RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/252 
24 July 2008 
 (08-3565) 
Dispute Settlement Body 
20 June 2008  
 
   
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard
 
on 20 June 2008  
 
Acting Chairman:  Mr. Bruce Gosper (Australia) 
  
 Prior to the adoption of the Agenda
, Amb. Bruce Gosper, the Chairman of the General 
Council, welcomed delegations and said that he had been asked to chair the present meeting by 
Amb. Mario Matus, the Chairman of the DSB.  He said that Amb. Matus had asked to excuse himself from chairing the present meeting since he had served as a panelist on the compliance Panel whose report was now before the DSB for consideration.  
 
 
1. United States – Subsidies on upland cotton:  Recourse to Article 21.5 of the DSU by 
Brazil 
(a) Report of the Appellate Body (WT/DS267/AB /RW) and Report of the Panel (WT/DS267/RW 
and Corr.1) 
1. The Chairman
 recalled that at its meeting on 28 Se ptember 2006 the DSB had decided, in 
accordance with Article 21.5 of the DSU, to refer to  the original Panel the matter raised by Brazil 
concerning the measures taken by the United States to comply with the DSB's recommendations and 
rulings in this dispute.  He recalled that the Report of the Panel had been circulated on 
18 December 2007 in document WT/DS267/RW and Co rr.1.  Subsequently, on 12 February 2008, the 
United States had notified the DSB of its decision to appeal certain issues of law covered in the Panel 
Report and certain legal interpretations  developed by the Panel.  In th is connection, he drew attention 
to the communication from the Appellate Body c ontained in document WT/DS267/36 transmitting the 
Appellate Body Report on:  "Unite d States – Subsidies on Upland Cotton:  Recourse to Article 21.5 of 
the DSU by Brazil", which had been circulated on 2 June 2008 in document WT/DS267/AB/RW, in 
accordance with Article 17.5 of the DSU.  He remi nded delegations that th e Appellate Body Report 
and the Panel Report had been circulated as unrestri cted documents.  The Reports were now before 
the DSB for adoption at the request of Brazil.  He said that the adoption procedure was without prejudice to the right of Members to express their views on the Reports. 
2. The representative of Brazil
 recalled that three years ago, on 21 March 2005, the Reports of 
the Appellate Body and the Panel on:  "Unite d States – Subsidies on Upland Cotton" had been 
adopted by the DSB.  Both the Panel and the Appe llate Body had found that various subsidies granted 
by the United States on the production, use and exports of cotton (and, as regards export credit guarantees, other commodities) were inconsistent w ith the US obligations under the Agreement on 
Agriculture and the SCM Agreement.  He recalled that the consultations on this matter had begun in WT/DSB/M/252 
Page 2  
 
