BRAZIL – MEASURES AFFECTING IMPORTS OF RETREADED TYRES
Document: ARB-2008-2/23 Arbitration under Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes
Date: 29 August 2008
Document codes: WT/DS332/16
Complainant: EU
Respondent: Brazil
Third parties: Argentina, Australia, China, Cuba, Guatemala, Japan, South Korea, Mexico, Paraguay, Taiwan, Thailand, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. I:1, III:4, XI:1, XIII:1  GATT 1994

BRAZIL – MEASURES AFFECTING IMPORTS OF RETREADED TYRES

ARB-2008-2/23

Arbitration
under Article 21.3(c) of the
Understanding on Rules and Procedures
Governing the Settlement of Disputes

Award of the Arbitrator
Yasuhei Taniguchi

AWARD OF THE ARBITRATOR

Parties:

Brazil
European Communities
 ARB-2008-2/23

 Arbitrator:

 Yasuhei Taniguchi

I. Introduction
1. On 17 December 2007, the Dispute Settlement Body (the "DSB") adopted the Appellate Body
Report
1 and the Panel Report 2, as modified by the Appellate Body Report, in .3 At the meeting of the DSB held on 15 January 2008, Brazil
stated that it intended to comply with the recommendations and rulings of the DSB in this dispute, and
that it would need a reasonable period of time in which to do so.4
2. On 4 June 2008, the European Communities info rmed the DSB that consultations with Brazil
had not resulted in an agreement on the reasonable period of time for implementation. The European
Communities therefore requested that such period be determined through binding arbitration pursuant
to Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (the "DSU").5
3. The European Communities and Brazil were unable to agree on an arbitrator within 10 days
of the matter being referred to arbitration. Ther efore, by letter dated 16 June 2008, the European
Communities requested that the Dir ector-General appoint an arbitrat or pursuant to footnote 12 to
Article 21.3(c) of the DSU. Th e Director-General appointed me as arbitrator on 26 June 2008, after
consulting the parties. 6 I informed the parties of my acceptance of the appointment by letter dated
30 June 2008 and undertook to issue the award no later than 29 August 2008.

1Appellate Body Report, WT/DS332/AB/R.
2Panel Report, WT/DS332/R.
3WT/DS332/12.
4WT/DSB/M/244, para. 11.
5WT/DS332/14.
6WT/DS332/15.

4. By letters dated 1 July 2008, Brazil and the European Communities each agreed that this
award will be deemed to be an arbitration award under Article 21.3(c) of the DSU, notwithstanding
the expiry of the 90-day period stipulated in Article 21.3(c).
7
5. Brazil filed its written submission on 9 July 2008. The European Communities filed its
written submission on 18 July 2008. An oral hearing was held on 5 August 2008.
II. Arguments of the Parties
A. Brazil
6. Brazil requests that I determine the "reasonabl e period of time" for implementation of the
recommendations and rulings of the DSB in this dispute to be 21 months from the date of adoption by
the DSB of the Panel and Appellate Body Reports
8, that is, until 17 September 2009.
7. Brazil recognizes that Article 21.3(c) of the DSU provides that "the reasonable period of time
to implement panel or Appellate Body recommendati ons should not exceed 15 months from the date
of adoption of a panel or Appellate Body report." 9 Yet, referring to the proviso in the third sentence
of Article 21.3(c), that the period of time may be shorter or longer de pending on the particular
circumstances in Article 21.3(c) of the DSU, Braz il asserts that the unique circumstances of this case
require a period of time longer than 15 months for implementation.10
8. Brazil proposes to implement the DSB's recommendations and rulings in this dispute by
taking the following steps. First, Brazil states that it would "halt imports of used tyres through court
injunctions" and submits that the reasonable pe riod of time for revoking the preliminary court
injunctions granted in the present and past cases and to prevent new preliminary injunctions from
being granted in the future would be 21 months from the date of adoption of the Appellate Body
Report.11 Secondly, Brazil argues that it was necessar y to "establish new regulatory disciplines for
used and retreaded tyres within MERCOSUR"12 and submits that 19 months from the date of adoption
of the Appellate Body Report would be a reasona ble period of time for negotiating a new regime for

7The 90-day period following adoption of the Panel and Appellate Body Reports expired on
17 March 2008. The parties concluded a procedural agreement on 11 February 2008 regarding the extension of
the time period under Article 21.3(c) of the DSU. (WT/ DS332/13) According to th is agreement, an award
issued later than 90 days after the date of adoption of the recommendations and rulings by the DSB shall be
deemed to be an award of the arbitrator for purposes of Article 21.3(c) of the DSU.
8Brazil's submission, paras. 5, 34, 36, 44, 47, 54, and 55.
9Ibid., para. 23.
10Ibid., para. 23.
11Ibid., paras. 33 and 34.

used and retreaded tyres with its MERCOSUR partners. 13 Thirdly, Brazil would "declare the
unconstitutionality of state measures that purport to regulate imports of retreaded tyres", which, in
Brazil's submission, would require a time period of 21 months from the date of adoption of the
Appellate Body Report.14
9. Brazil emphasizes that Article 21.3(c) leaves to the implementing Member the decision as to
how a measure should be brought into compliance with in the Member's own legal system and that the
reasonable time needed for that purpose may vary depending on the means of compliance selected by
the implementing Member.15 Making reference to previous Artic le 21.3(c) arbitration awards, Brazil
recognizes that the reasonable period of time should be the "shortest period possible within the legal
system of the Member". 16 Yet, Brazil also submits that this is not to be understood as requiring the
implementing Member to have recourse to extraordinary procedures. 17 Finally, Brazil states that the
15-month period in Article 21.3(c) is to be understood as a "guideline" rather than an "outer limit" for
the reasonable period of time.18
1. Proceeding before the Federal Supreme Court Concerning Preliminary
Court Injunctions
10. Brazil contends that, in order to stop imports of used tyres effectively, the Government of
Brazil has initiated Federal Supreme Court proceedings. 19 The President of Brazil initiated an
Argüição de Descumprimento de Preceito Fundamental ("ADPF") (Allegation of Violation of
Fundamental Precept) proceeding in September 2006, requesting a ruling from the Federal Supreme
Court that used tyre imports infringe on the fundamental constitutional right to a balanced
environment.20 Brazil argues that a favourable ruling by the Federal Supreme Court in this case will

13Brazil's submission, paras. 33 and 35.
14Ibid., paras. 33 and 36.
15Ibid., para. 25 (quoting Award of the Arbitrator, Australia – Salmon , para. 35; and referring to
Award of the Arbitrator, Korea – Alcoholic Beverages, para. 45; Award of the Arbitrator, US – Offset Act (Byrd
Amendment), para. 48; Award of the Arbitrator, EC – Tariff Preferences , para. 30; Award of the Arbitrator,
Chile – Price Band System , para. 32; Award of the Arbitrator, US – Oil Country Tubular Goods Sunset
Reviews, para. 26; Award of the Arbitrator, Japan – DRAMs (Korea), para. 25; Award of the Arbitrator, EC –
Chicken Cuts, para. 49; and Award of the Arbitrator, EC – Hormones, para. 38).
16Ibid., para. 30 (referring to Award of the Arbitrator, Chile – Price Band System , para. 34; Award of
the Arbitrator, Canada – Pharmaceutical Patents, para. 48; Award of the Arbitrator, EC – Hormones, para. 26;
and Award of the Arbitrator, EC – Tariff Preferences, para. 26).
17Ibid., para. 30 (referring to Award of the Arbitrator, EC – Chicken Cuts , para. 49; Award of the
Arbitrator, Korea – Alcoholic Beverages, para. 42; Award of the Arbitrator, US – Section 110(5) Copyright Act,
para. 32; Award of the Arbitrator, Canada – Patent Term , para. 39; Award of the Arbitrator, EC – Tariff
Preferences, para. 42; and Award of the Arbitrator, Japan – DRAMs (Korea), para. 25).
18Ibid., para. 31 (quoting Award of the Arbitrator, US – Hot-Rolled Steel, para. 25).
19Ibid., para. 38.
20Ibid., para. 40.

revoke the existing preliminary injunctions, prohibit the issuance of future injunctions, and thereby
bring Brazil into compliance with its World Trade Organization ("WTO") obligations.
11. Brazil makes reference to decisions by the Federal Supreme Court involving individual
preliminary injunctions.
21 Brazil submits that the Federal Supreme Court has rejected several
arguments advanced in favour of preliminary in junctions, including the arguments that: (1) a
"portaria" is not an appropriate instrument to implement the import ban on used tyres; (2) the
government agency that imposed the initial ban lacked the constitutional authority to do so; (3) the
prohibition of imports of used, but not new, tyres violated the constitutional principle of isonomy, or
equality of rights; and (4) the import ban on used tyres interfered with the constitutional principle of
free enterprise because it restricted access to supplies of raw materials for domestic retreaders.22
12. Furthermore, Brazil refers to two 2007 proceed ings before the Federal Supreme Court, in
which the President of the Supreme Court accepted the Solicitor General's request to suspend lower
courts' rulings that allowed specific retreaders to import used tyres. Brazil contends that these
decisions recognized that the importation of used ty res entailed environmental risks. Brazil submits
that these cases were decided based on, inter alia , public interest in health and an ecologically
balanced environment according to Article 225 of the Federal Constitution. 23 Brazil explains that
these Federal Supreme Court cases involved specific preliminary injunctions and, therefore, did not
have prospective application; yet, in Brazil's vi ew, they indicated the Federal Supreme Court's view
on the issue. Furthermore, Brazil explains that the ADPF, in contrast to the specific preliminary
injunctions, would apply prospectively.
24
13. Brazil points out that the ADPF was initiated in September 2006, and submits that, on
31 January 2008, the Government of Brazil asked the Federal Supreme Court to take note of the WTO
decision and to expedite its proceedings. A pub lic hearing in this case took place on 27 June 2008. 25
Brazil asserts that, in any event, it will be 21 mont hs after the adoption of the Appellate Body Report
before the Federal Supreme Court issues its decision.26
14. In support of its argument that 21 months is a reasonable period of time for Brazil to
implement the recommendations and rulings of the DSB in this dispute, Brazil explains that the only
ADPF action decided by the Federa l Supreme Court of Brazil so fa r took 41 months from the day of

21Brazil's submission, para. 39.
22Ibid.
23Ibid., para. 42, where Brazil refers to the Decision of the Plenary of the Federal Supreme Court in
Case No. STA 118-AgR (Exhibit BRA-179 submitted by Brazil to the Arbitrator).
24Ibid., para. 43.
25Ibid., para. 46 and footnote 67 thereto.
26Ibid., para. 44.

