List of abbreviations 444 table of cases



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per se if such measures mandate a violation of the WTO Agreement." Brazil First Submission in Original Panel Proceeding, para. 244 (citing US – 1916 Act (AB), para. 88). Thus, in the case of its claims against the challenged programs, per se, Brazil asked the Panel "to find that the mandatory provisions of the 2002 FSRI Act and the 2000 ARP Act together with their implementing regulations, as listed above, cannot be applied in a WTO consistent manner." Brazil's 9 September 2003 Further Submission, para. 435-436. Explaining what this would mean in the context of this dispute, Brazil argued "[f]irst, the Panel needs to evaluate whether the U.S. subsidies will necessarily threaten to cause serious prejudice at price levels below the trigger prices of the U.S. subsidies. Second, the Panel needs to consider whether the U.S. subsidies threaten to cause serious prejudice even at price levels at which only crop insurance subsidies and direct payments are made." Brazil's September 9, 2003 Further Submission, para. 426 (emphasis added). The Panel neither conducted the requested evaluations, nor made any findings along the lines requested by Brazil.


474 See Upland Cotton (Panel), paras. 8.3(b) and 8.1(e).

475 See
Upland Cotton (Panel), paras. 8.3(c) and 8.1(f).

476 Upland Cotton (Panel), para. 7.337(ix), n. 466.

477 Upland Cotton (Panel), para. 7.108 ("The Panel notes that Brazil pursues claims only in respect of the subsidies and domestic support provided under the expired programmes and authorizing legislation, in other words, the payments themselves. Brazil does not seek any relief in respect of the PFC and MLA programmes or authorizing legislation 'as such.' Therefore, the Panel only considers whether the payments are within its terms of reference.") (italics added).

478 Upland Cotton (Panel), para. 7.111.

479 Upland Cotton (AB), para. 272 (citing U.S. – Certain EC Products (AB), paras. 81-82).

480 Brazil Answers to Second Set of Panel Questions, para. 12.

481 Brazil Answers to Second Set of Panel Questions, para. 91.

482 Brazil Answers to Second Set of Panel Questions, para. 90.


483 In fact, if the United States were in fact "ignor[ing]" Brazil's arguments, one can only wonder why Brazil has repeatedly attempted over the course of this proceeding to attempt to cut U.S. opportunities for response: for example, arguing at the start of the proceeding that the United States should be given no more than two weeks to respond to Brazil's nearly 200-page first written submission and; arguing that the United States should not be permitted to address Brazil's contingent "threat" claim in its rebuttal submission; arguing that the United States should be given no opportunity to respond to Brazil's unsolicited third written submission submitted under the guise of an "exhibit" to Brazil's "oral" presentation; and in its latest attempt to obtain an unfair procedural advantage, arguing against the grant of any additional time for submission of these comments.

484 The full U.S. arguments in this respect are set out at U.S. First Written Submission, paras. 149-195, U.S. Rebuttal Submission, paras. 175-214, and U.S. Oral Statement, paras. 54-59.

485 Brazil's Rebuttal Submission to the Panel Regarding the "Peace Clause" and Non-Peace Clause Related Claims," para. 128 (22 August 2003) (emphasis in original).

486 Brazil Answers to Second Set of Panel Questions, para. 90.

487 Brazil Answers to Second Set of Panel Questions, para. 131.

488 "US Cotton Industry To Face Challenges In Global Market," 2006 AgWeb.com (Exhibit BRA-679).


489 Brazil Answers to Second Set of Panel Questions, para. 48.

490 U.S. Rebuttal Submission, paras. 206-213.

491 "China: Cotton import quotas of 1.5mn tons to be issued," available at www.fibre2fashion.com (April 24, 2007) (Exhibit US-165).

492 U.S. Export Sales for Week Ending 4.12.2007, available at www.fas.usda.gov/export sales/cottfax.htm (Exhibit US-166).

493 U.S. Export Sales Weekly Export Performance Indicator for Week Ending 4.12.2007, available at http://www.fas.usda.gov/esrquery/esrpi.aspx (Exhibit US-167).