  September 2002 and that the Panel had been establishe d in 2003.  The period determined by the DSB 
for the United States to come into  compliance with its obligations had expired in September 2005 (or 
even earlier than that, in the case of the prohibited export subsidies).  At  the end of that period, it was 
Brazil's understanding that the United States had take n very limited action to comply with the DSB's 
recommendations and rulings.  In respect of some ke y measures, no action had been taken at all.  
Brazil had decided thereafter to request the establishment of a compliance Panel.  The compliance 
Panel had concluded that, by continuing to act in consistently with the Ag reement on Agriculture and 
the SCM Agreement, the United States had indeed failed to comply with the DSB's recommendations 
and rulings.  On appeal, the Appellate Body had up held the compliance Panel's ultimate conclusions 
in their entirety.  
3. Brazil welcomed the adoption of the Reports a nd was grateful to the Panel, the Appellate 
Body and the Secretariat for their ha rd work in all phases of the disput e.  Some of the conclusions of 
the Appellate Body were very important since they  had clarified the nature of the implementation 
obligations of Members with respect to subsidies that  had been found to cause adverse effects.  First, 
according to the Appellate Body, the terms of  Article 7.8 of the SCM Agreement involved 
"affirmative action" that was directed at effecting the withdrawal of the subsidy or removal of its 
adverse effects.  Second, the obligation in Article 7. 8 was not limited to subsidies granted in the past.  
In the words of the Appellate Body that meant that, "in the case of recurring annual payments, the 
obligation under Article 7.8 would extend to paym ents 'maintained' by the respondent Member 
beyond the period examined by the panel".  Moreover,  according to the Appellate Body, the option in 
Article 7.8 of removing the adverse effects instead of withdrawing the subsidy "cannot be read as 
allowing a Member to continue to cause adverse effe cts by maintaining the subsidies that were found 
to have resulted in adverse effects".  Third, th e Appellate Body had recognized that the distinction 
between "as such" and "as applied" claims may not lend itself to a proper analysis of adverse effects 
cases.  This was in the context of an artificial di stinction between "payments" and "programmes" that 
was at the core of the dispute in these complianc e proceedings.  The Appellate Body had correctly 
noted that it was difficult to divorce payments fro m programmes, and that it would be "difficult to 
conceive how an analysis of whether a programme 'as such' resulted in adverse effects would differ 
from an analysis of whether payments under a programme have resulted in such effects". 
4. All these findings went in the direction of safe guarding the effectiveness of the rules agreed 
by Members to discipline the use of subsidies.  Braz il agreed with the Appellate Body that a different 
conclusion would have "serious implications fo r a complaining Member's ability to obtain relief 
against adverse effects of actionable subsidies".  At the DSB meeting when the Reports of the 
Appellate Body and of the original Panel had b een adopted in 2005, Brazil had stated that "this 
protracted and sometimes painful process has finally come  to an end".  Brazil, of course, expected that 
the United States would comply with the clear and unmistakable rulings that had then been made by 
the DSB.  Now, three years after that meeting a nd after another period of prolonged litigation, Brazil 
could at least say that this was the last stage where Brazil's arguments could be examined on their 
merits.  Now, in light of findings of continued inc onsistency of the US measures with the multilateral 
rules, Brazil, once again, expressed its hope and ex pectation that the United States would fully and 
immediately comply with the DSB's rulings and recommendations on this matter. 
5. The signals being received by Brazil, however, we re not encouraging.  He recalled that the 
compliance proceedings were about measures that ha d been enacted as part of the so-called 2002 
Farm Bill, pursuant to which US$8.8 billion had b een paid to cotton producers from marketing years 
2002 to 2005 alone under the three programmes th at had been found to cause adverse effects – an 
average of US$2.2 billion per year.  And it was not too much to recall that the original Panel 
proceedings, started in 2003, referred to US $12.9 billion in subsidi es paid in 1999-2002, 
corresponding, on average, to a subsidization rate of 89.5 per cent.  As Members were aware, a new 
Farm Bill had been very recently approved by th e US Congress.  According to a report by the 
International Cotton Advisory Committee (ICAC):  "the 2008 Farm Bill introduces few modifications  WT/DSB/M/252 
 Page 3 
 
