List of abbreviations 444 table of cases



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107. What can explain the discrepancy between the "credit guarantee liability" recorded in the CCC's financial statements (which suggest that the program is provided at a net cost to the US government) and the evidence presented by the US in para. 87 of its First Written Submission?

108. Please explain why the "liability" figure in the CCC's financial statements should not be considered by the panel to provide, if not the amount of actual losses, at least a reliable estimate of the CCC's own perception of the cost to the government of the programmes since their inception. Is the Panel wrong in understanding that a "credit guarantee liability" in this context means that the CCC considers that the programmes will not cover their costs and losses in the long term?
109. Please indicate to the Panel whether there have been occurrences of reschedulings prior to the occurrence of defaults and the payment of claims by the CCC.
110. Is it possible to calculate the "subsidy estimate net of reestimates" for GSM 102 alone (similar to what the US has done for all three programmes in para. 87)? If so, please provide a table recording the results of this exercise.
111. In paragraph 7.853, the original Panel stated that it "disagree(d) with the United States that we should 'eliminate' the data for certain, more recent, cohorts in our analysis." Is the United States asking that this Panel eliminate such data for the most recent cohorts (the table at para. 87 of the United States' First Written Submission includes data up to 2005 only). Why should this Panel do what the original refused to do? What would be the result of the United States "re-estimates" exercise if the original subsidy estimate for the 2006 and 2007 cohorts were included?

112. Please explain whether and how the CCC limits risks or control costs of the GSM 102 programme as regards foreign banks' individual credit ratings.

113. Please explain whether and how CCC country risk categories correspond to ICRAS ratings.
Question to Brazil
114. Brazil argues that "(t)hat the United States has, on one view of the data, beaten the odds and met its costs and losses over a series of years does not mean that ECG programs are structured and designed to do so" (para. 503, Brazil's Rebuttal). Is Brazil arguing that evidence regarding the actual operation and "profitability" of the programme (i.e. retrospective evidence) is irrelevant to the Panel's analysis under item (j)?
166. The United States notes that Brazil now appears to be advocating exclusively for "cash results" in respect of an analysis under item (j).668 This appears to be a wholesale abandonment of Brazil's position in the original panel proceeding regarding the credit reform accounting methodology, a shift that can only be explained by the fact that the methodology now confirms the robust profitability of the programs, directly undermining Brazil's theory in the present proceeding. The United States recalls that Brazil had previously stated that "it does not intend for this revised constructed formula to replace the formula used by the U.S. government itself to track the costs of the CCC guarantee programs pursuant to the U.S. Federal Credit Reform Act."669 Brazil's response to the compliance panel's Question 114 reflects a complete reversal of that position.

167. While Brazil's positions on the issue may shift to accommodate the results Brazil prefers, the overwhelming evidence confirms the profitability of the export credit guarantee programs. This evidence directly contradicts Brazil's claims that premiums charged under these programs are insufficient to cover the long-term costs and losses of the programs.


1 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 142.

2 U.S. 2 April response to question 44, para. 8.

3 Appellate Body Report, U
.S. – OCTG from Argentina (21.5), para. 146 (emphasis in original).

4 Appellate Body Report, U
.S. – OCTG from Argentina (21.5), para. 151.

5 Appellate Body Report, U
.S. – OCTG from Argentina (21.5), paras. 146 and 148.

6 Appellate Body Report, U
.S. – OCTG from Argentina (21.5), paras. 151.

7 U.S. 2 April response to question 44, para. 18.

8 Panel Report, U
.S. – Gambling (21.5), para. 6.24 (emphasis in original).

9 Appellate Body Report, U
.S. – Softwood Lumber IV (21.5), paras. 15, 67 and 92.

10 U.S. 2 April response to questions 44 and 46, paras. 12 and 52.

11 U.S. 2 April response to question 97, paras. 224-225.


12 Panel Report, U
.S.Upland Cotton, para. 7.869.

13 In comments on Question 98, Brazil shows that the amended GSM 102 program is an export subsidy by comparison with ExIm Bank products, even taking account of the differing interest rate coverage of the products. In its 2 April response to question 100, Brazil has also demonstrated that this same evidence proves that GSM 102 ECGs lower the "total cost of funds" in GSM 102-supported transactions.

