GENEVA, Dec 3 (Reuters) - A World Trade Organisation (WTO) appeal court upheld on Monday Brazil's right to ban imports of retreaded tyres for health and environmental reasons.

But the court granted an appeal from the European Union that the ban had been applied in a discriminatory manner because it allowed imports from the South American trade group Mercosur as an exemption.

A WTO dispute panel ruled in June that Brazil's ban breaks trade rules by discriminating against European exporters of retreads, and ordered it to conform with WTO regulations, an order repeated by the appeal body.

But Brussels appealed against the verdict, challenging the health argument and contesting the reasoning behind the finding on discrimination.

Brazil argued that imports of retreads aggravated a problem faced by the country of an accumulation of used tyres that became breeding grounds for malarial mosquitoes.

EU lawyers had argued that imports of retreaded tyres did not add to the problem of discarded waste tyres, and the ban simply aimed to allow a retread industry to develop in Brazil and its neighbours.

"We are of the view that the Panel did not err in the manner it conducted its analysis... as to whether the Import Ban was 'necessary to protect human, animal or plant life or health'," the appeal body said in its report.

The appeal body said the panel's reasoning in finding the ban discriminatory had been faulty from a trade law perspective because it examined the effects of the discrimination instead of its causes. (Reporting by Jonathan Lynn)

AlertNet news is provided by