, the Panel considers the disposal obligation to be  a measure affecting internal sale of 
retreaded tyres.  This is because satisfying the disposal requirement as indicated in the amendment 
(i.e. disposal of ten used tyres in the case of impor ted retreaded tyres, in comparison to just one used 
tyre otherwise) is a prerequisite for the importati on of used tyre carcasses and, in turn, the marketing 
of imported retreaded tyres made from such used tyre carcasses on the internal market.  Thus, the 
disposal obligations directly affect the internal  sale of retreaded tyres concerned in the Brazilian 
market. 
(iii) Less favourable treatment  
7.434  The amendment requires the disposal of one used tyre for one domestic retreaded tyre that 
would be made from imported used tyre carcasses, and ten used tyres for one imported retreaded tyre. 
7.435  The Panel considers that the requirement imposed on imported retreaded tyres to dispose of 
ten used tyres is a more onerous burden than the requirement imposed on domestic retreaded tyres to 
dispose of just one used tyre.  Therefore, the di sposal requirement affords "less favourable treatment" 
to imported retreaded tyres within the meaning of Article III:4 of the GATT 1994. 
7.436  Consequently, we find that the disposal require ment under Law 12.381 is inconsistent with 
Article III:4 since it accords less favourable treatme nt to imported retreaded tyres than to like 
domestic products. 
(c) Conclusion 
7.437  In light of the above, the Panel finds that Law 12.114 of Rio Grande do Sul, as amended by 
Law 12.381, is inconsistent with Brazil's ob ligations under Article III:4 of the GATT 1994. 
                                                     
 
1585 Korea – Various Measures on Beef , Appellate Body Report on para. 133. 
1586 Brazil's answer to panel question No. 6. 
1587 See paragraph 7.415 above. WT/DS332/R 
Page 242  
 
  3. Are the state measures justified under Article XX(b) of GATT 1994? 
7.438  Brazil submits that the state measures – i.e. La w 12.114 as amended by Law 12.381 – are 
justified by Article XX(b) for the same reasons that  the import ban is justified by Article XX(b) and 
does not warrant an independent consideration becau se it does not restrict imports of retreaded tyres 
any more than the federal import ban does.
1588 
7.439  The European Communities argues that for the same reasons that the import ban cannot be 
justified under Article XX(b), the state me asures cannot be justified by Article XX(b).1589  T h e  
European Communities sees no objective basis for the allegedly discriminatory treatment accorded by 
the disposal obligations under the state measur es concerned as to imported and domestic retreaded 
tyres.  The European Communities s ubmits that such discrimination is manifestly arbitrary and seems 
to be inspired by the motive to protect the domestic industry. 
7.440  First, with respect to the marketing prohibition  imposed by Law 12.114, although the parties 
disagree, as noted above, on the legal effect of this  state measure in relation to the import ban imposed 
at the federal level, they do not seem to dispute that  the marketing prohibition is similar to the import 
ban to the extent that it effectively prohibits th e sale of imported retreaded tyres in the Brazilian 
market.1590 
7.441  The Panel recalls its finding above that although th e import ban falls within the scope of 
measures covered by paragraph (b) of Article XX, it cannot be justified under Article XX because it is 
applied inconsistently with the requirements under the chapeau of Article XX(b).  In our view, to the 
extent that the marketing prohibition has the same effect as the import ban by effectively prohibiting 
the marketing of imported retreaded tyres as noted  above, it cannot be justified under Article XX(b) 
either for the same reasons that the import ban could not be justified under Article XX(b). 
7.442  We will now turn to the disposal obligation  contained in Law 12.381.   
7.443  We have found that the disposal obligation un der Law 12.381 is also inconsistent with 
Article III:4:  the disposal obligation is not equall y applied to imported retreaded tyres and domestic 
retreaded tyres made from imported used tyre carcasses and accords imported retreaded tyres less 
favourable treatment. 
7.444  We also recall that the disposal obligation operates in a different manner from the marketing 
prohibition contained in Law 12.114, in that it allows  the importation of retreaded tyres and used tyres 
under certain conditions.  Brazil has also acknowledged that the disposal obligation seems to conflict 
with the marketing prohibition.1591  To the extent the disposal obligation conflicts with the marketing 
prohibition by allowing imports of retreaded tyres as well as used tyre carcasses, it is not clear to us 
how they can be justified under Article XX(b) for th e same reasons as in the case of the import ban as 
argued by Brazil. 
                                                      