14 U.S. 2 April response to question 97, paras. 224-225.

15 See Brazil's comments on U.S. responses to questions 45, 47 and 48, below.

16 Appellate Body Report, Canada – Aircraft (21.5), para. 40.

17 Appellate Body Report, U.S. – OCTG from Argentina (21.5), paras. 151.

18 Appellate Body Report, U.S. – OCTG from Argentina (21.5), paras. 146.

19 Appellate Body Report, Canada – Aircraft (21.5), para. 41.

20 Brazil's 26 February response to question 6, paras. 32-60.


21 WT/DS267/30, paras. 13 and 17.

22 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 142, circulated 12 April 2007, not yet adopted.

23 See, in particular, Brazil's 26 February response to question 11 and its 2 April response to question 45.

24 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 142, circulated 12 April 2007, not yet adopted.

25 U.S. 16 March comments, para. 65.

26 Panel Report, U.S. – Upland Cotton, para. 7.187.

27 U.S. 16 March comments, para. 63.

28 Panel Report, U.S. – Upland Cotton, paras, 7.1107.

29 U.S. 16 March comments, para. 68.

30 Brazil's 2 April response to question 44, para. 13.

31 U.S. 16 March comments, para. 68.

32 Brazil's 2 April response to question 44, paras. 14 to 16.

33 Panel Report, U.S. Upland Cotton, para. 7.1501.


34 U.S. 2 April response to question 45, paras. 27 ff.

35 Panel Report, U.S. – Upland Cotton, para. 7.1198.

36 Panel Report, U.S. Upland Cotton, para. 7.1501.

37 Brazil's 26 February response to question 15, paras. 145-150.

38 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 140.

39 Panel Report, U.S. – Gambling (21.5), para. 6.24 (emphasis in original). Appellate Body Report, U.S. – Softwood Lumber IV (21.5), paras. 15, 67 and 92. The Appellate Body found the "first assessment review" to be a "measure taken to comply" even though the United States Department of Commerce did not adopt it "with the intention of complying with the DSB's recommendations and rulings."

40 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 142 and Appellate Body Report, U.S. – Softwood Lumber IV (21.5), para. 68. See United States 2 April response to question 44, paras. 8 and 9.

41 Appellate Body Report, U.S. – Softwood Lumber IV (21.5), para. 68.


42 Appellate Body Report, U.S. – Softwood Lumber IV (21.5), para. 67 (emphasis added).

43 U.S. 2 April response to question 44, footnotes 5 and 22, and para. 17.

44 Brazil's 26 February response to question 15, para. 147.

45 Appellate Body Report, U.S. – Softwood Lumber IV (21.5), para. 67 (emphasis added).

46 Appellate Body Report, U.S. – FSC (21.5 II), para. 84.

47 U.S. 16 March comments, para. 100; and U.S. 2 April response to question 47, para. 53.

48 Appellate Body Report, U.S. – OCTG from Argentina (21.5), para. 148.

49 U.S. 2 April response to question 48, para. 54.

50 U.S. 16 March comments, para. 101; U.S. 2 April response to question 48, paras. 54 ff.

51 U.S. 2 April response to question 46, para. 52.

52 U.S. 2 April response to question 46, para. 51.

53 Appellate Body Report, U.S. – OCTG from Argentina (21.5), paras. 146 and 151 (emphasis in original).


54 U.S. 2 April response to question 49, para. 59.

55 Appellate Body Report, Guatemala – Cement I, para. 65.

56 See Award of the Arbitrator, Chile. – Alcoholic Beverages, para. 38; Award of the Arbitrator, U.S. – Byrd Amendment, para. 40; Award of the Arbitrator, U.S.1916 Act, para. 30.

57 Appellate Body Report, U.S. – Softwood Lumber IV (21.5), para. 103 (emphasis added) citing Appellate Body Report, Mexico – Corn Syrup (21.5), para. 121. See Brazil's First Written Submission, para. 28.

58 Brazil's 26 February response to question 21, paras. 154 ff.

59 Panel Report, Australia – Salmon (21.5), para. 7.30. See, also, para. 8.1(i) of the panel's findings and conclusions (underlining added).

60 WT/DS267/29.

61 Panel Report, U.S. Upland Cotton, footnote 1471 referring to Exhibit Bra-109 (Testimony (Full) of Robert McLendon, Chairman, NCC Executive Committee, Before the House Agricultural Committee. National Cotton Council (NCC)). See also Exhibit Bra-324 (NCC Chairman's Report by Kenneth Hood, 24 July 2002, p. 2).


62 Exhibit Bra-563 ("Cotton bailout: How your tax dollars prop up big growers and squeeze the little guy," Atlanta Journal-Constitution, 1 October 2006, p. 2, accessed December 2006 at http://www.ajc.com/search/content/metro/stories/cotton1.html).