the petition. 27 Furthermore, Brazil makes re ference to the duration of the Ação Direta de
Inconstitucionalidade ("ADI") (Direct Unconstitutionality Action), which it describes as a more
frequently used, but similarly complex, constitutio nal action. Brazil surveyed 1,333 ADI actions
submitted to the Federal Supreme Court between 1 January 1998 and 31 December 2003. Brazil
submits that the average duration of these proceedings (not taking into account actions that are still
pending or that have been rejected on procedural grounds) was 34 months.28
15. Brazil contends that the ADPF involving imports of used tyres is "of like complexity" as the
ADI concerning stem cell research. Brazil submits th at it took the Federal Supreme Court 38 months
to issue a decision in the ADI proceeding concerning stem cell research. Therefore, Brazil considers
it reasonable to expect that the Federal Supr eme Court's decision in the pending ADPF action
concerning retreaded tyres would take at least 34 months. 29 Brazil envisages that a further two
months would be required for implementation of the Federal Supreme Court's decision, in particular,
notifying Brazil's federal courts of the decisi on and having prior licenses withdrawn by customs
authorities. Subtracting 15 months (the period between the initiation of the ADPF procedure and the
adoption of the Appellate Body Report) from the tota l of 36 months, leads Brazil to conclude that a
total of 21 months from the date of the adoption of the Appellate Body Report would be a reasonable
period of time to comply with the DSB's recommenda tions and rulings relati ng to preliminary court
injunctions with respect to imports of used tyres.30
2. Import Regime for Retreaded Tyres from MERCOSUR Countries
16. Brazil contends that, in order to comply with the DSB's recommendations and rulings with
respect to the exemption from the import ban on re treaded tyres originating in MERCOSUR countries
(the "MERCOSUR exemption") established in Article 40 of Portaria No. 14 of the Secretaria de
Comércio Exterior ("SECEX") (Secretariat of Foreign Trade of the Brazilian Ministry of
Development, Industry, and Foreign Trade) da ted 17 November 2004 ("Portaria SECEX 14/2004") 31,
it would have to negotiate an agreement with its MERCOSUR partners.32 Brazil argues that removing
the exemption from the import ban on retreaded tyres originating in MERCOSUR countries and
restoring the original erga omnes application of the import ban on retreaded tyres would not be a

27Brazil's submission, para. 45.
28Ibid. and footnote 66 thereto.
29Ibid., para. 47.
30Ibid.
31I note that in November 2006, Article 40 of Portaria SECEX 14/2004 was replaced by Article 41 of
Portaria SECEX 35/2006, and subsequently by Article 41 of Portaria SECEX 36/2007. The text of the Article
remains identical. (Appellate Body Report, footnote 15 8 to para. 122; European Communities' submission,
para. 35)
32Brazil's submission, para. 48.

viable option because it would conflict with th e current MERCOSUR rules as interpreted by the
MERCOSUR Tribunal.
33
17. In support of its argument that 19 months is a reasonable period of time for Brazil to achieve
compliance with the DSB's recommendations and rulings, Brazil submits that a new MERCOSUR-
wide tyres regime will have to be reviewed and approved by the Common Market Group ("GMC"),
the executive body of MERCOSUR, and by the Common Market Council ("CMC")—MERCOSUR's
highest body, vested with the authority to promulgate union-wide policies and regulations.34
18. Brazil submits that, on 15-16 April 2008, it proposed a GMC Resolution to create an Ad Hoc
Working Group for the Regional Policy for Tyres 35 (the "Ad Hoc Working Group"). Brazil further
contends that the GMC approved the Resolution an d established the group at a meeting held on 29
June 2008. Brazil maintains that the Ad Hoc Wo rking Group on Tyres will present its results to the
GMC in December 2008, and that the GMC's decision will then be submitted to the CMC for a vote,
also in December 2008. 36 The GMC's decision establishing a new regime for the importation of
retreaded tyres would then have to be submitted to MERCOSUR member states' legislative bodies for
approval. Based on a survey of implementation of all 27 CMC Decisions and 188 GMC Resolutions
adopted and incorporated into domestic law between 1998 and 2007, Brazil contends that the average
period of time for incorporation of CMC Decisions and GMC Resolutions into national law was 34
months.37 Brazil submits, however, that in the present case the benchmark should rather be the
shortest period for legislative approval, which, according to Brazil, was six months. 38 Further, Brazil
maintains that according to Article 40 of the Protoc ol of Ouro Preto on the Institutional Structure of
MERCOSUR39, an additional month is necessary for the regi me to enter into force after it has been
incorporated into the domestic legal system of the member states.40
19. Summing up the time period required for designing a new measure and securing CMC
approval (12 months), approval by MERCOSUR memb ers' legislatures (6 months), and the new

33Brazil's submission, para. 49.
34Ibid., para. 50.
35Ibid., para. 51 and footnote 70 thereto (referring to MERCOSUR/GMC Resolution No. 25/08 of
29 June 2008, establishing an Ad Hoc Group for a Regional Policy on Tyres, Including Used and Retreaded
Tyres (Exhibit BRA-181 submitted by Brazil to the Arbitrator)).
36Ibid. (referring to MERCOSUR/GMC Resolution No. 25/08, supra, footnote 35).
37Ibid., para. 52 and footnote 72 thereto.
38Ibid., para. 52 and footnote 73 thereto (referring to MERCOSUR/GMC Resolutions No. 35/98,
No. 36/98, and No. 21/99).
39Additional Protocol to the Treaty of Asunción on the Institutional Structure of MERCOSUR, done in
Ouro Preto on 17 December 1994.
40Brazil's submission, para. 52 and footnote 74 thereto.

measure's entering into force (one month), Braz il submits that 19 months would be a reasonable
period of time for Brazil to comply with the DSB's recommendations and rulings.41
3. Proceeding before the Federal Supreme Court Concerning Laws Adopted by
the State of Rio Grande do Sul
20. Brazil contends that certain state measures a dopted by Rio Grande do Sul have no practical
application because the state is not competent to issue such acts. Rather, the Brazilian Federal
Government has exclusive competence to issue import licenses.42
21. Nonetheless, Brazil submits that, with respect to a potential inconsistency of the state
measures with the Brazilian Federal Constitution, Br azil's General Prosecutor has filed an ADI action
with the Federal Supreme Court requesti ng the court to revoke the state measures. 43 According to
Brazil, this action was filed in September 2006. In view of the Federal Supreme Court's practice of
grouping together cases with related subject matters, Brazil asserts that this ADI action would most
likely be decided together with the ADPF action involving tyre imports. Based on the assumption that
both cases will be decided together, Brazil argues that the same period of time, namely 21 months,
would be a reasonable period of time for complian ce with respect to the measures adopted by the
State of Rio Grande do Sul.
44
B. European Communities
22. The European Communities requests that I dete rmine the "reasonable period of time" for
implementation of the recommendations and rulings of the DSB in this dispute to be 10 months from
the date of the adoption by the DSB of the Pa nel and Appellate Body Reports, that is, until
17 October 2008.45
23. As an initial matter, the European Communities submits that Article 21.1 of the DSU calls for
"prompt compliance" by the implementing Member. Therefore, in the European Communities' view,
the default position is compliance in the shortest delay possible, should Brazil fail to meet its burden
of proving that a longer period is indeed necessary. The European Communities argues that the
average time periods referred to by Brazil for certa in of its proposed implementation steps are not
relevant, but that, instead, implementing measures have to be adopted in the shortest possible
manner.46 Furthermore, the European Communities argues that failure to begin adequately

41Brazil's submission, para. 53.
42Ibid., para. 54.
43Ibid.
44Ibid.
45European Communities' submission, para. 1.
46Ibid., para. 17.

implementation after adoption of the report must not result in advantage to the implementing Member
and does not warrant granting of extra time.
47
24. The European Communities maintains that th e most "obvious" way for Brazil to achieve
compliance with its WTO obligations would consist in repealing or modifying the measures found to
be inconsistent with its WTO obligations ( actus contrarius)48, and advances several arguments with
respect to the individual measures. In addition, the European Communities raises objections to the
specific implementing steps proposed by Brazil.
1. Repealing the Inconsistent Measures
25. First, with respect to Portaria No. 36 of the SECEX dated 22 November 2007 ("Portaria
SECEX 36/2007"), the European Communities ar gues that Brazil could lift the import ban on
retreaded tyres by repealing Article 41 of that portaria.49 Portarias are sub-legislative normative
acts, adopted by the Executive without involvement of Congress. The European Communities
submits that a portaria can be modified or repealed within weeks or a few months. In support of this
argument, the European Communities makes refe rence to Brazil's implementation of a 2002
MERCOSUR arbitral award through modification of the respective portaria within two months
following the ruling of the MERCOSUR arbitral tribunal. The European Communities claims that the
implementation obligation in the context of the pres ent dispute is similar to that concerning the 2002
MERCOSUR arbitral award as both relate to a bindi ng ruling by an international organization and
concern the same subject-matter, the same action ( lifting an import ban), and the same type of legal
act.50 Furthermore, the European Communities lists several portarias adopted in 2007 as examples
illustrating that the two-month period estimated by the European Communities is the usual period of
time for the adoption of portarias.51 The European Communities also argues that an implementing
Member is required to take full advantage of the fl exibility inherent in its legal system in order to
ensure that implementation takes place in acco rdance with the requirement of promptness in
Article 21 of the DSU. In the European Commun ities' view, the absence of mandatory time periods
within which steps must be taken under Brazil's law to amend or revoke portarias demonstrates the
existence of flexibility and supports the view that implementation can be achieved within a short
period of time.52

47European Communities' submission, para. 33 (referring to Award of the Arbitrator, US – Section
110(5) Copyright Act, para. 46).
48Ibid., para. 34.
49Ibid., para. 35.
51Ibid., para. 39.
52Ibid., para. 41.

