Document: WT/DS267/R/Add.3 Page K-1 ANNEX K COMMUNICATIONS FROM PARTIES AND THIRD PARTIES Contents Page Annex K-1 United States letter of 21 May 2003 K-3
Date: 21 May 2003
Document codes: WT/DS267/R/Add.3
Complainant: Brazil
Respondent: U.S.
Third parties: Argentina, Australia, Benin, Canada, Chad, China, Taiwan, EU, India, New Zealand, Pakistan, Paraguay, Venezuela, Japan, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 3, 5, 6  Subsidies and Countervailing Measures (SCM)Art. 3.3, 7.1, 8, 9.1, 10.1  AgricultureArt. III:4, XVI  GATT 1994

ANNEX K

COMMUNICATIONS FROM PARTIES AND THIRD PARTIES

Contents Page
Annex K-1 United States letter of 21 May 2003 K-3
Annex K-2 Brazil's letter of 23 May 2003 K-5
Annex K-3 Brazil's letter of 14 July 2003 K-9
Annex K-4 United States letter of 29 July 2003 K-10
Annex K-5 Brazil's letter of 29 July 2003 K-11
Annex K-6 European Communities letter of 31 July 2003 K-12
Annex K-7 United States letter of 1 August 2003 K-14
Annex K-8 Brazil's letter of 1 August 2003 K-15
Annex K-9 European Communities letter of 4 August 2003 K-16
Annex K-10 Brazil's letter of 14 August 2003 K-18
Annex K-11 United States le tter of 20 August 2003 K-21
Annex K-12 Brazil's letter of 23 August 2003 K-23
Annex K-13 United States le tter of 25 August 2003 K-26
Annex K-14 Brazil's letter of 25 August 2003 K-29
Annex K-15 United States le tter of 27 August 2003 K-32
Annex K-16 Brazil's letter of 28 August 2003 K-34
Annex K-17 United States le tter of 29 August 2003 K-36
Annex K-18 Brazil's letter of 29 August 2003 K-38
Annex K-19 Brazil's letter of 9 September 2003 K-39
Annex K-20 United States le tter of 9 September 2003 K-40
Annex K-21 Brazil's letter of 10 September 2003 K42
Annex K-22 United States le tter of 11 September 2003 K-44
Annex K-23 Brazil's letter of 16 September 2003 K-46
Annex K-24 United States le tter of 16 September 2003 K-47
Annex K-25 Brazil's letter of 17 September 2003 K-48
Annex K-26 United States le tter of 17 September 2003 K-49
Annex K-27 United States le tter of 23 September 2003 K-50
Annex K-28 Brazil's letter of 23 September 2003 K-51
Annex K-29 Brazil's letter of 2 October 2003 K-52
Annex K-30 United States le tter of 6 October 2003 K-54
Annex K-31 United States le tter of 14 October 2003 K-56
Annex K-32 Brazil's letter of 5 November 2003 K-58
Annex K-33 United States letter 11 November 2003 K-59
Annex K-34 Brazil's letter of 12 November 2003 K-61
Annex K-35 United States letter of 13 November 2003 K-63
Annex K-36 Brazil's letter of 13 November 2003 K-65
Annex K-37 United States letter of 18 December 2003 K-67
Annex K-38 United States letter of 22 December 2003 K-69
Annex K-39 Brazil's letter of 23 December 2003 K-71
Annex K-40 Brazil's letter of 23 December 2003 K-73
Annex K-41 United States letter of 23 December 2003 K-74

Contents Page
Annex K-42 United States letter of 20 January 2004 K-76
Annex K-43 United States letter of 28 January 2004 K-79
Annex K-44 United States letter of 30 January 2004 K-80
Annex K-45 Brazil's letter of 2 February 2004 K-81
Annex K-46 United States le tter of 3 February 2004 K-83
Annex K-47 United States letter of 11 February 2004 K-85
Annex K-48 Brazil's letter of 13 February 2004 K-87
Annex K-49 United States letter of 16 February 2004 K-90
Annex K-50 United States letter of 23 February 2004 K-93

ANNEX K-1

LETTER FROM THE UNITED STATES

21 May 2003

 The Panel in this dispute will soon meet with the parties to discuss th e Panel’s timetable and
working procedures. In this regard, we draw to th e Panel’s attention Brazil’s decision to raise claims
under the Agreement on Subsidies and Countervailing Measures (“Subsidies Agreement”) prior to the
expiration of the Peace Clause (Article 13 of the Agreement on Agriculture) together with its desire to
have recourse to the Annex V procedures of the Subsidies Agreement from the outset of this dispute.

 Brazil’s claims raise procedural and substantive questions that have not previously been faced
by a dispute settlement panel. The most fundament al of these is whether Brazil may proceed with
claims under the Subsidies Agreement against US support measures, notwithstanding that these
claims are barred by the Peace Clause. The Unite d States clearly maintains that Brazil may not.
1 The
United States is submitting this letter in advance of the organizational meeting in order to propose a
process to resolve these novel issues in an orderly and logical fashion.

 Brazil has not contested that, if US support m easures conform to the Peace Clause, they are
protected from action based on claims of adverse effects or serious prejudice. In fact, Brazil
implicitly recognizes that the Peace Clause bars its claims unless Brazil can demonstrate that the US
measures are in breach of the Peace Clause – in both its panel request (WT/DS267/7, at 3) and its
consultation request (WT/DS267/1, at 3), Brazil ass erts that the Peace Clause does not exempt the
challenged US measures from action. Thus, Brazil may not maintain this action based on its claims of
adverse effects and serious prejudice under the Subsidies Agreement and GATT 1994 Article XVI
unless the Panel has found that US support measures for upland cotton do not conform to the Peace
Clause.

 Accordingly, the United States proposes that th e Panel organize its procedures to deal with
the threshold Peace Clause issue at the outset of this dispute. We would sugg est that the Panel first
receive written submissions from both parties on the applicability of the Peace Clause, to be followed
by a meeting of the Panel with the parties on this issue, and then rebuttal submissions. The Panel
would then make findings on whether any US measure is in breach of the Peace Clause. If the Panel
agrees that Brazil has failed to establish that the US measures are inconsistent with the Peace Clause,

1 In this dispute, Brazil is claiming that US support measures for upland cotton have caused adverse
effects (including serious prejudice) to Brazil’s interests, within the meaning of Articles 5 and 6 of the Subsidies
Agreement and GATT 1994 Article XVI. Both the Agri culture Agreement and the Subsidies Agreement make
clear that such claims are precluded as long as the m easures conform to the Peace Clause. The Peace Clause
states that domestic support measures that conform fully to the criteria in Annex 2 of the Agriculture Agreement
(“green box” support) “shall be . . . exempt from actions based on,” inter alia , claims of adverse effects,
including serious prejudice. Similarly, the Peace Clause states that domestic support measures that conform
fully to the criteria in Article 6 of the Agriculture Agr eement (for example, “amber box” support) “shall be . . .
exempt from actions based on,” inter alia, claims of ad verse effects, including serious prejudice, “provided that
such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing
year.” The final sentences of both Article 5 (on adve rse effects) and Article 6 (f urther explaining serious
prejudice) of the Subsidies Agreement use identical language to recognize the protection afforded by the Peace
Clause: “This Article does not apply to subsidies maintained on agricultural products as provided in Article 13
of the Agreement on Agriculture.” Thus, domestic support measures that conform to the criteria specified in the
Peace Clause are protected against actions claiming adverse effects and serious prejudice.

then that would dispose of those claims. If the Pane l finds that the US measures are inconsistent with
the Peace Clause, then Brazil could have recourse to the Annex V procedures with respect to its
Subsidies Agreement claims on these measures. In either event, briefing a nd meetings of the Panel
with the parties could then proceed on any claims not disposed of by the Peace Clause findings.

 This procedure would satisfy the legal require ment that certain claims not be maintained
while the Peace Clause is applicable and provide the Panel with a fair and orderly means of
addressing the issues in this dispute. The United States notes that the Panel has broad discretion to
determine its working procedures under Article 12.1 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (“DSU”), and, under DSU Article 12.2, the Panel is charged
with establishing panel procedures with “sufficient flexibility so as to ensure high-quality panel
reports.” Because in this dispute Brazil has made claims under 17 different provisions of the WTO
Multilateral Agreements with respect to numerous US programmes under at least 12 US statutes, we
believe the Panel’s consideration of the critical Peace Clause issue would be aided by briefing and
argumentation focused on this threshold issue. Di spute settlement panels have made use of three
panel meetings to allow adequate consideration of particular issues. For example, the panel in
Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain (DS276) has
recently organized its proposed timetable and proc edures to provide for the possibility of a panel
meeting prior to the first substantive meeting in or der to consider any preliminary issues. We also
note that three panel meetings have been scheduled in each of the disputes under the Agreement on the
Application of Sanitary and Phytosanitary Measures to allow a separate meeting of the panel with
scientific/technical experts. Similarly, in this dispute, a meeting focused on the Peace Clause issue
would assist in considering the complex matter in dispute.

 We look forward to discussing this proposal with you in more detail at the organizational
meeting. The United States is providing a copy of this letter directly to Brazil.

ANNEX K-2

LETTER FROM BRAZIL

23 May 2003

 The Government of Brazil is in receipt of a letter dated 21 May 2003 from the US Mission,
proposing that the Panel's working procedures provide for a special advance proceeding to deal with
issues relating to Article 13 of the Agreement on Agriculture (AoA), commonly known as the "peace
clause". The United States proposes two rounds of s ubmissions by the parties, a meeting of the Panel
with the parties, a special “discovery” proceedi ng and Panel issuance of a separate ruling on these
issues. All other work in this dispute would be su spended until after the Panel has issued findings and
a preliminary panel report. Brazil opposes th ese unprecedented and unnecessary procedures, which
would impose significant financial and human resour ce burdens on Brazil and significantly delay this
proceeding. Brazil asks that the Panel proceed expeditiously with this case using normal dispute
settlement procedures and timeframes, for the reasons set forth below.

 Brazil urges the Panel to take full account of Article 3.3 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU), which provides: "The prompt settlement of
situations in which a Member considers that any bene fits accruing to it directly or indirectly under the
covered agreements are being impaired by measur es taken by another Member is essential to the
effective functioning of the WTO and to the mainte nance of a proper balance between the rights and
obligations of Members." DSU Article 12.9 contem plates that panel proceedings will be completed
within six months. DSU Article 12.2 provides th at "panel procedures should provide sufficient
flexibility so as to ensure high-quality panel reports, while not unduly delaying the panel process ".
The US suggested procedure would unduly delay the panel process to the detriment of Brazil’s rights.

The United States has singled out AoA Article 13 as a “special” provision which allegedly requires
special and unprecedented procedural treatment. Yet DSU Appendix 2, the closed list of “special and
additional” rules and procedures that trump the nor mal rules of dispute settlement, does not include
Article 13 or any other AoA provision, nor does it include the cross-refe rences to the AoA in
Articles 3.1 and 7.1 of the Agreement on Subsidies and Countervailing Measures (ASCM). There is
no support in the DSU, in the Agreement on Agricult ure, or elsewhere in the WTO Agreement for the
proposition that a separate “mini-trial” on peace clau se issues is required before any claim can be
made against subsidies under the Agreement on Ag riculture. Acceptance of this proposition would
invent a substantial new obstacle to future clai ms by any government against agricultural subsidy
programs, altering the rights of Brazil and many other Members, in contradiction to Article 3.2 of the
DSU.

 The US notion that two rounds of submissions and a special meeting are required before the
parties perform any further work on the case is unpreced ented. As the Panel is aware, the concept of
preliminary objections is not new. There are ma ny WTO cases in which a defending party has made
preliminary objections that a claim or a pane l request has not met the requirements of DSU
Article 6.2, and has requested an early ruling. Sometimes panels make an early ruling,
1 and sometimes

1 US – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from
Germany, WT/DS213/R, fn. 224.

they do not.
2 The decision on how to handle such preliminary objections procedurally is a matter of
panel discretion. Where preliminary objections have been resolved in ad vance of other claims,
normally they have been resolved in the panel’s first meeting, on the basis of the first round of
submissions and oral statements.

 The threshold issues posed by AoA Article 13 are no more or less significant than other
threshold issues in many WTO Agreements. Th ere are “peace clause”-type provisions in
Articles 27.2(b), 27.3, and 27.4 of the ASCM Agreement precluding prohibited subsidy claims against
developing country export subsidies under certain conditions. When this provision was invoked by
developing countries in prior cases, no special proce dures were created by panels and these threshold
issues were decided as part of the final panel report. 3 Similarly, no claim may be brought against a
measure under the General Agreement on Trade in Se rvices unless the measure falls within the scope
of the GATS as defined in GATS Article I. No claim may be brought under Article 2 of the
Agreement on Technical Barriers to Trade except in respect of a measure that is a “technical
regulation” as defined by that agreement. Clai ms under the Agreement on Government Procurement
may only be brought concerning procurement of an en tity covered by Annex I of that agreement.
Many more examples exist.

 Following the US proposal, panels would be required in any case involving such threshold
issues to provide for special submissions, special meetings and preliminary panel decisions on
admissibility of claims before reaching the substance, adding a month or two to each panel
proceeding. The same procedure would be required whenever a defending party makes a preliminary
objection under DSU Article 6.2. Resolving such issues, the United States would presumably argue,
would be necessary to avoid wasteful litigation of unnecessary claims. But like the Agreement on
Agriculture, none of these agreements contain any special procedural provisions for resolution of
these threshold issues, and there is no reference to such procedures in Appendix 2 of the DSU.
Negotiators could have provided for the type of bifurcated dispute settlement process suggested by the
United States for these types of issues. But they did not.

 The United States notes that special meetings ha ve been held with experts in cases involving
the Agreement on the Application of Sanitary a nd Phytosanitary Measures (SPS). However, these
meetings were held pursuant to Article 11.2 of the SPS Agreement that gives the panel the authority
to “seek advice from experts chosen by the panel in consultation with the parties to the dispute.” With
such authority comes an implied need for the Panel to meet with the experts. It also creates an
expectation of additional delay from the norma l panel schedule to accommodate obtaining such
advice. Nothing in the AoA contains any similar authority to address peace clause issues.

 The peace clause issues in this dispute are not just technical procedural issues (as the US
implies in its letter) that can be quickly disposed of without extensive briefing or the presentation of
considerable factual evidence and expert econometric testimony. They require careful deliberation by
the Panel on the basis of the entire body of evidence submitted by the parties. The peace clause issues
are also intertwined with the substance of Br azil’s claims regarding prohibited and actionable
subsidies under the Agreement on Subsidies and Countervailing Measures. For example:

Among the issues presented by the peace cl ause are whether three of the six
actionable US domestic support subsidies (Production Flexibility Payment Contract
Payments, Direct Payments, and Counter-C yclical payments) are properly in the
“green” or “amber/blue” box of the AoA. To resolve these issues involves, inter alia,

2 US – Anti-Dumping Measures on Certain Hot Rolled Steel Products from Japan, WT/DS184/R, fn.
16 to para. 7.1.
3 Brazil – Export Financing Program for Aircraft, WT/DS46/R (20 August 1999), paras. 7.56-57;
Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R (23 July 1998), para. 14.52

the presentation of econometric analysis of the trade distorting or production
enhancing effects of each of these subsidi es to determine whether or not they are
properly green box subsidies w ithin Annex 2 AoA. If they are not, then these three
subsidies are included in the amount of support in marketing years 1999-2002 for the
purpose of comparing against the level of support decided by the United States for
marketing year 1992 under Article 13(b)(ii) AoA. However, Brazil’s econometric
and other extensive documentary evidence regarding the production enhancing effects
of such subsidies for the pur poses of the peace clause is exactly the same evidence
Brazil presents for these three referenced subsidies to demonstrate its serious
prejudice claims under ASCM Articles 5(c), 6.3(b), 6.3(c), 6.3(d), and Article XVI of
GATT 1994.
Brazil has made claims under the AoA and the ASCM regarding prohibited export
subsidies under the US Step-2 progr amme and US export credit guarantee
programmes. Brazil will demonstrate in its first submission that these two export
subsidies do not “conform fully to the provisions of Part V of this Agreement” in the
sense of AoA Article 13(c); obviously, Brazil's evidence and argument regarding the
lack of conformity of these two measures with Part V of the AoA largely overlaps
with the evidence and argument necessary to demonstrate a violation of ASCM
Articles 3.1(a) and (b).
 The close relationship between these "threshold" issues and the merits of Brazil's case can be
seen by considering the possible outcome of the Panel' s preliminary rulings. For instance, if the Panel
rules that Brazil may bring its export subsidy claims because the US export subsidies are inconsistent
with AoA Part V, it will have decided up front a key issue regarding the merits. But would the
United States accept such a ruling and not attempt to re-litigate the same issu es raised in the context
of the ASCM Agreement? The answer is obvious. It highlights that a preliminary mini-trial of the
sort sought by the United States will not save ti me, expense, and trouble for the Panel or for the
parties, and will simply serve to increase the length and expense of this panel proceeding.

 The Panel must also consider the position of th e 13 interested third parties in this dispute.
Many of these third parties may wish to provide th eir views on the interpreta tion and application of
AoA Article 13 given the implications of any decision for future disputes. If the panel were to decide
to request submissions and/or hold a hearing in adva nce of its first meeting with the parties, third
parties will probably claim that they must be acco rded the same opportunities for participation as in
normal panel proceedings. These opportunities are partic ularly important since the “mini-trial” called
for by the United States would decide key substantive issues relating to the facts and merits of Brazil's
complaint.

 Brazil would also be prejudiced because the United States proposal would require it to use
limited resources to bring its Brazilian counsel a nd its US econometric experts to Geneva for the
proposed special meeting. Further, Brazil would be required to prepare essentially four additional
written submissions (a first and rebuttal written s ubmissions, an oral statement submission, and
written answers to the Panel’s questions) for th e proposed special briefing and meeting. The
acceptance of the US proposal will create travel, hotel, legal, and human resource expenditures that
are particularly burdensome for a developing co untry with limited financ ial and human resources
such as Brazil. In sum, the US proposal would impair Brazil’s rights under WTO rules.

 Finally, the United States proposes even more de lay in this proceeding with its suggestion in
the letter that “Brazil could have recourse to the Annex V procedures with respect to its Subsidies
Agreement claims” after the determination by the Panel pursuant to the special procedures. Brazil
initiated Annex V procedures on 18 March as the DS B established the panel pursuant to Brazil’s
request for the establishment of a panel that i nvoked ASCM Article 7.4. Brazil sought information

from third countries and the United States on 1 April 2003 under the provisions of Annex V,
paragraphs 2 and 3. Brazil has collected informati on from a number of third parties pursuant to these
requests. The United States on 19 March in WT/DS267/8 informed the DSB that “any requests for
information pursuant to the Annex V procedures may be provided in writing to the US Mission to the
World Trade Organization. The United States will gather the information to respond to any such
requests and provide the responses through the US Mission”. Unfortunately, the United States refused
to answer Brazil’s questions dated 1 April 2003 during the 60-day period of the procedures that ended
on 17 May 2003.