 
  to the US cotton programme.  The structure of subsid ies (...) will remain the same. (...) [L]oan rates 
will be unchanged (...) and the upland target price, currently 72.40 cents per pound, will be reduced to 
71.25 cents per pound.  (...) "In conclusion, the co tton programme introduced in the 2008 Farm Bill is 
little different from the cotton progra mme established by the 2002 Farm B ill.  US farmers will face a 
similar set of policies between 2008/09 and 2012/13  as they faced between 2002/03 and 2007/08."  
6. This was a cause of great concern, not only fo r Brazilian cotton growers, but certainly also for 
other producers around the world, who may have to  continue to suffer the adverse effects of 
subsidized US cotton production.  At the same ti me, US producers, as recognized by the Appellate 
Body, were kept isolated from market signals.  Su ch actions raised questions about the willingness of 
the United States to comply with its obligations in the present case.  As stated by the Appellate Body, 
the obligation enshrined in Article 7.8 of the SC M Agreement "cannot be read as allowing a Member 
to continue to cause adverse effects by maintaining th e subsidies that had been found to have resulted 
in adverse effects".  Brazil hoped that the adoption of the compliance Panel and the Appellate Body 
Reports provided sufficient incen tive for the United States to amend its legislation and ensure 
compliance with the DSB's rulings.  Absent full co mpliance with those rulings, Brazil would pursue 
the established procedures in order to obtain the DS B's authorization to ta ke countermeasures vis-à-
vis the United States. 
7. The representative of the United States  said that his country first wished to thank the 
compliance Panel, the Appellate Body, and the Secretar iat staff assisting them for their hard work in 
this proceeding.  The length of time taken by this  proceeding, as well as the length of the Reports, had 
given some sense of their efforts to deal with the voluminous arguments and materials presented in 
this proceeding.  In addition, t hose efforts and the time and resour ces spent on this proceeding by all 
concerned only highlighted that negotiation, and not litigation, was the most effective way to resolve 
Members' concerns about agricultural trade.  The Un ited States, therefore, looked forward to working 
with Members to conclude the Doha negotiations  as soon as possible.  Needless to say, the 
United States was deeply disappointed in the complia nce Panel and the Appellate Body Reports.  The 
United States believed it had brought the challenged payments and export credit guarantees into full 
compliance with the DSB's recommendations and ruli ngs.  To find otherwise, the compliance Panel 
and the Appellate Body had had to  make findings on jurisdiction that re-cast or ignored those DSB 
recommendations and rulings and othe r findings that assumed conclusions and failed to demand of the 
complaining party that it fully established its case.  Thus, while the quality of the analysis in these 
Reports had improved compared to the original pro ceedings, the Reports still did not provide the type 
and degree of analysis towards which the dispute settlement system should strive.  As examples of 
this, the United States would like to highlight th ree aspects of the compliance Panel and Appellate 
Body Reports:  first, the findings on jurisdiction under Article 21.5 of the DSU;  second, the findings on export credit guarantees;  and third, the findings on serious prejudice. 
8. As to the first issue, Article 21.5 established the scope of a compliance proceeding as a 
"disagreement as to the existence of or consiste ncy with a covered agreement of measures taken to 
comply with the recommendations and rulings" of the DSB.  This provision was clear:  the DSB's recommendations and rulings shaped the very scope  of the compliance proceeding.  The Appellate 
Body, however, had upheld the compliance Panel's two preliminary rulings on scope by misapplying 
Article 21.5 and neglecting the fundamental role of  the DSB's recommendations and rulings.  The first 
preliminary ruling on Article 21.5 involved US export credit guarantees.  In this proceeding, Brazil 
had challenged US export credit guarantees for pig meat and poultry meat.  However, as the 
compliance Panel and the Appellate Body had agreed, there were no DSB recommendations and 
rulings concerning export credit guarantees for pig meat and poultry meat, and the United States was 
not required to take any measure to comply with  respect to those export credit guarantees.  Any 
changes made to the GSM 102 export credit guarantee programme concerning pig meat and poultry 
meat, then, had not been taken to comply with the DSB's recommendations and rulings, and had not 
properly fallen within the scope of the compliance proceeding. WT/DSB/M/252 
Page 4  
 
