Dispute Settlement Body 15 July 2005

Brazil requests authorization to impose countermeasures against US in cotton case

At the DSB meeting on 15 July 2005, Brazil's request for authorization to impose countermeasures against the US in the cotton case (DS267) was challenged by the US and, hence, referred to arbitration.

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This summary has been prepared by the WTO Secretariat’s Information and Media Relations Division to help public understanding about developments in WTO disputes. It is not a legal interpretation of the issues, and it is not intended as a complete account of the issues. These can be found in the reports themselves and in the minutes of the Dispute Settlement Body’s meetings.

At the DSB meeting on 15 July 2005, Brazil requested authorization to impose countermeasures against the US in the cotton dispute (WT/DS267/21) corresponding to a value of approximately US$3 billion per year. The US responded by pointing out that in its communication to the DSB dated 14 July 2005 (WT/DS267/23) the US had objected to the appropriateness and level of the countermeasures proposed by Brazil. Hence, the matter was referred to arbitration. Both Brazil and the US also drew attention to their bilateral agreement (WT/DS267/22) concerning procedures under DSU Articles 21 and 22, and Article 4 of the Subsidies Agreement. According to this procedural agreement, both parties would, “at the earliest possible moment”, request the arbitration to be suspended, while Brazil would retain the right to request a compliance review panel under DSU Article 21.5.

In its statement at the meeting, Brazil recalled that, on 21 March 2005, the DSB adopted the rulings, including the panel's recommendation that the US withdraw by 1 July 2005 the prohibited subsidies under the export credit guarantee programmes and under the STEP 2 programme. Brazil said that on 30 June 2005 the US announced the adoption of measures concerning these programmes but no action was taken in relation to STEP 2 within the time-period specified by the DSB. Brazil stated that on 5 July 2005 it submitted its request for authorization to impose countermeasures. On the same day, the US announced additional measures to implement the rulings concerning prohibited subsidies, which it planned to submit to Congress for approval. Brazil acknowledged that the US measures and announcements constituted a positive step towards the resolution of the dispute, but stated that much more had to be accomplished before it could be recognized that the rulings had been fully implemented. Brazil also hoped that the US Congress would follow up with concrete and timely actions that may enable a mutually satisfactory solution.

In its statement, the US drew attention to the steps it had taken to implement, pointing to the administrative changes to the three agricultural export credit guarantee programmes, effective 1 July 2005, and the legislative proposal, announced on 5 July, to repeal the STEP 2 programme. The US reiterated its intention to implement fully the rulings, and stressed its belief that the arbitration, once suspended, would not need to be re-activated.


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