 Brazil rejects any suggestion by the United States that a new Annex V procedure be
conducted during the panel stage of the process to im pose even further delays in this proceeding.
Instead, Brazil will use the best information availabl e to it when it files its first submission. If
appropriate, Brazil will request that the Panel dr aw adverse inferences from any failure of the
United States to provide information requested during the consultation and Annex V process.

 In light of the above, Brazil strongly urges the Panel to reject the United States’
unprecedented and wasteful procedural proposal. As noted above, much of the evidence involved in
demonstrating the absence of peace clause protection also is related to Brazil’s substantive claims.
Given this overlap, the Panel should structure its work so that the peace clause issues and Brazil’s
claims regarding prohibited subsidies and serious prej udice are dealt with at the same time and in the
same two meetings between the Panel and the parti es. Use of the normal two meetings and briefing
schedule will permit the Panel to have sufficient ti me to consider the views of Brazil, the United
States, and the 13 third parties involved in this dispute. Use of the existing procedures and
timeframes will avoid significant prejudice to Brazil by avoiding it having to use its limited resources
to litigate the same issues at three, not two meetings. Use of existing procedures will avoid
duplication of effort by the Panel and the third part ies, and avoid significant delays in the issuance of
a final report regarding the subsidies Brazil challenges in this dispute.

 Brazil would be pleased to provide the Panel w ith additional information at the organizational
meeting regarding this and any other procedural issues.

ANNEX K-3

LETTER FROM BRAZIL

14 July 2003

 Brazil would like to bring to the attention of the Panel in United States – Subsidies on Upland
Cotton (DS267) the following matter.

 The "Working Procedures for the Panel" establish in paragraph 17(b) that,

 "the parties and third parties should provide their submissions to the Secretariat by 5:30 pm
on the deadline established by the Panel, unless a different time is set by the Panel"

 and in paragraph 17(d) that,

 "the parties and third parties shall provide electronic copies of all submissions to the
Secretariat at the time they provide their submissions [...]".

 The electronic version of the US first submi ssion, which was due on Friday, 11 July, 5:30 pm,
was delivered after 11 pm, almost 6 hours after the de adline. Brazil had access to the hard copy only
on Saturday morning. Because it was a Friday, the failu re of the United States to meet the established
deadline led to delays in the transmittal and r eception of the submission to different Government
officials in Brazil and to Brazil's legal advisors. In addition, the delay no doubt caused third parties to
have less time to react to the US submission – a not insignificant delay given the fact that third parties
had only two working days to respond to the US submission before filing on 15 July. The result was
that Brazilian officials were unable to review the submission until Monday, 14 July.

 Brazil notes that this delay is not the firs t in the present case. The US Comments on the
initial brief by Brazil, due on 13 July, 5:30 pm, were sent electronically after 8 pm.

 Brazil has been faced with extremely short deadlines in this case, in cluding the filing on
24 June its First Submission which required extensive changes to respond to the Panel's determination
of 20 June. Nevertheless, Braz il met the deadline and filed the submission prior to 5:30 pm on
24 June. Brazil expects that the United States will, like Brazil, meet its own deadlines in a timely
fashion.

 Brazil would like the Panel to take note of this delay and to encourage the US to respect the
deadlines, with a view to ensuring procedural fairness in these proceedings.

ANNEX K-4

LETTER FROM THE UNITED STATES
REQUEST FOR EXTENSION OF DEADLINE
FOR RESPONSES TO PANEL QUESTIONS

29 July 2003

In view of the number and the complexity of the questions addressed by the Panel to the
United States and Brazil (not counting subparts, it a ppears that the Panel has asked the United States
approximately 95 questions), the United States would like to request an extension of the deadline for
the parties’ responses until Friday, 15 August 2003. In particular, a number of the questions address
new issues and request extensive additional informat ion. Given the issues and volume of information
involved, as well as the travel schedules of key members of the US delegation, an extension of the
deadline originally proposed by the Panel would assist the parties in providing thorough responses.

While extending the deadline for answers would necessarily shorten the period for
commenting on those answers, the parties would still have one week to prepare those comments. The
United States considers that both the initial answ ers and subsequent comments would benefit if
proportionately more time were allocated to ensuring that the initial answers are as complete and clear
as possible.

ANNEX K-5

LETTER FROM BRAZIL

29 July 2003

 Brazil received a letter dated today from the United States requesting until Friday 15 August
to provide answers to the Panel’s questions. Brazil cannot agree to this request.

 Brazil has been working diligently every day since 25 July to comply with the Panel’s
deadline and is prepared to provid e its answers to the Panel’s questions by 4 August. A delay until
15 August will prejudice Brazil by not providing it with sufficient time to comment on the US
answers or to prepare its Rebuttal Submission.

 Brazil also notes that the Panel's questions do not raise new issues. Instead, they address
issues either raised to a large ex tent in the First Written Submissions or that have been dealt with
extensively during the first substantive meeting with the parties.

 However, in the spirit of cooperation and in r ecognition of the fact that the Panel did request
more questions of the United States than Brazil, Br azil would have no objection if the Panel were to
extend the deadline to 7 August for the Parties and the Third Parties to answer the Panel’s and each
other’s questions.

ANNEX K-6

LETTER FROM THE EUROPEAN COMMISSION

31 July 2003

 The European Communities would like to thank th e Panel for the questions it has posed to the
third parties, and for extending the deadlines for r esponses. In light of the detailed nature of the
questions asked and the importance of the issues concerned, the European Communities respectfully
makes two requests to the Panel.

 First, it would greatly assist the European Communities (and we assume other third parties) in
preparing our responses to the Panel’s questions to have sight of the oral statements of the main
parties to the dispute at the first substantive meeti ng. So doing would permit third parties to respond
to arguments made by the main parties where such a response would be of relevance in answering the
Panel’s questions. Since the Panel has requested th e third parties to answer detailed questions, the
European Communities considers that allowing the th ird parties access to the oral statements would
allow the third parties to participate in a “full and meaningful fashion” in the stages of the proceeding
where the panel has requested their input.
1 Moreover, the European Communities considers that this
would benefit the Panel since the third parties will be able to provide more complete responses to the
Panel’s questions.

 Second, the European Communities welcomes th e Panel’s decision to allow the third parties
to comment on the response of the other third parti es. However, it is not clear to the European
Communities whether the third parties will also be able to comment upon the responses of the main
parties to the Panel’s questions, or questions the ma in parties have asked of each other. Once more,
the European Communities considers that the th ird parties comments will be more full and
meaningful, and consequently more beneficial to th e Panel, if it is also possible to comment on the
responses of the main parties in addition to commenting upon the other third parties responses.

 Accordingly, the European Co mmunities requests the Panel to ask the main parties to provide
the third parties with copies of their oral statem ents and copies of their responses to the Panel’s
questions, when lodged. The European Communities also requests the Panel to invite the third parties
to comment upon the responses of the main parties to the Panel’s questions, and those posed by the
other party.

 Finally, the European Communities would also r espectfully ask you to clarify the treatment of
the Panel’s expression of views on Article 13 of the Agreement on Agriculture and associated issues,
scheduled for 5 September 2003. Given that the Pa nel’s findings on this issue may be considered
similar to a preliminary ruling, and that the third parties will be asked to provide the Panel with
further comments on 29 September 2003, the Europ ean Communities considers that, in order to
protect third parties’ due process rights, the Pane l’s expression of views should be available to the
third parties. The European Communities would be obliged if you could confirm this understanding.

1 Para. 249, Article 21.5 Appellate Body Report, United States – Tax Treatment for “Foreign Sales
Corporations” (“United States – FSC (21.5)”), WT/DS108/AB/RW, adopted 29 January 2002.

 A copy of this letter has been provided to th e delegations of Brazil and the United States, and
to the other third parties.

 May I take this opportunity to thank you in advance for your consideration of these issues.

ANNEX K-7

LETTER FROM THE UNITED STATES

1 August 2003

 The United States is in receipt of the letter dated 31 July 2003, from the European
Communities (EC) relating to third parties’ particip ation in the present dispute. The United States
would consent to the Panel’s release of its further views on the Peace Clause issue to the third parties
as a sensible way forward in this dispute (althou gh we would not necessarily endorse all of the
reasoning expressed in the EC letter). Further, the United States has no objection to either party
choosing to make its submissions or oral statemen ts public – as the United States and, we understand,
Brazil have decided to do. However, we see no basis in the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU) for the additional procedural requirements that the EC is
proposing – namely, that the Panel require the parti es to make available to the third parties copies of
their oral statements and responses to the Panel’s questions, and that the third parties comment on the
parties’ responses to the Panel’s questions. The EC proposal appears to eras e the distinction between
parties and third parties for purposes of dispute settlement.

 The United States recalls that in the context of a panel proceeding a third party is welcome to
express its interests under any covered agreement at i ssue in the dispute. Th us, the DSU ensures that
third parties may express those interests by providin g “an opportunity to be heard by the panel and to
make written submissions” (DSU Article 10.2) and the right to “receive the submissions of the parties
to the dispute to the first meeting of the panel” (DSU Article 10.3). These requirements have been
met in every prior dispute by providing third parties the opportunity to receive the first submissions of
the parties, to make one written submission, and to present statements at a third-party session of the
first meeting of the panel.

 We are aware of no dispute in which third par ties have been granted the additional rights now
sought by the EC. It would represent a fundamental change in the role of third parties in dispute
settlement. Changes of this nature are being di scussed in the context of the ongoing negotiations on
clarifications and improvements to the DSU, and th at is the proper forum for Members to consider
these changes.

 In addition, on a practical note, if the parti es have to deal with the additional work of
responding to comments by potentially more than a do zen third parties on (1) each others’ answers to
the Panel’s third-party questions as well as (2) the parties’ answers to more than 100 questions from
the Panel, the already ambitious timetable established by the Panel will become totally untenable.

 Finally, the United States recalls that, like all WTO Members and the public, the EC already
has access to US submissions and oral statements on our website. (Indeed, we have already provided
a copy of our oral statement directly to the EC at their request.) We also understand that Brazil is
making its submissions public within two weeks of filing as contemplated by the parties’ agreement
and reflected in the Panel’s Working Proce dures. We would welcome Brazil’s making its
submissions public upon filing but do not see a basi s in the DSU for requiring disclosure of those
submissions to the third parties.

 The United States is providing a copy of this letter directly to Brazil and the third parties.

ANNEX K-8

LETTER FROM BRAZIL

1 August 2003

 Brazil received a letter dated 31 July 2003 from the European Communities requesting the
Panel:

 (i) to ask the parties to the dispute to pr ovide third parties with copies of their oral
statements and copies of their responses to the Panel’s questions;
 (ii) to invite the third parties to comment upon the responses of the parties to the dispute
to the Panel’s questions, and those posed by the other party;
 (iii) to make the “Panel’s expression of views on Article 13 of the Agreement on
Agriculture and associated issues”, scheduled fo r 5 September 2003, available to the
third parties.

2. With respect to the EC’s requests, Brazi l would like to make the following comments.

3. In light of the Timetable for Panel Proceedings, the Workin g Procedures for the Panel, and
DSU Articles 10.2 and 10.3, Brazil considers that the third parties to the present dispute are entitled to
be provided with copies of the parties’ First Written Submission and parties’ Further Submission only.
In Brazil’s view, these are the only documents that constitute “submissions of the parties to the
dispute to the first meeting of the panel” in accordance with DSU Article 10.3.

4. Brazil further notes that the parties to the dispute did not make any oral statements during the
session of the substantive meeting of the Panel set aside for the third parties to present their views
(24 July 2003). Thus, there are no oral statemen ts of which the third parties should receive written
versions. As a matter of fact, the oral (opening an d closing) statements made by Brazil and the US
were delivered exclusively at the closed session of the substantive meeting of the Panel which the
third parties did not have access to. Again, there would be no reason for providing third parties with
copies of those oral statements.

5. As is the case for the oral statements, Braz il submits that third parties need not be given
copies of the parties’ responses to the Panel’s questions. The Panel’s questions were put to Brazil and
the US in the context of the closed session of the first substantive meeting with the parties, as were the
preliminary responses given by both parties to the dispute. Moreover, such responses do not
constitute “submissions” within the meaning of DSU Article 10.3.

6. Finally, with regard to the “Panel’s views on certain issues”, Brazil agrees with the EC that
the document should be available also to third parties.

ANNEX K-9

LETTER FROM THE EUROPEAN COMMISSION

4 August 2003

 The European Communities refers to its letter to the Panel of 31 July 2003, and the responses
of the United States and Brazil of 1 August 2003.

 The European Communities would like first to welcome the agreement of both the
United States and Brazil that the Panel’s views on the Peace Clause and related issues should be
communicated to the third parties.

 However, in the view of the European Communities, both the United States and Brazil
misunderstand the thrust of the EC’s letter of 31 Ju ly. Both parties enter into a discussion of whether
the third parties are entitled to be given access to , and the chance to comment upon, the responses to
the Panel’s questions of the main parties. Both argue that the docu ments which the third parties have
received are the only documents which the third pa rties are entitled to. However, these arguments
miss the point of the European Communities request.

 The European Communities central point was that, given the detailed questions which the
third parties have received from the Panel, and give n the Panel’s decision to permit third parties to
comment upon the responses of the other third parties, it would be a reasonable exercise of the Panel’s
discretion to organise its procedures so as to a llow the third parties also to comment upon the
responses of the main parties. The European Commun ities considers that this would be beneficial to
the Panel, and would allow the third parties to par ticipate completely, given the extent to which the
Panel has already invited the third parties to participate.

 The European Communities does not consider th at this would set an unfavourable precedent
because a panel would always have the discretion, in the light of its own procedures and the dispute
before it, to decide whether to grant third pa rties such possibilities. Moreover, the European
Communities sees no possible impairment of the due pr ocess rights of the main parties, and indeed
neither the United States not Brazil have alleged any such impairment would result from the Panel
acceding to the request of the European Communities.

 The European Communities is aware of the prac tical concerns raised by the United States.
However, the European Communities notes that a pa rty always has a choice whether to comment
upon responses, and that these practical concerns weigh equally on both parties.

 Finally, the European Communities is, of cour se, aware that the United States makes it oral
statements public (and is grateful that the US offi cials involved in this dispute have provided a copy
directly to the EC delegation). We also note that the Panel’s procedures provide for the submission of
non-confidential summaries within 14 days of filing which could be made public.
1 However, the
European Communities is not aware, first, whether su ch summaries shall also be provided to the third
parties, and second, whether such summaries can be considered equivalent to the oral statements as

delivered. In that light, the European Communities recalls its arguments in favour of provision of the
statements as delivered, set out in its letter of 31 July 2003.

 A copy of this letter has been provided to th e delegations of Brazil and the United States, and
to the other third parties.

 Thank you in advance for your consideration of these issues.

ANNEX K-10

LETTER FROM BRAZIL

14 August 2003

 Once more, Brazil is faced with the need to de tract from its substantive work relating to the
dispute United States – Subsidies on Upland Cotton (DS267) to bring to the attention of the Panel a
new US failure to abide by the “Working Procedures for the Panel” concerning the timing for delivery
of documents required by the Panel.

 As it had already done on two previous occasions
1, the US did not deliver its answers to the
Panel’s questions following the firs t substantive meeting with the parties by the time established in
paragraphs 17(b) and (d) of the “Working Procedures”.2 Brazil recalls that the deadline for submitting
the parties’ answers to the Panel was expressly confirmed by the Panel on its communication dated
30 July 2003 informing about the extension of the deadline for the submission of the parties’
responses3.

 As a matter of fact, the electronic version of the US answers, which was due on 11 August,
5:30 pm, was delivered around 11:30 pm, more than 6 hours after the deadline, more than 6 hours
after Brazil delivered both its electronic version and hard copies to the Secretariat and the US. Brazil
further notes that no hard copy of the US answers wa s made available either to the Secretariat or to
Brazil by the deadline.

 Brazil regrets that the US has decided to adopt such a strategy. In this particular case, the US
behavior is even more egregious because the deadlin e – at request of the US and with the good faith
and cooperation of Brazil – had been extended by 7 days by the Panel (from 4 August to 11 August).

 As stated, the failure of the US to meet the established deadline provided US officials an
opportunity to examine Brazil’s answers before submitting their own responses more than 6 hours
later. Moreover, the US failure led to delays in the transmittal and reception of the US answers to
different Government officials in Brazil and to Br azil’s legal advisors, diminishing an already short
period for Brazil to comment upon the US responses. Due to the 5 hour time zone difference between
Brasilia and Geneva, the US delay preven ted work by Brazilian officials on the 11
th of August. US
official, however, had no such impairment since the USTR representatives in Geneva had the
Brazilian answers to the Panel by 11:30 a.m. Washington D.C. time on that same date.

 Needless to repeat that Brazil – a devel oping country with serious budgetary and human
resources constraints – has been faced with extrem ely short deadlines in this case, including the filing
on 24 June of its First Submission which require d extensive changes to respond to the Panel’s

1 Also the US Comments on the initial brief by Brazil, due on 13 June 2003, and the US First Written
Submission, due on 11 July 2003, were delivered after the deadline (see Brazil’s letter to the Panel on
14 July 2003).

2 WP, paragraph 17(b): “ the parties and third parties should provide their submissions to the
Secretariat by 5:30 pm on the deadlines established by the Panel, unless a different time is set by the Panel .”
WP, paragraph 17(d): “ the parties and third parties shall provide electronic copies of all submissions to the
Secretariat at the time they provide their submissions [...]”.
3 “The Panel reminds the parties that paragraph 17(b) of the Panel’s working procedures indicates
that the responses should be submitted by 17:30 (Geneva time).”

determination of 20 June. Howeve r, Brazil has been meeting the deadlines established, and will
continue to do so. Although the facts do not recommend Brazil to be very optimistic, Brazil continues
to expect that the US will, like Brazil, meet its own deadlines in a timely fashion from now on.

 Brazil respectfully asks the Panel to take note of this new delay and to encourage, again, the
US to respect the deadlines, with a view to ensuring procedural fairness in these proceedings.

