Environmental Groups Slam EU Decision To Appeal WTO Panel Ruling in Tire Dispute

Original Publication Date: 
6 September, 2007

GENEVA--Environmental groups have slammed the European Union for its decision to appeal a World Trade Organization panel ruling in an EU complaint filed against a Brazilian ban on imports of retreated tires.

The World Wide Fund for Nature (WWF), the Geneva-based Center for International Environmental Law (CIEL), and an alliance of 50 German nongovernmental organizations, all issued statements urging the European Commission to withdraw its appeal filed with the WTO on Sept. 3.

In a joint letter dated Sept. 4, WWF and CIEL said the panel ruling in the Brazil tire dispute has "made an important contribution to the progressive development of WTO's jurisprudence on environment and trade."

"Given that the EU has in the past and is currently defending European environmental and health policies at the WTO and will likely have to defend others in the future, it is in the EU's interest that the Panel's environmentally sensitive interpretation of WTO law stands," the two organizations added.

In a Sept. 5 letter to European Trade Commissioner Peter Mandelson, the German NGO Forum on Environment and Development declared an EU appeal would be an "assault on the health needs of the poor and the environment."

"The EC has defended several European environmental and health policies at the WTO (asbestos, GMOs, hormones) and will likely have to defend others in the future," the group declared. "It does not make sense to challenge a decision that will be useful for arguing pending and future environment and health cases at the WTO."

"Instead of appealing, the Commission should support Brazil and other developing countries to implement efficient measures for the responsible management of used tires and other hazardous waste," the group added.

Ruling Sided With Brazil

Brazil argued before the panel that it already lacks the capacity to properly dispose of waste tires produced domestically, and that the ever-growing mountains of used tires are ideal breeding grounds for mosquitoes and the subsequent spread of diseases such as malaria and dengue fever.

The EU countered that the real purpose of the Brazilian ban was to protect its retreaded tire producers, who, according to Brazil's own industry estimates, import some 8 million used tires per year for retreading. Brussels noted before the panel that since the ban was imposed in 2000, Brazil's imports of retreaded tires have dropped to zero whereas imports of used tires jumped from 5,000 metric tons to 70,000 tons by 2005.

In the ruling circulated June 12, the WTO panel backed the European Union's claim that the Brazilian ban on imports of retreaded tires violates WTO rules prohibiting import restrictions and discriminatory treatment between imports and similar domestic products. However, the panel went on to say that the ban could be justified as an exception to WTO rules based on public health concerns.

Specifically, the panel said the ban could be considered necessary to protect human health and could therefore provisionally be justified under Article XX(b) of the WTO's General Agreement on Tariffs and Trade (GATT) allowing trade-restrictive measures for such purposes. It also agreed with Brazil that alternative measures put forward by the EU, such as controlled stockpiling and landfilling, energy recovery, and material recycling, do not constitute reasonably available alternatives to an import ban that would achieve Brazil's public health objectives.

The panel nevertheless said the Brazilian ban failed to qualify for the exception because it is applied in a manner that constitutes unjustifiable discrimination and a disguised restriction on international trade. In particular, the panel faulted Brazil for continuing to allow large quantities of used tires to be imported into Brazil for retreading, undermining the purpose of the ban.

Brazil hailed the ruling as a victory, noting the panel backed Brazil's claim that the tire ban was justified on public health grounds. Brazil also noted the panel recognized that the importation of used tires for retreading was not a decision of the Brazilian government, but was the result of several court injunctions in favor of used tire importers, and that Brazilian legislation already foresees an import ban on such tires for retreading.

EU Arguments on Appeal

In its notice of appeal, the EU said the panel erred in merely assessing whether the Brazilian ban is capable of making a "potential" contribution to the objective of protecting public health, reasoning which is inconsistent with Article XX(b) of the GATT, and of failing to make an objective assessment of the facts of the case.

The EU also accuses the panel of wrongly excluding some of the reasonable alternative measures put forward by the EU for dealing with the problem of waste tires other than a ban, and of ignoring important facts and arguments presented by the EU in this regard.

In addition, the EU said the panel erred in failing to find that Brazil's exemption of its Mercosur partners from the retreaded tire import ban violated WTO rules. The panel exercised judicial economy regarding the claim on the grounds that the tires being imported from the Mercosur partners (Uruguay, specifically) were not in significant amounts.

The WTO's Appellate Body is due to issue a ruling on the EU's appeal claims by early December.

By Daniel Pruzin