26. Secondly, the European Communities asserts th at Presidential Decree 3.179 as amended by
Presidential Decree 3.919 should be repealed. Accord ing to the European Communities, this could be
achieved in less than two months. In support of its argument, the European Communities lists five
presidential decrees modifying decrees that had been issued up to one-and-a-half months before the
respective presidential decrees were issued. 53 The European Communiti es further argues that the
repeal of Presidential Decree 3.179 as amended by Presidential Decree 3.919 could be conducted in
parallel to the modification of Portaria SECEX 36/2007.54
27. Thirdly, the European Communities maintains th at, to the extent Portaria No. 8 of the
Departamento de Comércio Exterior ("DECEX") (Department of Foreign Trade of the Brazilian
Ministry of Development, Industry, and Fo reign Trade) dated 13 May 1991 ("Portaria
DECEX 8/1991") banning the importation of used products has been applied to imports of retreaded
tyres, Brazil is required to change its practice of interpretation and application. In the European
Communities' view, this would not entail modificati on of legislation and therefore would not require
any specific amount of time.55
28. Fourthly, the European Communities submits that, pursuant to Article XXIV:12 of the
General Agreement on Tariffs and Trade 1994 (the "GATT 1994") and Article 22.9 of the DSU,
Brazil is obliged to take the necessary steps to ensure that Law 12.114 as amended by Law 12.381 of
the State of Rio Grande do Sul is brought into co mpliance with Brazil's obligations under the covered
agreements. The European Co mmunities argues that the reasonable period of time should be
calculated based on the time required for the state legi slator to remove the WTO inconsistency, if that
is the shortest possible option; it should not be based on the time required for the Brazilian Federal
Government to prompt the State of Rio Grande do Sul to modify its legislation. The European
Communities maintains that state laws can be amen ded within approximately two months, and lists
three recent examples of state laws that have been adopted within less than two months in support of
its argument.56
2. Implementation Proposed by Brazil
29. The European Communities contends that the means proposed by Brazil are not achievable
within the timeframe of 15 months set out in Ar ticle 21.3(c) and raises several objections to the
specific implementation steps proposed by Brazil.

53European Communities' submission, para. 43 and footnote 40 thereto.
54Ibid., para. 44.
55Ibid., para. 45.
56Ibid., para. 48 (referring to Laws 12.979, 12.949, and 12.761 of the State of Rio Grande do Sul). The
European Communities identifies the website <www.al.rs.g ov.br/legis> as the source for this information.
(Ibid., footnote 41 to para. 48)

(a) Proceeding before the Fede ral Supreme Court Concerning
Preliminary Court Injunctions
30. The European Communities considers Brazil's propo sal to stop imports of used tyres through
a Federal Supreme Court proceeding that would invalidate existing prelim inary injunctions and
prohibit the issuance of new injunctions to be "quite extravagant".
57 The European Communities
asserts that it is the first time that a Member pr oposes to use domestic judicial action as a means of
implementation. The European Co mmunities argues that judicial acti on is not suitable to definitely
stop the importation of used tyres into Brazil becau se Brazil would not have control over the outcome
of that judicial action. The European Commun ities submits that the Government of Brazil's
expectation that the Federal Supreme Court would declare the preliminary injunctions
unconstitutional was speculative, given that the judges of the Federal Supreme Court are
independent.58 In the European Communities' view, the fact that a party goes to court is evidence of
the existence of legal controversy and uncertainty.
31. In addition, the European Communities makes re ference to the Award of the Arbitrator in
EC – Export Subsidies on Sugar , holding that the chosen method must be such that it could be
implemented within a reasonable period of time in accordance with the guideline contained in
Article 21.3(c) of the DSU 59. The European Communities asserts th at it is unclear what legal effects
the ongoing ADPF lawsuit will have and that it h as already taken longer than an average WTO
dispute settlement proceeding. The only ADPF deci ded as yet took 41 months to complete. In the
European Communities' view, this does not corr espond to the timeframe set out for compliance
measures in Article 21.3(c) of the DSU.60
32. The European Communities argues that, in orde r to prevent domestic courts from issuing
preliminary injunctions permitting th e importation of used tyres, Brazil could instead adopt a formal
law that would elevate the existing import ban on retreaded tyres from the level of a portaria to that of
a parliamentary act. The European Communities ma intains that a respective law could be adopted
through the two chambers of the Brazilian Congress within no more than 10 months.61
33. Furthermore, the European Communities mak es reference to Article 62 of the Brazilian
Federal Constitution concerning "provisional meas ures". This provision enables the Brazilian
President to declare provisionally applicable a bill submitted to Congress, thereby pressing the
legislature to vote on the bill rapidly. The Euro pean Communities submits that this procedure is

57European Communities' submission, para. 56.
58Ibid., para. 57.
59Ibid., para. 18 (referring to Award of the Arbitrator, EC – Export Subsidies on Sugar, para. 69).
60Ibid., paras. 58 and 61.
61Ibid., para. 63 and footnote 51 thereto.

frequently used in Brazil and can therefore not be regarded as an "extraordinary measure". The
European Communities states that compliance with the recommendations and rulings of the DSB
should give rise to comparable urgency as is regularly applied in internal matters in Brazil.62
(b) Import Regime for Retreaded Tyres from MERCOSUR Countries
34. The European Communities submits that Brazil's proposal to negotiate a MERCOSUR-wide
tyre import regime to be adopted by the CMC a nd subsequently approved by the Brazilian Congress
does not constitute a valid basis for calculating the reasonable period of time under Article 21.3(c) of
the DSU.63 The European Communities argues that, in the present case, negotiating a modification of
an international legal framework is not an acceptable basis for the calculation of the reasonable period
of time pursuant to Article 21.3(c), because alterna tive options for implementation are available and
Brazil has not demonstrated that negotiating a MERCO SUR-wide regime is indispensable to achieve
compliance.64 The European Communities asserts that banning the importation of retreaded tyres
originating in MERCOSUR countries would merely require an actus contrarius to the exemption
provided in Portaria SECEX 36/2007. In res ponse to Brazil's argument that removing the
MERCOSUR exemption and restoring the original erga omnes application of the import ban on
retreaded tyres would conflict with MERCOSUR rule s, the European Communities asserts that, in the
summer of 2007, and again in the summer of 2008, Br azil restricted imports of retreaded tyres from
MERCOSUR countries without any amendment to MERCOSUR rules.65
35. The European Communities questions whether Brazil actually intends removing the
MERCOSUR exemption from the import ban on retreaded tyres. It alleges that Brazil, rather,
envisages a regime under which all MERCOSUR count ries would ban the importation of used and
retreaded tyres from outside the bloc while, at the sam e time, letting tyres of all types be traded freely
within MERCOSUR.
66 The European Communities argues that, wh ile it is not up to the Arbitrator to
assess the WTO-consistency of the implementation measure, the Arbitrator cannot allot time for a
measure that obviously would not bring about compliance.
67

62European Communities' submission, para. 66.
63Ibid., para. 80.
64Ibid., para. 77.
and Exhibit BRA-175 submitted by Brazil to the Appellate Body); footnote 55 to para. 68 (stating that, on
22 August 2007, Brazil adopted Resolution No. 38 limiting imports of retreaded tyres from Uruguay to 130,000
and from Paraguay to 120,000 per year); footnote 61 to para. 78 (stating that Brazil further increased the import
quota for retreaded tyres from Uruguay and Paraguay in the summer of 2008).
66Ibid., para. 69 (referring to a news paper article in Argentina's La Nación, 22 February 2008, p. 16
(Exhibit EC Arbitration-1 submitted by the European Communities to the Arbitrator)).
67Ibid., para. 70.

36. Referring to the Award of the Arbitrator in EC – Chicken Cuts , the European Communities
maintains that an implementing Member is not entirely free to choose among different options of
achieving WTO compliance. The European Commun ities argues that, if the implementing Member
does not prove that recourse to external elements (such as the adoption of a regional framework by
MERCOSUR) is indispensable for achieving compliance, then the implementing Member must not
receive grace time for such an exte rnal step especially if compliance can be achieved by that Member
alone, without adopting a MERCOSUR-wide regime.
68
37. In addition, the European Communities asserts that a modification of the MERCOSUR trade
regime for tyres is not something Brazil could contro l, and that means of implementation that require
the agreement of other states are too hypothetical fo r determining the reasonable period of time. The
European Communities adds that the timing and outcome of negotiations would be "completely
uncertain", all the more because the intended negotiati ons were to take place w ithin the diversity of
interests of the different members of MERCOSUR. Furthermore, a decision would have to be ratified
or transposed into the domestic legal system of all MERCOSUR countries. This would add to the
uncertainty about the timing of the entry into force of a MERCOSUR-wide regime.69
(c) Proceeding before the Federal Supreme Court Concerning Laws
Adopted by the State of Rio Grande do Sul
38. The European Communities submits that the ADI action before the Federal Supreme Court
challenging the state law of Rio Grande do Sul under the Brazilian Federal Constitution is not a
suitable action that could serve as the basis for the determination of the reas onable period of time for
implementation pursuant to Article 21.3(c) of the DSU. The European Communities points out that
proceedings before the Federal Supreme Court are concerned with potential vi olations of provisions
of the Brazilian Federal Constitution. Yet, th e present dispute before the WTO does not concern
possible violations by state measures of the Fede ral Constitution of Brazil but rather, exclusively,
violations of Brazil's WTO obligations.70
39. With regard to the ADI proceeding before the Federal Supreme Court, the European
Communities raises the same objections it raised with respect to the ADPF proceeding above, namely,
that the outcome of court proceedings is inherently unforeseeable, and that the time the court will take
in this case to reach a decision is uncertain.71

68European Communities' submission, para. 76 (quoting Award of the Arbitrator, EC – Chicken Cuts ,
para. 56) and para. 77.
69Ibid., para. 78.
70Ibid., para. 83.
71Ibid., para. 84.

40. In addition, the European Comm unities maintains that, even if, arguendo, the Federal
Supreme Court rendered a decision confirming that Rio Grande do Sul's measure was inconsistent
with the Brazilian Constitution, the legal effects of that decision on the state measures would be
unclear. The European Communities ques tions whether these measures would be ipso facto repealed,
or whether such decision would have to be enfor ced by the Federal Government, which would require
additional time for Brazil to achieve compliance with its WTO obligations.72
41. Finally, the European Communities refers to Br azil's statement that the average duration of
ADI proceedings is 34 months.73 The European Communities argues that this duration is significantly
outside the 15-month "guideline" foreseen in Article 21.3(c) of the DSU as interpreted by previous
arbitrators. In the absence of particular circumstan ces justifying the allocation of a time period that is
not the shortest period possible, the European Communities submits that the calculation of the
reasonable period of time should be based on the tim e needed by the State Assembly of Rio Grande
do Sul to repeal the measure, rather than on th e time expected for the conclusion of the ADI
proceeding before the Federal Supreme Court.
42. In the absence of any alternative course of action proposed by Brazil, the European
Communities maintains that the only possible implem entation option is the repeal of the import ban
on retreaded tyres, which, in the European Co mmunities' submission, will not take longer than
10 months.
III. Reasonable Period of Time
A. Preliminary Matters
1. Mandate of the Arbitrator
43. The Panel and Appellate Body Reports in this dispute were adopted by the DSB on
17 December 2007. Pursuant to Article 21.3 of the DSU, Brazil informed the DSB of its intention to
comply with the recommendations and rulings shortly thereafter. 74 Article 21.3 of the DSU
establishes that, when it is "impracticable" fo r a Member to comply "immediately" with the
recommendations and rulings of the DSB, that Me mber "shall have a reasonable period of time in
which to do so". Brazil informed the DSB that it would require a reasonable period of time in this
dispute. Given that the parties failed to ag ree on a period of time for implementation of the
recommendations and rulings of the DSB, the Director-General appointed me as Arbitrator on

72European Communities' submission, para. 85.
74WT/DSB/M/244, para. 11.