 In addition, Brazil would like to bring to the Pa nel’s attention an issue regarding certain of the
United States’ Answers to the Panel’s Questions. In certain answers, the United States has indicated
it will provide responsive arguments and information in its rebuttal submission. In other answers, it
made allegations without providi ng any documentary support that w ould permit Brazil to challenge
the accuracy and credibility of allegations. The answers in question are the following:

Answer to Questions 14 and 26: no detaile d information or arguments were provided
in the US answers regarding either produc tion flexibility contracts or market loss
assistance payments. The last sentence of paragraph 57 of the U.S. answers indicates
US will discuss production flexibility contract payments only in the rebuttal
submission.
Answer to questions 60 and 66(a): The United States provided no responsive
information or calculations to respond to the Panel’s questions.
Answer to Questions 66(d): In paragraph 121, the United States indicates that “it will
provide a detailed critique of Mr. Sumner’s analysis in our rebuttal submission.” In
paragraph 124 it states: “We will discuss other conceptual errors in Sumner’s
approach in our rebuttal submission.”
Answer to Question 73: Other than an undocumented allegation in US answer to
Question 76, the United States provided no information or argument concerning
Articles 1 and 3 of the SCM Agreement. Instead, the United States stated in
paragraph 140 that it would “review Braz il’s submissions, including its responses to
these questions, and provide any further response in the US submission”.
Answers to Questions 12, 71-88: The Unite d States provided only two exhibits (US-
12 and US-20) and no other documentation in support of arguments or allegations.
 Brazil recalls that the purpose of scheduling the filing of the answers to the Panel’s questions
11 days before the submission of the rebuttal subm ission was to permit the parties to review each
other’s answers and supporting documentation and then to comment on those answers in the rebuttal
submissions. Brazil cooperated in this process by providing complete and comprehensive answers to
all of the Panel’s questions together with exte nsive documentation. As demonstrated above, for
certain questions, the United States did not provide complete answers or documentation that would
have allowed Brazil the opportunity to comment and rebut in its rebuttal submission.

 Brazil will be prejudiced if it does not have the opportunity to comment on information,
arguments, and documents the United States makes or provides for the first time in their rebuttal
submission that would have been responsive to those Panel questi ons listed above. Accordingly,
Brazil requests the right, only with respect to the questions above
, to comment on any new
information, arguments, or documents presented for the first time in the U.S. rebuttal submission.

 Providing Brazil with this right is consistent with basic notions of due process. Otherwise,
Brazil will not have another opportunity prior to the Panel’s 5 September decision on peace clause
issues, to comment on any new information, documents , or arguments presented by the United States.

The inability or unwillingness of the United States to provide complete answers should not prejudice
Brazil. The United States now has the benefit of Brazil’s complete answers together with extensive
additional documentation to comment on in its rebutta l submission. This is particularly true with
respect to issues related to export credit guarantees a nd issues related to Professor Sumner’s analysis.
Brazil is entitled the same right.

 Brazil requests that it be provided until 28 August to file any such comments. In light of the
fact that Brazil provided complete answers to the Pa nel’s questions, there is no basis for the Panel to
provide the United States with any corresponding right. Its due process rights have not been
adversely impacted.

ANNEX K-11

LETTER FROM THE UNITED STATES

20 August 2003

 The United States has received a copy of the letter to the Panel from Brazil of
14 August 2003. We have also received your co mmunication of yesterday, responding to Brazil’s
requests for additional time to submit its rebuttal. The United States does wish to record its views on
Brazil’s letter, and my authorities have therefore in structed me to convey their surprise that Brazil
would send such a letter and their re gret over any burden that it may have placed on the Panel in what
is already a very difficult and complicated dispute.

 The United States would first like to thank the Panel for agreeing to extend the deadline for
the responses to the Panel’s questions. The Un ited States appreciates the depth and level of
understanding of the issues represented by the Pa nel’s extensive and broad-ranging questions.
Without an extension of the deadline, it would have been completely impossible for the United States
to have provided responses in a timely manner. Ev en with the extension, the drafting, compiling,
consulting internally with the va rious relevant officials, and fi nalizing the responses all required
supreme effort and personal sacrifice on the part of the entire US delegation. The United States did
provide responses by the August 11 deadline, although it was not possible to accommodate the
5:30 pm filing guideline despite the best efforts of the United States to do so.
1

 The same burden was not placed on Brazil and the outside legal counsel that Brazil has
employed for this dispute. As a result, it is not surprising that Brazil found the deadline to be less
demanding and resource-intensive. We would note th at, if one only counts the main questions and
not any of the subquestions, there were 104 questions posed to the United States, but only 63 posed to
Brazil.2 With all respect, the United States has consider able difficulty with Brazil’s complaints about
the time within which the United States filed its response in light of the total amount of work required,
and effort that the United States expended, to provide its answers to the Panel’s questions.3

 The United States also could not understa nd how Brazil could ask for an additional
opportunity to respond to new material in the rebutta l submissions while at th e same time asking that
the Panel deny any such opportunity to the United States. (After all, one would expect that Brazil will

1 On the one hand, the United States is flattered that Brazil credits the United States with the ability to
finalize its own responses while simultaneously reviewing Brazil’s responses filed earlier in the evening. On the
other hand, the United States is, to say the least, taken aback that Brazil would sugges t that the United States
would do so. In any event, the press of finalizing the US responses completely consumed the US delegation and
no one was able to spare time to look at Brazil’s responses at any point that day, let alone before the US
responses were filed.
2 The difference in the number of questions for each party means that Brazil ha d nearly 6-1/2 hours to
prepare its responses to each questio n posed to it, whereas the United St ates had less than four hours per
question. (Counting the subquestions would increase the disparity since a preliminary check indicates that there
were more subquestions for the United States than for Brazil.) As a result, Brazil had approximately 65 percent
more time to prepare its responses. Had the United States taken the same amount of time as Brazil to prepare
each response, its responses would have taken 28 days to file (they would have been finished on August 22).
3 The United States also failed to understand the reference in Brazil’s letter to Brazil’s “good faith and
cooperation” in extending the deadline by seven days. In fact, Brazil did not “cooperate” in the Panel’s decision
to grant a seven-day extension. Brazil instead objected to any extension beyond three days.

also provide new material in its rebuttal submi ssion on topics covered in the Panel’s questions, and
not just repeat material it has already submitted.) Such a one-sided approach would not have achieved
the “procedural fairness” that Brazil has said it seeks. In this connection, the United States considers
that the approach taken by the Panel in its comm unication yesterday achieves a fair balance of the
parties’ interests.

 In conclusion, the United States would like to th ank the Panel for the approach it has taken on
Brazil’s request, as well as for its work to date on the many issues presented by this dispute. The
United States is also providing a copy of this letter directly to Brazil.

ANNEX K-12

LETTER FROM BRAZIL

23 August 2003

 The Government of Brazil is in receipt of the Communication from the Panel dated 19 August
2003. Brazil only received this morning the Rebuttal Submission of the United States of America ,
dated 22 August 2003 (“US Rebuttal Submission”). Brazil notes that consistent with all of its earlier
written submissions, the United States filed its Re buttal Submission 6 hours late. This delay has
prejudiced Brazil and prevented it from providing comments responsive to the Panel’s
19 August 2003 letter until today. Brazil notes that the United States received its copy of Brazil’s
Rebuttal Submission, along with Brazil’s Comments to the US Answers, consistent with the 5:30 p.m.
deadline established in the Panel’s Working Procedures.

 In accordance with your communication of 19 August 2003, Brazil has reviewed the US
Rebuttal Submission to determine “whether there is any specific material on which it has not had an
opportunity to comment”, and which it would like to address in a 27 August submission. Brazil
identifies below the specific US arguments, data and documents on which it would like to comment.
Brazil also shows below good cause why it should be granted the opportunity to address each specific
argument, data and document.

 Brazil recalls that its original 14 August 2003 re quest to the Panel to afford it this opportunity
was triggered by explicit indications by the Un ited States, in its 11 August responses to Panel
questions, that it was not providing full responses to the Panel’s questions and would instead address a
number of issues for the first time in its Rebuttal Submission. Brazil argued that it would be
prejudiced by this conduct. The list below is consis tent with the spirit of Brazil’s 14 August request.
Brazil’s list only includes specific issues that s hould have been but were not addressed in the
United States’ 11 August responses, or specific issues related to new documents relied on by the
United States for the first time in its Rebuttal Submission.

 There are a number of new arguments or re-packaging of earlier arguments presented by the
United States in its Rebuttal Submission. Most of these arguments do not require a further response,
since Brazil’s various earlier submissions and e xhibits addressed or anticipated the new or re-
packaged US arguments or issues raised by those arguments. In this regard, Brazil notes that the
United States’ Rebuttal Submission does not res pond to a number of arguments made in earlier
submissions by Brazil. Brazil would object to an y opportunity given to the United States to provide
such a response in its 27 August submission. Brazil is of the view that the purpose of this exercise is
not to provide the Parties with a whole-scale opportunity to rebut every point raised in either the
United States’ or Brazil’s Rebuttal Submissions. The Panel should limit the United States to
comments on specific issues that should have been but were not addressed in Brazil’s 11 August
responses, or specific issues related to new documen ts relied on by Brazil for the first time in its
Rebuttal Submission.

 Should the Panel grant the United States an opportunity to comment on issues beyond this
narrow scope, Brazil reserves its right to revisit the list of material it includes in the list below.

 In accordance with the above understanding, Brazil requests leave to comment on the
following specific material:

Domestic Support Issues

Para. 43

 Subject: US argument regarding the growing of illegal crops, etc.

 Good cause : This is a new argument that should have been but was not raised in the
United States’ 11 August response to questions 25 and 26 from the Panel.

Paras. 96-98

 Subject : US argument regarding crop insurance notifications of other Members.

 Good cause : This is a new argument referring to new WTO documents not raised in earlier
submissions.

Paras. 114-117

 Subject : US argument regarding a price gap methodology for marketing loans.

 Good cause: This is a new argument that should have been but was not raised in the
United States’ 11 August response to question 67 from the Panel, and that is directly
contradictory to information provided by the United States in paragraphs 128-134 of that
response.

Paras. 123-127 and Exhibit US-24

 Subject : US new challenge to Professor Dan Sumner’s analysis.

 Good cause : This is a new argument and exhibit th at should have been but was not provided
in the United States’ 11 August response to question 61(d) from the Panel.

Export Credit Guarantee Issues

Paras. 135-146 and Exhibits US-25 through US-29

 Subject: New US arguments concerning the negotiating history of Article 10.2 AoA.

 Good cause: These arguments should have been but we re not raised in the United States’
11 August response to questions 88(a) and 88(b) from the Panel.

Paras. 147-152

 Subject: New US argument that had it intended to subject export credit guarantees to the
AoA and the SCM Agreement, it would have incl uded them in the calculation of its reduction
commitments.

 Good cause: This argument should have been but was not raised in the United States’
11 August response to questions 88(a) and 88(b) from the Panel.

Paras. 156-157, 160-162, and Exhibits US-31 and US-32

 Subject: New US arguments and data concerning the FCRA formula and the reestimate
process.

 Good cause: These arguments and data should have been but were not raised in the
United States’ 11 August response to questions 81(d)-(g) from the Panel.

Para. 169 and Exhibit US-33

 Subject: New US assertion that rescheduled debt is not in arrears.

 Good cause: This argument and evidence should have been but was not raised in the
United States’ 11 August response to question 81(a) from the Panel.

Paras. 172, 174-175:

 Subject: US argument that item (j) does not require recovery of long-term losses.

 Good cause: This argument should have been but was not raised in response to the
United States’ 11 August responses to questions 74 and 77 from the Panel.

Paras. 186-191, and Exhibits US-34 through US-37

 Subject: US argument that “forfaiting” is analogous to CCC export credit guarantee programs
for agricultural commodities.

 Good cause: This argument should have been but was not raised in the United States’
11 August response to question 76 from the Panel (as well as questions 71(a) and 73).

 Brazil notes that the United States has for the first time addressed Brazil’s “threat of
circumvention” claims under Article 10.1 AoA (p aras. 180-183). In particular, Brazil notes new US
arguments contrasting CCC guarantee programs from FSC (and the panel and Appellate Body
decisions concerning the United States – FSC dispute), asserting that there is no legal entitlement to
CCC guarantees, and asserting ( via new data) compliance with scheduled quantitative reduction
commitments. Consistent with the purpose of th is exercise – offering an opportunity to comment
solely on arguments that should have been addr essed in the United States’ 11 August responses to
questions and to new documents pr offered by the United States for the first time in its Rebuttal
Submission – Brazil is not asking for an opportunity to address the US “circumvention” arguments in
its 27 August submission. Brazil would be pleased , however, to address any questions the Panel has
concerning these new US arguments.

 Brazil thanks the Panel and the Secretariat for its consideration of this request and for its
continuing work on this dispute.

ANNEX K-13

LETTER FROM THE UNITED STATES

25 August 2003

 In the Panel’s fax dated 19 August 2003, the Panel noted the possibility that a party might
lack sufficient opportunity to comment on information, argumentation and documents submitted by
the other party in its rebuttal submission, and the Panel invited the parties to request the opportunity to
comment on specific material after receiving each other’s rebuttal submissions. My authorities have
instructed me to submit this letter requesting such an opportunity.

 Because of Brazil’s tactical decision to defer presenting its entire case with respect to Peace
Clause issues, the United States is once again put in the difficult position of attempting to respond to
extensive, wholly new evidence and arguments in an extremely compressed time frame. Furthermore,
we note the comment of Brazil in its rebuttal submission that it “provides additional evidence
establishing that under a variety of interpretations and methodologies the US level of support granted
to upland cotton in MY 1999-2002 was far greater than the support decided in MY 1992".
1

 Under paragraph 13 of the Panel’s working pr ocedures, all evidence was supposed to have
been submitted no later than during the first substantive meeting, ex cept evidence necessary for
purposes of rebuttals or answers to questions. Brazil has not explained why it could not have
presented this evidence by the first Panel meeting or why this evidence is necessary for purposes of
rebuttal. A quick review of the “additional evidence” appears to indicate that this is all evidence that
should have been presented no later than the meeti ng with the Panel. Accordingly, unless Brazil can
show “good cause” for withholding this eviden ce from the Panel and the parties until now, the
United States would respectfully request the Panel to disregard this evidence.

 In light of the shortness of time, the United States requests the opportunity to comment with
respect to a number of issues raised for the first time in Brazil’s rebuttal submission and comments on
answers to questions, as listed below. With respect to each such issue, the United States demonstrates
that there is good cause to permit such comments. The United States is requesting the opportunity to
comment (even though some of this evidence may be disregarded by the Panel in response to the US
request) so as to avoid further delay, pending th e Panel’s finding in response to the request to
disregard the evidence.

Rebuttal Submission:

 Paras. 4-9
: Brazil for the first time responds to th e US argument, made in both its opening
and closing oral statements at the first panel mee ting, that Brazil’s interpretation of paragraph 6(b)
would create an inconsistency between that provisi on and the fundamental requirement of the first

1 Rebuttal Submission of Brazil, para. 1 (22 August 2003) (emphasis added). We also note that Brazil
had indicated in its answers to the Panel’s questions th at it was deferring presenting its case on several issues
pending receipt of the answers to the questions by the United States and in at least one instance by the European
Communities (see e.g., paragraph 80 of Brazil’s answers to the Pa nel questions). Brazil’s rebuttal submission
for the first time now presents this material.

sentence of Annex 2, paragraph 1. This is a ne w argument not previously made to the Panel, for
example, in either of Brazil’s oral statements or in its answers to questions from the Panel.2

 Paras. 24-26 : On the basis of a previously submitted exhibit, Brazil now advances for the
first time the argument that production flexibility c ontract payments may be considered “support to
upland cotton” on the basis that such payments were not made “in favour of agricultural producers in
general” because payments were linked to acres th at produced any of seven crops during a fixed and
defined base period. 3 This argument could have been made in Brazil’s first submission, either of
Brazil’s oral statements, or in Brazil’s answers to questions from the Panel.4

 Paras. 29-35: In these paragraphs, Brazil for the first time advances an argument for market
loss assistance payments that parallels the argument made for the first time in paragraphs 24-26 with
respect to production flexibility contract payments: that market loss assi stance payments may be
considered “support to upland cotton” on the basis th at such payments were not made “in favour of
agricultural producers in general” because payments were linked to acres that produced any of seven
crops during a fixed and defined base period. In addition, Brazil introduces a raft of assertions, new
data, and calculations, including some with respect to crops other than upland cotton, to assert that
production flexibility contract payments and market loss assistance payments are support for upland
cotton because of costs for upland cotton farmers.
5 Brazil could have presented these data,
calculations, and arguments in its previous submissions and statements.

 Paras. 36-46
: As with production flexibility contract payments and market loss assistance
payments, Brazil argues (again for th e first time) that direct paymen ts may be considered “support to
upland cotton” on the basis that such payments were not made in favor of all agricultural producers,
and Brazil introduces a raft of assertions, new data, a nd calculations, including some with respect to
crops other than upland cotton, to assert that direct payments are support for upland cotton because of
costs for upland cotton farmers. 6 Brazil could have presented these data, calculations, and arguments
in its previous submissions and statements.

 Paras. 48-50:
 Brazil makes a nearly identical argument for counter-cyclical payments as for
those indicated above: that is, these payments ma y be considered “support to upland cotton” on the
basis that such payments were not made “in favour of agricultural producers in general” and on the
basis of the same or similar assertions, new data, and calculations with respect to costs and subsidies
for upland cotton and other crops.
7 Brazil could have presented these data, calculations, and
arguments in its previous submissions and statements.

2 See, e.g., Brazil’s Answer to Question 27 from the Pane l (para. 39 failed to make any such argument
in the course of the answer alleging that US decoupled income support has more than a minimal effect on
production (and thus is inconsistent with the fundamental requirement of the first sentence of Annex 2,
paragraph 1) because such support “limit[s] payments based on the type of production”).
3 Indeed, none of the citations provided by Brazil in these paragraphs discloses the argument Brazil
now advances. See Brazil ’s Rebuttal Submission, paras. 24-35 fn. 38-44.
4 See Brazil’s Answer to Question 23 from the Panel (paras. 25, 27: noting base acreage and addition of
crops to base acreage under direct payments program but failing to argue that limitations on base acreage render
measure product-specific).
5 See, e.g. , Brazil’s Rebuttal Submission, para. 31 fn. 68, 69 (both of these footnotes contain new
evidence that should have been pres ented by the first Panel meeting); id., para. 33 fn. 71 (disclosing new
calculation).
6 See, e.g. , Brazil’s Rebuttal Submission, para. 39 fn. 84 (this footnote contains new evidence that
should have been presented by the first Panel meeting), 85.
7 See, e.g., Brazil’s Rebuttal Submission, para. 50 fn. 112, 113, 114 (all of this is new evidence that
should have been presented by the first Panel meeting).