1588 Brazil's first written submission, paras. 186-18 9; Brazil's first oral statement, para. 77. 
1589 European Communities' first written submission, para. 189; European Communities' second oral 
statement, paras. 121-123. 
1590 For example, Brazil states that "[the state measure]  does not restrict imports of retreaded tyres from 
the EC any more than the federal import ban does" (Brazil's first written submission, para. 186); and the 
European Communities states that "[the state law] wo uld continue to restrict the marketing of imported 
retreaded tyres in Rio Grande do Sul" (European Commun ities' first oral statement, para. 109) and that "the 
[marketing] prohibition cannot be justif ied under Article XX...either...the EC can refer to what is set out above 
as regards the impossibility to justify the import ban under Article XX..." (Europea n Communities' first written 
submission, para. 189). 
1591 Brazil's answer to panel question No. 57.  WT/DS332/R 
 Page 243 
 
 
  7.445  Further, as found above, the disposal obligation imposes the more strict obligation on 
imported retreaded tyres than on imported used tyre  carcasses that would be used for the production 
of domestic retreaded tyres.  This difference in tr eatment seems to go against Brazil's policy objective 
of reducing the number of waste tyres to the greates t extent.  Specifically, we considered above in 
relation to the necessity of the import ban that the import ban on retreaded tyres could be considered 
as contributing to Brazil's policy ob jective only if imported retreaded tyres were to be replaced by 
either new tyres or domestic retreaded tyres produced  using domestic used tyres.  We also considered 
that the import ban on retreaded tyres should not lead to a substitution of imported used tyres for imported retreaded tyres.
1592  The disposal obligation at issue, however, facilitates the importation of 
used tyres, which in turn can be used for the production of domestic retreaded tyres, penalizing the 
importation of retreaded tyres.  In our view, this contravenes the very objective sought to be achieved 
through the import ban. 
7.446  In light of the above, the Panel is of the view that Brazil has not demonstrated that the 
disposal obligation can be justified under Article  XX(b) for the same reasons as the import ban. 
4. Conclusion 
7.447  For the reasons above, the Panel finds that the state measures – i.e. the marketing prohibition 
and the disposal obligation – contained in Law 12.114, as amended by Law 12.381, of the Brazilian 
State of Rio Grande Do Sul are inconsistent with  Article III:4 of the GATT 1994.  We also find that 
Brazil has not demonstrated that the state meas ures can be justified unde r Article XX(b) of the 
GATT 1994. 
D. EXEMPTION OF MERCOSUR  COUNTRIES FROM THE IMPORT BAN AND THE FINES  
7.448  The European Communities  submits that the exemptions provided for retreaded tyres 
imported from MERCOSUR countries (i.e. Argentin a, Paraguay and Uruguay) from the import ban 
(Article 40 of Portaria SECEX 14) as well as fr om the fines on the importation, marketing, 
transportation, storage, keeping or warehousi ng of imported retreaded tyres (Presidential 
Decree 3.919) are inconsistent with Articles XIII:1 and I:1 of the GATT 1994.1593   
7.449  Brazil  does not contest that the measures are a prima facie  violation of Articles XIII:1 and I:1 
of the GATT 1994.1594  Brazil however responds that th ese exemptions are justified under 
Article XX(d), as measures necessary to secure comp liance with laws and regulations that are not 
inconsistent with GATT 1994, and under Article XXIV, in the context of its customs union under 
MERCOSUR. 
                                                      
1592 See paragraphs 7.139 above. 
1593 In its panel request, the European Communities identifies the following measures:  
"The exemption of retreaded tyres imported from other MERCOSUR countries from the import ban by means of Portaria No. 14 of 17 November 
2004  of the Secretariat of Foreign Trade of the Brazilian Ministry of 
Development, Industry and International Commerce and from the above-mentioned financial penalties by virtue of Presidential Decree No. 4592
 of 
11 February 2003, in response to the ruling of a MERCOSUR panel 
established at the request of Uruguay." (underline added)   
In its first written submission, the European Communities develops arguments in relation to both 
Portaria 14/2004 and Presidential D ecree 4592. (European Communities' first written submission, paras. 65, 73, 
74.) 
1594 Brazil's answer to panel question No. 33. WT/DS332/R 
Page 244  
 