  9. The Appellate Body, in reaching its finding, had made a statement that should be of concern 
to Members.  At paragraph 202 of its Report, the Appellate Body had noted that "when the measures 
actually 'taken' by the implementing Member ar e broader than the DSB's recommendations and 
rulings, we do not see why the scope of the DS B's recommendations and rulings should necessarily 
limit the scope of the 'measures taken to comply' for purposes of the Article 21.5 proceedings".  It was 
difficult to understand how the scope of the DSB' s recommendations and rulings could do anything 
other than determine or limit the scope of the meas ures taken to comply.  In order to be taken "to 
comply", there must be something to comply with .  For reasons that were not clear, the Appellate 
Body appeared to be ignoring the plain text of Article 21.5.  
10. The United States also found troubling the Appellate Body's dicta that the WTO dispute 
settlement system did not provide "incentives or di sincentives for a WTO Member to take broader or 
narrower action as part of its implementation efforts".
1  This appeared to be ignoring reality.  Of 
course the WTO dispute settlement system provi ded incentives and disincentives on the scope of 
action taken to implement the DSB's recommendations and rulings.  One of the main points of the 
system was to provide incentives to comply.  Where a Member went further than necessary for 
compliance, for example, for administrative effici ency, good governance, or other reasons, the system 
should not penalize them for doing more than what w as required.  Otherwise, contrary to what the 
Appellate Body had said, the system would provide  every incentive to limit any action taken only to 
what was strictly necessary for compliance.  This re sult was desirable neither from the point of view 
of good governance nor from the point of view of the WTO.  
11. The United States was pleased, however, with th e finding in the Appellate Body Report on a 
different question on the scope of Article 21.5.  Th e Appellate Body had corrected the misreading by 
Brazil and the compliance Panel of the Appellate  Body Report in:  "US – Softwood Lumber IV" 
(Article 21.5 – Canada).2  The Appellate Body had made clear th at there was no general rule that any 
measure that had a "particularly close relationship" to the declared measure to  comply with the DSB's 
recommendations and rulings would al so be within the scope of a compliance proceeding.  Such a 
misreading had implied an ever-widening circle of  measures within the scope of an Article 21.5 
proceeding since once a measure had been found to be  closely related to a measure taken to comply, 
then any measure closely related to that measure would also be a measure taken to comply, which 
would then sweep in additional measures, and so forth.  The Appellate Body had agreed with the 
United States that the Appellate Body's reasoning in  the Softwood Lumber IV report was limited to a 
circumstance where a measure which had allegedl y undone the declared measure taken to comply 
could also be considered to be w ithin the scope of Article 21.5.   
12. The second preliminary ruling on Article 21.5 involved certain payments commencing in 
September 2005.  The Appellate B ody had also upheld the compliance Panel's finding that the US 
marketing loan and counter-cyclical payments ma de after 21 September 2005 were properly within 
the scope of the Article 21.5 proceeding.  In so  doing, both the Appellate Body and the compliance 
Panel had failed to respect the actual recommendati ons and rulings of the DSB that formed the basis 
for a compliance proceeding.  
13. The DSB's recommendations and rulings on present serious prejudice pertained to US support 
payments made during marketing years ("MY") 1999-2002, and not to the programmes under which 
those payments had been made.3  The compliance Panel had conf irmed that this was correct.4  The 
Appellate Body had not reversed that finding, a nd the DSB was adopting that finding at the present 
                                                      
1 Appellate Body Report, para. 206. 
2 Idem para. 205. 
3 Original Panel Report, paras. 7.1416, 8.1(g)(i). 
4 Compliance Panel Report, para. 9.54.  WT/DSB/M/252 
 Page 5 
 