 Paras. 55-59:
 With respect to crop insurance pa yments, Brazil introduces new evidence (for
example, relating to availability of specific polici es) and arguments to claim that these payments are
product-specific support to cotton. 8 Brazil could have presented this evidence and argument in its
previous submissions and statements.

 Paras. 73, 75-77: Brazil introduces revised data and calculations relating to alleged budgetary
expenditures for upland cotton and an AMS for upland cotton.9

 Paras. 88, 90-94: Brazil misstates the US position with respect to the Peace Clause analysis
for support provided in past marketing years. Br azil also asserts, erroneously, the US Peace Clause
interpretation is inconsistent with the position ta ken by the United States in previous WTO dispute
settlement proceedings. These arguments could have been presented by Brazil earlier -- for instance,
during its first oral statement to the Panel10 or in its answers to the Panel’s questions.11

Brazil’s Comments on U.S. Answers

 Paras. 44-45:
 Brazil for the first time presents an argument claiming that the US
interpretation of paragraph 6(b), made in both its opening and closing oral statements at the first panel
meeting, would render paragraph 6(e) a nullity. These arguments could have been presented in
Brazil’s answers to the Panel’s questions. (See also paragraphs 4-9 of Brazil’s Rebuttal Submission,
discussed above.)

 Paras. 54-56:
 In the guise of a “general comment” to questions 47-69, Brazil asserts for the
first time that the US argument relating to the level of support decided by US measures does not
account for various forms of product-specific suppor t. This erroneous assertion could have been
presented as early as Brazil’s oral statements at the first panel meeting or in its answers to the Panel’s
questions.

 The United States thanks the Panel for its cons ideration of these requests. In addition, like
Brazil, we would of course also welcome the opportunity to respond to any further questions the Panel
may have. Moreover, should the Panel consider it useful to hear further argumentation from the
Parties, we would of course be pleased to make a dditional submissions or appear before the Panel on
this complicated and sensitive matter.

 The United States is providing a copy of this letter directly to Brazil.

8 See, e.g., Brazil’s Rebuttal Submission, para. 56 fn. 131, 132.
10 See, e.g., Brazil’s Oral Statement at First Panel Meeting, paras. 40-43.
11 See, e.g., Brazil's Answer to Question 15 from the Panel.

ANNEX K-14

LETTER FROM BRAZIL

25 August 2003

 The Government of Brazil is in receipt of a letter from the United States dated 25 August.
Brazil received that letter at 6 p.m. today. Brazil requests the Panel to take the following action as set
forth below.

Rejection of US request as untimely:

 Brazil requests that the Panel disregard the United States’ request to have the Panel grant it
permission to offer rebuttal arguments to Brazil’s 22 August rebuttal submission and comments on the
US answers. This letter, like all prior US submissions to the Panel, w as not timely filed. This latest
request was made at least 60 hours too late. The Panel’s Communication of 19 August 2003 stated:

when each party receives the other party’ s rebuttal submission, it is invited, without
delay to draw the Panel’s attention to any specific material on which it has not had an
opportunity to comment . . . .”
The Communication further stated that “the Pane l is willing to grant such permission on Saturday,
23 August 2003, if necessary.”

 Brazil interpreted this Communication as requiring it to make the request on Friday evening,
22 August, immediately after reviewing the US Rebu ttal Submission. Unfortunately, the US Rebuttal
Submission was sent shortly before midnight on Frid ay, 22 August and could only be accessed by the
Brazilian Mission in Geneva at 9: 00 a.m. Geneva time on Saturday, 23 August. Brazil informed the
Secretariat on Friday evening that it could not make its request that evening since it had not received
the US Rebuttal Submission. Brazil further inform ed the Secretariat on Saturday morning that it
would file a request by 2:00 p.m. on Saturday.

 By contrast, the United States received Br azil’s 22 August Rebuttal Submission and Brazil’s
22 August Comments to the US Answers and Brazil’s exhibits at 5:30 p.m. Geneva time on Friday,
22 August. Regardless, the United States waited more than 72 hours to file its request that the Panel
strike certain information in Brazil’s 22 August submissions, and its request for leave to file
comments on those Brazilian submissions.

 Brazil has endured repeated violations by the United States of the Panel’s procedural
deadlines over the past three months. If the Panel’ s procedures are to mean anything, they must be
enforced. There is no doubt that this latest request by the United States is well out of time. It was not
made “without delay”. There is no basis offered by the United States for such delay. There is none.
Accordingly, the Panel should reject the United States request as untimely.

Reject US Request to Strike Brazil’s Rebuttal Evidence and Argument

 The United States also requests the Panel to strike large amounts of Brazil’s Rebuttal
Submission and Brazil’s documents with the argument that Brazil allegedly violated paragraph 13 of
the Panel’s working procedures. Brazil notes the ir ony of the United States invoking the Panel’s

working procedures given their repeated violations of such procedures over the past three months.
Nevertheless, the United States ignores the Panel’s De termination of 20 June, in which it stated, in
paragraph 20, last bullet:

For the purposes of allowing the Panel to express its views on the exemption
conditions of Article 13 of the Agreement on Agriculture by 1 September 2003, in
relation to those measures which may be affected by Article 13, full and complete
submissions on factual and legal issues related to Article 13 in this dispute will need
to be provided, at the latest, in the part ies’ rebuttal submissions (to be submitted on
22 August 2003).
Brazil interpreted this ruling as permitting it to provide no later than 22 August all of its evidence and
argument that had not already been provided in its ear lier submissions. This is the manner in which it
treated the new evidence and arguments presented by the United States in its Rebuttal Submissions.
Therefore, Brazil did not, in its 23 August letter to the Panel, seek to “st rike” new US evidence
included in the US 22 August Rebuttal Submission, but simply asked to be provided with an
opportunity to respond to that evidence.

 Therefore, there is no basis for the US request.

Response to US requests to comment on Brazil’s 22 August Submissions

 The United States complains at several points in its letter that Brazil is presenting for the first
time, in its 22 August Rebuttal Submission, respons es to US arguments made in the US opening and
closing oral statements at the first panel meeting. Unless particular questions from the Panel offered
Brazil the opportunity to respond to arguments made by the United States in the US statements at the
first panel meeting, however, Brazil’s first opportunity to respond to the US arguments was in Brazil’s
22 August Rebuttal Submission.

 Brazil has listed below its comments to the requests by the United States:

Brazil’s 22 August Rebuttal Submission

Paragraphs 4-9:

 These arguments were made by Brazil in rebuttal of US and EC arguments advanced in their
first submissions, oral statements and answers to questions, or reflect summaries of earlier arguments
made by Brazil. The Panel should, therefore, reject the US request to comment on them.

Paragraphs 24-26:

 This evidence and arguments are based on exhibits presented prev iously and rebut US
arguments that PFC payments do not constitute support to upland co tton. Contrary to the US
assertion, there is no question by the Panel to which this evidence and arguments would be
responsive. Therefore, the US request should be rejected.

Paragraphs 29-35:

 This evidence was presented by Brazil in rebutta l to US arguments that market loss assistance
payments do not constitute support to upland cotton. The US does not assert that there would have
been a question by the Panel to which this eviden ce and arguments would be responsive. Therefore,
the US request should be rejected.

Paragraphs 36-46:

 This evidence was presented by Brazil in rebutta l to US arguments that direct payments do
not constitute support to upland cotton. The US do es not assert that there would have been a question
by the Panel to which this evidence and arguments would be responsive. Therefore, the US request
should be rejected.

Paragraphs 48-50:

 This evidence was presented by Brazil in rebu ttal to US arguments that counter-cyclical
payments do not constitute support to upland cotton. The US does not assert that there would have
been a question by the Panel to which this eviden ce and arguments would be responsive. Therefore,
the US request should be rejected.

Paragraphs 55-59:

 This evidence was presented by Brazil in re buttal to US arguments that crop insurance
payments do not constitute support to upland cotton. The US does not assert that there would have
been a question by the Panel to which this eviden ce and arguments would be responsive. Therefore,
the US request should be rejected.

Brazil’s 22 August Comments on US Answers

Paragraphs 44-45:

 These arguments were made in rebuttal of US arguments that the restrictions on planting
flexibility contained in the US PFC and direct pa yment programmes are consistent with Annex 2,
paragraph 6. Therefore, the US request should be rejected.

Paragraphs 54-56:

 These arguments are a direct reaction and co mment to new information provided by the
United States in response to Question 67. It is enti rely appropriate to react to this information and
include it in the peace clause calculation. Therefore, the US request should be rejected.

 Brazil would like once more to thank the Pa nel for the consideration of these requests.

ANNEX K-15

LETTER FROM THE UNITED STATES

27 August 2003

Attached please find the US comments on new material in Brazil’s rebuttal filings and answer
to the additional question from the Panel in the dispute, United States – Subsidies on Upland Cotton
(DS267). The United States wishes to take this opportunity to thank the Panel for its rapid
consideration of, and response to, the US request to file these comments.

In Brazil’s letter to the Panel of 14 August 2003, Brazil raises the concern that “basic notions
of due process” require providing parties the oppor tunity to comment on new material. Brazil’s
concern and the exchanges with the Panel and the parties over the days since that letter have
highlighted a particular aspect of the unique pro ceedings in this panel process. As a result, my
authorities have instructed me to draw another matt er to the Panel’s atten tion. The United States
notes that the Panel intends to express its views on the issue of the Peace Clause by
5 September 2003. No prior panel nor the Appellate Body has made findings on the Peace Clause.
The submissions and material provided to the Panel to date have demonstrated that the issues involved
in the Panel’s findings on the Peace Clause are fact-intensive, complex and sensitive.

While prior panels have made preliminary rulings on procedur al issues, no prior panel has
been confronted with the situation presented in this dispute. Here, the Panel will be making
substantive findings on key provisions of the covered agreements. In this connection, the
United States takes note of the Panel’s observation th at the fairness of panel proceedings may require
ensuring that the parties receive sufficient opportunity to comment on new material. 1 T h e
United States also takes note of the provis ions of paragraph 2 of Article 15 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes in which Members have agreed that
parties should have an opportunity to comment on a panel’s findings before they are final.

In this dispute, the Panel’s findings on the Peace Clause are presumably intended to be
dispositive of substantive claims and arguments of the parties for the remainder of the panel
proceedings. Because of the substantive nature of those findings, the Panel’s findings on 5 September
will need to provide the factual basis and basic rati onale underlying the findings. Both parties have a
significant interest in those findings, in terms not ju st of the ultimate conclusion reached, but also in
terms of the factual findings, rationale underlying those findings, and an understanding of the scope of
those findings.2 Accordingly, in keeping with Article 15.2 of the DSU, and in order to be fair to both
parties, the United States respectfully requests that the Panel provide Brazil and the United States with
the Panel’s 5 September Peace Clause findings in an interim form and provide the parties an
opportunity to comment on the Panel’s findings.3 The United States suggests that, in keeping with the

1 In the Panel’s letter of 19 August 2003.
2 Recent experience in the DSU with panel preliminar y rulings has demonstrated the significant effect
they can have on the parties and the course of the panel proceedings.
3 The United States assumes that the Panel will also include its fi ndings on the Peace Clause in its
interim report issued towards the end of the panel proceedings. However, at that point the findings would have
already determined the course of the remainder of the panel proceedings and it would be too late for either party
to provide comments in a timely manner that would help ensure the accuracy of the facts on which the findings
were based or to facilitate a clear understanding of the legal basis for those findings. Accordingly, the
opportunity to comment at that stage would be inadequate to preserve the rights of both parties and could

practice in other panel proceedings and this Panel’s timetable for the interim review in this dispute,
two weeks should be sufficient time to comment.

The United States would be happy to provide further elaboration or to respond to any
questions the Panel may have with respect to this request.

The United States is providing a copy of this submission directly to Brazil.

instead prejudice those rights. For the same reason, it could be perceived as circumventing the provisions of
Article 15.2 of the DSU to issue substantive findings on the claims made (and that have effect on the parties)
without an opportunity for the parties to comment prior to the findings having an effect.

ANNEX K-16

LETTER FROM BRAZIL

28 August 2003

 The Government of Brazil is in receipt of a letter from the United States dated 27 August.
Brazil notes that the US Comments to Brazil’s 22 August Rebuttal Submission were filed five hours
after the deadline of 5:30 p.m. In the covering lette r to those Comments, the United States requests
that the Panel provide the Parties with an opportuni ty to comment on an inte rim form of the Panel’s
5 September rulings regarding peace clause-related issues.

 Brazil opposes this request for the reasons stated below.

 The Panel’s ruling of 20 June 2003 revising the timetable for this dispute did so in order to
“organize [its] proceedings in an orderly, effective and efficient manner”. This 20 June 2003 decision,
in the view of Brazil, addressed the concerns of Brazil that the extra briefing and meeting proposed by
the United States on peace clause issues would not r esult in an overly lengthy delay of the resolution
of Brazil’s serious prejudice claims. To that end, the Panel established the date of September 1 for the
Panel’s decision and September 4 for Brazil to file its “Further Submission.” Those dates were later
extended to September 5 and 9 respectively pursuan t to a 30 July Panel decision to accommodate a
request of the United States for additional time to answer the Panel’s questions.

 Brazil is ready to file its Further Submissi on no later than 5:30 p.m. on 9 September.
Establishing an unprecedented “interim review” for the peace clause preliminary finding will
unquestionably delay Brazil’s filing of its Further Submission and the Second meeting of the Panel
scheduled for 7-9 October. This request will up set the balance created by the Panel’s 20 June
proceeding and negatively impact Brazil’s rights to a speedy resolution of this dispute pursuant to
DSU Article 3.3. The Panel was established more than five months ago and Brazil has yet to file its
first submission on many of its claims.

 Brazil notes further that DSU Article 15.2 prov ides an opportunity for the parties to request
the panel to review "precise aspects of the interim report prior to the circulation of the final report to
the Members". This actual text is contrary to the US statement that Article 15.2 provides Members
“an opportunity to comment on a panel's finding befo re they are final". The parties’ rights under
Article 15.2 are explicitly recognized and pr eserved by paragraph 16 of the Panel’s Working
Procedures.

 The US letter argues that the Panel must set forth its complete and full reasoning and factual
findings in its 5 September decision. Brazil notes that paragraph 20 of the Panel’s 20 June Decision
stated that it would “express its views on whether measures raised in this dispute satisfy the
conditions in Article 13 of the Agreement on Agriculture” and would “express its views in the form of
ruling...”. Brazil does not and would not presume or suggest what form the Panel’s “ruling” will or
should take. However, it is within the Panel’s discretion, as with many previous panels, to provide the
basic rulings on the preliminary issue and then to further elaborate such rulings in the final
determination.

 As the United States recognizes, there will be an opportunity for the parties to comment on
the interim report that the Panel will issue following the second meeting of the Panel with the Parties.

Brazil believes that its procedural rights will be fu lly protected by the existing procedural safeguards
provided by the interim review process. The United States has provided no legitimate reasons why its
rights would not also be protected. Both parties will have an equal opportunity to comment on any
decision by the Panel regarding the peace clause at that time.

 In sum, Brazil requests that the Panel reject the United States request to establish an interim
review process to the Panel’s 5 September ruling.

ANNEX K-17

LETTER FROM THE UNITED STATES

29 August 2003

 By letter of 28 August 2003 Brazil objects to the US request in the dispute United States –
Subsidies on Upland Cotton (DS267) that the Panel provide Brazil and the United States with the
Panel’s September 5 Peace Clause findings in an in terim form and provide the parties an opportunity
to comment on the Panel’s findings. My authorities have instructed me to submit this response to
Brazil’s letter.

 The United States has reviewed carefully the con cerns raised by Brazil in its letter. Brazil’s
objection appears solely to be based on the concern that granting this request would mean that the
parties would have time to review and provide co mments to assist the Panel in finalizing the Panel’s
findings on this key element of the dispute. Brazil expresses concern that the time for comment may
result in some shifting of the schedule for the remainder of the dispute.
1

 Brazil acknowledges that the parties have the ri ght under the DSU to comment on the Panel’s
Peace Clause findings before they are made final. The only apparent concern for Brazil is when that
right to comment can be exercised. For Brazil, the comments should only be provided when they are
too late to be effective. According to Brazil’s approach, while it is to be expected that the Panel could
alter any part of its findings in response to a part y’s comments, that alteration would come after the
Panel’s proceedings had already taken place on the b asis of the preliminary findings. Any alteration
would be unable to affect the past proceedings. The United States is unable to understand how this
could possibly mean, as Brazil asserts, that a party’ s “procedural rights will be fully protected by the
existing procedural safeguards provided by the interim review process”.

 Brazil would compound the problem by suggestin g that findings on key substantive claims
may be made in just a basic form, with none of th e underlying factual basis or legal reasoning. Brazil
asserts that would be in keeping “with many previo us panels”. Brazil’s assertion has no foundation.
No previous panel has ever been in the current s ituation, nor has any previous panel made findings
part-way through a dispute on the Peace Clause or on any substantive issue, let alone one as factually
complex with so many legal questions of first impression. The Panel’s situation is unprecedented,
thus it is no surprise that there are no preced ents on which to draw. However, there is the text of the
DSU on which to draw. As the United States explai ned in its 27 August 2003, letter, Article 15.2 of
the DSU provides the parties with a right to comme nt on findings in an interim form. Brazil argues
for an approach that would render that right largely hollow.

 The United States has difficulty perceiving the basis for Brazil’s objections. As the
United States has argued, Brazil is barred by vi rtue of the Peace Clause from pursuing most of its
claims in this dispute. It is strange then that Brazil would not want an opportunity to comment on any
finding as to whether the Panel should hear evidence and argument on Brazil’s claims.

1 However, granting the request would not appear n ecessarily to mean any ch ange in the date of
circulation of the Panel’s final report.

 Brazil has failed to present a basis for denying the parties a timely and effective opportunity
to exercise their right to comment on the Panel’s findings. Accordingly, the United States respectfully
renews its request that the Panel provide Brazil and the United States with the Panel’s September 5
Peace Clause findings in an interim form and pr ovide the parties an opportunity to comment on the
Panel’s findings.

 The United States is providing a copy of this submission directly to Brazil.

ANNEX K-18

LETTER FROM BRAZIL

29 August 2003

 The Government of Brazil is in receipt of a letter from the United States dated 29 August
responding to Brazil’s letter of 28 August. Brazil re grets the US continuation of the debate over its
unprecedented “interim review” proposal that distracts the Panel and Brazil from substantive work on
this dispute. In response, Brazil refers to the ar guments set forth in its letter of 28 August that
provides the Panel with the basis to reject the US request for a special interim review procedure.