494 Brazil Answers to Second Set of Panel Questions, para. 10 (citing Upland Cotton (Panel), para. 10).

495 See e.g., Brazil Answers to Second Set of Panel Questions, paras. 45, 53-55, 94, 99.

496 See e.g., Brazil Answers to Second Set of Panel Questions, paras. 49, 55, 94.

497 These are assertions by Brazil, not "undisputed facts," as it has stated. Brazil Answers to Second Set of Panel Questions, para. 95.

498 Brazil Answers to Second Set of Panel Questions, para. 94.


499 To the contrary, there is one agriculture-specific actionable subsidy provision in the SCM Agreement – Article 6.3(d) of the SCM Agreement – and that falls far short of a blanket prohibition on any subsidy that increases producer wealth and renders them less risk averse.

500 U.S. First Written Submission, paras. 203-331 and Annex I; U.S. Rebuttal Submission, paras. 215-404 and Annex I; U.S. Answers to Parts A-C of First Set of Panel Questions, paras. 27-44; U.S. Oral Statement, paras. 50-85 and Statement of Dr. Joseph W. Glauber; U.S. Answers to Parts D-E of First Set of Panel Questions, paras. 14-42; U.S. Comments on Brazil's "Oral" Presentation, paras. 34-91 and Annex I, and U.S. Answers to Second Set of Panel Questions, paras. 1-4, and 62-170.

501 Brazil First Written Submission, paras. 222 and 224. This is the figure if one looks at U.S. share of world production plus beginning stocks. If one looks at U.S. share of world production, there was a similarly small increase (of 1.53 percent) over the average for MY 2002-2004.

502 See U.S. First Written Submission, paras 332-343.

503 See U.S. Comments on Brazil's "Oral" Presentation, paras. 70-72.

504 The United States notes in this regard that Brazil devotes much effort in its answers to Questions 76 77 to attempting to characterize the U.S. interpretation of Article 6.3(d) as a "new" interpretation not previously presented. This is inexplicable given that in the U.S. first written submission, the United States clearly examined whether the U.S. world market share was higher than the average share of the previous 3-year period for each year in the periods MY 1996-2006, MY 1980-2006, and 1960-1996. This is the exact same examination conducted by the United States in its rebuttal submission. Indeed, Brazil appears to be confusing two separate issues – (a) the question of normal fluctuations in market share, which relates to the question of causation and whether in any particular year it is the challenged measures that are "causing" an increase over the previous three-year average and (b) the question of a "consistent trend" under the second element of Article 6.3(d).


505 This is true if one looks at world production. If one looks at world production plus beginning stocks, U.S. share of world supply would have been higher than the previous three-year average also in MY 2002.

506 Brazil First Written Submission, para. 227.

507 Brazil Answers to Second Set of Panel Questions, para. 182.

508 Brazil First Submission, para. 253.

509 DSU Article 3.2.

510 U.S. Rebuttal Submission, para. 413.

511 See U.S. Answers to Second Set of Panel Questions, paras. 1-4 (discussing NASS Prospective Plantings Report (March 30, 2007) (Exhibit US-140)).

512 Indeed, just last month, USDA lowered expected production levels for MY 2007 even further. According to NASS, the MY 2007 U.S. upland cotton crop is now forecast at 20.8 million bales – down from the 21.3 million bales forecast in December 2006 – and approximately 11 percent below MY 2005 levels. NASS March 2007 Cotton Ginnings Report (Exhibit US-168).

513 U.S. Export Sales Weekly Export Performance Indicator for Week Ending 4.12.2007, available at http://www.fas.usda.gov/esrquery/esrpi.aspx (Exhibit US-167).

514 Cotton This Month, ICAC, p. 4 (February 1, 2007) (Exhibit US-107).


515 U.S. Export Sales Weekly Export Performance Indicator for Week Ending 4.12.2007, available at http://www.fas.usda.gov/esrquery/esrpi.aspx (Exhibit US-167).

516 U.S. Rebuttal Submission, paras. 422-425.

517 See U.S. Answers to Second Set of Panel Questions, paras. 196-199 (showing that both FAPRI and CBO project at most a 2 cents/lb marketing loan payment for MY 2007.