63 Panel Report, U.S. – Upland Cotton, para. 7.1291.

64 A letter to the President dated 12 April and signed by 58 U.S. Senators states "We cannot support a deal that directly reduces net farm income through steep cuts in farm programs in return for minimal market access gains whose effects on farm gate receipts is speculative at best," available at http://conrad.senate.gov/issues/statements/agriculture/070412_WTO_Ag_Letter.pdf.

65 Brazil's First Written Submission, paras 126-150; Brazil's Rebuttal Submission, paras. 101-113, 180-194, 209-231; Brazil's Oral Statement, paras. 63-78.

66 See Brazil's 2 April response to question 69, paras. 90-106.

67 Brazil's 2 April response to question 69, paras. 92-96.

68 Brazil's First Written Submission, Section 7.4.

69 Brazil's First Written Submission, Section 7.4.

70 Brazil's First Written Submission, Section 7.4; Brazil's Oral Statement, para. 148 and Declaration by Andrew Macdonald, Brazil's First Written Submission, Annex II, para. 18.


71 Exhibit Bra-559 ("Potential Challenges to U.S. Farm Subsidies in the WTO: A Brief Overview," Congressional Research Service Report for Congress, 25 October 2006, p. 5).

72 Brazil's First Written Submission, paras. 126-150.

73 Brazil's Rebuttal Submission, paras. 101-113, 180-194, 209-231.

74 Brazil's Opening Statement, paras. 63-78.

75 U.S. 2 April response to question 51, para. 69 (emphasis in original).

76 Brazil's First Written Submission, Table 8 at para. 133.

77 Brazil's First Written Submission, Table 8 at para. 133.

78 U.S. 2 April response to question 53(c), para. 94.

79 U.S. 2 April response to question 51, para. 69.

80 U.S. 2 April response to question 51, para. 71.

81 Appellate Body Report, U.S. – Upland Cotton, para. 445.

82 Brazil's Oral Statement, paras. 70-71.

83 U.S. 2 April introduction to responses to questions, paras. 1-4.

84 Panel Report, U.S. – Upland Cotton, para. 7.1294. Appellate Body Report, U.S. – Upland Cotton, para. 445.


85 Brazil's Oral Statement, paras. 54-91.

86 Panel Report, U.S. – Upland Cotton, para. 7.1295.

87 Panel Report, U.S. – Upland Cotton, para. 8.1(g)(i).

88 Appellate Body Report, U.S. – Upland Cotton, para. 763.

89 U.S. 2 April response to question 51, para. 72, first bullet point.

90 Brazil's First Written Submission, Table 6 at para. 111, as amended by updated marketing loan subsidy amounts (see Brazil's 16 March Comments on U.S. Answer to Question 4, para. 14) and an updated counter-cyclical subsidy amount in MY 2005 (see Brazil's Oral Statement, paras. 40, 107-119).

91 Brazil's First Written Submission, paras. 126-150; Brazil's Rebuttal Submission, paras. 101-113; 180-194, 209-231; and Brazil's Opening Statement, paras. 63-78.

92 See Quantitative Simulation Analysis by Professor Daniel Sumner, Annex I to Brazil's Further Submission before the original panel, 9 September 2003, para. 18, available at http://www.mre.gov.br/portugues/ministerio/sitios_secretaria/cgc/analisequantitativa.pdf.

93 U.S. 2 April response to question 51, para. 71.


94 Appellate Body Report, U.S. – Upland Cotton, para. 445.

95 See, e.g., Brazil's Rebuttal Submission, Sections 7.7, 7.8, 7.9, 7.11, 7.12.

96 Brazil notes that even using the futures price analysis for the December contract, U.S. upland cotton farmers expected to receive significant marketing loan and counter-cyclical payments in every year under the FSRI Act of 2002.

97 U.S. 2 April response to question 51, para. 72, second bullet point.

98 Brazil's Opening Statement, paras. 63-77

99 Brazil's Comments on U.S. Oral Statements, paras. 13-34.

100 See also Brazil's comments on the U.S. responses to questions 53 and 59, below.

101 U.S. 2 April response to question 51, para 72, third and fourth bullet points.

102 Brazil's Rebuttal Submission, paras. 201-202.

103 "Analysis of Effects of U.S. Upland Cotton Subsidies on Upland Cotton Prices and Quantities by Daniel A. Sumner," Brazil's First Written Submission, Annex I, Table

104 Brazil's Rebuttal Submission, paras. 226-231.

105 Brazil's Comments on the U.S. Oral Statement, para. 31.


106 See Exhibit Bra-562 (Cotton and Wool Situation Outlook and Yearbook, USDA, November 2006, Table 2, accessed November 2007 at http://usda.mannlib.cornell.edu/usda/current/CWS-yearbook/CWS-yearbook-11-21-2006.pdf.