 Brazil notes that the United States does not deny that the proposed new interim procedure
would result in additional delay. Th is is apparently not a concern to the United States. But it is a
concern to Brazil. The United States ignores the bala nce in the Panel's June 20 decision that struck
the balance protecting Brazil's rights under Article 3.3 of the DSU.

 Reviewing the Panel's decision in the Ar ticle 15.2 existing procedures will not, as the
United States claims, render the parties rights "large ly hollow." The practical purpose of the interim
review exercise under Article 15.2 is for parties to point out any particular errors of fact or citations
that the Panel may wish to correct in the final report. Thus, the "timely and effective right to
comment on the Panel's finding" can be accomplished in this case -- as Brazil suggests -- through the
use of the normal Article 15.2 procedures in the normal timeframe for making such comments.

ANNEX K-19

LETTER FROM BRAZIL
COMMENTS RE REVISED TIMETABLE

9 September 2003

1. Brazil welcomes the invitation to comment on the draft further revised timetable, as attached
to the Panel’s communication of 5 September 2003. In this respect, Brazil recognizes that the Panel
must be given all the time necessary to make the best and most objective examination of the matter
before it in order to provide the Parties to the di spute with a report founded on a sound legal basis and
an accurate scrutiny of the facts. Nonetheless, the proposed date for the second substantive meeting
with the Parties poses a difficulty for Brazil given commitments previously scheduled by members of
the legal team according to the earlier adopted tim etables. Indeed, the Brazilian team would face
serious difficulties to participate in meetings in Geneva from 12 to 19 November 2003.

2. Brazil would further recall that any adjustments to the draft further revised timetable should
take into account the time limits established in DSU Articles 12.8 and 12.9.

3. That said, Brazil would kindly request the Pa nel to examine the possibility of modifying the
date for the second substantive meeting with the Par ties. The subsequent deadlines would be adjusted
accordingly.

ANNEX K-20

LETTER FROM THE UNITED STATES
COMMENTS RE REVISED TIMETABLE

9 September 2003

In the Panel’s communication of 5 September 2003, the Panel invited the parties to comment
on the draft further revised timetable attached to the communication. My authorities have instructed
me to submit the following comments on the draft tim etable and, in addition, to request that the
further submission of the United States be due on 2 October rather than 23 September.

With respect to the draft timetable, the Unite d States notes that the Panel provides separately
for comments on answers to questions, due on 27 Oct ober, one week after the rebuttal submissions
and answers to questions. The United States appreciat es the value of an opportunity for the parties to
comment on each others’ answers to questions. Howe ver, in this case that opportunity comes at the
cost of adequate time to prepare the rebuttal subm issions and answers to questions themselves. Given
the number and complexity of issues in this di spute, and the opportunity available at the second
substantive meeting for parties to comment on each other’s submissions
1 and responses, it would be
best to dispense with the 27 October comments, an d instead have 30 October – three weeks after 9
October – as the due date for rebuttal submissions and answers to questions. The first substantive
meeting may finish as late as 9 October, leaving less than two weeks for rebuttals and answers to
questions2 if they are due on 22 October. The Un ited States notes that DSU Appendix 3 provides as a
guideline for 2-3 weeks between the first substan tive meeting and rebuttal submissions. Given the
scope and scale of argumentation that has prevailed to date, and that is likel y to continue, the United
States believes that at least the three week guide line provided for in Appendix 3 is necessary for the
parties to have adequate time to prepare their rebuttal submissions and answers.

The United States also wishes to request that it have until 2 October to prepare its further
submission. Brazil noted in its submission of 24 June 2003 that its submission due today would
include “extensive evidence”
3, and we expect that it will also include extensive new argumentation. It
is therefore likely to require significant effort and time for the preparation of a response. Brazil has
had months to prepare this submission, which is a first written submission for purposes of this part of
the proceedings. Appendix 3 provides for 2-3 weeks for a first submission of the party complained

1 The United States notes as well that comments on rebuttal submissions could be of equal importance
or value, and those will be presented at the Panel meeting.
2 The United States assumes that the questions may be at least as comprehensive at this stage as they
were in connection with the Peace Clause, and therefore require significant time and care to research, develop
and consult on the answers to those questions.
3 Brazil stated in paragraph 18 of its submission of 24 June 2003,

Consistent with the Panel’s decision of 20 June decision, and because (1) Brazil’s claim under
GATT Article XVI:3 involves export subsidies co nditionally exempt from action and (2) Brazil’s
actionable subsidy claims under ASCM Articles 5 and 6 involv e domestic support and export
subsidies conditionally exempt from action, Br azil will only present its extensive evidence in
support of those claims in its “further submission”.

against4, and the burdens imposed by this dispute cl early warrant at least a three-week response
period.

Preparing the submission in three weeks woul d likely be extremely challenging under any
circumstances. However, the timing for this submission involves unusual circumstances. Many of
the US officials involved in this dispute are atte nding the Fifth Ministerial Conference in Cancun this
week and are therefore unavailable to assist with preparation of the submission. At the same time, the
head of the US litigation team in this dispute beca me a father three weeks ah ead of schedule. As a
result, he will have limited time over the next week (at least) to prepare the US response. For all of
these reasons, the United States respectfully requests that its next submission be due no earlier than
2 October.
5

4 Indeed, in the DSU negotiations many Members have indicated that this is too short a period of time
and that the timeframes suggested in Appendix 3 of the DSU for first submissions should be reversed between
complaining parties and responding parties.
5 The United States notes that the third party submissions could then be due on 6 October.

ANNEX K-21

LETTER FROM BRAZIL
COMMENTS RE REVISED TIMETABLE

10 September 2003

 Brazil is in receipt of a letter dated 9 Se ptember 2003 from the United States commenting on
the proposed timetable and requesting to be able to file their Further Submission on 2 October.

 Brazil opposes the US request that it be grante d until 2 October to file its Further Submission
for the reasons set out below:

 First, the United States has been on notice of Brazil’s claims and arguments on the adverse
effects portion of this dispute for almost one year when Brazil filed its 27 September 2002 request for
consultations (WT/DS 267/1). The Annex to this comprehensive consultation request set forth in
detail arguments, facts, and evidence (mostly cons isting of US Government documents) that were
available to Brazil. The great majority of th ese arguments and evidence are now found in Brazil’s
Further Submission. If this information and the th ree sessions of the consultations discussing these
issues were not enough, Brazil’s First Submission at paragraphs 1-15 outlined in summary form many
of the principle arguments (and evidence) supporting Brazil’s adverse effects claims. All of these
arguments are again repeated in Brazil’s Further Submission. Pa ragraphs 26-106 of Brazil’s First
Submission also set out comprehensive facts upon whic h Brazil relies but not repeated in its Further
Submission. Thus, in view of the transparency of Brazil’s earlier submissions, the United States’
claims concerning the alleged “complexity” of this dispute as justifying more time to prepare is
somewhat disingenuous.

 Second, Brazil and the Third Parties need suffici ent time between the filing of the US Further
Submission to prepare their oral statements for the second session of the First Meeting on 7-
9 October. Providing the United States until 2 Octo ber to file its Further Submission will not provide
the Panel, Brazil, or the third parties enough time to prepare for the hearing on 7-9 October. Given the
previous practice of the United States to file its submissions six hours late (the equivalent of
unilaterally granting itself an additional working day to file each submission, and of giving Brazil one
less day to respond), the US request to file on 2 October probably means that Brazil will not be able to
review the submission until 3 October.

 Third, Brazil (and no doubt some of the thir d parties) has relied upon the long-standing date
of 7-9 October for the resumed session of the First Meeting. Brazil notes that while the United States’
letter does not ask to reschedule the date of th e resumed Second Session of the First Substantive
meeting, the effect of its request to file its Further Submission on 2 October does just that. Brazil
strongly opposes any delay in the resumed session of the First Meeting. Brazil intends to present at
least three witnesses at the resumed session - Professor Daniel Sumner, Andrew Macdonald, and an
upland cotton producer from Brazil. Each of these individuals (as well as the Brazilian delegation
travelling from Brasilia) have complicated schedules and they have for some time rearranged their
schedules to attend the hearing on 7-9 October.

Fourth, the working procedures of the DSU provide fo r 2-3 weeks for the Party complained against to
file its First Written Submission and 2-3 weeks for th e Parties to file their Rebuttal submissions. The
United States’ request to file on 2 October is beyond that maximum amount of time.

 However, in the spirit of compromise, and partic ularly in view of circumstances set out in the
fourth sentence of the last full paragraph of the US letter, Brazil could agree to an extension of time
no later than Thursday, 25 September 2003 at 5:30 p.m. Geneva time. In this regard, Brazil notes that
both the United States and Brazil will have, unde r the revised timetable for Panel proceedings,
numerous opportunities to brief the various issues in the adverse effects portion of this dispute and
thus to fully articulate, expand, and clarify their arguments and supporting evidence.

 The United States also requests that the parties be provided until 30 October to file their
rebuttal submissions. Brazil has no objection to this request but believes it is important to keep the
22 October date for answering questions intact. Un der Brazil’s proposed procedure – which was used
in the “peace clause” portion of the proceedings – the parties could use their Rebuttal Submissions as
the vehicle for commenting on the Parties’ answers to the questions.

ANNEX K-22

LETTER FROM THE UNITED STATES
RE DRAFT REVISED TIMETABLE

11 September 2003

My authorities have instructed me to res pond to Brazil’s letter of 10 September 2003,
objecting to the US request for an extension to file its Further Submission.

In this letter, Brazil suggests first that its requ est for consultations offered sufficient notice of
Brazil’s arguments that the United States does not now require sufficient time to respond to the
Brazilian Further Submission – a submission so exte nsive that it had to be divided in two for
electronic transmission, and which in addition incl uded extensive economic annexes. According to
Brazil, the consultation request and additional summaries of Brazil’s arguments render the US
reference to the complexity of the issues raised by Brazil “disingenuous.”

Brazil appears to be making the implausible s uggestions that it is possible to respond to
arguments that have not yet been written, a nd that complex issues become less complex if
summarized in advance. One need only note again the size of Brazil’s submission to conclude that
Brazil itself did not consider its previous summari es to adequately present its arguments; yet Brazil
considers that those summaries should have prov ided a sufficient basis for the United States to
prepare its response. It is a statement of th e obvious that Brazil’s 214-page Further Submission
represents the first time Brazil has set forth its de tailed arguments and evidence (including the lengthy
economic analysis found in the annexes). It is this Brazilian submission, and not anticipatory
summaries, to which the United Stat es must have the ability to res pond. Brazil’s suggestion that the
United States need not have adequate time to re spond to Brazil’s massive submission on the basis that
Brazil’s argumentation cannot, under the circumstances, be considered “complex,” strains credulity.

Brazil also objects to the US extension request on the ground that Brazil and third parties
need adequate time to prepare for the second session of the first panel meeting. As regards Brazil,
this amounts to an argument that while one week is not enough time for it to prepare for the panel
meeting, two weeks must be c onsidered sufficient for the US to respond to Brazil’s 214-page
submission and economic annexes. Apparently, Brazil considers it fair that, after having had months
to prepare its Further Submission, the amount of ti me for the US response (two weeks) should be no
greater than that provided to Brazil to prepare for the first panel meeting. While the United States
appreciates that the time for third-party submissions will be limited, this is frequently the case in
disputes given party and panel schedul es. Further, third parties are free to use the third-party session
to elaborate on their written statements.

Brazil is correct when it notes that the United St ates has not asked the Panel to postpone the
date of the first panel meeting. However, it errs when it says that the US request would require a
change in the date of that meeting. To th e contrary, the United States made its requests for
modification of the timetable in consideration of the dates of the pa nel meetings and on the
assumption that it might be difficult for the Panel to change that date in light of the panelists’ differing
schedules. Indeed, but for seeking to accommodate the panelists’ schedules by retaining the meeting
dates, the United States would have requested a longer response period appropriate to the
argumentation and evidence Brazil has submitted.

At the same time, the United States notes that Br azil has asked the Panel to postpone the date
of the second meeting. The United States has no objection in principle to this request, but would
request that it be consulted on any new dates that might be possible in light of the panelists’
schedules. Brazil is not the only one with “complicated schedules.”

Brazil also notes that Appendix 3 provides as a guideline 2-3 weeks for a responding party’s
first submission, and states that the US request excee ds that period (by two days). Brazil ignores not
only the fact that a panel is free to adjust these time frames, but that a panel is required to adjust these
time frames. Article 12.4 of the DSU states that panels must “provide sufficient time for the parties to
the dispute to prepare their submissions.” Indeed , in the past several disputes in which the United
States has been a complaining party, panels have on averag e provided five weeks for the responding
party to prepare its first written submission, twice the average called for under the DSU.
1 Article 12.4
applies fully to this proceeding, and the time request ed by the United States to prepare its submission
is more than justified.

In light of the above, and now with confirmation that Brazil’s Further Submission does in fact
contain “extensive evidence” and “extensive new ar gumentation”, as foreshadowed by the US letter
of 9 September, 2003
2, the United States respectfully renews its request that the Panel provide it until
2 October 2003, to submit its Further Submissi on. We thank the Panel once again for its
consideration of this and previous requests.

1 Indeed, of the last 23 panels to which the United States has been a party, the single shortest time
period for preparing a responding submission has been the 17 days provided in this proceeding, a marked
contrast from the over 35 days provided to responding parties when the United States has been the complaining
party.

ANNEX K-23

LETTER FROM BRAZIL

16 September 2003

 Brazil thanks the Panel for its “Proposed revision to timetable for Panel Proceedings” of
12 September 2003.

 Brazil notices that the second hearing with th e parties is scheduled for 2 and 3 December,
receipt of answers to Panel’s questions for 22 December and receipt of parties’ comments on each
other’s answers for 19 January 2004. Brazil also appreciates that establishing the timetable with the
parties, the panelists and the Secretariat requires considerable coordination.

 In light of the several changes made to the original schedule and also of the length of time
between the second hearing and the answers to quest ions from the Panel, Brazil would like to suggest
that these answers be delivered on 15 December (i nstead of 22 December) and that the parties’
comments on the answers be due on 22 December (ins tead of 19 January). This would allow for the
completion of the parties’ main substantive work still in 2003 (the next step would then be the
comments on the descriptive part).

 Furthermore, Brazil notices that Article 12.9 of the DSU establishes that “in no case should
the period from the establishment of the panel to th e circulation of the report to the Members exceed
nine months". The new proposed timetable of the Pa nel foresees that circulation of the final report to
the WTO Members will take place after 19 May, that is, more than 5 months in excess of the strict
time limit set up in DSU Article 12.9. Therefore, Brazil would stress that any changes in the schedule
should not postpone the conclusion of the proceedings.

ANNEX K-24

LETTER FROM THE UNITED STATES
COMMENTS ON REVISED TIMETABLE

16 September 2003

The United States thanks the Panel for its inv itation to comment on the draft further revised
timetable attached to its communication of 12 Septem ber 2003. My authorities have instructed me to
submit the following comments.

The new dates of December 2 and 3 for the sec ond substantive meeting are acceptable to the
United States. We note, however, that there is a pproximately one month between the receipt of the
further rebuttals (currently due November 3) and the second substantive meeting. We believe that this
one month would be better allocated for the partie s to consider and draft responses to the Panel’s
questions and prepare their rebuttal submissions. Therefore, the United States proposes that the due
date for receipt of answers to Panel’s questions be changed to Friday, 31 October 2003, and that the
due date for the rebuttal submissions be changed to Friday, 21 November 2003. This would leave
approximately 10 days before the second Panel meeting (which would be within the DSU guideline of
one to two weeks between rebuttal submissions and the second panel meeting).

There also remains some con cern with the 3 p.m. deadline for filing the US further
submission on 29 September. While we – as always – will try our best to accommodate this deadline,
we note that the time difference between Gene va and Washington (opening of business time in
Washington would be 3 p.m. Geneva time) may cause additional difficulties with respect to finalizing
the US submission in capital. We nonetheless appreciate the Panel’s understanding in this regard.

ANNEX K-25

LETTER FROM BRAZIL

17 September 2003

1. The Government of Brazil is in receipt of a letter from the United States dated 16 September
commenting on the proposed further revised timeta ble attached to the Panel’s communication of
12 September.

2. Brazil would like to express its opposition to the alterations suggested by the United States.
In our view the dates proposed by the Panel on 12 September ensure the parties will have the
appropriate amount of time to respond to the Panel’ s further questions and to elaborate their further
rebuttal submissions. Brazil notes, in particular, that between the last day of the resumed second
session of the first substantive meeting (9 Octobe r) and the deadline for delivering their further
rebuttal submissions (3 November), parties will have almost 30 days to prepare such documents. This
is more than the amount of time the United States requested on 9 September to elaborate its further
submission (previously due on 22 September).

3. Therefore, Brazil submits that parties need not be granted any extension of deadlines as
suggested by the United States. Nonetheless, were the Panel inclined to change the timetable to
accommodate the US concerns, Brazil would reiterate that any modifications in the schedule should
not result in further delays of the proceedings (w hose current timetable already exceeds by more than
five months the time limit set out in DSU Article 12.9).

ANNEX K-26

LETTER FROM THE UNITED STATES

17 September 2003

My authorities have instructed me to res pond to Brazil’s letter of 16 September 2003,
suggesting that the parties’ answers to the Panel’s questions related to the second substantive meeting
be due 15 December instead of 22 December, and that the comments on these answers be due
22 December instead of 19 January 2004. The United States opposes these suggestions.

As it currently stands, the issues in this dispute are both wide-ranging and complicated.
Therefore, it is unrealistic to expect that the parti es would need only 10 days to answer the Panel’s
questions, and only 7 days to comment on each other’s answers. Moreover, Brazil’s sole justification
for its suggestion, i.e., that this “would allow for the completion of the parties’ main substantive work
still in 2003,” is a non sequitur, particularly in light of the fact that Brazil does not object to the rest of
the Panel’s further revised timetable.

ANNEX K-27

LETTER FROM THE UNITED STATES

23 September 2003

As the Panel may be aware, hurricane Isabel hit the mid-Atlantic region of the East Coast of
the United States last Thursday and Friday, bringing with it significant flooding, property damage,
and extended loss of electricity to hundreds of thousands of homes and businesses. The hurricane
forced all US Government offices in the Washington, D.C., area to be closed on Thursday and Friday,
18 and 19 September 2003. Further, several memb ers of the US delegation were without power
through the weekend and were unable to access mate rials for this dispute. During this time the
United States delegation was unable to work on the US further submission that is due on
29 September. As result, the United States has been significantly impeded in its preparation of that
submission. At the same time, we are mindful of the October 7 through 9 dates for the next meeting
with the Panel.