 
  meeting.  Consequently, there was no question that  the compliance Panel and the Appellate Body had 
considered that payments in later years were not measures "taken to comply". 
14. Yet the Appellate Body had found that late r payments were within the scope of the 
compliance proceeding.  In so doing, the Appella te Body had ignored the DSB's recommendations 
and rulings in this dispute by deeming MY 1999-2002 "merely the historical reference period 
examined by the original panel".5  And it had considered that US payments made after 
21 September 2005 were also subject to the require ment of Article 7.8 of the SCM Agreement  to 
withdraw the subsidy or remove its adverse e ffects, even though the DSB's recommendations and 
rulings did not cover payments after MY 2002, or the programmes themselves.  In other words, the 
Appellate Body had inappropriately treated the or iginal Panel's finding on some measures (certain 
payments) as if it had been a finding on other measu res (the programmes or future payments allegedly 
mandated to be provided).  However, Brazil had in fact challenged those other measures in the 
original proceeding, but the DSB had made no reco mmendations or rulings on them.  The Appellate 
Body, just as the compliance Panel, had misinterpr eted how Article 7.8 of the SCM Agreement and 
Article 21.5 of the DSU related to one another.  The Appellate Body had stated that Article 7.8 
"informs the meaning and scope of the DSB's reco mmendations and rulings arising from the original 
proceedings".6  However, Article 7.8 could not re-write  the actual DSB recommendations and rulings 
and particularly the measures subject to the DSB's re commendation.  In this dispute, as already noted, 
the DSB's recommendations and rulings applied only to US payments made during MY 1999-2002.  
Therefore, under Article 7.8, "the Member granti ng or maintaining such subsidy" – i.e. those 
payments – "shall take appropriate steps to remove th e adverse effects or shall withdraw the subsidy".  
The sole basis in the text of Article 7.8 that th e Appellate Body provided for its approach was the 
words "granting or maintaining such subsidy".7  But "such subsidy" meant it applied only to the 
measures found to be inconsistent , and those had not included payments after MY 2002.  So, the 
Appellate Body misread Article 7.8 in finding that it applied to any measure other than the one found 
to be a WTO-inconsistent subsidy. 
15. The Appellate Body had worried that "the a pproach advocated by the United States would 
have serious implications for a complaining Member 's ability to obtain relief against adverse effects 
of actionable subsidies".8  However, the question was not what was the Appellate Body's view of what 
relief was desirable, but what was the relief that had been negotiated and agreed by Members in the WTO Agreements.  Article 7.8 could not be re-wr itten to apply to additional measures just because 
that was what a panel or the Appellate Body believe d would be a better approach.  For example, relief 
under the DSU was prospective, as the Appellate Body ha d recognized in this Report.  This meant that 
there may be no relief in some disputes that involve d challenges to past actions.  However, the fact 
that there would be no relief unless it was retroact ive would not authorize the Appellate Body to 
declare in such cases that relief would be retroactiv e.  The United States was also concerned with the 
dicta in the report that "[a] Member would normally not be able to abstain from taking any action [to 
comply] on the assumption that the subsidy will expire or that the adverse effects of the subsidy will 
dissipate on their own".
9  Not only was this statement unclear – for example, what did the Appellate 
Body mean by using the terms "normally" and " on the assumption"? – but it had no apparent legal 
basis.  Whether a subsidy was causing adverse e ffects – for example, whether a subsidy was causing 
significant price suppression – depended in large part on economic circumstances.  If conditions in the 
market changed such that a subsidy was no longer cau sing adverse effects, then what basis was there 
to believe that a Member should still take some furt her action?  All Article 7.8 required was that the 
Member remove the adverse effects.   If the adverse effects were gone, then what more was there to 
                                                      
5 Appellate Body Report, para. 237, n. 482. 
6 Idem para. 240. 
7 Idem para. 237. 
8 Idem para. 245. 
9 Idem para. 236. WT/DSB/M/252 
Page 6  
 
