. /.   WORLD TRADE  
ORGANIZATION  WT/DS267/41 
9 November 2009 
 
 (09-5600) 
 Original:   English 
  
 
UNITED STATES – SUBSIDIES ON UPLAND COTTON 
 
Recourse to Article 4.10 of the SCM Agreement and Article 22.7 of the DSU by Brazil
 
  
 The following communication, dated 6 November 2009, from the Permanent Mission of 
Brazil to the Chairman of the Dispute Settlement Bo dy, is circulated pursuant to Article 22.7 of the 
DSU and Article 4.10 of the SCM Agreement.  
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 In the original proceedings, the Panel and the Appellate Body found that certain of the 
measures at issue in this dispute were inconsistent  with Articles 3.1(a) and 3.2 of the Agreement on 
Subsidies and Countervailing Measures ("SCM Agreement") and Articles 10.1 and 8 of the 
Agreement on Agriculture. On 21 March 2005, the Dispute Settlement Body ("DSB") adopted the 
Appellate Body report (WT/DS267/AB/R) and th e Panel report (WT/DS267/R and Corr.1), as 
modified by the Appellate Body report. The resu lting DSB recommendations and rulings include the 
recommendation that the United States bring its me asures into conformity with the Agreement on 
Agriculture and withdraw the prohi bited subsidies without delay. 
 
 The period of compliance expired on 1 July 2005. On 4 July 2005, Brazil requested 
authorization from the DSB to take appropriate c ountermeasures pursuant to Article 4.10 of the SCM 
Agreement  and Article 22.2 of the Unde rstanding on Rules and Procedures Governing the Settlement 
of Disputes ("DSU") (WT/DS267/21).   On 5 July 2005, Brazil and the United States informed the DSB of the "Agreed Procedures 
under Articles 21 and 22 of the DSU and Article 4 of  the SCM Agreement in the follow-up to the 
dispute United States – Subsidies on Upland Cotton" (WT/DS267/22).   On 14 July 2005, the United States objected to Brazil's request (WT/DS267/23), and the matter was referred to arbitration pursuant to Artic le 22.6 of the DSU and Article 4.11 of the SCM 
Agreement. 
  On 18 August 2005, following a joint request by Brazil and the United States, the arbitration 
proceedings were suspended (WT/DS267/25). 
 
 On 18 August 2006, Brazil requested the establis hment of a panel pursuant to Article 21.5 of 
the DSU. On 18 December 2007, the complian ce Panel report was circulated to Members 
(WT/DS267/RW). The compliance Panel found that the United States had failed to implement the recommendations of the DSB and continued to act inconsistently with Articles 10.1 and 8 of the 
Agreement on Agriculture and Articles 3.1(a) a nd 3.2 of the SCM Agreement. The Appellate Body 
report, circulated on 2 June 2008, upheld the co mpliance Panel's conclusions (WT/DS267/AB/RW). 
On 20 June 2008, the DSB adopted the Appellate Bo dy report and the compliance Panel report, as 
modified by the Appellate Body report. WT/DS267/41 
Page 2  
 
   
 On 25 August 2008, Brazil requested the resumption of the arbitration proceedings (WT/DS267/38).   On 31 August 2009, the Arbitrator issued its Decision as follows (WT/DS267/ARB/1): 
 
"6.5 Accordingly, the Arbitrator determines that: 
(a) Brazil may request authorization from the DSB to suspend concessions or 
other obligations under the Agreements on trade in goods in Annex 1A, at a 
level not to exceed the value of US $147.4 million for FY 2006, or, for 
subsequent years, an annual amount to  be determined by applying the 
methodology described in Annex 4. 
(b) In the event that the total level of  countermeasures that Brazil would be 
entitled to in a given year (footnote 475) should increase to a level that would exceed the threshold described in paragr aph 5.201, updated to account for the 
change in Brazil's total imports from the United States, then, Brazil would 
also be entitled to seek to susp end certain obligations under the 
TRIPS Agreement and/or the GATS, as identified in footnote 468, with respect to any amount of permissible countermeasures app lied in excess of 
that figure. 
Footnote 475 : It is understood that this amount  is to be calculated taking into 
account the entirety of the level of coun termeasures that Brazil is entitled to 
at that point in time, arising both from the application of the formula identified in paragraph 6.5(a) and from the Decision by the Arbitrator contained in WT/DS267/ARB/2." 
 Article 22.7 of the DSU provides that "the DSB shall be informed promptly of the decision of 
the arbitrator and shall upon request, grant authori zation to suspend concessions  or other obligations 
where the request is consistent with the deci sion of the arbitrator, unless the DSB decides by 
consensus to reject the request."   Accordingly, Brazil hereby requests authorizati on from the DSB to suspend the application to 
the United States of concessions or other obligations  in conformity with the Arbitrator's Decision, 
pursuant to Article 22.7 of the DSU. 
  Every year, Brazil will notify the DSB of the countermeasures it intends to adopt prior to 
bringing those measures into force. This annua l notice will identify the level of suspension of 
concessions and other obligations determined by applying the methodology established by the 
Arbitrator in paragraph 6.5(a) of its Decision and, in light of that level and of the threshold established 
by the Arbitrator in paragraph 6.5(b) of its D ecision, the concessions and obligations subject to 
suspension.  
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