Accordingly, the United States would like to request a modification of the deadline for
submitting its further submission so that it would be due on Thursday, 2 October. In order to provide
additional time for the Panel and the parties to re view the third party further submissions, currently
scheduled to be submitted on Friday, October 3, th e deadline for these submissions could be changed
to the opening of business on Monday, 6 October 2003.

ANNEX K-28

LETTER FROM BRAZIL

23 September 2003

 The Government of Brazil is in receipt of a letter from the United States dated 23 September
asking for a further extension of time until 2 October 2003 to respond to Brazil’s Further Submission.
The most recent US request for an extension of tim e would mean that the Panel, Brazil, and the Third
Parties would have only two working days – Friday 3 October and Monday 6 October -- to review and
draft an oral statement in response to the US Fu rther Submission. Brazil would have no working days
to review the numerous third party submissions.

 The Panel must balance out the rights of Br azil and the Third Parties with those of the
United States. The United States has been in r eceipt of Brazil’s Further Submission for over two
weeks. The United States will have a number of opportunities, including in its 7 October Oral
Statement and in answering questions posed by the Panel, to clarify and expand on its responses to
issues raised in Brazil’s Further Submission. Un der these circumstances, Brazil requests that the
Panel maintain the current schedule requiring the United States to provide its Further Submission on
29 September 2003.

ANNEX K-29

LETTER FROM BRAZIL

2 October 2003

As the Panel may be aware, for the sixth c onsecutive time in the present proceedings the
United States failed to deliver a document by the time expressly determined by the Panel in the
Working Procedures and constantly reiterated to th e United States in specific communications of the
Panel. Instead of abiding by the 5h30 p.m. (Gen eva time) deadline, the United States delivered the
electronic version of its Further Submission ar ound 11h45 p.m. on 30 September 2003, again more
than 6 hours after the deadline. No hard copy of the document, also due on the same day by
5h30 p.m., was available to Brazil before 1 October.

Brazil will not repeat here the whole set of arguments showing the prejudices and obstacles
caused by the US tactic to the rights of Brazil. We note however that this sixth delay is particularly
egregious given the fact that the Panel provided th e United States with two separate extensions of
time to prepare its Further Submission. Therefore, Brazil cannot at this time only ask the Panel to
take note of the problem and to encourage the Un ited States to respect the deadlines. After six
consecutive and totally unjustifiable delays, a more compelling action by the Panel appears to be
necessary.

The strict observance of the dead lines is a centerpiece of any pro cedurally fair proceedings in
all legal systems where the due process principle is expected to apply. Consequently, disrespect of
the deadlines constitutes a fundamental breach of due process requirements, undermining the
procedural fairness in the conduct of the examinati on of the matter in dispute. In other words,
deadlines cannot be taken lightly. This is reinfo rced by DSU Article 12.5, which states: “Panels
should set precise deadlines for written submissions by the parties and the parties should respect those
deadlines.”

 In WTO dispute settlement procedures a Panel, together with the Appellate Body, must act as
the guardian of the procedural fairn ess and, in order to act in this capacity, it is accorded the authority
and discretion to establish its own working pro cedures, in addition to those set out in DSU
Appendix 3, as recognized by the Appellate Body.
1 The working procedures are, in effect, the means
by which a Panel exercises its authority and discre tion to ensure that due process is respected and
parties to the dispute have equal opportunities of defense. Brazil is fully aware that the term “working
procedures” has been interpreted differently by WT O Members, but it is undeniable that the setting
out and enforcement of deadlines is within the bounda ries of the Panel’s authority to establish its own
working procedures.

In view of the fact that Brazil’s rights have been systematically impaired by the US contempt
of the established rules, and taking into considera tion the Panel’s authority to set up procedural rules
to guarantee the respect for due process requirements, Brazil requests the Panel to determine that in
the next steps of the present proceedings any unjustif ied delay in document delivery by the US results
in such document being disregarded by the Panel. In addition, Brazil requests that the Panel reflect

1 See for instance Australia – Measures Affecting Importation of Salmon (DS18), Report of the
Appellate Body, para. 272.

each of the violations of the working procedures by the United States in the factual section of its Final
Report so that the record of misconduct may be available to the full WTO Membership.

ANNEX K-30

LETTER FROM THE UNITED STATES

6 October 2003

 The United States received on Friday, 3 October 2003, a copy of the letter to the Panel from
Brazil dated 2 October 2003, and my authorities have instructed me to submit this reply. The
United States regrets that Brazil once again distr acts the Panel and the United States from the work
required to prepare for the second session of the first panel meeting.

 The United States takes seriously the time lines established by the Panel and has expended
considerable resources and dedicated tremendous personnel time and effort to accommodate each of
them.
1 As a result, the United States has filed each of its submissions on the date specified by the
Panel. At the same time, the Panel will appreci ate that the issues are not only complicated and
difficult, but that there are a very large number of them – and that the materials that Brazil has
submitted are voluminous.

 As the complaining party in this dispute, Br azil has had the advantage of months and months
in preparing its case far in advance.
2 Brazil has, however, consistently sought to deny to the
United States sufficient time to prepare its ow n submissions, and Brazil’s letter of last week
regrettably continues an approach it appears to have adopted at the beginning of this dispute: to
employ procedural tactics in an attempt to reduce the material and arguments that the United States
could submit to the Panel to respond to Brazil’s argumen ts, to correct factual errors by Brazil, and to
explain the legal inaccuracies and omissions committed by Brazil. Those procedural tactics include in
particular seeking imbalances between itself and the United States in the time provided to prepare
submissions. These imbalances have been manifest from early in this dispute, as Brazil has
simultaneously been submitting extraordinarily le ngthy and complicated submissions and been
resisting every effort of the United States to ensure that, as provided by Article 12.4 of the DSU, “the
panel ... provide sufficient time for the parties to the dispute to prepare their submissions.”

 The United States recalls the very first example of Brazil’s approach. During the
organizational meeting Brazil objected to the US requ est that the time for the first US submission be
increased beyond the two weeks contemplated in the Pa nel’s draft timetable of 27 May. In that same
meeting, however, Brazil objected to the suggestion that it have less than two weeks after filing its
first submission to submit the executive summary of that submission. As the United States
commented at the time, it seemed implausibl e that the United States could prepare a substantive
response to a submission in two weeks if Brazil was unable to prepare a summary of that submission
in less than that time. Brazil’s attempt to hold th e United States to a two-week period to reply to the
first Brazilian submission is partic ularly telling given that, during that organizational meeting, the
Panel had not yet decided to bifurcate the parties’ initial submissions. Brazil thus must have hoped to
force a response in two weeks to the over 350 pages of material contained in both its first submission
(24 June 2003) and in its further written submission (9 September 2003).

1 The United States also wishes to note that it arranged with the Brazilian Mission in Geneva to
transmit a copy of its Further Submission directly to Brasilia upon filing in order to enable the Brazilian
authorities to begin reviewing the document as soon as possible. The United States wishes to take this
opportunity to express once again its thanks to the Brazilian Mission for its courtesy and cooperation in this
connection.
2 The document “properties” of Brazil’s further submission to the Panel suggest quite clearly that
Brazil began preparing its submission in April of 2002 -- i.e., more than a year before filing it.

 The exchange at the organizational meeti ng was only the first example of a Brazilian
approach to this dispute that combines extremely le ngthy material with procedural inflexibility. The
most recent example was Brazil’s unwillingness to contemplate an extension for the filing of the US
Further Submission in response to the circumst ances in Washington, D.C., brought about by
Hurricane Isabel (letter of 23 September 2003).

 As the United States noted in its letter of 11 September 2003, the timetable that the Panel has
established in this dispute for the filing of the US submissions are much shorter than the amount of
time that has been provided to other WTO Members.
3 The length and complexity of Brazil’s
submissions makes it increasingly difficult to consider that the United States has had sufficient time to
prepare its submissions or that the United Stat es does not suffer prejudice in this proceeding as a
result.4

 It is also difficult, in the circumstances of this dispute, to credit the Brazilian suggestion that it
is Brazil that has suffered an “impairment” of its “rights” when the United States has filed each of its
written submissions on the date specified by the Panel. Brazil’s sole complaint is with the time, not
the date, of filing. There is certainly no basis (and indeed Brazil has not suggested one) for Brazil’s
astonishing suggestion that the Panel should not consid er the views of the United States in the future.
Brazil’s suggestion is particularly startling in lig ht of the numerous occasions on which Brazil has
made extra submissions to the Panel that were nowhere provided for in the Panel’s working
procedures. Brazil appears to believe that it ma y ignore the Panel’s working procedures at its
convenience.5

 Brazil’s suggestion that “the Panel reflect each of the violations of the working procedures by
the United States in the factual section of its Final Report” continues Brazil’s one-sided approach to
presenting material in these proceedings. First, of course, there is no basis for Brazil’s
characterization of the proceedings to date nor is th ere any basis for Brazil to seek to use the Panel’s
report6 for Brazil’s own purposes. Second, the Unite d States notes that Brazil carefully seeks to
censor out any reference to Brazil’s disregard for th e Panel’s working procedures. Third, Brazil also
would appear to want to avoid any record of th e US responses to Brazil’s allegations, an approach
which would seem to be in keeping with Brazil’s attempts throughout this proceeding to limit any
material that might refute Brazil’s flawed claims.

 In conclusion, the United States would like to th ank the Panel for its work to date on the many
issues presented by this dispute. We look forw ard to our discussions of the parties’ further
submissions this week.

 The United States is providing a copy of this letter directly to Brazil.

3 The United States noted then that in the most recent 23 panel proceedings to which it had been a
party, the single shortest time period for preparing a responding submission has been the 17 days provided in
this proceeding -- roughly one-half the average time period that respondents had been given when the
United States was the complaining party.
4 The United States would also like to take this opportunity to thank the Panel for agreeing to extend
the deadline for the rebuttal submissions; we would hope that this extended time will help in the completion of
that submission.
5 The United States has to date in this dispute deliberately refrained from requesting that the Panel
disregard Brazil’ s extra-procedural material.
6 The purpose of the Panel’s report is supposed to be to help resolve the dispute in accordance with the
terms of reference for the Panel, and the content of the re port is specified in Articles 12.7 and 19.1 of the DSU.
Brazil neglects to refer to these provisions.

ANNEX K-31

LETTER FROM THE UNITED STATES

14 October 2003

 As discussed during the second session of the first panel meeting, the United States is
providing in the attachment a written description of materials relating to Dr. Sumner’s model that
Brazil has agreed to provide to the Panel and the United States. The United States looks forward to
receiving these materials at Brazil’s earliest opportun ity, with a view to permitting the United States
to undertake its review of these materials in a timely fashion and without delay.

 The United States is also providing in the att achment, as agreed, the two remaining exhibits
referred to in its opening statement at the second session of the first panel meeting.

ATTACHMENT

Request from the United States to Brazil

 Please provide the following information relating to the model used by Dr. Sumner in his
analysis presented in Annex I to Brazil’s further submission:

(a) Electronic copies of the actual models used for the baseline and each of the seven scenarios
described in Annex I.

(b) Printed copies of the exact equation specifica tions used for the baseline and for each of the
seven scenarios described in Annex I, including all parameter estimates. (If no such printed
copies currently exist, please develop and provide.)

(c) Documentation of all adaptations to the original FAPRI modelling system made or used by
Dr. Sumner for his analysis presented in Annex I. (If no such documentation currently exists,
please develop and provide.)

ANNEX K-32

LETTER FROM BRAZIL

5 November 2003

 In a letter to the Panel dated 14 October 2003, the United States requested from Brazil
electronic and documentary information concerning Professor Sumner’s econometric model (items a,
b and c of the Annex).

 In order to collect and compile that informa tion, Professor Sumner, at the request of Brazil,
has been working diligently to provide the Unite d States with the “printed copies” of the exact
equation specifications in paragraph (b) of the Anne x and the “documentation of all adaptations to the
original FAPRI modelling system made or used by Dr. Sumner for his analysis” as requested in
paragraph (c). This process is now about to be completed and Brazil expects to provide the
United States and the Panel with this information early in the week of 10 November.

 As regards the request in paragraph (a) of the Annex for electronic copies of the
FAPRI/CARD model used by Professor Sumner, Professor Sumner has contacted Professor Bruce
Babcock of the Centre for Agricultural and Rural Development at the Iowa State University, which
“owns” the FAPRI model. You will realize by th e attached exchange of correspondence between
Professor Sumner and Professor Babcock, that “[they] are unable to respond to your request for a
simple ‘electronic copy’ of the FAPRI model used for the baseline and each of the seven scenarios
described in Annex I because they literally do not exist”.

 Brazil notes, however, the last paragraph of Professor Babcock’s letter which provides as
follows:

“[W]e would be willing to run USTR-requ ested scenarios using the FAPRI/CARD
modeling system along with the operational a dditions and adaptations that comprise
[Professor Sumner’s] model of cotton polic y. Our researchers would have to be
compensated for the time it would take to run the model and we would have to work
out the timing and other logistics of running the model”.
It is thus our understanding th at this paragraph means that the “electronic version” of
the model used by Professor Sumner is presently available for use by the US
Government upon coordination with FAPRI staff."

ANNEX K-33

LETTER FROM THE UNITED STATES

11 November 2003

 The United States is in receipt of Brazil’s le tter of 5 November 2003, in which it indicates
that it expects to submit during the week of Novemb er 10 certain evidence relating to the analysis of
Dr. Sumner presented in Annex I to Brazil ’s furthe r submission. My authorities have instructed me
to submit this response.

 The United States is disappointed that Brazil claims not to be able to provide electronic copies
of the actual model used in that analysis. In our experience, it is common for electronic copies of
econometric models to be disclosed to substantiate claimed model results, even in the context of WTO
dispute settlement. Brazil’s failure to make elect ronic copies available will hinder the ability of the
Panel and the United States to analyze Dr. Sumner’s claimed results.
1

 Brazil states that it will be providing printed copies of the exact equation specifications and
documentation of all adaptations to the original FA PRI modelling system. This evidence is expected
to be substantial and complex. Brazil has previ ously stated that its economic model "is built upon
hundreds of linear supply, demand and related equa tions for major commodities - and in particular
upland cotton - in the United States" and that "[t]he se equations are linked to a system of equations
covering the demand and supply of upland cotton internationally". 2 This substantial new evidence
relates to the core of Brazil’s case relating to price suppression, as evidenced by the frequent
invocation of those results in Brazil’s further s ubmission, at the second session of the first panel
meeting, and in Brazil’s answers to the Panel’s further questions.

 We note that the Panel and the United States ha d asked for this evidence during the first panel
meeting, nearly five weeks ago. The United Stat es expected this eviden ce to be submitted by the
conclusion of the first panel meeting, or, at the latest, shortly after the United States provided Brazil
with a written version of the information requested . Brazil, however, has now indicated that it will
submit some of this new evidence mere days before the parties’ rebuttal submissions are due.

 The United States notes that, pursuant to paragra ph 13 of the Panel’s working procedures, the
United States must be provided sufficient time to respond in writing to any new evidence submitted
by Brazil. This paragraph reflects the Panel’s obligation under Article 12.4 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes to "provide sufficient time for the parties
to the dispute to prepare their submissions." Had Brazil presented that new evidence relating to
Dr. Sumner’s analysis no later than during th e first panel meeting on 7-9 October 2003, as

1 The offer by FAPRI to run simulations at the Un ited States request for a fee is not an acceptable
substitute. It is unprecedented that a party to a dispute should put another party in the position of not being able
to gain access to that party’s evidence, and its only reco urse is to pay a private entity in order to gain even
partial access.
2 See Brazil’s Further Submission, para. 218 ("The econometric model is built upon hundreds of linear
supply, demand and related equations for major commodities - and in particular upland cotton - in the
United States, but also accounts for regionally varying supply and demand responses in the United States. These
equations are linked to a system of equations covering the demand and supply of upland cotton
internationally.") (emphasis added).

contemplated by the Panel’s working procedures, under the current timetable the United States would
have been afforded nearly 6 weeks to examine and respond to that evidence.
3

 Given the anticipated complexity of the information and the fact that it will not be provided in
electronic form, the United States will need sufficien t time to be able to analyze and respond to
Brazil’s complex and substantial new evidence. To this end, and on the assumption that Brazil meets
its expectation of submitting that evidence early this week, the United States would request that the
rebuttal submissions be due on 22 December 2003, the current date for answers to panel questions.
Remaining items on the timetable set out by the Panel could then be rescheduled accordingly.
Adjusting the timetable in light of Brazil’s late submission of new evidence is necessary to preserve
US rights of defence by providing sufficient opportuni ty to analyze and critique that new evidence as
well as by allowing the United States to present its res ponse to that evidence in its rebuttal submission
and at the second panel meeting.
4

3 Had Brazil presented this evidence as part of Annex I to its further submission of 9 September 2003,
moreover, the United States would have been afforded 10 weeks to review and respond to that evidence.
4 See Working Procedures for the Panel, para. 7 ("Formal rebuttals shall be made at a second
substantive meeting of the Panel. . . . . The parties sha ll submit, prior to that meeting, written rebuttals to the
Panel.") (28 May 2003).

ANNEX K-34

LETTER FROM BRAZIL

12 November 2003

 The Government of Brazil is in receipt of a letter from the United States dated 11 November
requesting yet another lengthy delay in this panel proceeding. Brazil requests the Panel to reject this
request and maintain the current schedule incl uding the deadline for rebuttal submissions of
18 November and the second Panel meeting on 2-3 December for the reasons set forth below.

 The United States’ letter attempts to leave the impression that there will be a tremendous
amount of new evidence that will be provided to them in written form in response to their request of
14 October. This is incorrect. The bulk of the requested information is in electronic form which has
been available for the United States to examine, revi ew, and use since 5 November. Attached to this
letter are (1) Professor Sumner’s written adaptations to the FAPRI model for each of the seven
scenarios described in Annex I to Brazil’s Furthe r Submission (Exhibit Bra-313), and (2) Professor
Sumner’s summary description of the equations in the FAPRI domestic model and the CARD
international cotton model (Exhibit Bra-314). As the Panel can see from Exhibit Bra-313, this
document reflecting Professor Sumner’s adaptations is not lengthy and does not contain hundreds of
equations as the US letter suggests. The “hundreds of equations” referred to in the US letter are those
of the FAPRI/CARD model used by Professor Sumner and summarized in Exhibit Bra-314. Brazil
believes that the US econometric experts who deal with the FAPRI model on a regular basis will not
have any difficulty understanding Exhibit Bra-313. Professor Sumner, of course, will be prepared to
provide any additional follow-up information and clarifications, as necessary, at the Panel meeting on
2-3 December for which he has made arrangements in his schedule to attend.

