Australia and WTO dispute settlement

United States - Subsidies on Upland Cotton: recourse to Article 21.5 of the DSU by Brazil (DS267)

In September 2006, the DSB established at Brazil’s request a DSU Article 21.5 compliance panel in these proceedings, which commenced in September 2002. The report of the compliance panel, which was circulated on 18 December 2007, found that continued marketing loan and counter-cyclical payments to United States upland cotton producers resulted in significant price suppression constituting ‘present serious prejudice’ to the interests of Brazil within the meaning of Articles 5(c) and 6.3(c) of the Agreement on Subsidies and Countervailing Measures. The panel therefore found that the United States had failed to comply with its obligation under Article 7.8 of that Agreement ‘to take appropriate steps to remove the adverse effects or…withdraw the subsidy.’ The panel also found the United States was providing prohibited export subsidies for agricultural products through an export credit guarantee programme, inconsistent with Articles 3.1(a) and 3.2 of the Agreement on Subsidies and Countervailing Measures and Articles 10.1 and 8 of the Agreement on Agriculture.

The United States notified its intention to appeal the report on 12 February 2008 and the report of the Appellate Body was released on 2 June 2008. The Appellate Body upheld the key findings of the original compliance panel report, confirming that the United States had failed to bring its export credit guarantee programme into conformity with the relevant provisions of the Agreement on Subsidies and Countervailing Measures and the Agreement on Agriculture, and that the effect of marketing loan and counter-cyclical payments is significant price suppression causing present serious prejudice to the interests of Brazil. By continuing to make these payments, the United States had failed to take appropriate steps to remove their adverse effects or withdraw the subsidy. The full text of the report is available on the WTO website.

The report of the Appellate Body was adopted by the DSB which met in irregular session on 20 June 2008.  Australia participated in the original and compliance proceedings in the dispute as a third party along with Argentina, Benin, Canada, Chad, China, Chinese Taipei, European Communities, India, New Zealand, Pakistan, Paraguay, Venezuela, Japan and Thailand.

See: Australia’s third participant written submission in the appellate proceedings DS267 [ PDF ]
See: Australia's third participant oral statement in the appellate proceedings DS267 [ PDF ]
See: Australia’s third party written submission in the compliance proceedings DS267 [ PDF ] (word) (rtf)
See: Australia's third party oral submission in the compliance proceedings DS267

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