107 See, e.g., Brazil's comments on the U.S. response to question 59, below.

108 U.S. 2 April response to question 51, para. 72, fifth bullet point.

109 Brazil's Rebuttal Submission, paras. 335-336.

110 Brazil's Rebuttal Submission, paras. 324-345.

111 Brazil's Rebuttal Submission, paras. 337-339.

112 U.S. 2 April response to question 51, paras. 75-76.

113 U.S. 2 April response to question 51, para. 77.

114 U.S. 2 April response to question 51, para. 78.

115 U.S. 2 April response to question 51, para. 73.

116 U.S. 2 April response to question 53(a), para. 83.

117 These Comments respond to many of the expectation-related arguments in the U.S. 2 April response to question 53(a).


118 U.S. 2 April response to question 53(a), para. 85.

119 See, e.g., Brazil's Rebuttal Submission, para 188 (Brazil agrees that there are some factors that may influence planting decisions for some upland cotton producers in addition to expected prices and expected subsidy revenue . . . However, these exogenous factors do not reduce the importance or U.S. upland cotton producers of the key economic factor based on what farmers decide to produce upland cotton: expected revenue from selling upland cotton as topped up by massive U.S. marketing loan and counter-cyclical payments.").

120 Brazil's Rebuttal Submission, para 221-222 discussing Figure 8 – Futures Prices and Planted Acreage; see also U.S. Rebuttal Submission, Figure in para. 306 (showing that since 2002, foreign harvested acreage has increased when prices were predicted to be higher, and decreased when prices were predicted to be lower; by contrast, the U.S. harvested acreage did not show any correlation to price movements in MY 2003, MY 2005, and MY 2006).

121 U.S. Rebuttal Submission, Figure in para. 306 (showing that since 2002, foreign harvested acreage has increased when prices were predicted to be higher, and decreased when prices were predicted to be lower; by contrast, the U.S. harvested acreage did not show any correlation to price movements in MY 2003, MY 2005, and MY 2006).

122 Brazil's Rebuttal Submission, para. 224 discussing Figure 9 – Changes in Acreage and Percentage Changes in Futures Prices; Brazil's First Written Submission, paras 141-143 discussing Figure 9 – Futures Prices and Planted Acreage; Brazil's Oral Statement, para. 61-62.


123 U.S. 2 April response to question, para. 89.

124 Exhibit Bra-629 (Brazilian Harvested Acreage, Producer, Supply & Distribution Database, FAS, USDA, accessed February 2007 at http://www.fas.usda.gov/psdonline/psdquery.aspx). See also Exhibit Bra 570 (Producer, Supply & Distribution Database, FAS, USDA, accessed January 2007 at http://www.fas.usda.gov/psdonline/psdquery.aspx).

125 Citations by Stephen Houston Sr., a cotton farmer from Georgia, can be found in Exhibit Bra-563 ("Cotton bailout: How your tax dollars prop up big growers and squeeze the little guy," Atlanta Journal-Constitution, 1 October 2006, p. 2, accessed December 2006 at http://www.ajc.com/search/content/metro/stories/cotton1.html).

126 See also Professor Sumner's analysis regarding the magnitude of the reaction of U.S. upland cotton producers to an elimination of marketing loan and counter-cyclical subsidies, Brazil's First Written Submission, Annex I.

127 U.S. 2 April response to question 53, paras. 88 and 90 ("the data show … that U.S. production and exports shift consistently with production and exports elsewhere in the world.").

128See "Cotton Backgrounder," USDA, March 2007, accessed April 2007 at http://www.ers.usda.gov/Publications/CWS/2007/03Mar/CWS07B01/).

129 Producer, Supply and Distribution Database, Foreign Agriculture Service, USDA, accessed April 2007 at http://www.fas.usda.gov/psdonline/psdQuery.aspx.


130 Exhibit Bra-447 (Upland Cotton Supply and Use).

131 Producer, Supply and Distribution Database, Foreign Agriculture Service, USDA, accessed April 2007 at http://www.fas.usda.gov/psdonline/psdQuery.aspx.

132 Exhibit Bra-579 ("Cotton: Impact of Support Policies on Developing Countries – Why Do the Numbers Vary?" FAO Trade Policy Brief, p. 1, accessed December 2006 at ftp://ftp.fao.org/docrep/fao/007/y5533e/y5533e00.pdf).