26 June 2008, after consulting with the parties
75, to determine a reasonable period of time, and I
accepted the appointment on 30 June 2008.
44. In determining the reasonable period of time, I shall take due account of the relevant
provisions of the DSU, in particular, paragraph 3(c) of Article 21, which reads:
[A] guideline for the arbitrator should be that the reasonable period
of time to implement panel or Appellate Body recommendations
should not exceed 15 months from the date of adoption of a panel or
Appellate Body report. However, th at time may be shorter or longer,
depending upon the particular circumstances. (footnote omitted)
45. I am mindful of the context in which this provision appears. Article 21.1 of the DSU provides
that "prompt compliance" with recommendations a nd rulings of the DSB "is essential in order to
ensure effective resolution of disputes to the bene fit of all Members." Moreover, the introductory
paragraph of Article 21.3 indicates that a "reasona ble period of time" for implementation shall be
granted only if "it is impracticable to comply imme diately" with the recommendations and rulings of
the DSB.
46. At the oral hearing in this arbitration, both Brazil and the European Communities accepted
that Article 21.3 of the DSU requires "prompt compliance", and that a "reasonable period of time" for
implementation shall be granted only if immediate co mpliance is "impracticable". The parties further
agreed with the statement of the arbitrator in EC – Hormones that the reasonable period of time
"should be the shortest period possible within the legal system of the [implementing] Member".
76
47. I also draw guidance from principles articulated in previous arbitration awards. Accordingly,
my mandate relates to the time by when the implementing Member must have achieved compliance,
not to the manner in which that Member achieves co mpliance. Yet, I consider that when a Member
must comply cannot be determined in isolation from the chosen means of implementation. It closely
relates to the question of how a Member intends to comply with the recommendations and rulings of
the DSB. In that vein, the arbitrator in US – 1916 Act stated that, "[t]urning to the question of what
would constitute the 'reasonable period of time' for im plementation in this case, I need to look first at
the type of measure proposed to be used for implementation." 77 Similarly, the arbitrator in Japan –
DRAMs (Korea) found that, in order "to determine when a Member must comply, it may be
necessary to consider how a Member proposes to do so."78

75WT/DS332/15.
76Award of the Arbitrator, EC – Hormones, para. 26.
77Award of the Arbitrator, US – 1916 Act, para. 34.
78Award of the Arbitrator, Japan – DRAMs (Korea), para. 26. (original emphasis)

48. Brazil and the European Communities hold diverg ent views with respect to the appropriate
means of implementation. Yet, as a general prem ise, both parties agree with the statement of the
arbitrator in EC – Hormones that the implementing Member has "a measure of discretion in
choosing the means of implementation, as long as the me ans chosen are consistent with the
recommendations and rulings of the DSB and with the covered agreements."79 In my determination, I
am also guided by the statements of the arbitrator in EC – Export Subsidies on Sugar that "the
implementing Member does not have an unfettered right to choose any method of implementation",
and that "the chosen method must be such that it could be implemented with in a reasonable period of
time in accordance with the guidelines contained in Article 21.3(c)."80 As other arbitrators in the past,
I also consider that the implementing Member is expected to use whatever flexibility is available
within its legal system 81; however, this does not necessarily include recourse to "extraordinary"
procedures.82 Finally, I am mindful that it is beyond my mandate to determine the consistency with
WTO law of the measure eventually taken to comply; this can only be judged in Article 21.5
proceedings. In making my determination pursuant to Article 21.3(c), the means of implementation
available to the Member concerned is , however, a relevant consideration. 83 In particular, I must
consider "whether the implementing action falls with in the range of permissible actions that can be
taken in order to implement the DSB's recommendations and rulings." 84 At the oral hearing in this
arbitration, both Brazil and the European Communiti es agreed that these principles set out in previous
arbitration awards are relevant for the determination of a reasonable period of time.
2. The Measures to be Brought into Conformity
49. I refer to the relevant findings of both the Pane l and Appellate Body in this dispute. The
Appellate Body found that the inconsistency of the import ban on retreaded tyres with Article XI of

79Award of the Arbitrator, EC – Hormones , para. 38. (original emphasis) See also Award of the
Arbitrator, Japan – DRAMs (Korea) , para. 25 (referring to Award of the Arbitrator, EC – Chicken Cuts ,
para. 49, in turn referring to Award of the Arbitrator, Canada – Pharmaceutical Patents , paras. 41-43; Award
of the Arbitrator, Chile – Price Band System , para. 32; Award of the Arbitrator, EC – Tariff Preferences ,
para. 30; Award of the Arbitrator, US – Oil Country Tubular Goods Sunset Reviews , para. 26; Award of the
Arbitrator, US – Gambling, para. 33; and Award of the Arbitrator, EC – Export Subsidies on Sugar, para. 69).
80Award of the Arbitrator, EC – Export Subsidies on Sugar, para. 69. See also Award of the Arbitrator,
Japan – DRAMs (Korea), para. 27 (referring to Award of the Arbitrator, EC – Chicken Cuts, para. 56).
81See Award of the Arbitrator, Japan – DRAMs (Korea), para. 25 (referring to Award of the Arbitrator,
EC – Chicken Cuts, para. 49, in turn referring to Award of the Arbitrator, Chile – Price Band System, para. 39;
Award of the Arbitrator, EC – Tariff Preferences, para. 36; and Award of the Arbitrator, US – Offset Act (Byrd
Amendment), para. 64).
82See ibid. (referring to Awar d of the Arbitrator, EC – Chicken Cuts , para. 49, in turn referring to
Award of the Arbitrator, Korea – Alcoholic Beverages , para. 42; Award of the Arbitrator, Chile – Price Band
System, para. 51; and Award of the Arbitrator, US – Offset Act (Byrd Amendment), para. 74).
83Ibid., para. 27.
84Ibid.

the GATT 1994 falls within the scope of Article XX (b) but is not justified under the chapeau of
Article XX of the GATT 1994.
(a) In particular, the Appellate Body found that:
 (i) the imports of used tyres
85 under court injunctions have resulted in the
import ban on retreaded tyres "being applied in a manner that constitutes
arbitrary or unjustifiable discriminati on within the meaning of the chapeau
of Article XX" of the GATT 1994
86; and
 (ii) the MERCOSUR exemption, which exempts imports of retreaded tyres from
MERCOSUR countries from the general ba n on imports of retreaded tyres
into Brazil87, has "resulted in the import ban being applied in a manner that
constitutes arbitrary or unjustifiable discrimination within the meaning of
the chapeau of Article XX" of the GATT 1994.88
(b) The Panel found that:
 (i) the marketing prohibition and the disposal obligation concerning used and
retreaded tyres contained in Law 12.114 of the State of Rio Grande do Sul,
as amended by Law 12.381, are incons istent with Article III:4 of the
GATT 1994 and are not justified under Article XX(b) of the GATT 199489;
 (ii) Presidential Decree 3.179, as am ended by Presidential Decree 3.919,
concerning the imposition of fines on the importation, marketing,
transportation, storage, keeping, or warehousing of retreaded tyres is

85I note that, in this dispute, the European Communities had challenged the import ban on retreaded
tyres, but not the import ban on used tyres. (See Appellate Body Report, para. 123) Yet, as the Panel has
pointed out, the import ban on retreaded tyres is related to the import ban on used tyres. The Panel found that
the import ban on retreaded tyres can encourage domestic retreaders to retread more domestic used tyres than
they might have done otherwise. (See Panel Report, para. 7.134) Therefore, the Panel and the Appellate Body
considered imports of used tyres under court injunctions as a relevant element for the analysis of whether the
import ban on retreaded tyres was applied consistently w ith the requirements of the chapeau of Article XX of
the GATT 1994.
87The import ban as well as the MERCOSUR exemption from the import ban on retreaded tyres were
established in Article 40 of Portar ia SECEX 14/2004. Article 40 of Port aria SECEX 14/2004 was replaced by
Article 41 of Portaria SECEX 35/2006, and subsequently by Article 41 of Portaria SECEX 36/2007. The text of
the provision remained the same. (See Appellate Body Report, para 122 and footnote 158 thereto; and European
Communities' submission, para. 35) I note that Article 41 of Portaria SECEX 36/2007 incorporates an annex
setting out criteria for the distribution of the quota.
89Panel Report, paras. 7.447 and 8.1(c).

inconsistent with Article XI:1 of the GATT 1994 and is not justified under
either Article XX(b) or under Article XX(d) of the GATT 199490; and
 (iii) 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 the GATT 1994.91
50. The Appellate Body recommended that the DSB request Brazil to bring its inconsistent
measures into conformity with its obligations under the GATT 1994.
B. Factors Affecting the Determination of the Reasonable Period of Time
1. Burden of Proof
51. As stated by previous arbitrators, I consider that it is for the Member seeking a reasonable
period of time for implementation to establish that the proposed period indeed constitutes the "shortest
period possible" within its legal system to implem ent the recommendations and rulings of the DSB.
Failing that, the arbitrator must determine the "s hortest period possible" for implementation, which
will be "shorter than proposed by the implementin g Member, on the basis of the evidence presented
by all parties".92
2. Choice of Method of Implementation
52. Brazil indicates that it will seek to implement the recommendations and rulings of the DSB by
taking the following steps.
53. First, Brazil states that, in order to remedy th e inconsistency found in paragraph 258(b)(iv) of
the Appellate Body Report in respect of preliminar y court injunctions, it will "halt imports" of used
tyres through such injunctions through a decision of the Federal Supreme Court confirming the
constitutionality of the import ban on used tyres. Brazil submits that the reasonable period of time for
revoking the preliminary court injunctions granted in present and past cases, and preventing lower
courts from granting new preliminary injunctions in the future, would be 21 months from the date of
adoption of the Panel and Appellate Body Reports.93

90Panel Report, paras. 7.390 and 8.1(b); European Communities' submission, para. 42.
91Panel Report, paras. 7.29 and 8.1(a)(ii); European Communities' submission, para. 45.
92Award of the Arbitrator, US – Offset Act (Byrd Amendment), para. 44.
93Brazil's submission, paras. 33 and 34.

