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WTO Dispute Settlement Bulletin

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

Australia and WTO dispute settlement

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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Last Updated: 9 January 2013
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