518 See U.S. Answers to Second Set of Panel Questions, paras. 277-278.

519 Statement of Brazil - First (Original) Panel Meeting, para. 129 (22 July 2003).

520 Statement of Brazil - First (Original) Panel Meeting, para. 129 (22 July 2003).

521 Because it interprets and applies the definition of "benefit" set out in Article 1.1, Article 14 has been relied upon by the Appellate Body as important contextual guidance in interpreting "benefit." Canada – Aircraft (AB), para. 155.

522 Brazil First Written Submission, para. 381.

523 See U.S. Answers to Second Set of Panel Questions, paras. 1-16.

524 See U.S. Answers to Second Set of Panel Questions, paras. 17-41.


525 Brazil Answers to Second Set of Questions, para. 10.

526 United States – Argentina OCTG Sunset Reviews (AB), paras. 172.

527 United States – Argentina OCTG Sunset Reviews (AB), paras. 172.

528 Brazil Rebuttal Submission, para. 236.

529 See U.S. Answers to Second Set of Panel Questions, paras. 1-16.

530 U.S. Rebuttal Submission, paras. 81-83

531 Brazil Request for Panel Establishment, para. 28.

532 Brazil Request for Panel Establishment, para. 28.

533 Brazil Answers to Second Set of Questions, para. 44.

534 Brazil's assertions about the alleged "key role" that direct payments allegedly play in "allowing many upland cotton farmers to achieve a healthy 'profit' from growing upland cotton" – even though direct payments are not at issue in the present proceeding – is further evidence of Brazil's efforts to render income support a prohibited measure under the SCM Agreement. Brazil Answers to Second Set of Questions, para. 56. According to Brazil, "such profits play an important role in maintaining upland cotton production over the longer term by increasing the 'wealth' of producers." Brazil Answers to Second Set of Questions, para. 56. What Brazil asserts is true of any payment to any agricultural producer; any such payment would "increas[e] the 'wealth' of producers." This does not mean that all payments to producers are causing "significant" price suppression.


535 As Brazil confirmed in the first (resumed) meeting with the original Panel, "[t]he four-year period in which these subsidies [the "subsidies provided for the production, export and use of U.S. upland cotton during the period MY 1999-2002"] were provided is both the period of time covering the measures challenged by Brazil as well as the period of investigation to examine present serious prejudice caused by the U.S. subsidies under Articles 5(c) and 6.3 of the SCM Agreement." Brazil's 7 October 2003 Second Statement at First Panel Meeting, para. 3 (emphasis added)

536 U.S. Answers to Second Set of Panel Questions, paras. 101-106.

537 Brazil Answers to Second Set of Questions, para. 45.

538 Brazil Answers to Second Set of Questions, para. 45.

539 Brazil Answers to Second Set of Questions, para. 45.

540 Brazil Rebuttal Submission, para. 309.

541 Brazil Rebuttal Submission, para. 309. Indeed, the FAO itself concludes that any potential distortion may be minimal. The FAO estimates price effects of only 3.1 to 5 percent and it does so for "complete elimination of domestic subsidies as notified to the WTO and tariffs;" in other words, every domestic support and every tariff for every country in the world that notifies either to the WTO. Poonyth, Daneswar, et al., "The Impact of Domestic and Trade Policies on the World Cotton Market," FAO Commodity and Trade Policy Research Working Paper No. 8, April 2004, p. i (Exhibit US-55). Any possible effect of U.S. domestic supports – let payments under only two of the U.S. programs – would necessarily be substantially less. This is hardly evidence of a "strong link."


