## Facts

- The European Communities challenged Brazilian measures restricting imports of retreaded tyres.
- Brazil imposed an import prohibition on retreaded tyres and applied fines (BRL 400 per tyre) to certain dealings in imported, but not domestic, retreaded tyres.
- Several Brazilian states adopted additional restrictions affecting the marketing of imported retreaded tyres and related disposal obligations.
- Brazil exempted retreaded tyres from MERCOSUR countries from the import ban and related fines, citing compliance with a MERCOSUR arbitral ruling and domestic judicial constraints.
- Brazil justified the measures as protecting human health and the environment by reducing accumulation of waste tyres associated with disease vectors (e.g., mosquito-borne illness) and toxic emissions from tyre fires.
- Brazil did not contest that the measures were prima facie inconsistent with GATT obligations (including Articles XI:1, III:4, I:1, and XIII:1) but invoked GATT 1994 Article XX(b) and the Article XX chapeau.

## Issues

1. Whether Brazil’s import ban on retreaded tyres was “necessary to protect human, animal or plant life or health” under GATT 1994 Article XX(b).
2. Whether the measures, as applied (including MERCOSUR exemptions and tolerance of certain other imports), resulted in “arbitrary or unjustifiable discrimination” or a “disguised restriction on international trade” under the chapeau of Article XX.
3. Whether aspects of the Panel’s treatment of certain state-level measures and fines (and their relationship to Article XX) should be modified on appeal.

## Decision

- The Appellate Body upheld that the import ban was provisionally justified under Article XX(b) because it was necessary to protect life and health by materially contributing to reducing waste-tyre accumulation.
- The Appellate Body nevertheless found that the measure failed the Article XX chapeau due to discriminatory application, especially:
  - the exemption for MERCOSUR-origin retreaded tyres, and
  - continued entry of used tyres through judicial injunctions.
- Because the chapeau was not satisfied, Brazil’s overall regime remained inconsistent with GATT 1994 and had to be brought into conformity.

## Legal Principles

- Article XX(b) “necessity” involves weighing and balancing: (i) the importance of the protected interests, (ii) the measure’s contribution to the objective, and (iii) the measure’s trade-restrictiveness, assessed against reasonably available alternatives.
- A measure may be “necessary” even if it does not eliminate all sources of the risk; remaining sources do not, by themselves, defeat necessity if the measure makes a material contribution and no reasonably available less restrictive alternative is shown.
- Even if provisionally justified under an Article XX subparagraph, a measure must also satisfy the chapeau; discriminatory application can independently bar the Article XX defense.
- Discrimination may be “unjustifiable” where exemptions allow continued imports from some origins despite the same health/environmental conditions, thereby undermining the stated objective.
- Other international or regional obligations do not displace WTO obligations for purposes of the chapeau; the inquiry focuses on whether the WTO-inconsistent discrimination is justified under Article XX’s conditions.

## Conclusion

The Appellate Body accepted Brazil’s health-and-environment rationale and found the import ban “necessary” under Article XX(b), but held that exemptions and inconsistent enforcement produced arbitrary or unjustifiable discrimination under the Article XX chapeau, leaving the measures inconsistent with GATT 1994.


Brazil—Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R (WTO App. Body Dec. 3, 2007)