133 "Analysis of Effects of U.S. Upland Cotton Subsidies on Upland Cotton Prices and Quantities by Daniel A. Sumner," Brazil's First Written Submission, Annex I, Tables 2.A.1-2.A.3.

134 See Brazil's First Written Submission, para. 162. See also Exhibit Bra-480 (Survey of the Cost of Production of Raw Cotton, ICAC, November 2004, p. 13).

135 See Brazil's First Written Submission, para. 162. See also Exhibit Bra-480 (Survey of the Cost of Production of Raw Cotton, ICAC, November 2004, p. 13).

136 See Brazil's First Written Submission, paras. 167-180.

137 U.S. 16 March comments on Brazil's answer to question 28(a), para. 121.

138 See Brazil's Closing Statement, para. 11.


139 See "World Cotton," 2007 FAPRI Baseline, accessed April 2007 at http://www.fapri.iastate.edu/brfbk07/CottonTables2007.xls.

140 U.S. 2 April response to question 53, para. 92.

141 Exhibit Bra-477 (Upland Cotton Costs and Returns).

142 Brazil's Rebuttal Submission, Table 3 at para. 157. Results are from U.S. First Written Submission, table at para. 224.

143 Average effects from MY 2002-2005, see "Analysis of Effects of U.S. Upland Cotton Subsidies on Upland Cotton Prices and Quantities by Daniel A. Sumner," Brazil's First Written Submission, Annex I, Tables 2.A.1-2.A.3.

144 Average effects from MY 2002-2005, see "Analysis of Effects of U.S. Upland Cotton Subsidies on Upland Cotton Prices and Quantities by Daniel A. Sumner," Brazil's First Written Submission, Annex I, Tables 2.A.1-2.A.3.

145 Appellate Body Report, U.S.–Upland Cotton¸ para. 445; Panel Report, U.S. – Upland Cotton, paras. 7.1290-7.1303.

146 See, e.g., Brazil's 2 April response to question 69.

147 U.S. 2 April response to question 53(c), paras. 94-95 citing Brazil's Oral Statement, para. 55.


148 Brazil's comments on the U.S. response to question 51, above, address the arguments in paragraphs 95-96 in the Answer to Question 53(c).

149 For more details on the functioning of the marketing loan program, see Section 7.3.1 of Brazil's First Written Submission or see 7 U.S.C. §7931(a) in Exhibit Bra-442 (7 U.S.C. §§ 7901-7939, Legal Information Institute, Cornell Law School, accessed July 2006 at http://www.law.cornell.edu/uscode/).

150 Panel Report, U.S. – Upland Cotton, paras. 7.1294-7.1295.

151 Panel Report, U.S. – Upland Cotton, para. 7.1291.

152 Panel Report, U.S. Upland Cotton, para. 7.1291.

153 Brazil's First Written Submission, Table 6 at para. 111, as amended by updated marketing loan subsidy amounts (see Brazil's 16 March Comments on U.S. Answer to Question 4, para. 14) and an updated counter-cyclical subsidy amount in MY 2005 (see Brazil's Oral Statement, para. 40). See also Brazil's 2 April Answer to question 69, para. 99.

154 See also Brazil's comment on the U.S. response to question 51, above.

155 See also Brazil's comment on the U.S. response to question 51, above.


156 Brazil's First Written Submission, paras. 111-113 and Table 6.

157 See Brazil's comment on the U.S. response to question 51, above.

158 Appellate Body Report, U.S. – Upland Cotton, para. 445; Panel Report, U.S. – Upland Cotton, paras. 7.1290-7.1303.

159 See Brazil's comment on the U.S. response to question 51, above.

160 U.S. 2 April response to question 53, para. 97.

161 U.S. 2 April response to question 53, para. 98.

162 Panel Report, U.S. Upland Cotton, para. 7.1354.

163 See also Brazil's comments on the U.S. response to question 59, below.

164 Brazil's Rebuttal Submission, paras. 254-283.

165 The United States does not consider unpaid labor, land or capital recovery costs to be variable, see U.S. Rebuttal Submission, paras. 324-332. Brazil considers these costs to be fully, or in part, variable, see Brazil's Rebuttal Submission, para. 254-283.


166 Brazil's Oral Statement, paras. 87-88

167 See Brazil's 2 April response to question 73; Brazil's First Written Submission, Annex I.

168 See Brazil's Rebuttal Submission, Annex I, para. 11. Brazil also notes that it addresses the other U.S. cost of production related arguments in its comments on the U.S. response to question 59, below.