542 Brazil Answers to Second Set of Questions, para. 51.

543 The market analysis submitted by Brazil actually confirms that – contrary to Brazil's assertions – U.S. production and exports/stocks are not primarily responsible for the upland cotton market trends that are currently being observed. Specifically, the actual planting intentions figures for MY 2007 were far lower than those predicted by the "market expert" cited by Brazil – the report forecasted U.S. upland plantings to be only 11.86 million acres. NASS Prospective Plantings Report (March 30, 2007) (Exhibit US-140). This is 20.7 percent lower than MY2006 acreage and over 600,000 acres below the point at which the "market expert" predicted there would be a "bullish" impact on prices. Yet, both the May and December futures contracts for upland cotton, as quoted by the New York Board of Trade, declined, on average, since the report was issued. N.Y. Futures After Issuance of Planting Intentions Report (Exhibit US-169). This is hardly the "bullish" response predicted and confirms that other factors – such as China's upland cotton trade balance – are very much responsible for the world market price phenomenon that experts are trying to understand. As discussed in response to Question 74 below, Brazil has never properly accounted for these other factors in its assessment of "present" serious prejudice.

544 Brazil Answers to Second Set of Questions, para. 59.

545 Supplementary Statement of Daniel Sumner, para. 21.

546 Brazil Answers to Second Set of Questions, para. 65. Brazil's attempts to attribute the focus on "coupling" to the United States in its response is, however, patently unfounded, as the U.S. discussion in footnote 72 (reflected above) clearly shows.


547 Brazil Answers to Second Set of Questions, para. 66.

548 U.S. First Written Submission, paras. 203-331 and Annex I; U.S. Rebuttal Submission, paras. 215-404 and Annex I; U.S. Answers to Parts A-C of First Set of Panel Questions, paras. 27-44; U.S. Oral Statement, paras. 50-85 and Statement of Dr. Joseph W. Glauber; U.S. Answers to Parts D-E of First Set of Panel Questions, paras. 14-42; U.S. Comments on Brazil's "Oral" Presentation, paras. 34-91 and Annex I, and U.S. Answers to Second Set of Panel Questions, paras. 1-4, and 62-170.

549 Brazil Answers to Second Set of Questions, para. 67.

550 Lin, William and Dismukes, Robert. "Supply Response Under Risk: Implications for Counter cyclical Payments' Production Impacts," Review of Agricultural Economics–Volume 29, Number 1–Pages 64-86, forthcoming, p. 83 (Exhibit US-85) (emphasis added).

551 McIntosh, Christopher R, Jason F. Shogren and Erik Dohlman,"Supply Response to Counter-Cyclical Payments and Base Updating under Uncertainty: An Experimental Study,: forthcoming paper in the American Journal of Agricultural Economics, November 2006, page 18 (Exhibit BRA-565). The United States notes that this citation is in error since the article did not appear in the November 2006 issue of the American Journal of Agricultural Economics.

552 McIntosh, Christopher R, Jason F. Shogren and Erik Dohlman,"Supply Response to Counter-Cyclical Payments and Base Updating under Uncertainty: An Experimental Study,: forthcoming paper in the American Journal of Agricultural Economics, November 2006, page 18 (Exhibit BRA-565). The United States notes that this citation is in error since the article did not appear in the November 2006 issue of the American Journal of Agricultural Economics.


553 See Brazil Answers to Second Set of Questions, para. 68, n. 63 (citing McIntosh, Christopher R., Jason F. Shogren and Erik Dohlman, "Supply Response to Counter-Cyclical Payments and Base Acre Updating under Uncertainty: An Experimental Study," Forthcoming paper in the American Journal of Agricultural Economics, November 2006, p. 16-17 (See Exhibit BRA-565)).

554 The original panel found an earlier version of Westcott's analysis to be persuasive as to the effects of counter-cyclical payments.

