The WTO and EU Sugar Reform

Panel established pursuant to Article 6 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes

Brazil - Measures Affecting Imports of Retreaded Tyres, (WT/DS/332)

First Panel hearing: Third Party Session, Oral Statement by Australia

Geneva, 6 July 2006

Mr Chairman,

  1. Australia has read with interest the submissions of the parties in this dispute and the points raised by third parties.

  2. Australia joined this dispute as a third party in view of its systemic interests in the questions under consideration by the Panel. We therefore refrain from taking a position on the specific facts of this dispute.

  3. With this in mind, Australia would like to make the following general comments.

  4. In Australia's view, the panel's determination of the GATT Article XX and Article XXIV issues before it in this dispute will be of significance for Members.

  5. GATT 1994 is of vital importance to WTO Members- it specifies Members rights and responsibilities with regard to international trade in goods. GATT Article XX offers Members important exceptions from other GATT provisions, where the application of a measure is justifiable in order to achieve a particular policy objective - meeting all the requirements both of the specific exception cited and the chapeau to Article XX.

  6. The application of Article XX to a measure is of critical significance, in that such an outcome permits a Member to derogate from the GATT rules on trade in goods. Accordingly, each exception made under Article XX requires cautious weighing of Members' rights, and careful application of the Article XX exceptions and the chapeau.

  7. Australia does not offer an assessment as to whether the challenged Brazilian measure satisfies the requirements of Article XX. The resolution of this question will require the Panel to determine complex factual and legal issues.

  8. In undertaking this task, Australia encourages the Panel to evaluate carefully the factual evidence before it, including by drawing on expert opinion as necessary.

  9. As to the legal issues, Australia notes that the Appellate Body has clarified significant aspects of the operation of Article XX. In particular, Australia draws the attention of the Panel to the Appellate Body's jurisprudence concerning the interpretation and application of the chapeau of Article XX. The Panel's views on whether Brazil's measures can pass the tests set out in the chapeau will be important in this case.

  10. In relation to Brazil's reliance on Article XX(b), Australia notes that it claims the obligation to comply with the Mercosur arbitral decision means that its discrimination between Mercosur Members and other WTO Members is neither arbitrary nor unjustifiable in the terms of the chapeau to Article XX.

  11. We encourage the Panel to apply carefully the terms of the chapeau, mindful of the broad purpose - namely, the prevention of abuse of the general exceptions listed under Article XX paragraphs (a) to (g).

  12. The implementation of the Mercosur arbitral decision is also of relevance to Brazil's arguments concerning the application of Article XX(d). The Panel will need to consider carefully whether Article XX(d) covers arbitral decisions such as this.

  13. Brazil's submission also raises the interpretation and application of GATT Article XXIV. Australia notes that there is limited Appellate Body jurisprudence on this provision. Accordingly, the Panel may be required to traverse new ground in dealing with the arguments of the Parties on Article XXIV. The questions arising include:

    1. What is the scope of the requirements of Article XXIV:5(a) and XXIV:8(a) and their application in time?;
    2. Is Mercosur a customs union which has met these requirements as between its Members and as between its Members and other WTO Members?; and
    3. How are the challenged measures to be assessed against these requirements?
  14. Australia recognises that this dispute may also present an opportunity for the Panel to clarify the relationship between Articles XX and XXIV.

  15. In conclusion, Australia would encourage the Panel to address only those issues necessary to resolve the trade issues in this dispute.

  16. We await the Panel's findings with interest.

Thank you Mr Chairman.