169 U.S. 2 April response to question 53(c), para. 99.

170 Brazil notes that it is impossible to verify much of the new information presented by the United States. Exhibit U.S.-139, which contains the U.S. analysis, was not provided electronically and much of the information does not appear to be publicly available. Brazil's analysis, by contrast, was based on publicly available information and provided to the Panel and the United States in electronic format.

171 U.S. Comments on Brazil's Oral Presentation, Annex I, Section 1 "Expected Market Prices."

172 U.S. Comments on Brazil's Oral Presentation, Annex I, Section 1 "Expected Market Prices."

173 See http://www.ers.usda.gov/Data/PriceForecast/, accessed April 2007.

174 Brazil used CBO's projection of MY 2007 prices because the corresponding FAPRI projection was not yet available. See Exhibit Bra-634 (Analysis of Planting Decisions Based on Expected Returns).


175 See expected prices for upland cotton in Exhibit Bra-634 (Analysis of Planting Decisions Based on Expected Returns) and Exhibit US-139 (Data Supporting Expected Market Returns Above Variable Costs Chart)

176 Compare expected net outlays in Exhibit US-139 (Data Supporting Expected Market Returns Above Variable Costs Chart, p. 1).

177 U.S. 2 April response to question 53(c), para. 99.

178 See US-139 (Data Supporting Expected Market Returns Above Variable Costs Chart, p. 20). For convenience, Brazil's replicates and provides citations to the United States yield calculations in Exhibit Bra-688 (Expected Upland Cotton Yields).

179 USDA cost of production of data clearly specifies that yields are in terms of planted acres, not harvested acres. See, e.g. Exhibit Bra-475 (U.S. Cotton Producers Costs and Returns Per Planted Acre, Excluding Government Payments, Economic Research Service, USDA, accessed October 2006 at http://www.ers.usda.gov/data/costsandreturns/testpick.htm).

180 The United States provided very little documentation as to how it constructed its "linear trend equation" of expected yields in US-139 (see U.S. Comments on Brazil's Oral Statement, Annex I). Brazil has reconstructed the U.S. calculation for the panel's convenience, using both yields per harvested acre and yields per planted acre in Exhibit Bra-688 (Expected Upland Cotton Yields).


181 See US-139 (Data Supporting Expected Market Returns Above Variable Costs Chart, p. 20). For convenience, Brazil's replicates and provides citations to the United States yield calculations in Exhibit Bra-688 (Expected Upland Cotton Yields).

182 By contrast, Brazil used a three year rolling average of yields per planted acre actually achieved on farms in USDA's cost survey. See Exhibit Bra-634 (Analysis of Planting Decisions Based on Expected Returns).

183 USDA baseline projections are from Exhibit Bra-635 (2002-2007 USDA Agricultural Baseline Projections). Actual yields are from Exhibit Bra-562 (Cotton and Wool Situation Outlook and Yearbook, USDA, November 2006, Table 2, available at http://usda.mannlib.cornell.edu/usda/current/CWS-yearbook/CWS-yearbook-11-21-2006.pdf). Yields used by the U.S. in their planting decisions analysis is from Exhibit US-139.

184 U.S. 2 April response to question 53(c), para. 99.

185 See Brazil's Oral Statement, paras. 63-78 and Brazil's Comments on the U.S Oral Statements, paras. 13-27. As Brazil explained in its Comments on the U.S. Oral Statements, using total costs or variable costs does not change the relative attractiveness of producing upland cotton versus corn or soybeans.

186 Appellate Body Report, U.S. Softwood Lumber V, para. 111.


187 Appellate Body Report, U.S. OCTG Sunset Reviews, para. 188.

188 Appellate Body Report, U.S. Softwood Lumber IV (21.5), para. 103 (emphasis added) citing Appellate Body Report, Mexico Corn Syrup (21.5), para. 121. See Brazil's First Written Submission, para. 28.

189 Appellate Body Report, U.S. Softwood Lumber VI (21.5), para. 103 (emphasis added).

190 Panel Report, United States – Gambling (Article 21.5), para. 6.53.

191 U.S. 2 April response to question 54, paras. 108-110.

192 U.S. 2 April response to question 54, paras. 111-115.

193 U.S. 2 April response to question 54, paras. 117-120.

194 U.S. 2 April response to question 56, para. 123.

195 Brazil also cited one study by McIntosh, Shrogren and Dohlman on the effect of counter-cyclical payments that found significant production impacts from counter-cyclical subsidies. See Brazil's 2 April response to question 64.