 Brazil has been informed by Professor Sumner that he is working as quickly and thoroughly
as he can in completing this work in addition to his other many responsibilities as the Director of the
Agricultural Issues Centre at the University of Ca lifornia at Davis. Professor Sumner indicates he
expects to be able to provide the relevant equati ons for the CARD international cotton model by the
close of business on 13 November. This will comp lete Brazil’s response to the US request of
14 October. Because Professor Sumner made no adaptations to the CARD international cotton model,
the information to be provided will simply be th e equations for a model that is much-used and well-
known to USDA economists.

 Brazil notes that the United States waited until 14 October to file its request for this
information from Brazil. Brazil’s letter of 5 N ovember provided the United States with an offer of
complete access to the electronic version of the exact same model used by Professor Sumner. The
United States then waited almost a week to reply to Brazil’s 5 November lette r with full knowledge
that the date for the Further Rebuttal Submission w as 18 November. It appears as if the United States
has not used the week since 5 November to take adva ntage of its ability to review and analyze the
complete electronic version of everything that Profess or Sumner has done in his analysis. As the last
paragraph of Professor Babcock’s letter of 31 Oct ober stated, upon request, the United States will be
provided full and immediate access to the FA PRI and CARD models and Professor Sumner’s
adaptations that are available in electronic form.

 Contrary to the US unsupported assertion, Brazil has not “put the United States in the position
of not being able to gain access to that party’s evidence.” Rather, Professor Babcock’s offer provides

the United States with complete ac cess to the electronic version of all of the equations and analysis
performed by Professor Sumner and the United States had access to them since 5 November.

 Brazil further notes that it was required to use the FAPRI/CARD model for a fee, that neither
Brazil nor Professor Sumner owns or can copy this model, and as explained by Professor Babcock,
that there is no “written version” of the FAPRI model. The United States can, however, make
arrangements with FAPRI officials to use the model and it would certainly not be unprecedented for
the United States Government (or other governments or private entities) to compensate FAPRI for the
use of the FAPRI model.

 Brazil notes that USDA economists and officials use the FAPRI model frequently and are
well aware of its parameters (for which the USDA provided it with its highest honorary award in
2002). Therefore, it will not be difficult for the United States to quickly analyze Professor Sumner’s
limited adaptations to the standard FAPRI/CARD m odels with which they are familiar. Brazil also
notes that the FAPRI project is financed in large part by the US Congress

 With respect to the existing schedule, Brazil considers that there is no legal or due process
basis for the Panel to again delay the proceedings . Indeed, the existing schedule has considerable
flexibility to provide the United States with more than sufficient time to prepare any rebuttal of
Professor Sumner’s analysis. In order to avoid furt her delay, Brazil suggests that the United States
and Brazil file their rebuttal submissions on 18 N ovember and the Panel hold the second meeting of
the Panel with the Parties on 2-3 December as originally scheduled.

 If the United States determines that it does not ha ve sufficient time to (a) use the exact same
FAPRI/CARD electronic model as adapted by Professor Sumner (as offered by Professor Babcock)
and (b) to analyze Professor’s Sumner’s written equa tions and explanations of adaptations to the
FAPRI model by 18 November, then Brazil would have no objection to the United States providing its
rebuttal to Professor Sumner’s analysis by 28 November, a few days prior to the Panel meeting on 2-3
December. This rebuttal, however, would be in addition to the 18 November Rebuttal on the
multitude of other issues in this proceeding that do not relate in any way to Professor Sumner’s
analysis.

 Brazil notes that the current schedule is also flexible enough to allow for rebuttal and counter-
rebuttal by the Parties of the US analysis of Professor Sumner’s results, i.e., until the 22 December
and 19 January deadlines for answering and th en commenting on the Answers to the Panel’s
Questions. Of course, if the Panel determines that the United States and Brazil need additional time to
comment on the econometric models or other issues, th en the Panel has the discretion to allow for this
for periods after 19 January 2004.

 Brazil believes that this proposal will protect the United States’ and Brazil’s due process
rights without yet again delaying this proceeding. It will allow the Panel and the Parties to maintain
their current travel and business schedules which have now been in place for some time. Brazil notes
that its delegation has scheduled a number of m eetings and travel with a view towards the 2-
3 December meeting date.

 Finally, Brazil stresses that any changes in the schedule must not further delay the date of
issuance of the final report to the parties, since the time limits of DSU Articles 12.8 and 12.9 have
already been breached.

ANNEX K-35

LETTER FROM THE UNITED STATES

13 November 2003

 My authorities have instructed me to res pond to Brazil’s letter of 12 November 2003, in
which Brazil objects to the US request for an extens ion of time for the filing of rebuttal submissions
in this dispute. Brazil ignores the Panel ’s work ing procedures and the arguments in our letter of
11 November 2003, in dismissing the possibility that the United States would be prejudiced if the
briefing schedule were not adjusted to take into account Brazil’s decision to submit new evidence
relating to the analysis of Dr. Sumner nearly five weeks after the conclusion of the first panel meeting.
Brazil’s 12 November letter cannot change the fact that United States will be prejudiced if it is not
given adequate time to analyze the materials Brazil is only now providing.

 First, Brazil simply does not discuss either the requirements of DSU Article 12.4, which
provides that "[i]n preparing the timetable for the panel process, the panel shall provide sufficient time
for the parties to the dispute to prepare their subm issions," or the provisions of paragraph 13 of the
Panel’s working procedures, pursuant to which the United States must be provided sufficient time to
respond in writing to any new evidence submitted by Brazil.

 Second, Brazil states that it "would have no objec tion to the United States providing its
rebuttal to Professor Sumner’s analysis by 28 Nove mber, a few days prior to the Panel meeting on 2-
3 December" and that "the current schedule is also flexible enough to allow for rebuttal and counter-
rebuttal by the Parties of the US analysis of Pr ofessor Sumner’s results, i.e., until the 22 December
and 19 January deadlines for answering and th en commenting on the Answers to the Panel’s
Questions". The United States cannot agree to this proposal. Indeed, this suggestion by Brazil would
make it appear that Dr. Sumner’s analysis w as an issue of secondary importance to Brazil’s
allegations, such that the US response is not impo rtant to the Panel’s evaluation. The reality, of
course, is that Brazil’s main economic conclusions rest on Dr. Sumner’s analysis. If not, there would
have been no reason for Brazil to reference that analys is repeatedly in its further submission, to attach
Dr. Sumner’s analysis as a 52-page annex to that submission, to call upon Dr. Sumner to deliver a
16-page statement as part of its opening statement and a four-page statement as part of its closing
statement at the second session of the first panel mee ting, nor to continue referencing Dr. Sumner’s
analysis in its answer to the Panel’s further questions . It is simply not credible for Brazil to suggest
that no prejudice would result to the United States if it were compelled to prepare and file a rebuttal
submission without having had sufficient opportunity to examine and critique Brazil’s new evidence
relating to the very model which allegedly underlies Dr. Sumner’s analysis.

 Third, Brazil has also indicated that it will file even more new evidence on 13 November
relating to Dr. Sumner’s analysis. In addition to the prejudice that would result from not being able to
prepare our rebuttal submission and prepare for the second panel meeting with sufficient time to
analyze this new evidence, the United States not es that it has already been prejudiced because
preparation of the US rebuttal submission over the last several weeks has been based on the materials
which we have had at hand, that is to say, neith er the materials included with Brazil ’s 12 November
letter nor those it says will be forthcoming on 13 No vember. Elements of the US rebuttal could be
superseded or confirmed on the basis of Brazil’s ne w information. Thus, without an extension of
time, the United States will be forced either to re ply to Dr. Sumner ’s analysis in the absence of
complete information or to defer responding to the centrepiece of Brazil’s case.

 Fourth, Brazil is in error when it claims that "the United States waited until 14 October to file
its request for this information from Brazil". In fact, both the United States and the Panel Chairman
verbally requested access to Brazil’ s model on 7 October 2003, at the conclusion of opening
statements on the first day of the second session of th e first panel meeting. Brazil has provided no
explanation for why it should have delayed providing any information in response to that request for
nearly five weeks, which merely related to the very model that Dr. Sumner asserts to have employed.

 Fifith, Brazil also claims that "Brazil’s letter of 5 November provided the United States with
an offer of complete access to the electronic ve rsion of the exact same model used by Professor
Sumner" and "Professor Babcock’s offer provides the United States with complete access to the
electronic version of all of the equations and analysis performed by Professor Sumner and the
United States had access to them since 5 November " (italics added). Presumably, Brazil is referring
to its suggestion that the United States pay to run the model employed by Brazil
1, since FAPRI did not
offer to disclose – either to the United States or the Panel – the equations underlying that model,
whether for pay or otherwise (and we assume Brazil was also offering to the Panel this opportunity to
pay to obtain Brazil’s evidence). As stated in th e US letter of 11 November, Brazil’s suggestion that
the responding party (and presumably the Panel) must pay for evidence on which the complaining
party so heavily relies is unprecedented.

 Sixth, Brazil also claims that "it will not be diffi cult for the United States to quickly analyze
Professor Sumner’s limited adaptations to the stan dard FAPRI/CARD models with which they are
familiar." If it is the case that Professor Sumner has made only "limited adaptations to the standard
FAPRI/CARD models," a claim we are not in a pos ition to confirm, then again the question arises
why Brazil should have delayed five weeks in providing these new materials. Presumably, Professor
Sumner knew of and had documented those adaptations prior to submitting his analysis to the Panel as
part of Brazil’ s further submission on 9 September.

 The United States respectfully requests the Panel to defer the parties’ rebuttal submissions as
set out in its letter of 11 November 2003. The United States is providing a copy of this letter directly
to Brazil.

1 See Brazil’s Letter of 5 November 2003, p. 2 (quoting FAPRI letter as saying that FAPRI "‘would be
willing to run USTR-requested scenarios using the FAPR I/CARD modeling system along with the operational
additions and adaptations that comprise [Professor Su mner’s] model of cotton policy. Our researchers would
have to be compensated for the time it would take to run the model and we would have to work out the timing
and other logistics of running the model.’").

ANNEX K-36

LETTER FROM BRAZIL

13 November 2003

 Brazil is in receipt of a letter from the United States dated 13 November. Brazil reiterates its
request that the Panel adhere to the existing schedule along with the suggested modifications proposed
by Brazil in its letter of 12 November. Brazil responds to the numbered paragraphs of the US
13 November letter below using the same paragraph numbers.

 First, Brazil notes that with respect to DSU Article 12.4, the normal amount of time for a
rebuttal submission set out in Annex 3 of the DSU is 2-3 weeks from the date of the First Substantive
meeting. The Panel in this case provided the par ties with a period of six weeks to prepare rebuttal
submissions. Based on Brazil’s suggestion that the United States have until 28 November to prepare a
rebuttal on a single aspect of Brazil’s ev idence, the United States will have had 23 days (from
5 November or more than three weeks) to examine, use, and analyze the full electronic version of
everything that Professor Sumner examined. In addition, the United States would have 16 days from
12 November to examine Professor Sumner’s writte n adaptations to the FAPRI/CARD model and
15 days (from November 13) to examine the full CARD in ternational cotton model. All of these time
frames either exceed or are within the 2-3 week pe riod for rebuttal submissions set out in Annex 3 to
the DSU. Therefore, there is no basis for the Unite d States to claim any violation of either its due
process rights or of DSU Article 12.4.

 Second, Professor Sumner’s analysis is not the “centrepiece” of Brazil’s adverse effects case
that the United States claims. Brazil has placed an enormous amount of evidence before the Panel
that exists independently of Professor Sumner’s an alysis. Brazil has repeatedly emphasized in this
dispute that Professor Sumner’s analysis confirms econometrically what common sense and the
overwhelming body of other evidence already conc lusively demonstrates. The Panel need only
examine paragraph 105 of Brazil’s Further Submis sion to appreciate this point. Even Professor
Sumner’s econometric analysis is only one of many such analyses of the impact of US upland cotton
subsidies that is referenced in Brazil’s submissi ons. Professor Sumner has functioned for Brazil in
these proceedings as a dual expert – as one who is expert in US subsidy programs and the US
agricultural system, as well as an expert in econometric analysis.

 Third, Brazil attaches as Exhibit Bra-315 the doc umentation for the CARD international
cotton model.
1 This model is well-known to USDA ec onomists and has not been changed for
Professor Sumner’s analysis. Therefore, this information will not be “new” to the United States or is
something that it could not otherwise have already anticipated in preparing their arguments.

 Fourth, the United States did not provide in wr iting, exactly what evidence it wanted from
Professor Sumner until 14 October. Brazil provided access to the complete electronic version of
Professor Sumner’s analysis – which only exists in electronic form – on 5 November. This was not
five weeks after receipt of the US request as the US claims. The additional information provided on
12 and 13 November required Professor Sumner to expend considerable amount of time. His busy

1Brazil is also providing herewith an electronic version of the CARD international cotton model via
email.

schedule at the University of California at Davi s as well as previous speaking commitments posed
additional difficulties in completing this assignment.

 Fifth, the United States again demonstrates that it has made no efforts to take advantage of the
offer to gain access to everything that Professor Sumner did and analyzed, which is contained in the
electronic version at the University of Iowa in the ca re of Professor Babcock. It appears to Brazil that
the United States’ conduct suggests it may be more in terested in delaying this proceeding than in
gaining access to Professor Sumner’s analysis.

 Sixth, the United States claims that it has only a small amount of time to change their rebuttal
submission. Brazil notes that on 24 June 2003, it filed a lengthy submission after only being given
4 days notice of what it was required to file. Brazil, at great effort, met that deadline. Further, the
additional ten days proposed by Brazil (until 28 November) provide the United States with an
opportunity to react to and respond to Professor Sumner’s documents delivered on 12 and
13 November. The United States will have additional time to prepare further responses for their oral
statement on 2 December. Finally, as Brazil’s 12 November letter indicated, both Brazil and the
United States will have until 22 December and 19 Janua ry to file additional an swers to questions and
comments relating, inter alia, to the econometric models at issue in this dispute.

 In conclusion, the Panel has to balance the right of the United States to have sufficient time to
prepare a rebuttal to Professor Sumner’s analysis with Brazil’s right to obtain a timely panel decision.
Brazil believes that its suggestion to provide the Un ited States with an additional 10 days to prepare
its rebuttal – until 28 November – is an appropriate result which is fair and protects each of the
parties’ due process rights. However, the request by the United States for another five weeks to
prepare their rebuttal and to delay this proceeding by at least as much time, if not more, is grossly out
of proportion. Brazil requests the Panel to avoid yet another long delay in these proceedings.

ANNEX K-37

LETTER FROM THE UNITED STATES

18 December 2003

In a communication dated 8 December 2003, th e Panel afforded to the United States the
opportunity to respond by 18 December 2003, to the request that Brazil had made through the Panel
for certain information in Exhibit BRA-369. 1 The United States has completed work on 3 electronic
files containing approximately 135 megabytes of re quested data related to the production flexibility
contract payment era, which are being transmitted with this letter. Work on the data files relating to
the direct and counter-cyclical payment era is c ontinuing, and the United States is endeavouring to
provide this data by close of business Friday, 19 December.

However, as the United States preliminarily ad vised Brazil and the Panel at the second panel
meeting, the release of planted acreage informatio n associated with a particular farm, county, and
state number is confidential information that cannot be released under US domes tic law, in particular
the Privacy Act of 1974.
2 This is consistent with the positi on of the United States in Freedom of
Information Act 3 appeals raising this issue. One such decision is attached as Exhibit US-104. 4
Although the United States cannot provide planted acr eage information associated with an individual
farm, in an effort to be as fully responsive as po ssible, we are providing, for all programme crops and
for each marketing year: (1) planted acreage data aggregated for all cotton farms and (2) farm-level
planted acreage data without any fields that could identify the particular farm.

The United States is providing all of the pieces of data requested by Brazil in data files
organized as follows:5

First, a file with aggregate data for yields, bases, cropland, and
plantings for all “cotton farms” for all programme crops as defined in
the data request, using three categories: (1) farms with “cotton base”
but no cotton plantings; (2) farms with cotton plantings but no
“cotton base,” and (3) farms with cotton plantings and “cotton base.”

Second
, a farm-by-farm file (with pa rticular farm identification
information) with all of the requ ested data (plus additional data
regarding payment quantities) but not including planted acres and
cropland.

1 See Exhibit US-102.
2 See 5 USC 552a(b) (Exhibit US-107).
3 Exhibit US-103.
4 We note that no final denial of a release may be made by the US Department of Agriculture without
the concurrence of USDA’s Office of General Counsel. See 7 CFR 1.14 (Exhibit US-105). The attached appeal
determination is consistent with USDA’s long-standing policy that planted acres will not be released. For
example, the policy against release has been stated explicitly since 1997 in FSA’s FOIA Handbook. ( See
Exhibit US- 106.)
5 In addition to the data requested by Brazil, the United States has provided total cropland and
programme payment units (base acreage x base yield x .85) to allow for more meaningful aggregation.

Third
, farm-by-farm files for plante d acres only for all programme
crops, but with no other data a nd with the order of the farms
scrambled in order to prevent any matching of farms.

The three files have been copied to a CD. The base and yield data are a text file named “Pfcby.txt.” A
description of that file and its 118 fields is found at Exhibit US-109. Planted acres are in
“Pfcplac.txt”. A description of that file is found at Exhibit US-110. Finally, the aggregate data file is
named “Pfcsum.xls”. That file is an Excel file and the headings within the file should be self-
explanatory.

The information that we are providing is also sen sitive. We do not consent to release of this
information to the public domain and expect that it will be used solely for purposes of this dispute
settlement proceeding. Therefore, pursuant to pa ragraph 3 of the Panel’s working procedures, we
designate this information as confidential and must exceptionally insist that this information not be
disclosed outside of the delegation of the Brazilian Government and the Panel.