54. Secondly, in order to remedy the inconsistency found in paragraph 258(b)(ii) of the Appellate
Body Report in respect of the MERCOSUR exempt ion, Brazil intends to "establish new regulatory
disciplines for used and retr eaded tyres within MERCOSUR"
94. Brazil submits that 19 months from
the date of adoption of the Pane l and Appellate Body Reports woul d be a reasonable period of time
for negotiating a new regime for used and retreaded tyres with its MERCOSUR partners.95
55. Thirdly, in order to remedy the inconsistency found in paragraph 8.1(c) of the Panel Report in
respect of the measures taken by the State of Rio Grande do Sul, Brazil is seeking a ruling from the
Federal Supreme Court declaring the "unconstitutionality of state measures that purport to regulate
imports of retreaded tyres"
96. In Brazil's submission, this w ill require 21 months from the date of
adoption of the Panel and Appellate Body Reports.97
56. Finally, in order to remedy the inconsistenci es found in paragraph 8.1( b) of the Panel Report
with respect to the fines imposed through Preside ntial Decree 3.179, as amended by Presidential
Decree 3.919, Brazil did not request a particular pe riod for implementation and stated at the oral
hearing that these measures were "totally accessory" meas ures that stand or fall with the import ban
and do not have an independent life.98
57. The European Communities contests that these st eps are suitable to achieve compliance with
the recommendations and rulings of the DSB, and sugg ests, instead, that Brazil repeal or modify the
measures found to be incompatible th rough legislative or regulatory action. 99 In this respect, I note
that, in principle, the implementing Member has "a measure of discretion in choosing the means of
implementation" that it deems most appropriate. 100 This discretion includes the choice of either
withdrawing or modifying the measure found to be inconsistent. 101 Article 3.7 of the DSU provides
that the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the
measures concerned if these are found to be inconsiste nt. This implies that withdrawal is not the only
option. Where withdrawal is impracticable, the Me mber may modify the measure, provided that this

94Brazil's submission, para. 33.
95Ibid., paras. 33 and 35.
96Ibid., para. 33.
97Ibid., paras. 33 and 36.
98With respect to the application of Portaria DECEX 8/1991 prohibiting imports of used consumer
goods to the importation of retreaded tyres 98, which was found to be inconsistent in paragraph 8.1(a)(ii) of the
Panel Report, Brazil does not request a particular period of time for implementation. According to the European
Communities, to the extent that Portaria DECEX 8/19 91 has been applied to retreaded tyres, Brazil could
achieve compliance by changing its practice of interpretation or application without modification of its
99European Communities' submission, paras. 61, 80, and 87.
100Award of the Arbitrator, EC – Hormones, para. 38. (original emphasis)
101Award of the Arbitrator, Japan – DRAMs (Korea) , para. 37; Award of the Arbitrator, US – Offset
Act (Byrd Amendment), para. 50.

is done in the shortest time possible and that the mo difications are consistent with the relevant DSB
recommendations and rulings and provis ions of the covered agreements. 102 In that respect, I concur
with the statement of the arbitrator in EC – Hormones that, "[a]lthough withdrawal of an inconsistent
measure is the preferred means of complying with the recommendations and rulings of the DSB in a
violation case, it is not necessarily the only means of implementation c onsistent with the covered
agreements."103
58. I consider that, in this dispute, Brazil could, in principle, remain within the range of
permissible actions to comply with the DSB recomm endations and rulings by either lifting the import
ban on retreaded tyres and thus removing the incons istency with Article XI, or by modifying the
existing import ban in a way that would rectify th e inconsistencies with the chapeau of Article XX
found by the Appellate Body in respect of the used tyre imports on the basis of preliminary court
injunctions and the MERCOSUR exemption from the ba n on imports of retreaded tyres. While it is
not my role as an arbitrator to identify a particul ar method of implementation in my determination of
by when Brazil must comply, it is relevant to consider how it proposes to do so. Therefore, in
determining what would be a reasonable peri od of time for Brazil to comply with the
recommendations and rulings of the DSB, it is necessary for me to take into consideration aspects of
Brazil's chosen means of implementation.
3. The Specific Steps of Implementation
59. I now turn to the examination of what would be a "reasonable period of time" within which
Brazil could achieve compliance in the light of th e specific means of implementation it has proposed.
As noted earlier, Brazil requests a total of 21 months, that is, until 17 September 2009.
(a) Proceeding before the Federal Supreme Court Concerning
Preliminary Court Injunctions
60. First, in order to prevent imports of used tyr es on the basis of preliminary injunctions issued
by lower courts, Brazil indicates that it has initiated an Argüição de Descumprimento de Preceito
Fundamental ("ADPF") (Allegation of Violation of Fundamental Precept) proceeding before the
Federal Supreme Court. Brazil contends that a ruling by the Federal Supreme Court confirming the
constitutionality of the ban on imports of used tyr es, and affirming that such imports infringe on the
fundamental constitutional right to a balanced environment pursuant to Article 225 of the Constitution
of the Federal Republic of Brazil (the "Constitution") 104, will revoke the existing preliminary

102Award of the Arbitrator, Japan – DRAMs (Korea) , para. 37; Award of the Arbitrator, EC – Tariff
Preferences, para. 30.
103Award of the Arbitrator, EC – Hormones, para 38. (original emphasis; footnote omitted)
104Brazil's submission, para. 40 and footnote 57 thereto.

injunctions, prohibit the issuance of future injuncti ons, and thereby bring Brazil into compliance with
its WTO obligations. Brazil maintains that preliminar y injunctions have been granted by lower courts
based on various constitutional law grounds. Braz il further asserts that, in previous cases involving
individual injunctions, the Federal Supreme Court has rejected several arguments on the basis of
which preliminary injunctions have been grante d by lower courts, including that: (i) a " portaria" is
not an appropriate instrument to implement the impor t ban on used tyres; (ii) the government agency
that imposed the initial ban lacked the constitutional authority to do so; (iii) the prohibition of imports
of used, but not new, tyres violated the constitutiona l principle of isonomy, or equality of rights; and
(iv) the import ban on used tyres interfered with th e constitutional right of free enterprise pursuant to
Article 170 of the Constitution because it restricted access to supplies of raw materials for domestic
retreaders.
105
61. As regards the fourth argument, Brazil points out that, in 2007, the President of the Federal
Supreme Court accepted a request to suspend certai n individual inj unctions allowing used tyre
imports, relying, inter alia , on the right to a balanced environment under Article 225 of the
Constitution. The plenary of the Court confirmed this decision by a majority of 7:3, albeit only in a
preliminary injunction.106 Brazil notes that these decisions concerned individual injunctions and did
not have general and prospectiv e application as would have a decision resulting from the ADPF
proceeding at issue. Nevertheless, in Brazil's view, these cases give an indication of the likely
outcome of the ADPF proceeding in terms of the environmental concerns raised by injunctions
permitting used tyre imports. Therefore, Brazil is confident that, as a result of the pending ADPF
proceeding, the Federal Supreme Court will revoke th e existing injunctions and prohibit, with general
and prospective effect, the issuance of injunctions by lower courts.
107
62. Brazil submits that the ADPF proceeding cons titutes the only effectiv e means to prevent
lower courts from granting further preliminary in junctions authorizing used tyre imports. A
favourable outcome of that proceeding would ensure that the import ban on retreaded tyres is applied
in a manner that is consistent with Brazil's obligations under the covered agreements.
63. The European Communities argues that court ac tion is not a suitable measure to prevent
definitively the importation of used tyres into Br azil because the outcome of the legal proceeding is
"completely uncertain".108 Instead, the European Communities argues that "[t]he most 'obvious' way
for Brazil to bring itself into compliance with its WTO obligations consists in repealing ( actus

105Brazil's submission, para. 39.
106Exhibit BRA-179 submitted by Brazil to the Arbitrator.
107Brazil's submission, para. 40.
108European Communities' submission, para. 61.

contrarius) or modifying the measures found to be incompatible" with WTO law. 109 The European
Communities argues that, in order to qualify as an implementation action for which a Member may
receive a reasonable period of time, the suggested action must give the implementing Member
"control over the achievement of the intended objective". 110 In the European Communities' view, the
outcome of court proceedings is un certain and "inherently speculative". 111 The European
Communities submits that, in contrast to legisla tive or administrative acts, court proceedings are
beyond the control of the government and therefore not a suitable means to achieve compliance. The
European Communities further argues that the gov ernment has a considerably higher degree of
control over legislative action than over judicial action because of the interplay between government
and parliament in the preparation of legislation. Therefore, the European Communities submits that
the only viable means for Brazil to implement the recommendations and rulings of the DSB is through
regulatory or legislative action. 112 The European Communities sugg ests that Brazil adopt a formal
law that would elevate the existing import ban on used tyres from the level of a portaria to the level
of an act of parliament.
64. The European Communities furt her argues that Brazil could adopt provisional measures
pursuant to Article 62 of the Constitution for a period of two months, renewable once. This provision
enables the President of Brazil to declare provi sionally applicable a bill submitted to Congress,
thereby pressing the legislature to vote on the bill ra pidly. The European Communities submits that
this procedure is frequently used in Brazil and can therefore not be regarded as an "extraordinary
measure". The European Communities states that compliance with the recommendations and rulings
of the DSB should give rise to comparable urgency as is regularly applied in internal matters in
Brazil.113
65. At the oral hearing, Brazil indicated that acts of the judiciary had to be attributed to the state
just as acts of the legislature or of the executive. Therefore, the judiciary, like other branches of
power, could contribute to achieving compliance with international obligations. Brazil considered
"totally misplaced" the European Communities' focus on the government's ability to control the
achievement of the intended objective of proposed implementation acts. Brazil argued that the
Federal Government could not "ensur e" that its intended results w ould be achieved, irrespective of
whether it undertook action through the legislature or judiciary in order to implement the
recommendations and rulings of the DSB, because bot h the legislature and the judiciary are separate
from the executive. Brazil stated that, even thoug h these two powers operate with a different degree