196 Panel Report, U.S. Upland Cotton, paras. 7.1301-7.1302.

197 Brazil's First Written Submission, paras. 167-185; Brazil's Rebuttal Submission, paras. 69-70, 119 123 or Exhibit Bra-659 (Statement of Professor Sumner Concerning Various U.S. Arguments), paras 42-47.

198 These include reducing risk associated with price variability, increasing investment through wealth effects, reducing risk aversion through wealth effects, constraining production choices because of planting restrictions, and increasing incentives to plant because of base acre updating. See "Analysis of Effects of U.S. Upland Cotton Subsidies on Upland Cotton Prices and Quantities by Daniel A. Sumner," Brazil's First Written Submission, Annex I, paras. 59-64.

199 These include reducing risk associated with price variability and reducing risk through wealth effects. See Exhibit Bra-659 (Statement of Professor Sumner Concerning Various U.S. Arguments, para. )

200 Brazil's 2 April response to questions 64 and 65.

201 Exhibit Bra-675 (Updated Program Crop Comparison, March 2007).

202 Exhibit Bra-675 (Updated Program Crop Comparison, March 2007).

203 Compare Exhibit Bra-675 (Updated Program Crop Comparison, March 2007) to U.S. 2 response to question 53, para. 101.


204 See, e.g., Brazil's attempt to obtain this data through a Freedom of Information Act request was rejected. See Exhibit Bra-689 (Freedom of Information Act Rejection Letter).

205 Panel Report, U.S. – Upland Cotton, paras. 7.634-7.647.

206 See, e.g., Panel Report, U.S. Upland Cotton, paras. 7.6377.1362.

207 The original panel stated that "United States upland cotton producers would not have been economically capable of remaining in the production of upland cotton had it not been for the United States subsidies at issue and that the effect of the subsidies was to allow United States producers to sell upland cotton at a price lower than would otherwise have been necessary to cover their total costs." Panel Report, U.S. Upland Cotton, para. 7.1353.

208 Brazil's Rebuttal Submission, Table 3 at para.157. Results are from U.S. First Written Submission, table at para. 224.

209 U.S. 2 April response to question 54, para. 115.

210 Panel Report, U.S. Upland Cotton, para. 7.1362.

211 Exhibit Bra-109 (Testimony (Full) of Robert McLendon, Chairman, NCC Executive Committee, Before the House Agricultural Committee. National Cotton Council (NCC)).


212 Exhibit Bra-675 (Updated Program Crop Comparison, March 2007).

213 Brazil's Rebuttal Submission, Table 3 at para.157. Results are from U.S. First Written Submission, table at para. 224.

214 See Exhibit Bra-477 (U.S. Upland Cotton Costs and Returns).

215 U.S. 2 April response to question 58, para. 132.

216 U.S. 2 April response to question 58, para. 134 (emphasis added).

217 U.S. 2 April response to question 58, para. 133.

218 Brazil's Rebuttal Submission, paras. 254-283.

219 U.S. 2 April response to question 58, para. 136.

220 U.S. 2 April response to question 58, paras. 135-136.

221 U.S. 2 April response to question 59, paras. 137-142.

222 See Brazil's First Written Submission, Section 7.11; Brazil's Rebuttal Submission, Section 2.3.6; Brazil's Opening Statement, Section 2.4; and Brazil's Comments on U.S. Oral Statements, Section 4.

223 U.S. First Written Submission, paras. 293-297; U.S. Rebuttal Submission, paras. 344-348; and U.S. 2 April response to question 59, paras. 155-157.


224 U.S. Rebuttal Submission, para. 337; U.S. Opening Statement, paras. 11-13; and U.S. 2 April response to question 59, paras. 144-145.

225 U.S. 2 April response to question 59, paras. 147-154.

226 Brazil's Oral Statement, para. 57.

227 U.S. 2 April response to question 59, paras. 155-157.

228 The United States repeatedly quotes a portion of one of these studies which finds that "[o[ff-farm work could hypothetically effect exits in two ways" (U.S. Answers to Second Set of Questions, para. 156). As explained above, the question before this compliance Panel is not whether farmers would go bankrupt. It is whether a farmer would stop producing upland cotton. Furthermore, the "hypothetical" effects of off-farm income on farm-exits is no more than a theory. See Exhibit US-46 (Hoppe, Robert A. and Korb, Penni. "Understanding U.S. Farm Exits." Economic Research Service Report 21. June 2006, p. 20).

