DS267: US — Subsidies on upland cotton; recourse to Article 21.5 of the Dispute Settlement Understanding

The DSB adopted the compliance Panel and Appellate Body (AB) reports (WT/DS267/RW and Corr.1 — WT/DS267/AB/RW) on the US cotton subsidies.

Brazil welcomed the reports and stated it was the last stage where Brazil's arguments could be examined after this prolonged period of litigation. Brazil hoped and expected the US to fully and immediately comply with the rulings of the DSB. Referring to the new US Farm Bill, Brazil declared it was a great concern for all cotton producers around the world. Brazil hoped that the adoption of the compliance Panel and AB reports would provide sufficient incentive for the US to amend its legislation and ensure compliance with the ruling. Brazil added that without full compliance, it would ask the DSB for authorisation to take countermeasures.

The US said it was deeply disappointed in the compliance Panel and AB reports and believed it had brought the challenged measures into full compliance with the DSB recommendations. The US disagreed with the reports' conclusions regarding three legal issues namely jurisdiction under Article 21.5, export credit guarantees and serious prejudice. On the latter, the US said that the reports' conclusions on the serious prejudice caused to Brazil's interests by US payments was based on outdated data, given that today's market conditions were not the same as two or three years ago.

Australia, Canada and the EC welcomed the reports' conclusions. More specifically, Canada and Australia were concerned about the 2008 Farm Bill. Canada said that the US had missed an opportunity to make its farm programmes more market oriented. Australia argued that the 2008 Farm Bill institutionalised the US trade distorting support programmes. Replying to both countries, the US said that the 2008 Farm Bill was not included in the compliance procedure.