Friday, September 07, 2007

WTO trade and the environment ruling: Brazil and Tyres

From the inbox:

Interesting article in Insight from the American Society of International Law.

This once again begs the question: "Are environmental regulations being used as a secondary trade barrier?"

The academic economic literature suggests that it is. The rights and wrongs of such policies need to be debated.

The ruling from the WTO has potentially important implications but it appears that environmental considerations are being given a greater weight that previously.

WTO Panel decision in Brazil – Tyres supports safeguarding environmental values
The recent decision of the World Trade Organization’s Panel in the Brazil – Tyres[1] case has the potential to become a milestone in WTO jurisprudence on trade and the environment. At issue was Brazil’s ban on imports of retreaded tyres. The European Communities (EC) challenged the ban as a violation of WTO rules, whereas Brazil defended the measure as necessary to protect health and the environment. The Panel held that, although the ban was necessary to protect health and the environment, it was applied in a WTO-inconsistent manner because Brazil failed to enforce a similar ban on used tyre imports. Thus, the Panel decision effectively directed Brazil to impose further trade restrictions so as to advance its environmental objective. Previous WTO decisions have not gone this far in safeguarding environmental values.

Brazil has indicated that it will accept the Panel’s ruling and implement the additional ban on used tyres. The European Communities, however, has decided to appeal. It remains to be seen, therefore, whether the WTO Appellate Body will uphold the Panel’s “green” decision.

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