229 Panel Report, U.S. Upland Cotton, para. 1354, footnote 1470.

230 U.S. 6 March response to question 31, para. 30.

231 U.S. 6 March response to question 31, para. 30.

232 U.S. 2 April response to question 59, paras. 144-146.

233 U.S. Rebuttal Submission, para. 337; U.S. Opening Statement, paras. 11-13; and U.S. 2 April response to question 59, paras. 144-145.


234 U.S. Opening Statement, paras. 11-12; U.S. 6 March Response to Question 29, para. 20; and U.S. 2 April response to question 59, paras. 144-146.

235 Brazil notes that the U.S. also adjusts the data to exclude costs and returns associated with cottonseed.

236 See Exhibit Bra-477 (U.S. Upland Cotton Costs and Returns); see also Exhibit Bra-475 (U.S. Cotton Producers Costs and Returns Per Planted Acre, Excluding Government Payments, Economic Research Service, USDA, accessed October 2006 at http://www.ers.usda.gov/data/costsandreturns/testpick.htm).

237 U.S. 2 April response to question 59, para. 145.

238 See, e.g., Brazil's First Written Submission, paras. 156-164.

239 U.S. 2 April response to question 59, para. 145.

240 U.S. 2 April response to question 59, para. 145.

241 Exhibit Bra-477 (U.S. Upland Cotton Costs and Returns); see also Exhibit Bra-475 (U.S. Cotton Producers Costs and Returns Per Planted Acre, Excluding Government Payments, Economic Research Service, USDA, accessed October 2006 at http://www.ers.usda.gov/data/costsandreturns/testpick.htm). Brazil notes that USDA's use of harvest period prices underestimates losses in MY 2004. The harvest period (Oct-Nov) farm price of upland cotton was 51 cents per pound (Exhibit Bra-477), while the marketing year average farm price was just 42 cents per pound (Exhibit Bra-448 (Cotton and Wool Situation Outlook and Yearbook, USDA, November 2005, p. 38, accessed October 2006 at http://usda.mannlib.cornell.edu/usda/current/CWS-yearbook/CWS-yearbook-11-25-2005.pdf)).


242 For yields in MY 2004 and 2005, see Exhibit Bra-562 (Cotton and Wool Situation Outlook and Yearbook, USDA, November 2006, Table 2, available at http://usda.mannlib.cornell.edu/usda/current/CWS-yearbook/CWS-yearbook-11-21-2006.pdf). For yields in MY 2006, see Table 1 from the April 2007 Cotton and Wool Outlook, accessed April 2007 at http://www.ers.usda.gov/Briefing/Cotton/Data/COTTONTABLE1.xls.

243 Compare seed, fertilizer and fuel costs in Exhibit Bra-475 (U.S. Cotton Producers Costs and Returns Per Planted Acre, Excluding Government Payments, Economic Research Service, USDA, accessed October 2006 at http://www.ers.usda.gov/data/costsandreturns/testpick.htm) and Exhibit Bra-575 ("Cost-of-production forecasts for U.S. major field crops, 2006-2008F," Economic Research Service, USDA, accessed January 2007 at http://www.ers.usda.gov/data/costsandreturns/data/Forecast/cop_forecast.xls).

244 Exhibit Bra-634 (Analysis of Planting Decisions Based on Expected Returns).

245 See Brazil's Comments to Question 82 below.

246 Based on partial year USDA and FAPRI data, the loss is expected to be $116 per acre, see Exhibit Bra-648 (Actual Costs and Returns Analysis).

247 U.S. 2 April response to question 59, para. 145.


248 U.S. 2 April response to question 59, para. 145.

249 Exhibit Bra-562 (Cotton and Wool Situation Outlook and Yearbook, USDA, November 2006, p. 36, available at http://usda.mannlib.cornell.edu/usda/current/CWS-yearbook/CWS-yearbook-11-21-2006.pdf)

250 See Table 1 from the April 2007 Cotton and Wool Outlook, accessed at http://www.ers.usda.gov/Briefing/Cotton/Data/COTTONTABLE1.xls.

251 See Brazil's comments on the U.S. response to question 82, below.

252 Appellate Body Report, Canada Dairy (21.5 II), para. 96.

253 U.S. 2 April response to question 59, para. 144.

254 Brazil's First Written Submission, para. 167.

255 Market returns minus total costs was reduced by the product of 5 percent and total costs, see Exhibit Bra-648 (Actual Costs and Returns Analysis).

256 Exhibit Bra-477 (U.S Upland Cotton Costs and Returns).

257 U.S. 2 April response to question 59, para. 147.


258 U.S. 2 April response to question 59, para. 143.

259 See e.g., Section F of U.S. Further Rebuttal Submission from the original proceeding, 18 November 2003



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