  do?  There was nothing in the text of Article 7.8 of  the SCM Agreement, or elsewhere in the covered 
agreements, that precluded such an approach. 
16. The United States then turned to the substantive findings of this dispute.  At the outset, the 
United States wished to note that the detailed US  arguments on the merits might be found in the 
compliance Panel and Appellate Body Reports, as we ll as in the US filings, which were publicly 
available.  Starting with export credit guarantees, the United States welcomed the Appellate Body's 
finding that, by dismissing the US budgetary re -estimates data on export credit guarantees "on the 
basis of internally inconsistent reasoning", the compliance Panel had faile d to conduct an objective 
assessment of the matter before it as required by Article 11 of the DSU.
10  In reaching this conclusion, 
the Appellate Body had agreed with the Unite d States on the standard for making an objective 
assessment.  The Appellate Body had properly unde rstood that the compliance Panel, as the initial 
trier of facts, should be held to the same sta ndard as that to which any domestic investigating 
authority was held by a WTO panel in a trade reme dies dispute.  That is, the compliance Panel was 
"expected to provide reasoned and adequate  explanations and coherent reasoning".11  It was surprising 
to hear Brazil and some third participants sugg est otherwise – as if WTO panels could provide 
unreasoned and inadequate explanations for their fi ndings – and the United States was gratified that 
the Appellate Body had corrected this misapprehension. 
17. The United States, however, was disappointed that the Appellate Body relied on what 
amounted to little more than speculation concerni ng the design of the GSM 102 programme to uphold 
the compliance Panel's ultimate finding on export cr edit guarantees.  Official US budget re-estimates 
data showed that the US export credit guarantee progr ammes were projected to be strongly profitable, 
even before the measures taken to comply were adop ted.  And, in fact, for the years in which the 
books had closed (FY 1994 and 1995), the data s howed an actual profit to the US Government.12   
18. The third issue on which the United States would comment at the present meeting very briefly 
were the findings on serious prejudice.  The United States was also disappoint ed that the Appellate 
Body had upheld the compliance Panel's finding that US marketing loan and counter-cyclical 
payments continued to cause significant price suppression, thereby constituting present serious 
prejudice to Brazil's interests, even though th e Appellate Body at times had recognized serious 
weaknesses in the compliance Panel's analysis (by way of example, see Appellate Body Report, paras. 357, 358, 361, and 374).  Given the implications  of serious prejudice disputes for domestic support 
programmes, a sensitive area for many Members, the United States considered that the WTO dispute 
settlement system would be better served by a mo re robust analysis that could better withstand 
scrutiny from Members and outside observers.  Finally, the United States was compelled to note that 
the findings on serious prejudice being considered at the present meeting were outdated.  The 
compliance Panel and the Appellate Body Reports ha d dealt with market conditions from two to three 
years ago.  Since then, US cotton acreage had falle n precipitously, and continued to decline.  US 
cotton planted acreage had fallen by 29.5 per cen t in 2007 from the year before and had fallen a 
further 12.8 per cent in 2008.  That is, despite the a llegedly market-insulating effects of US payments, 
US cotton acreage had declined by more than 38.5 per cent in the past two years.  And despite the 
alleged price-suppressing effects of US payments, co tton prices had risen sharply, and futures prices 
indicated the market expects prices to remain high fo r the foreseeable future.  As a result, the United 
States had not made any marketing loan payments since September 2007, before circulation of the 
compliance Panel report, and the United States was making only minimal counter-cyclical payments.  
19. The representative of Canada
 said that her country thanked th e Panel, the Appellate Body and 
the Secretariat for their work on this case.  Cana da welcomed the Panel and the Appellate Body 
                                                      