555 Paul A. Westcott, "Counter-Cyclical Payments Under the 2002 Farm Act: Production Effects Likely to be Limited" at 203-205 (Exhibit US-35). Westcott notes in this regard that: (a) where prices are expected to be above maximum threshold – counter-cyclical payments behave just like the fixed direct payments; (b) "cross-commodity effect[s] suggest[] that CCPs may provide a general reduction in revenue risks rather than a crop-specific effect. Net returns among alternative crops would remain the primary consideration underlying production choices;" (c) "while a number of studies indicate that farmers are risk averse (Chavas and Holt, 1990, 1996, for example), other risk reduction instruments already exist to manage risks. Thus, with revenue risk reduction now provided by CCPs as part of farm programs, farmers may adjust their use of these other farm and nonfarm risk management strategies;" and (d) "a large portion of output in the U.S. agricultural sector is produced by a small share of large producers. . . . Evidence that risk aversion decreases as income rises (Chavas and Holt, 1990, 1996) suggests that risk aversion may also tend to decline as the size of farms increases. Thus, with larger farms that account for most production being less averse to facing risk, this lowers potential production effects of CCPs due to risk reduction. And while smaller farms may be more risk averse in their farm enterprise, off-farm income may reduce the overall level of household income risk." Paul A. Westcott, "Counter-Cyclical Payments Under the 2002 Farm Act: Production Effects Likely to be Limited" at 203-205 (Exhibit US-35). On the basis of these and other factors, Westcott concludes that "there are several mitigating factors which suggest that overall production effects of CCPs through revenue risk reduction are likely to be limited." Paul A. Westcott, "Counter-Cyclical Payments Under the 2002 Farm Act: Production Effects Likely to be Limited" at 205 (Exhibit US-35). The other studies submitted by the United States examining the empirical evidence of production effects – for example, including the Lin & Dismukes study finding that "[t]he effect of CCPs on producers' planting decisions . . . appears to be very negligible – an increase in the acreage of major field crops of less than 1% . . . ." – confirm that the effects of the counter-cyclical payments are, in fact, very limited. Lin, William and Dismukes, Robert. "Supply Response Under Risk: Implications for Counter- cyclical Payments' Production Impacts," Review of Agricultural Economics–Volume 29, Number 1–Pages 64-86, forthcoming, p. 83 (Exhibit US-85) (emphasis added).


556 Brazil Answers to Second Set of Questions, para. 68.

557 Brazil Answers to Second Set of Questions, para. 69.

558 McIntosh, Christopher R., Jason F. Shogren and Erik Dohlman, "Supply Response to Counter-Cyclical Payments and Base Acre Updating under Uncertainty: An Experimental Study," Forthcoming paper in the American Journal of Agricultural Economics, November 2006, p. 5) (Exhibit Bra-565).

559 Brazil Answers to Second Set of Questions, para. 69.

560 See e.g., U.S. First Written Submission, paras. 319-328 and Annex I; U.S. Rebuttal Submission, paras. 349-386 and Annex I; U.S. Oral Statement, paras. 76-81 and Statement of Dr. Joseph W. Glauber; U.S. Comments on Answers to Parts D-E of First Set of Panel Questions, paras. 30-42; and U.S. Comments on Brazil's "Oral" Presentation, paras. 79-91.

561 Brazil Answers to Second Set of Questions, para. 71.

562 Brazil Answers to Second Set of Questions, para. 73.

563 Brazil Answers to Second Set of Questions, 75.

564 Brazil Answers to Second Set of Questions, 75.

565 Brazil Answers to Second Set of Questions, para. 80.

566 U.S. Oral Statement, para. 76.


567 Brazil Answers to Second Set of Questions, para. 90.

568 Brazil Answers to Second Set of Questions, para. 101.

569 U.S. First Written Submission, paras. 203-331 and Annex I; U.S. Rebuttal Submission, paras. 215-404 and Annex I; U.S. Answers to Parts A-C of First Set of Panel Questions, paras. 27-44; U.S. Oral Statement, paras. 50-85 and Statement of Dr. Joseph W. Glauber; U.S. Answers to Parts D-E of First Set of Panel Questions, paras. 14-42; U.S. Comments on Brazil's "Oral" Presentation, paras. 34-91 and Annex I, and U.S. Answers to Second Set of Panel Questions, paras. 1-4, and 62-170.

570 Brazil Answers to Second Set of Questions, para. 108.

571 U.S. First Written Submission, paras. 277-291; U.S. Rebuttal Submission. paras. 314-320.

572 Brazil Answers to Second Set of Questions, para. 109.

573 If yields were at the levels that prevailed in MY 2001, U.S. production would have been almost 30 percent lower in MY 2005. If yields were at MY 1999 levels, U.S. production would have been almost 40 percent lower.


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