CYIL vol. 8 (2017)

ELISA BARONCINI CYIL 8 ȍ2017Ȏ the European Union against the Brazilian measure prohibiting imports of retreaded tyres, 47 with the exception of those tyres originating from MERCOSUR countries. The so-called “MERCOSUR exemption” was introduced by the Brazilian authorities after the arbitral decision issued by a MERCOSUR Tribunal that, on the basis of a complaint by Uruguay, declared illegitimate the former general ban as it was a restriction of commerce between MERCOSUR countries incompatible with Brazil’s obligations under that RTA. 48 The Latin American country succeeded to demonstrate that its import ban could be provisionally justified under Article XX, let. b) of the GATT 1994, because it was necessary to protect the environment and the health of the Brazilian people, put in danger by excessive quantities of waste tyres, impossible to dispose of in an appropriate and safe way. However, the Appellate Body said that the requirements of the chapeau of Article XX of the GATT 1994 had not been satisfied by Brazil, as the Brazilian import ban arbitrarily and unjustifiably discriminated “between countries where the same conditions prevail,” by exempting retreaded tyres originating from MERCOSUR countries. Brazil argued that the discriminatory nature of the import ban had to be justified because the respect, by the Latin American country, of the MERCOSUR ruling could not be viewed as “capricious” or “random,” but, on the contrary, had to be qualified as an inescapable obligation under international law.The GenevaTribunal, however, emphasized that “discrimination can result from a rational decision or behaviour, and still be ‘arbitrary or unjustifiable’, because it is explained by a rationale that bears no relationship to the objective of a measure provisionally justified under one of the paragraphs of Article XX, or goes against that objective.” 49 Since the respect of the MERCOSUR award was completely unrelated to the value contemplated by Article XX, let. b) of the GATT 1994 -i.e. the “protect[ion of ] human, animal or plant life or health”- the Appellate Body stated that the respect of the arbitral decision could not are Argentina, Brazil, Paraguay, Uruguay, and Venezuela, which was nevertheless suspended on December 1, 2016 because of the very difficult internal situation making impossible for Caracas to respect MERCOSUR obligations. On MERCOSUR see TOSCANO, M., FILHO, F., LIXINSKI, L., OLMOS GIUPPONI, M. B. (eds.), The Law of MERCOSUR , Hart Publishing, Oxford, Portland, 2010. For the text of the Treaty of Asunción and the subsequent MERCOSUR treaties, protocols and agreements see the official MERCOSUR website at the link http://www.mercosur.int/innovaportal/v/4059/11/innova.front/normativa-y-documentos-oficiales (accessed on 25 January 2017). 47 “Tyres are an integral component in passenger cars, lorries, and airplanes and, as such, their use is widespread in modern society. New passenger cars are typically sold with new tyres. When tyres need to be replaced, consumers in some countries may have a choice between new tyres or ‘retreaded’ tyres. This dispute concerns the latter category of tyres. Retreaded tyres are used tyres that have been reconditioned for further use by stripping the worn tread from the skeleton (casing) and replacing it with new material in the form of a new tread, and sometimes with new material also covering parts or all of the sidewalls. Retreaded tyres can be produced through different methods, one of which is called “remoulding” (Appellate Body Report, Brazil – Retreaded Tyres , para. 118). 48 The award of the arbitral MERCOSUR tribunal is dated 9 January 2002, and it found that the Brazilian general ban of retreaded tyres was incompatible with MERCOSUR Decision CMC No. 22 of 29 June 2000, which obliged MERCOSUR countries not to introduce new inter se restrictions of commerce (see Appellate Body Report, Brazil – Retreaded Tyres , footnote 163 and the accompanying text, and Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres , WT/DS332/AB/R, adopted 17 December 2007, para. 2.13). On the present dispute see WEILER, Joseph H. H., Brazil –Measures Affecting Imports of Retreaded Tyres (DS322 ), World Trade Review , 2009, pp. 137-144; BRINK, Tegan, WhichWTO Rules Can a PTA Lawfully Breach? Completing the Analysis in Brazil – Tyres, Journal of World Trade , 2010, pp. 813-846. 49 Appellate Body Report, Brazil – Retreaded Tyres , para. 232.

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