10 Appellate Body Report, para. 295. 
11 Idem para. 293, n. 618. 
12 Idem para. 285.  WT/DSB/M/252 
 Page 7 
 
 
  findings that the United States continued to violat e the SCM Agreement through its marketing loan 
and counter-cyclical payments a nd its GSM 102 export credit guarantee programme.  With respect to 
the marketing loan and counter-cyclical payments in particular, the Reports confirmed that the 
United States had failed to implement the DSB's rulings and recommendations by failing to "take 
appropriate steps to remove adverse effects or w ithdraw the subsidy".  The United States had argued 
that its obligation under Article 7.8 of the SCM Agreement was limited to removing adverse effects 
caused by subsidies granted in a particular period of  time and did not cover either future payments 
under the same programmes, or the subsidy prog rammes themselves.  As a third party in these 
proceedings, Canada had argued that the loophole the United States had sought to establish was a 
direct challenge to the effectiveness of comp liance proceedings in serious prejudice cases.  
20. In rejecting the US position, the Appellate B ody Report had provided helpful clarification on 
the obligation under Article 7.8 of the SCM Agreem ent to "take appropriate steps to remove the 
adverse effects".  It also clarified the relationshi p between Article 7.8 and Article 21.5 of the DSU.  
Canada welcomed the Appellate Body's findings as  an important contribution to the prompt and 
effective settlement of disputes.  Canada was also  pleased with the Appellate Body's findings on the 
scope of a "measure taken to comply" for purposes of an Article 21.5 proceeding.  The Appellate 
Body's findings that a panel must consider a measur e in its totality in an Article 21.5 proceeding, 
while confirming that the scope of claims that ma y be raised in an Article 21.5 proceeding was not 
unbounded, were consistent with pr evious Appellate Body reports.  They would help to encourage 
prompt compliance with the DSB's recommendations and rulings.  And, they would limit the circumstances in which a complainant would need  to begin new proceedings in respect of a non-
compliant programme, where the programme's cove rage extended beyond the recommendations and 
rulings in the original dispute.  Canada also  welcomed the Appellate Body's findings on the 
allegations of the United States in respect of Artic le 11 of the DSU.  Canada was pleased that the 
Appellate Body had maintained its consistent positio n that, while a panel must carefully consider and 
analyse competing evidence submitted by parties, it w ould not interfere lightly with a panel's exercise 
of its authority as the trier of fact.   
21. Finally, looking beyond this case,  Canada was concerned that the Farm Bill recently passed 
by the US Congress failed to reform major US pr ogrammes including programmes at issue in this 
case, such as the direct payments and the counter cyclical payments programmes.  Not only did the 
new Farm Bill lack meaningful reforms, it also ra ised the possibility of increased subsidies.  As a 
result, the United States had missed an opportuni ty to make its farm programmes more market-
oriented and to decrease the vulnerability of US farm programmes to future challenges. 
22. The representative of Australia
 said that her country welcomed the Reports of the Panel and 
the Appellate Body in this dispute and joined others  in thanking the Appellate Body, the panelists and 
the Secretariat for their work on the case.  The Appe llate Body had clarified the scope of proceedings 
under Article 21.5 of the DSU, where those proceed ings concerned recommendations and rulings on 
actionable subsidies.  The findings and conclusions of the Appellate Body gave real effect to the 
meaning of Article 7.8 of the SCM Agreement.  The Appellate Body had thereby ensured that a 
Member whose interests had been adversely affect ed by another Member's subsidy was not left 
without a remedy, should the subsidizing Member fa il to take the action envisaged by Article 7.8.  
The Appellate Body had recognized that complian ce with Article 7.8 would usually involve an 
affirmative action to withdraw the subsidy or rem ove its adverse effects.  Australia expected the 
United States to take such positive action without delay, in fulfilment of the DSB's recommendations 
and rulings in this dispute.  Australia was of the view that abstaining from taking any action with 
respect to the subsidies at issue would not achieve co mpliance in this dispute.  Such inaction would be 
to ignore the United States' obliga tions owed to all WTO Members. 
23. Australia was particularly concerned that th e Farm Bill recently passed by the US Congress 
continued the cotton support programmes at issue in this dispute and reinstated certain elements of WT/DSB/M/252 
Page 8  
 
  support programmes benefiting cotton production previ ously found to be WTO-inconsistent.  More 
generally, the 2008 Farm Bill institutionalized trade- distorting support programmes with the potential 
to provide even greater subsidies to major crops .  The continuance of these same support programmes 
with more generous terms could severely test the ab ility of the United States to comply with its WTO 
domestic support commitments in future years, particularly should prices for key commodities return 
to historic levels. 
24. The representative of the European Communities
 said that the EC had followed this dispute 
very closely.  Many of the issues covered in this  dispute, and decided by the Appellate Body and the 
Panel, were highly relevant for the operation of the WTO Agreements.  The Reports clarified WTO 
rules on export financing, actionable subsidies and the scope of compliance procedures.  For example, 
they confirmed that if payments under a subsidies pr ogramme had been found to be inconsistent with 
the SCM Agreement, and if the defending Memb er continued to make payments under such 
programme under the same conditions, those further pa yments clearly fell within the jurisdiction of a 
compliance panel.  The EC welcomed these Repor ts.  They would provide useful guidance for 
pending and future disputes. 
25. The representative of the United States  said that his delegation wished to respond very briefly 
to some points made in the preceding interventions.  First, with reference to Members' comments at 
the present meeting concerning the 2008 Farm Bill, the Farm Bill was not within the terms of reference of the compliance Panel, nor was it the subj ect of findings by either the compliance Panel or 
the Appellate Body.  Second, with reference to Ca nada's comments on direct payments, neither direct 
payments nor the direct payment programme were  subject to any DSB's recommendations in this 
dispute.  Finally, regarding Australia's statement, neither were there any findings in this dispute 
relating to US domestic support reduction commitments. 
26. The DSB took note
 of the statements, and adopted  the Appellate Body Report contained in 
WT/DS267/AB/RW and the Panel Report contained in WT/DS267/RW and Corr.1, as modified by 
the Appellate Body Report 
__________