109European Communities' submission, para. 34.
110Ibid., para. 57.
111Ibid.
112Ibid., para. 61.
113Ibid., para. 66.

of autonomy, there is no difference in the sense th at Brazil's Federal Government cannot guarantee a
certain outcome either in the National Congress or before the Federal Supreme Court.
66. Brazil further explained that lower courts coul d continue granting preliminary injunctions on
certain constitutional grounds even if the ban was im posed in the form of a law. Brazil concedes that
if the import ban on used tyres was imposed by mean s of a formal law, then preliminary injunctions
permitting the imports of used tyres could not be granted on the grounds that a " portaria" is not an
appropriate instrument to implement the ban; nor could preliminary injunctions be granted on the
basis that the government agency imposing the impor t ban lacked constitutional authority to do so.
However, Brazil emphasized that lower courts could still grant preliminary injunctions on the grounds
that the import ban on used tyres violated the cons titutional principle of isonomy or equality of rights,
because imports of new tyres were allowed. Furt hermore, lower courts could grant preliminary
injunctions on the grounds that the import ban on used tyres interfered with the constitutional right of
free enterprise, because it restricted access of domestic retreaders to supplies of raw materials. Brazil
explained that only a Federal Supreme Court ruling, confirming the constitutionality of the import ban
on used tyres with erga omnes effect, could invalidate existing injunctions and unequivocally prohibit
lower courts from issuing new injunctions.
114 For these reasons, enacting the import ban as a formal
law rather than in the form of a portaria would not effectively prevent lower courts from granting
preliminary injunctions on the cons titutional grounds of the principle of isonomy and the right of free
enterprise. Therefore, Brazil submits that provisi onal measures adopted by the President pursuant to
Article 62 of the Constitution do not have a higher ra nk than formal laws. According to Brazil, it
would not appear that such measures could effectively prevent lower courts from granting preliminary
injunctions on the same constitutional grounds.
67. In considering these arguments of the parties, I recall the premise set out above 115 that, in
principle, the implementing Member has "a measure of discretion in choosing the means of
implementation" that it deems most appropriate. 116 This discretion includes the choice of either
withdrawing or modifying the me asure found to be inconsistent. 117 It is not my task as Arbitrator to
identify a particular means of implementation; I am called only to determine whether the steps
proposed by Brazil fall within the range of permissi ble actions that can be taken to implement the
recommendations and rulings of the DSB. At the oral hearing, Brazil did not contest that, if the
ADPF proceeding initiated by the Federal Governme nt before the Federal Supreme Court did not
result in the intended ruling, Brazil might have to face the consequences foreseen under Articles 21

114Brazil's statement at the oral hearing, para. 18.
115Supra, para. 48.
116Award of the Arbitrator, EC – Hormones, para. 38. (original emphasis)
117Award of the Arbitrator, Japan – DRAMs (Korea) , para. 37; Award of the Arbitrator, US – Offset
Act (Byrd Amendment), para. 50.

and 22 of the DSU. At the oral hearing, the European Communities did not contest that compliance
could, in principle, be achieved by modificati on, but contended that w ithdrawing the import ban
would be the only suitable means, since there was no certainty that alternative means would fully
implement the DSB's recommendations and rulings and would achieve that result within the 15-month
guideline set out in Article 21.3(c) of the DSU.
68. In previous arbitrations, implementing Members have usually proposed either legislative or
regulatory means to implement DSB recommendations and rulings. However, I do not consider that
implementation through the judiciary can be a priori excluded from the range of permissible action
that can be taken to implement DSB recommendations and rulings and bring about compliance with a
Member's obligations under the c overed agreements. The degree of government control may well be
different with respect to the executive, the legi slative, and the judiciary branches of power.
Implementation action, whether it is taken by the legislature, or the judiciary, may not be executed in
the way envisaged by the government. Yet the possibility of failure to achieve the intended
compliance has not been regarded by previous arb itrators as a reason to question the permissibility of
implementation by means of legislation, nor, in my view, does it exclude judicial action from the
range of a permissible means of implem entation. Moreover, as noted earlier 118, Brazil has pointed to
recent decisions by the Federal Supreme Court in terpreting the constitutional right to a balanced
environment that, in Brazil's view, give an indication as to the likely outcome of the ADPF
proceeding.
69. I now turn to the reasonable period of time requested by Brazil for completion of these
proceedings before the Federal Supreme Court. Brazil argues that the ADPF proceeding will take at
least 34 months to complete. Brazil requests anothe r two months to implement that decision within
the Brazilian legal system. This would involve notifying Brazilian courts of the Federal Supreme
Court decision and having customs authorities withdr aw prior import licenses. Brazil then subtracts
15 months, which is the period between the initia tion of the ADPF proceeding on 21 September 2006
and the adoption by the DSB of the Panel and A ppellate Body Reports on 17 December 2007. In
sum, Brazil submits that 21 months as of the adop tion of the Reports by the DSB is a reasonable
period of time for implementation of the recommendations and rulings of the DSB in this dispute, thus
expiring on 17 September 2009. By contrast, the Eu ropean Communities, on the basis of its assertion
that the only suitable means of implementation is the adoption of a formal law elevating the import
ban on used tyres from the level of a portaria to the level of an act of parliament, submits that the
reasonable period of time should be 10 months from th e date of adoption by the DSB of the Panel and
Appellate Body Reports, that is, by 17 October 2008.

118Supra, para. 61.

70. Brazil does not identify intermediate steps or time periods in the course of the ADPF
proceeding that would add up to 34 months. Rather, Brazil's estimate is based on the average duration
of a sample of Ação Direta de Inconstitucionalidade ("ADI") (Direct Unconstitutionality Action)
proceedings that were initiated and completed betw een 1998 and 2003. Brazil e xplains that, to date,
only one ADPF action has been decided on the merits
119 and that it is appropriate to draw inferences
from the average duration of ADI proceedings, because they are similar to ADPF proceedings in that
both ADI and ADPF are procedures for the review of the constitutionality of a legal act.
71. I do not consider that the approach of calculating the average duration of a sample of
proceedings from a past 5-year period under a differe nt procedure than the one at issue in the present
case provides an accurate and pertinent estimate of th e time that the Federal Supreme Court will need
to complete the pending ADPF proceeding. Brazil's table 120 listing ADI proceedings initiated as
of 1998 and completed by 2003 indicates that the du ration of ADI proceedings before the Federal
Supreme Court varies enormously. Certain ADI proceedings were completed within 3 months,
whereas other ADI proceedings were completed after more than 100 months. I consider that the
relevance of Brazil's estimate is reduced by the f act that the table does not include ADI proceedings
that were initiated after 1999 but no t completed by 2003, or initiated after 2003. The relevance of the
estimates is diminished further by the fact that the ADI is not the same procedure as the ADPF at
issue here. In response to questions at the oral hearing, Brazil explained that the ADI procedure can
be used to challenge the constitutionality of nor mative acts of general application, while the ADPF
procedure covers also individual decisions by authorities. However, decisions in both ADI and ADPF
proceedings produce erga omnes effect and have binding effect on other organs of the public
power.
121 More importantly, previous arbitrators have refused to rely on average time periods in
determining the reasonable period of time because an average figure "inherently" represents more
than the shortest possible period of time necessary within an implementing Member's legal system. 122
For these reasons, I consider Brazil's estimate of the likely duration of the pending ADPF proceeding
on the basis of an average of a sample of ADI proceedings not appropriate.
72. Instead, I believe that an assessment of the stat e of affairs in the particular ADPF proceeding
permits a more accurate estimation of the time required for its completion, and thus a more
appropriate basis for determining the reasonable pe riod of time needed for the implementation of the

119Brazil's submission, para. 45, indicating that this ADPF proceeding took 41 months.
120Exhibit BRA-180 submitted by Brazil to the Arbitrator.
121With respect to the ADI procedure, see Article 102(2) of the Brazilian Constitution and Article 28 of
Law 9.868/99 governing the ADI procedure. With respect to the ADPF, see Article 10 of Law 9.882/99
governing the ADPF procedure.
122The Arbitrator in EC – Export Subsidies on Sugar stated "that an average or median figure
'inherently represent[s] more than the shortest possible period of time necessary within [an implementing
Member's] legal system'". See also Award of the Arbitrator, EC – Hormones, para. 26.

DSB recommendations and rulings. I note that the Federal Supreme Court held a hearing in this
ADPF proceeding on 27 June 2008. Brazil confirmed at the oral hearing in this arbitration that the
ADPF proceeding at issue requires only one hearing before the Federal Supreme Court. Brazil further
explained that, when an ADPF case is filed with th e Federal Supreme Court, a reporting judge will be
assigned to the case. According to Brazil, that case will normally remain in queue, sometimes for a
long time, without much substantive work being done due to the great workload of reporting judges.
However, as soon as the reporting judge turns to the particular case, the proceedings will pick up.
Brazil submits that, with the public hearing in June 2008, this ADPF case has entered its substantive
phase. Brazil further explains that, when completing the report on a case, the reporting judge will ask
the President of the Court to place the case on the agenda for a decision by the plenary. In response to
questions at the oral hearing in this arbitration, Brazil stated, however, that it was difficult to give
concrete estimates of the time needed by the reporti ng judge to complete the report and the date when
the case will be placed on the agenda of the plenary, as this will depend on the overall workload of the
Federal Supreme Court.
123
73. Brazil explained that, according to the Internal Rules of the Federal Supreme Court, the
President has certain discretion as to when a particular case is put on the Court's agenda for voting. In
this respect, I recall that the implementing WTO Memb er is expected to use whatever flexibility is
available within its legal system to ensure that implementation takes place promptly in accordance
with Article 21 of the DSU. 124 Brazil explained that, according to Internal Rules of the Federal
Supreme Court, the reporting judge may request the Presi dent to give priority to certain types of cases
and that the President has discretion to grant such request. Brazil further explained that according to
Article 145 of the Internal Rules of the Federal Supreme Court, ADPF proceedings are eligible for
such priority action. The existence of such a rule and practice demonstrates that there is flexibility to
expedite proceedings before the Federal Supreme Court. 125 I am mindful of previous arbitrators'
statements that recourse to "extraordinary" proceedings cannot be expected. 126 Yet, in the context of
the present case, I do not consider that treating a sp ecific case with priority at the Federal Supreme

123I note that in accordance with Article 78(1) of th e Internal Rules of the Fe deral Supreme Court, the
court takes recess from 20 December to 1 January.
124See Award of the Arbitrator, Japan – DRAMs (Korea) , para. 25 (referring to Award of the
Arbitrator, EC – Chicken Cuts, para. 49, in turn referring to Award of the Arbitrator, Chile – Price Band System,
para. 39; Award of the Arbitrator, EC – Tariff Preferences, para. 36; and Award of the Arbitrator, US – Offset
Act (Byrd Amendment), para. 64).
125See also ibid., para. 47 (referring to Award of the Arbitrator, US – 1916 Act, para. 39; Award of the
Arbitrator, EC – Tariff Preferences , para. 36; Award of the Arbitrator, EC – Export Subsidies on Sugar ,
para. 76; and Award of the Arbitrator, EC – Chicken Cuts, paras. 79 and 80.
126See ibid., para. 25 (referring to Award of the Arbitrator, EC – Chicken Cuts , para. 49, in turn
referring to Award of the Arbitrator, Korea – Alcoholic Beverages , para. 42; Award of the Arbitrator, Chile –
Price Band System, para. 51; and Award of the Arbitrator, US – Offset Act (Byrd Amendment), para. 74).

