WORLD TRADE  
ORGANIZATION  WT/DS267/22 
8 July 2005 
 
 (05-3023) 
 Original:   English 
  
 
UNITED STATES – SUBSIDIES ON UPLAND COTTON 
 
Understanding between Brazil and the United States
 
Regarding Procedures under Articles 21 and 22 of the DSU  
and Article 4 of the SCM Agreement  
 
  The following communication, dated 5 July 2005, from the delegation of Brazil and the delegation of the United States to the Chairman of th e Dispute Settlement Body, is circulated at the 
request of those delegations. 
 
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  Brazil and the United States would like to inform the Dispute Settlement Body that they have agreed on the following "Agreed Procedures under Articles 21 and 22 of the Dispute Settlement 
Understanding and Article 4 of the SCM Agre ement in the follow-up to the dispute United States – 
Subsidies on Upland Cotton (WT/DS267)". 
 WT/DS267/22 
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 Agreed Procedures 
under Articles 21 and 22 of the Dispute Settlement Understanding 
and Article 4 of the SCM Agreement 
in the follow-up to the dispute 
United States – Subsidies on Upland Cotton (WT/DS267)  
 
  Noting that the Dispute Settlement Body (DSB) adopted, on 21 March 2005, the Appellate 
Body report (WT/DS267/AB/R) and the Panel repor t (WT/DS267/R and Corr.1), as modified by the 
Appellate Body report, in this dispute. 
 
 Considering that in paragraphs 8.3(b) and 8.3( c) of its report, the Panel recommended that the 
United States withdraw the prohibited subsidies referred  to in paragraphs 8.1(d)(i), 8.1(e), and 8.1(f) 
of the same report by at the latest within six months  of the date of adoption of the Panel report by the 
Dispute Settlement Body or 1 July 2005 (whichever is earlier). 
 
 Noting that the United States informed the DSB, on 20 April 2005, that it intends to implement the recommendations and rulings of the DSB in this dispute.   Recognizing:  
• that the United States Department of Agricultu re announced, on 30 June 2005, changes to 
the Commodity Credit Corporation's (CCC)  Export Credit Guarantee Program (GSM 
102), Intermediate Export Credit Guarant ee Program (GSM 103), and Supplier Credit 
Guarantee Program (SCGP); and 
• that a legislative proposal has been sent to  the United States' Congress with a view to 
repealing, as soon as possible, the user ma rketing (Step 2) program for exporters of 
upland cotton and domestic users of upland cotton. 
 
 Brazil and the United States ("the parties") have agreed on the following procedures: 
 1. In order to fully safeguard its rights unde r the Understanding on Rules and Procedures 
Governing the Settlement of Disputes (DSU), Brazil will, at the DSB meeting of 15 July 
2005, request authorization to suspend concessi ons or other obligations pursuant to Article 
22.2 of the DSU and to adopt appropriate countermeasures pursuant to Article 4.10 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement). 
2. Under Article 22.6 of the DSU including Article 4.11 of the SCM Agreement, the United 
States will object to the level of suspension of concessions or other obligations and the appropriateness of the countermeasures and/or claim that the principles and procedures set 
forth in Article 22.3 of the DSU have not been  followed, and the matter will be referred to 
arbitration pursuant to Article 22.6 of the DS U. Brazil will not pose any objection to referral 
of the matter to such arbitration ("Article 22.6 arbitration"). 
3. Brazil and the United States will, at the earli est possible moment, request the arbitrator 
appointed under paragraph 2 ("the arbitrator") to suspend its work. 
4. At any moment after the DSB meeting of 15 July 2005, Brazil is entitled to request the 
establishment of a panel pursuant to Article 21.5 of the DSU ("Article 21.5 compliance panel").  WT/DS267/22 
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 5. At the first DSB meeting at which Brazil's Ar ticle 21.5 compliance panel request appears as 
an item on the agenda, the United States w ill accept the establishment of that panel. 
6. Brazil and the United States will cooperate to enable the Article 21.5 compliance panel to 
circulate its report within 90 days of its est ablishment, excluding any time during which the 
panel's work may be suspended pursuant to Article 12.12 of the DSU. 
7. Either party may request the DSB to adopt the report of the Article 21.5 compliance panel at a 
DSB meeting held at least 20 days after the circulation of the report unless either party appeals the report. 
8. In case of an appeal of the Article 21.5 compliance panel report, Brazil and the United States 
will cooperate to enable the A ppellate Body to circulate its report within no more than 
90 days of the date of notification of the appeal.   
9. In the event of an appeal, either party may request the DSB to adopt the reports of the 
Appellate Body and the Article 21.5 complian ce panel (as modified by the Appellate Body 
report) at a DSB meeting held within 15 days of  the circulation of the Appellate Body report. 
10. In the event that the DSB finds that measures ta ken by the United States to comply with the 
relevant recommendations and rulings of th e DSB are inconsistent with the covered 
agreements referred to in the Article 21.5 comp liance panel request, the arbitrator will resume 
its work at Brazil's request.  Brazil and the United States will cooperate to enable the 
arbitrator to circulate its report within 60 days of the resumption of its work. 
11. In the event that the DSB finds that the measure s taken by the United States to comply with 
the relevant recommendations and rulings of th e DSB are not inconsistent with the covered 
agreements referred to in the Article 21.5 co mpliance panel request, Brazil will withdraw its 
request under Article 22.2 of the DSU, thereb y terminating the Article 22.6 arbitration 
procedure. 
12. In case the parties reach a mutually agreed solu tion, it shall be notified to the DSB under DSU 
Article 3.6 and Brazil will withdraw its requ est under Article 22.2 of the DSU, thereby 
terminating the Article 22.6 arbitration procedure. 
13. Brazil and the United States will cooperate to f acilitate the participation of the original 
panelists in the Article 21.5 compliance panel and the Article 22.6 arbitration. 
14. If any of the original panelists are not availabl e for either the Article 21.5 compliance panel or 
the Article 22.6 arbitration (or both), the parties will immediately request the WTO Director-General to appoint, as soon as possi ble, a replacement for the proceeding or 
proceedings in which a replacement is required.  If an original panelist is unavailable to serve 
in either of the proceedings, the parties to the dispute will further request that, in making this 
appointment, the Director-General seek a person who will be available to act in both proceedings. 
15. Brazil and the United States will continue to cooperate in all matters related to this 
Understanding and not to raise any procedural objec tion to any of the steps set out herein.  If, 
during the application of these procedures, Brazil and the United States consider that a procedural aspect has not been properly addressed  in this Understanding, they will endeavour 
to find a solution within the shortest time possi ble that will not affect the other aspects and 
steps agreed herein. WT/DS267/22 
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 16. This Understanding does not prejudice either part y's rights to take any action or procedural 
step to protect its rights or interests, including the activation of any aspect of the provisions of the DSU. 
 
Geneva, 5 July 2005 
 
    (signed) (signed) 
 H.E. Mr Luiz Felipe de Seixas Corrêa Mr David Shark 
 Ambassador Chargé d'Affaires, a.i.  Permanent Representative of the Federa tive Alternate Permanent Representative 
 Republic of Brazil of the United States of America  
 
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