  7.450   The provisions relevant to the MERCOSUR exemptions are Article 40 of Portaria 
SECEX 14/2004 and Presidential Decree 4.592. 
7.451  Article 40 of Portaria SECEX 14/2004 provides:  
"Article 40 – Import licenses shall not be issued  for imports of retreaded used tyres to 
be used as consumer goods or raw mate rials classified under NCM heading 4012, 
with the exception of remolded tyres classified under NCM heading 4012.11.00, 
4012.12.00, 4012.13.00 or 4012.19.00, originating in and coming from Member 
States of MERCOSUR under Economic Complementation Agreement No. 18 ."
1595 
(emphasis added) 
7.452  Presidential Decree 4592 of 11 February 2003 provides: 
"Article 1:  Article 47-A of Decree No. 3.179 of 21 September 1999 shall apply with 
the addition of the following paragraph, a nd the current sole paragraph shall be 
renumbered as (1): 
"paragraph (2)  – Imports of reconditioned tyres classified under heading MCN 
4012.11.00, 4012.12.00, 4012.13.00 and 4012.19.00, originating in the MERCOSUR 
member countries under Economic Comple mentation Agreement No. 18 shall be 
exempt from payment of the fine referred to in this Article.   
..." (emphasis added) 
7.453  The Panel notes that the legal bases of the exemptions  are the very regulations that provide 
the legal bases for the import prohibition as well as the fines, namely Article 40 of Portaria 
SECEX 14/2004 and Presidential Decree 3.179 through Presidential Decree 4.592.1596  As explained 
above, Article 40 of Portaria SECEX 14/2004 is the legal basis of the import prohibition at issue and 
Presidential Decree 3.179, through Presidential Decr ee 3.919, is the legal basis for the fines.  
7.454  We recall that in discharging its duties as set out in Article 11 of the DSU, "a panel is not ... 
required to examine all legal claims made before it."1597  A panel is required to address only those 
issues that are necessary fo r the resolution of the matter between the parties.1598  
7.455  In this instance, we have al ready found that the import proh ibition as well as the fines are 
inconsistent with Article XI:1 and are not justifie d under Article XX(b) and, in the case of the fines, 
are also not justified under Article XX(d).  Given that the import prohibition and the fines themselves, which are the legal bases from which the exempti ons are derived, have already been found 
inconsistent with the requirements of the GATT 1994, and that the exemptions only exist in relation to 
those measures, we find it unnecessary to examine th e European Communities' separate claim on the 
exemptions. 
7.456  Therefore, the Panel has decided to exercise judicial economy in respect of the 
European Communities' claims under Articles XIII: 1and I:1 on Brazil's MERCOSUR exemptions and 
Brazil's defence under Articles XXIV and XX(d) of GATT 1994. 
                                                     
 
1595 Exhibit EC-29. 
1596 Presidential Decree 4.592 incorp orates an exemption clause into  Presidential Decree 3.179, and 
Presidential Decree 3.919 incorporat es the provision on the fines into Presidential Decree 3.179. 
1597 Appellate Body Reports on Canada – Autos, paras. 112-114 and US – Wool Shirts and Blouses , 
p. 18. 
1598 Appellate Body Report on US – Wool Shirts and Blouses , p.22.   WT/DS332/R 
 Page 245 
 
 
  VIII.  CONCLUSIONS AND RECOMMENDATIONS 
8.1 In light of the above, the Panel concludes that: 
(a) with respect to Brazil's import prohibition on retreaded tyres: 
(i) Portaria SECEX 14/2004 is inconsiste nt with Article XI:1 of GATT 1994 in 
that it prohibits the issuance of import licences for retreaded tyres, and is not 
justified under Article XX(b) of GATT 1994. 
(ii) Portaria DECEX 8/1991, to the extent that it prohibits the importation of 
retreaded tyres, is inconsistent with Article XI:1 and is not justified under 
Article XX(b) of GATT 1994. 
(iii) Resolution CONAMA 23/1996 is not inconsistent with Article XI:1. 
(b) with respect to the fines imposed by Braz il on importation, marketing, transportation, 
storage, keeping or warehousing of retreaded tyres, Presidential Decree 3.179, as amended by Presidential Decree 3.919, is inconsistent with Article XI:1 of 
GATT 1994 in that it imposes limiting conditi ons in relation to the importation of 
retreaded tyres and is not justified under either Article XX(b) or Article XX(d) of 
GATT 1994. 
(c) with respect to the measures maintained by the Brazilian State of Rio Grande do Sul 
in respect of retreaded tyres, Law 12.114,  as amended by Law 12.381, is inconsistent 
with Article III:4 of GATT 1994 in that it accords less favourable treatment to imported retreaded tyres than to like dom estic products and is not justified under 
Article XX(b) of GATT 1994. 
8.2 With respect to the European Communities' cl aims that Brazil's MERCOSUR exemptions are 
inconsistent with Articles XIII:1 and I:1 of GATT 1994, the Panel has decided to exercise judicial 
economy.  
8.3 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie to constitute a case of 
nullification or impairment.  The Panel concludes that , to the extent that the measures listed above are 
inconsistent with GATT 1994, they have nullifi ed or impaired benefits accruing to the 
European Communities under that agreement. 
8.4 Accordingly, the Panel recommends that the Di spute Settlement Body request Brazil to bring 
these inconsistent measures as listed above into conformity with its obligations under the GATT 1994. 
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