Court can be regarded as recourse to "extraordinary" procedures. I further note that, on 31 January
2008, the Government of Brazil asked the Federal S upreme Court to take note of the WTO decision
and to expedite proceedings.
127
74. For these reasons, I consider it reasonable to expect that the ADPF proceeding before the
Federal Supreme Court can be co mpleted within a significantly shorter period of time than the
21 months suggested by Brazil.
(b) Import Regime for Retreaded Tyres from MERCOSUR Countries
75. In order to comply with the DSB's recommendations and rulings regarding the MERCOSUR
exemption from the import ban on retreaded tyres 128, Brazil submits that it would have to negotiate a
new regime for the importation of retreaded and u sed tyres with other MERCOSUR countries. Brazil
asserts that negotiating an agreement with its ME RCOSUR partners is necessary, because, if Brazil
were to remove the MERCOSUR exemption from th e import ban on retreaded tyres, this would
conflict with current MERCOSUR rules as inte rpreted by the MERCOSUR Ad Hoc Tribunal.
Therefore, Brazil argues that only after negotiating a MERCOSUR-wide tyre regime can it proceed to
bring the MERCOSUR exemption into compliance w ith its WTO obligations by incorporating an
agreement concluded with MERCOSUR countries into its national legal system. Brazil requests 12
months as of the adoption of the DSB recommendati ons and rulings for designing a new tyre regime
in an Ad Hoc Working Group for the Regional Policy on tyres created for that purpose, and the
review and approval of that measure by the Common Market Group ("GMC") and Common Market
Council ("CMC") of MERCOSUR by December 2008. Brazil requests another six months for the
approval of that measure by legislative bodies of MERCOSUR countries. Adding another month for
the entry into force of the measure, Brazil requests that I determine a total of 19 months to be the
reasonable period of time.
76. The European Communities alleges that Brazil is , in fact, seeking to establish a regime by
which all MERCOSUR countries ban the importation of retreaded and used tyres from outside the
region. The European Communities submits that th is would not lead to compliance with the DSB
recommendations and rulings in this dispute and that an Article 21.3(c) arbitrator cannot allot time for
measures that obviously do not bring about complian ce. Instead, the European Communities submits
that compliance with the DSB recommendations and rulings concerning the MERCOSUR exemption

127Brazil's submission, para. 44.
128See Appellate Body Report, para. 258(b)(ii).

would merely require an actus contrarius eliminating the exemption, which, in the European
Communities' view, could be achieved by regulatory action within two months.129
77. I am called upon to determine whether ne gotiating a new tyre import regime with
MERCOSUR countries falls within the range of ac tions that can bring the measure found to be
inconsistent into compliance, and by when this c ould reasonably be achieved. Brazil explains that
eliminating the MERCOSUR exemption and restori ng the original import ban on retreaded tyres
erga omnes would be inconsistent with its obligations under MERCOSUR. Therefore, it seeks to
negotiate a new tyre regime with the other ME RCOSUR countries. While the contours of the
envisaged regime have not been clarified by Br azil, I do not believe that a MERCOSUR-wide tyre
regime is outside the range of permissible action that could, in principle, bring the measure found to
be inconsistent into compliance with Brazil's WTO obligations.
78. I now turn to consider the reasonable period of time required for the implementation of the
DSB recommendations and rulings with respect to the MERCOSUR exemption from the import ban
on retreaded tyres. As a first step towards implementation, Brazil proposes negotiations with
MERCOSUR partners, for which it requests a period of 12 months. According to Brazil, these
negotiations are underway in the framework of the MERCOSUR Ad Hoc Working Group on the
Regional Policy on Tyres established on 29 June 2008. However, I note that these negotiations on a
new MERCOSUR-wide tyre regime are an external process that is outside the law-making and
regulatory system of Brazil. Yet, the recomme ndations and rulings of the DSB are addressed
specifically to Brazil and not to its MERCOSUR partners. Article 3.3 of the DSU confirms that WTO
dispute settlement is concerned with measures taken by a particular Member. The measure at issue,
Portaria SECEX 14/2004, is a domestic regulatory act adopted by the SECEX, a subdivision of the
Brazilian Federal Ministry of Development, Indus try and Foreign Trade. The legal basis for
Portaria SECEX 14/2004, as identified in its preambl e, is Article 15 of Annex I to Decree No. 4.632
dated 21 March 2003, which, in turn, is a domestic legal instrument.
130 As noted by the arbitrator in
EC – Chicken Cuts , "[b]ecause measures ... challenged originat e in the decision-making organs of a
WTO Member's own legal system, an arbitrator un der Article 21.3(c) may reasonably expect that
implementation would ordinarily be achieved by means entirely within the implementing Member's
lawmaking procedures." 131 This is all the more so with r espect to Portaria SECEX 14/2004, as it

129The Appellate Body addressed the question of the elimination of the MERCOSUR exemption from
the import ban on retreaded tyres in the light of Article XXIV:8(a) in footnote 445 to paragraph 234 of its
Report.
130Exhibit BRA-84 submitted by Brazil to the Panel. As noted in supra footnote 31, in
November 2006, Article 40 of Portaria SECEX 14/2004 was replaced by Article 41 of Portaria SECEX 35/2006,
and subsequently by Article 41 of Portaria SECEX 36/2007. These changes, how ever, do not affect the
qualification of the measure.
131Award of the Arbitrator, EC – Chicken Cuts, para. 51.

contains no indication of consulta tions or negotiations with MERCO SUR partners in the process of
adopting that portaria.
79. Brazil argues that the award of the arbitrator in EC – Chicken Cuts must be distinguished
from the present case, because th e ruling of the World Customs Organization ("WCO") sought by the
European Communities in that case was extraneous to the Europ ean Communities' implementation
obligations, whereas, in this case, the steps ta ken by Brazil to modify its MERCOSUR commitments
are not extraneous.
132 I am not persuaded by this argument. In EC – Chicken Cuts , the European
Communities argued that "a WCO decision [was ] necessary as a prerequisite to further
implementation internally by the Commission because implementation of the DSB's recommendations
and rulings [would] require the European Commission effectively to reverse certain judgments of the
European Court of Justice".133 Therefore, the European Communities argued that "it [would] not take
any action internally until it receive[d] a WCO decision." 134 Similarly, in the present case, Brazil
seeks to modify MERCOSUR law before taking any internal action with respect to the DSB's
recommendations and rulings relating to imports of retreaded tyres from MERCOSUR countries. I
consider the situation in the present case similar to that in EC – Chicken Cuts in the sense that, in both
cases, the DSB recommendations and rulings "will be no closer to being implemented unless—and
until" Brazil takes action internally to implement them. 135 In both cases, recourse to external action
would not exonerate the Member concerned of its ob ligation to comply with the DSB rulings. On the
contrary, internal action by Brazil is indispen sable in the present case as it was the case in EC –
Chicken Cuts.
80. Therefore, I agree with the arbitrator in EC – Chicken Cuts that "[r]ecourse to such external
processes will not ordinarily form part of the im plementation of the recommendations and rulings of
the DSB", and that recourse to external decision- making "is not entitled to the same deference as in
the case of an implementation procedure that is entirely within that Member's domestic legal
system."136 In addition, the arbitrator in EC – Tariff Preferences stated that "[t]he mere fact that the
European Communities has decided to incorporate the task of implementation within the larger
objective of reforming its overall GSP scheme cannot lead to a determination of a shorter, or longer,
period of time."137 Similarly, in this case, Brazil seems to envisage negotiations on new MERCOSUR
disciplines, which seems to include a wider sp ectrum than the MERCOSUR exemption from the ban
on retreaded tyres at issue here. This is not to say that I would discourage the Member concerned

132Brazil's statement at the oral hearing, para. 22.
133Award of the Arbitrator, EC – Chicken Cuts, para. 50.
134Ibid., para. 55.
135See ibid. See also Award of the Arbitrator, EC – Export Subsidies on Sugar, para. 81.
136Award of the Arbitrator, EC – Chicken Cuts, para. 52.
137Award of the Arbitrator, EC – Tariff Preferences, para. 31.

from consulting and coordinating with its trading part ners in advance of a modification of an import
regime, including in the context of implementing DSB recommendations and rulings that may affect
them. The question before me, however, is whethe r this should be recognized as a "particular
circumstance" that should be factored into my calculation of the reasonable period of time. In
keeping with the premise set out by the arbitrator in EC – Chicken Cuts , I am of the view that an
implementing Member seeking to go outside its domestic decision-making processes bears the burden
of establishing that "this external element of its proposed implementation is necessary for, and
therefore indispensable to, that Member's full and effective compliance with its obligations under the
covered agreements".138
81. Brazil asserts that negotiating a new import regime for retreaded tyres with its MERCOSUR
partners is a required step because of a binding decision of the MERCOSUR Ad Hoc Tribunal with
which alternative means of implementation would conflict. Brazil considers that the unilateral
elimination of the MERCOSUR exemption is not a means of implementation that it may choose
because in order to change Brazil's legislation in this respect, MERCOSUR disciplines would need to
be modified. I am not persuaded by this argument of Brazil. First, I observe that the arbitral decision
referred to by Brazil had been taken into account by the Panel and the Appellate Body in the
underlying dispute. The Appellate Body stated that:
[B]efore the arbitral tribunal established under MERCOSUR, Brazil
could have sought to justify th e challenged Import Ban on the
grounds of human, animal, and plant health under Article 50(d) of the
Treaty of Montevideo.443 Brazil, however, decided not to do so. It is
not appropriate for us to second-guess Brazil's decision not to invoke
Article 50(d), which serves a function similar to that of Article XX(b)
of the GATT 1994. However, Article 50(d) of the Treaty of
Montevideo, as well as the fact that Brazil might have raised this
defence in the MERCOSUR arbitral proceedings, show, in our view,
that the discrimination associate d with the MERCOSUR exemption
does not necessarily result from a conflict between provisions under
MERCOSUR and the GATT 1994.
139 (original footnotes 442, 444,
and 445 omitted)
[original footnote 443] Treaty of Montevideo, Instrument Establishing the
Latin American Integration Association (ALADI), done at Montevideo,
August 1980 (Exhibit EC-39 submitted by the European Communities to the
Panel). Article 50(d) reads as follows:
No provision under the present Treaty shall be interpreted as
precluding the adoption and observance of measures regarding:

d. Protection of human, animal and plant life and health;

138Award of the Arbitrator, EC – Chicken Cuts, para. 52.
139Appellate Body Report, para. 234 and footnote 443 thereto.

82. While Brazil may disagree with this stat ement, I note that the arbitrator in EC – Chicken Cuts
found that, "[w]here the Panel and the Appellate Bo dy have expressed one view on issues relating to
the substance of [the] dispute", an arbitrator, in fulfilling his limited mandate, is "not free ... to express
another".
140 The statement of the Appellate Body quot ed above does not suggest that Brazil would
necessarily be required to work towards negotiatin g a MERCOSUR-wide tyre regime in order to
comply with its WTO obligations while, at th e same time, respecti ng its commitments under
MERCOSUR. It is clear from the statement above th at the decision of the Ad Hoc Tribunal relates to
the specific procedural circumstances of that case, in which a particular litigation strategy was
applied. The decision of that Tribunal does not, and did not need to, reflect and interpret all rights and
obligations under MERCOSUR law that are relevant to the manner in which Brazil may choose to
implement the DSB recommendations and rulings. 141 As the arbitrator in EC – Chicken Cuts stated,
the Member seeking to take steps "outside its domestic decision-making processes" bears the burden
of establishing that these external elements of its proposed means of implementation are a
requirement under the law of the external system.
142
83. In this context, I also note that Brazil ha s restricted imports of retreaded tyres from
MERCOSUR countries by adopting CAMEX Resolu tion No. 38 of 22 August 2007, and again
through CAMEX Resolution No. 46 of 3 July 2008 143, without prior modification of MERCOSUR
law. Brazil conceded at the oral hearing that the 2007 import quota had not been introduced on the
basis of negotiations with MERCOSUR countries. These changes were introduced through
portarias, that is, in the form of regulatory ac tion by Brazil and not through MERCOSUR-wide
action. At the oral hearing, Brazil stated that it had consulted with MERCOSUR countries prior to
increasing the import quotas for retreaded tyres fro m certain MERCOSUR countries in July 2008.
This, however, does not change the fact that the modification was enacted through domestic
regulatory action.

140Award of the Arbitrator, EC – Chicken Cuts, para. 62.
141At the oral hearing, Brazil further referred to the MERCOSUR Permanent Tribunal of Review
Award No. 1/05 of 20 December 2005 concerning an import ban on retreaded tyres adopted by Argentina. In
that award, the Permanent Tribunal of Review rejected the defence invoked by Argentina under Article 50(d) of
the Treaty of Montevideo. I consider that this award is binding only between the parties to that dispute,
Uruguay and Argentina; Brazil was not a party to that dispute. Moreover, I note that the tribunal rejected
Argentina's defence for reasons relating to the alleged lack of proportionality of particular aspects of the
Argentine measure. It did not, in principle, rule ou t the applicability of Article 50(d) of the Treaty of
Montevideo to an import ban imposed for the protection of health and the environment.
142Award of the Arbitrator, EC – Chicken Cuts, para. 52.
143See European Communities' submission, para. 68 (referring to Brazil's submission, para. 49; Brazil's
appellee's submission, para. 225; and Exhibit BRA-175 submitted by Brazil to the Appellate Body); footnote 55
to para. 68 (stating that, on 22 August 2007, Brazil a dopted Resolution No. 38 limiting imports of retreaded
tyres from Uruguay to 130,000 and from Paraguay to 120,000 per year); and footnote 61 to para. 78 (stating that
Brazil further increased the import quota for retreaded tyres from Uruguay and Paraguay in 2008).

84. In this case, Brazil has referred to the deci sion of the Ad Hoc Tribunal as the reason why
Brazil would be obliged to negotiate modified ru les with its MERCOSUR partners. However, the
decision of that Tribunal did not involve Article 50( d) of the Treaty of Montevideo. Moreover, Brazil
has introduced modifications to the MERCOSUR exem ption by mere domestic measures twice since
the circulation of the Panel Report in this dispute. In these circumstances, I do not believe that Brazil
has established that negotiating such new disciplines in the ambit of MERCOSUR is in fact required
under MERCOSUR law. Therefore, I do not consider that I should factor into my determination the
time requested by Brazil for negotiations with MERCOSUR partners regarding a MERCOSUR-wide
tyre regime.
85. For the same reasons, I do not consider that I should factor into my calculation, as a particular
circumstance, the time requested by Brazil for ratification by MERCOSUR countries of a new
MERCOSUR tyres regime, its incorporation in thei r domestic legal systems, and its entry into
force.144
86. Having said that, I wish to clarify that I am not suggesting that Brazil could not seek to
negotiate a MERCOSUR-wide tyre regime with its MERCOSUR partners. My decision in no way is
intended to curtail Brazil's discretion as to which means Brazil may choose to modify its import
regime concerning retreaded tyres. Rather, my d ecision is limited to the question whether or not I
should factor into my determination the 19 mont hs requested by Brazil for negotiations with
MERCOSUR countries and incorporation of the results into its legal system.
(c) Proceeding before the Federal Supreme Court Concerning Laws
Adopted by the State of Rio Grande do Sul
87. With respect to the marketing prohibition and the disposal obligations concerning used and
retreaded tyres contained in Law 12.114 of the State of Rio Grande do Sul, as amended by
Law 12.381, Brazil seeks to implement the recommendations and rulings of the DSB through a
different Federal Supreme Court proceeding. Brazil explains that the Prosecutor General filed an ADI
action with the Federal Supreme Court in Septem ber 2006 requesting the court to revoke the state
laws on the grounds that these laws violated the distribution of competences between the Federal State

144In any event, even if I were to allocate time for ra tification, I could take into account only the most
prompt ratification process and not, as suggested by Braz il, an average period. Nor do I see a need to allocate
time for Brazil to await entry into force pursuant to Artic le 40 of the Protocol of Ouro Preto on the Institutional
Structure of MERCOSUR after completion of the incorporation process in all MERCOSUR countries. Brazil is
expected to use the flexibility available in its legal system in order to comply promptly with the
recommendations and rulings of the DSB, and could implement measures on a provisional basis. (In this
respect, see supra, footnote, 81. See also Article 62 of the C onstitution with respect to provisional measures as
referred to in para. 66, supra, and Article 25 of the Vienna Convention on the Law of Treaties with respect to the
provisional application of treaties.)

and the State of Rio Grande do Sul, and, in add ition, infringed on the fundamental constitutional right
to a balanced environment.
145 Brazil contends that, in view of the Federal Supreme Court's practice of
grouping together cases with related subject-matters , this ADI action would most likely be decided
together with the pending ADPF action relating to preliminary injunctions permitting used tyre
imports. On this basis, Brazil requests me to de termine that the same period of time, that is,
21 months, would be a reasonable period of time for Brazil to comply with the DSB recommendations
and rulings relating to the measures adopted by the State of Rio Grande do Sul.
88. The European Communities argues that, for the same reasons advanced with respect to the
ADPF proceeding before the Federal Supreme Court concerning preliminary injunctions granted by
lower courts, Brazil's intention to implement the relevant DSB recommendations and rulings through
judiciary action is not a suitable means to achieve compliance and thus should not serve as the basis
for the calculation of the reasonable period of time. Instead, the European Communities submits that
the reasonable period of time should be determined on the basis of the time n eeded for the State of
Rio Grande do Sul to repeal the measure.146
89. I understand that, in the ADI proceeding at issu e, the Federal Government has challenged the
ban imposed by the State of Rio Grande do Sul, on the grounds that, inter alia , it infringes the
allocation of powers between the federal and the st ate levels, and also, infringes on the fundamental
constitutional right to a balanced environment. I see no reason to question Brazil's assertion that, in
view of the Federal Supreme Court's practice of grouping together cases with related subject-matters,
this ADI action would likely be decided together with the ADPF proceeding challenging preliminary
injunctions by lower courts allowing imports of used tyres. However, as I noted earlier, I do not agree
with the method employed by Brazil for estimati ng the duration of the pending ADPF proceeding on
the basis of the average duration of a particular sample of ADI proceedings initiated and completed
between 1999 and 2003. Brazil relies on the same estimate with respect to the ADI proceeding
challenging the ban imposed by the State of Rio Gr ande do Sul. As with the ADPF proceeding, I
consider that this ADI proceeding can be completed in a significantly shorter period than 21 months.

145Brazil identifies Articles 22(VIII), 24(VI), (VIII) an d (XII), and 225 of the Constitution. (Brazil's
submission, footnote 78 to para. 54) The European Communities argues that a longer period of time for
implementation could not be justified on the basis of Ar ticle XXIV:12. I note that Brazil has not invoked
Article XXIV:12 of the GATT 1994 re lating to the scope of a Member's obligation to ensure the observance of
the provisions of the GATT 1994 by regional and local governments and authorities within its territory.
146European Communities' submission, para. 87.

(d) Related Measures
90. Finally, with respect to the fines imposed through Presidential Decree 3.179 as amended by
Presidential Decree 3.919 and the application of Portaria DECEX 8/1991 to the importation of
retreaded tyres 147, I note that Brazil has not requested a particular period of time to bring these
measures into conformity with the recommendations and rulings of the DSB. I consider that these
measures are accessory to and dependent upon the measu res discussed above. Therefore, I am of the
view that they can also be brought into compliance within the period of time specified below.
IV. Award
91. In the light of the above considerations, I de termine that the reasonable period of time for
Brazil to implement the recommendations and rulings of the DSB in this dispute is 12 months from
the date of adoption of the Pane l and Appellate Body Reports. Th e reasonable period of time will
thus end on 17 December 2008.

Signed in the original at Tokyo this 20th day of August 2008 by:

Yasuhei Taniguchi
Arbitrator

147See European Communities' submission, para. 45.