During the Panel meeting, Brazil referred to information released by the United States in
connection with rice. This release was an error. Apparently, the Kansas City office of the Farm
Services Agency (FSA) believed at some point th at the Washington FOIA office had approved the
release of planted acres so long as names and addresses were left out. FSA Washington personnel
were not aware of that misunderstanding. It has b een corrected. The farm number is unique and can
be linked back to the name and address of persons on the farm using the FSA-supplied Environmental
Working Group (EWG) payment and name and address files.
6 The payment files will allow a match
by farm number. This leads, by the same file, to the “customer number”. That number leads, in the
name and address file, to the name and address of the farm owner. At the second Panel meeting,
Brazil indicated that the rice request was theirs. We ask accordingly that Brazil and its agents return
all copies of the erroneous rice release.7

The United States also notes that responding to Brazil’s request has not been a simple
undertaking. Because of the extensive nature of the request, it was necessary to run through
approximately 10 million files to extract the pertinent information. There are approximately 2 million
farms involved. For the production flexibility co ntract (“PFC”) payment era under the 1996 Act,
there were 7 programme crops. In the direct payment and counter-cyclical (“DCP”) payment era
under the 2002 Act, there are 10 programme crops (counting “other oil seeds”, such as rapeseed,
canola, etc., as one “programme crop” only). The PFC file alone, if each field for each farm was
considered a cell, contains 25 million cells of informa tion. The task involved is a far bigger, far more
complicated task than the errone ous rice release. More than 250,000 farms fit the “cotton farm”
definition at work in this exercise. The United States has expended a significant amount of time and
resources to respond to this data request.
8

Per Brazil’s request, the United States is providing a copy of this letter, associated exhibits,
and three electronic data files relating to the produc tion flexibility contract payment era directly to
Brazil through the Brazilian Embassy in Washington, D. C. Because of their size, the electronic data
files will be couriered to Geneva for transmission to the Panel.

6 See Exhibit US-108 (excerpt of BRA-316).
7 Regarding that release, the United States notes, too, that no member of the US delegation at the
second panel meeting in Geneva was aware of the rice rel ease. On inquiry, no one at FSA in Washington was
aware of it either. The rice data was se nt to an address in Geneva identified by the requester, a member of the
Brazilian delegation, who the Kansas City office was led to understand had “relatives” there.
8 There may well be limitations in the data output since the output depends on the completeness and
accuracy of input from the FSA county offices. Moreover, not all farms f ile crop reports and not all plantings
are plantings of programme crops. These are merely some examples.

ANNEX K-38

LETTER FROM THE UNITED STATES

22 December 2003

 Further to the letter of the United States to the Panel on 18 December 2003, attached please
find a letter from the United States to the Embassy of Brazil in Washington, D.C., dated
19 December 2003, transmitting directly to Brazil th e completed electronic data files relating to the
direct and counter-cyclical payment era. Please also find attached Exhibits US-111 and US-112. This
letter, the electronic data files, and the two exhi bits were received by the Embassy of Brazil on
19 December. The electronic data files are presently en route to Geneva, and will be transmitted to
the Brazilian Mission to the WTO and to the Panel shortly.

 In a letter dated 18 December 2003, to the Chairman of the Panel in the WTO dispute
settlement proceeding United States – Subsidies on Upland Cotton (DS267), the United States
indicated that it would endeavour to provide addi tional information responding to the request of
Brazil conveyed in Exhibit BRA-369 by Friday, 19 December. In particul ar, we indicated that
preparation of certain direct and counter-cyclical payment era electronic files was continuing. Those
files have now been completed and are being transmitted with this letter.

 There are three direct and counter-cyclical payment era files, containing approximately
85 megabytes of requested data, on the enclosed CD. These three files correspond to the three
production flexibility contract payment era files transm itted previously. First, there is a farm-by-farm
base and yield data file ("Dcpby.txt "); a description of that file and its 99 fields is found at Exhibit
US-111. Second, there is a planted acres file ("Dcpp lac.txt"); a description of that file is found at
Exhibit US-112. For the reasons set forth in the 18 December letter to the Chairman, we note that the
order of the records in the planted acre file is not th e same as in the base and yield file. Finally, there
is an aggregate data file ("Dcpsum.xls"); that file is an Excel file, and the headings within the file
should be self-explanatory.

 As indicated in the 18 December letter to the Chairman, the information that we are providing
is sensitive. We do not consent to release of this information to the public domain and expect that it
will be used solely for purposes of this dispute settlement proceeding. Therefore, pursuant to
paragraph 3 of the Panel’s working procedures, we designate this information as confidential and
must exceptionally insist that this information not be disclosed outside of the delegation of the
Brazilian Government and the Panel.

 The United States is providing a copy of this letter, associated exhibits, and three electronic
data files relating to the direct and counter-cyclical payment era directly to the Panel.

ANNEX K-39

LETTER FROM BRAZIL

23 December 2003

 As per its Communication of 8 December 2003, the Panel established 22 December as a
deadline for the delivery by Brazil and the United St ates of the Answers to Questions from the Panel
and also for the delivery of the US comments on Brazil’s econometric model.

 In its Communication of 13 October, the Panel established that “ In accordance with
paragraph 17 (b) of the Panel’s working procedures, the Panel sets the following time for the
provision of submissions by the parties: 11.59 p. m., Geneva time on the dates concerned. This time
refers to receipt of submissions by the other party and the Secretariat and not to commencement of
transmission. For greater clarity, this time for re ceipt of submissions also refers to the time of
completion of receipt of any Exhibits and service of any Exhibits (if necessary electronically) to the
other party and to the Secretariat as envisaged in paragraphs 17 (a)-(d) of the Panel’s working
procedures. All other provisions of the Working Procedures remain unchanged”.

 The “Working Procedures for the Panel” establish in paragraph 17 b that

“the parties and third parties should provide their submissions to the Secretariat by
5:30 pm on the deadlines established by the Panel, unless a different time is set by the
Panel”
and in paragraph 17 d that,

“the parties and third parties shall provide el ectronic copies of all submissions to the
Secretariat at the time they provide their submissions [...]”.
 The US submissions were not delivered within the deadline of 11.59 p.m. provided by the
Panel, which is already an exception to the genera lly observed deadline of 5:30pm. Neither the paper
nor the electronic versions of the submissions we re delivered on 22 December until 11.59 p.m.. As
duly registered at the form provided by the Secret ary to the Panel, the US submission had not been
delivered until 0.35 a.m. and it was apparently deliver ed as late as 1.08 a.m.. The electronic version
was sent at 0.47 a.m. and received by Brazil at 1.34 a.m.

 Brazil notes that, apart of the impairment of Brazil’s rights under the DSU, the delay by the
US also involves significant administrative constr aints for the Brazilian Delegation in Geneva, which
maintains human resources active until such a time as the US delivers the documents

 This is already the seventh time the United States fails to deliver a document by the time
expressly determined by the Panel. This issue has also been addressed during the panel hearing on
7 to 9 October and the Panel has already explicitly requested the United States to respect the deadlines
of the dispute – “in order to ensure due pro cess and secure a balance between the two parties”
(Panel’s Communication of 13 October). In its lette r of 2 October, Brazil had requested the Panel to
“determine that in the next steps of the presen t proceedings any unjustified delay in document
delivery by the US results in such document being disregarded by the Panel”.

 Brazil therefore hereby requests that the docum ents delivered today by the United States, in
renewed disrespect of the established deadline, be disregarded by the Panel.

 Please accept, Sir, the assurances of my highest consideration.

ANNEX K-40

LETTER FROM BRAZIL

23 December 2003

 The Government of Brazil is in receipt of a letter from the Panel dated 23 December
enclosing a number of new questions to Brazil (ei ght) and to the United States (five) with a deadline
set for 12 January. These questions address new in terpretations by the Appellate Body, are very
comprehensive, and in the view of Brazil will requi re a significant allocation of resources to complete
properly.

 Brazil notes that in addition to answering these questions, it must also respond to an extensive
US critique of Professor Sumner’s analysis, as well as provide comments and analysis on the US
18 December 2003 data, by 12 January . Because Brazil was not aware that the Panel would be filing
these new questions, its representatives made severely tight travel and professional commitments that
try to accommodate the upcoming holidays bearing in mind the original two deadlines for 12 January
(Sumner and 18 December rebuttals).

 In consideration of the above, Brazil request s that the Panel push the schedule back by only
one week. The original 12 January deadline w ould be moved to 19 January, and the 19 January
deadline for comments on the answers to the Parties’ questions would be moved to 26 January. Other
aspects of the schedule would be adjusted accordingly by the Panel, but with no more than a one week
delay for the issuance of the final report, if this should be deemed necessary by the Panel.

 Please accept, Sir, the assurances of my highest consideration.

ANNEX K-41

LETTER FROM THE UNITED STATES

23 December 2003

 At the Panel’s invitation, my authorities ha ve instructed me to provide the following
comments on Brazil’s letter of 23 December 2003, in which Brazil requests that the upcoming
schedule of filings be delayed.

 The United States is amenable to Brazil’s exte nsion request, with the alternations suggested
below, because it is well aware of the burdens that the very tight time frame established in this dispute
has imposed on the parties (and the Panel), particularly in light of the complexity of the matter before
the Panel and the volume of materials necessary to ex amine that matter. In fact, the United States has
in the past three business days alone:

• Filed via two letters dated 18 and 19 Decemb er 2003, approximately two hundred megabytes
of data requested by Brazil. Attempting to collect, prepare, and file these data within the time
set out by the Panel in its 8 December communication required enormous efforts on the part
of the United States, necessarily affecting preparations of the US answers to the Panel’s
questions and the US comments on Brazil’s econometric model.

• Filed answers to approximately 51 questions from the Panel, within the same time that Brazil
had to answer approximately 32 questions. (In deed, given Brazil’s comment that the "eight"
new questions directed to it "in the view of Brazil will require a significant allocation of
resources to complete properly" and therefore ju stify an extension of time, Brazil should now
understand – if it did not before – the significantly greater burdens placed on the
United States in responding to approximately 20 more questions than Brazil was asked to
respond to.)

• Filed comments on Brazil’s econometric model. In making this filing, the United States was
faced with examining, and preparing and f iling comments on the FAPRI model transmitted to
the United States by Dr. Bruce Babcock, per the Panel’s communication dated
8 December 2003, within the time originally set out by the Panel only to address Brazil’s
exhibits and models.

 Had the United States focused its energies only on the answers to the Panel’s questions and
the comments on Brazil’s economic modelling, the f iling of those documents would not have been
delayed, but the United States chose to make best ef forts to comply with all of the requests and time
frames set by the Panel in this dispute. It is only due to tremendous e fforts by US personnel in
Washington, Kansas City, and Geneva that Brazil is even in a position to cite the need to respond to
the data submitted by the United States as part of the reason a delay in the schedule is needed.

 In light of the foregoing, the United States would be willing to agree to an extension of time.
However, instead of Brazil ’s proposal, the United States would ask that the schedule be altered as
follows: First, we would ask that the filing of th e parties’ responses to the additional questions from
the Panel (dated 23 December 2003), as well as Brazil’s comments origin ally scheduled for
12 January 2004, be moved to 21 January (to take into account the fact that 19 January is a US
Federal holiday). We would then request that the parties’ comments on each other’s answers be

moved to 2 February. The reason for this latter propo sal is because, in addition to filing comments on
Brazil’s answers to the Panel’s additional questions on that date, the United States will also be filing –
per the Panel’s communication of 8 December 2003 – comments on (1) Brazil’s comments on the
data provided by the United States on 18 and 19 December 2003, as well as (2) Brazil’s comments on
the US comments on Brazil’s economic model. Give n Brazil’s confirmation in its letter that its
submissions on these matters will require four weeks to prepare, the United States and the Panel can
expect that those comments will be extensive. Thus, one week to respond to Brazil ’s three
submissions would understandably be insufficient; fo r due process reasons, the United States believes
at least two weeks would be needed to respond to Brazil’s four weeks worth of comments and
answers.

 In agreeing to Brazil’s extension request, with the above caveats, the United States notes that
it is simply seeking to advance the goal of WTO dis pute settlement – that is, the effective resolution
of disputes, rather than pursuing litigation tactics designed merely to disadvantage the other party
procedurally. In this regard, we regret Brazil’s second letter of 23 December, requesting that certain
US documents "be disregarded by the Panel". The United States has in a communication earlier today
expressed its regret for any inconvenience that may have resulted to the Panel and Brazil due to the
delay in submitting the US comments and its answers to questions from the Panel, noting largely the
same reasons Brazil is now relying on to support its extension request. Indeed, this delay resulted in
large measure from the US determination to make best efforts to respond to Brazil’s request for
certain information while simultaneously preparing its comments and answers. In this connection, we
find it interesting that Brazil is seeking to have the Panel "disregard[]" the US answers and comments,
but not the extensive data requested by Brazil, which was provided on 19 December, one day after the
date set out in the Panel’s 8 December communicati on. The significant burdens on all parties to a
WTO dispute, and this dispute in particular, are well-understood. The effective functioning of the
dispute settlement system and the resolution of disp utes are not served through one-sided approaches
that only recognize the burdens place on one party but not the other.

ANNEX K-42

REPLIES OF THE UNITED STATES
TO ARTICLE 13 REQUEST

20 January 2004

 The United States is in receipt of a request for information from the Panel pursuant to
Article 13 of the Understanding on Rules and Procedures Go verning the Settlement of Disputes
transmitted on 12 January 2004. In its request, the Panel “requests the United States to provide the
same data that it agreed to provide in its letters dated 18 and 22 December 2003 but in a format which
permits matching of farm-specific information on contract payments with farm-specific information
on plantings”.
1 The Panel’s request states that “[d]isclosur e is sought to permit an assessment of the
total expenditures of PFC, MLA, CCP and direct pa yments by the US Federal Government to upland
cotton producers in the relevant marketing years” and invites the United States to “protect the identity
of individual producers by, for example, using substitute farm numbers which still permit data-
matching”. My authorities have instructed me to submit this response.

 With respect to the Panel’s explanation that “disclosure is sought to permit an assessment of
the total expenditures of PFC, MLA, CCP and direct payments by the US Federal Government to
upland cotton producers in the relevant marketing years”, the United States notes that it has
previously provided data that perm its calculation of “total expend itures” for all decoupled payments
made to farms planting upland cotton with respect to historical base acres (whether upland cotton base
acres or otherwise). In particular, for the productio n flexibility contract payment era, we provided a
farm-by-farm file (“Pfcby.txt”) with base acreag e and yield data for all programme crops for all
“cotton farms” as defined in BRA-369 and data file (“Pfcsum.xls”) that aggregated this data for ease
of use.
2 The “programme payment units” field allows for easy calculation of “total expenditures” to
farms planting upland cotton in any given year by multiplying payment units by the applicable
payment rate. Similarly, for the direct and count er-cyclical payment era, the United States provided a
farm-by-farm file (“Dcpby.txt”) with base acreag e and yield data and an aggregate data file
(“Dcpsum.xls”).3 Again, the “programme payment units” field allows for easy calculation of total
expenditures by multiplying payment units by the a pplicable payment rate. Thus, the data already
provided by the United States to Brazil and the Panel would permit an assessment of total
expenditures of decoupled payments to farms planting upland cotton.

 The United States has studied the Panel’s request for certain farm-specific data as well as its
suggestions with respect to protecting US producers’ privacy interests. The United States thanks the
Panel for recognizing the important confidentiality concerns which arise from Brazil’s request to
receive, by farm number, contract payment and planti ng information. The Panel will recall that at the
second panel meeting the US delegation expressly i nquired of the Brazilian delegation whether the

1 The Panel’s request references US letters da ted 18 and 22 December 2 003, providing certain
information from Brazil. The United St ates understands the latter reference to be to the 19 December letter to
Brazil that was transmitted to the Panel and the Brazilian Mission to the WTO on 22 December 2003.
2 These files were provided, per Brazil’s request, to the Brazilian Embassy in Washington, D.C., on
18 December 2003 via CD-ROM. The US letter was f iled with the Panel on 18 December, and the CD-ROM
was delivered via courier to Geneva and filed with the Panel on 23 December 2003.
3 These files were provided to the Brazilian Emba ssy in Washington, D.C., on 19 December 2003 via
CD-ROM. The US letter was filed with the Panel on 22 December, and the CD-ROM was delivered via courier
to Geneva and filed with the Panel on 23 December 2003.

United States could provide the requested data in so me format that also protected the identity of
individual producers. The Brazilian delegation refused to answer and insisted that the requested
information be provided with farm numbers, as set out in Exhibit BRA-369. In response to Brazil’s
request, the United States therefore provided all of th e data that it could without violating the privacy
interests of US producers, as required under the Privacy Act of 1974.

 The United States has studied the Panel’s request and has concluded that it is not possible to
“protect the identity of individual producers” while providing the requested data in a format that
permits data-matching. This results because the Un ited States has already provided, by farm number,
farm-specific contract information, including base acreage, base yield, and payment units, for each
programme crop for each requested year. For exam ple, for each and every “cotton farm” (as defined
in the Brazilian request) identified by its FSA farm number, the United States has provided 96
separate data fields relating to 2002 direct and counte r-cyclical contract payments. These 96 fields of
contract data form a unique combination, such that – even in the absence of farm numbers –
disclosing the farm-specific plantings that correspond to each unique combination of contract data
would allow each farm’s plantings to be connected to the FSA farm numbers through the farm-by-
farm files previously provided. Thus, as a result of Brazil’s insistence on receiving data with the FSA
farm numbers and refusal to consider any alternativ e that would respect the privacy interests of US
producers, unfortunately there would not appear to be a way to provide the requested data and
“protect the identity of individual producers” given the data already provided. Under the Privacy Act
of 1974, the United States could not disclose this information without the consent of the submitter.
4
Thus, the existence of confidentiality procedures would still not permit the United States to release
each farm’s planting information associated with the farm’s particular contract payment data (given
the previous submission of contract data in association with farm, county, and state numbers).5

 With respect to the Panel’s reference to the re lease of certain farm-specific planting data by
the Farm Services Agency to a member of the Braz ilian delegation, the United States has explained in
its December 18 letter to the Panel that this release was in error. We have requested that Brazil assist
the United States in curing this breach of confiden tiality by returning all copies of the erroneous
release but have yet to receive a response.

 The Panel makes reference to a weighing of “the public interest in disclosure” against a
payment recipient’s privacy interests. The questio n of whether the information could be released –
and even whether the “public interest” is a relevant consideration – is a complicated issue under US
domestic law. In the first instance, the US Depa rtment of Agriculture has determined that it is
prohibited under US law from releasing this informa tion without the consent of each submitter. In
any event, we note that the Panel states that it requests these data “to permit an assessment of the total
expenditures of PFC, MLA, CCP and direct payments . . . to upland cotton producers”. Thus, the
information relevant to the Pa nel’s assessment would not be farm-specific data but rather some
aggregation of data to permit this “assessment of . . . total expenditures”. As noted above, the United
States has provided both farm-specific and aggregated contract data that would permit an assessment
of total expenditures of decoupled payments to farms planting upland cotton.

4 5 U.S.C. 552a(b) (“No agency shall disclose any record which is contained in a system of records by
any means of communication to any person, or to anothe r agency, except pursuant to a written request by, or
with the prior written consent of, the individual to whom the record pertains . . . .”).
5 Moreover, because contract data by farm number may be releasable information – as we have done
here with respect to Brazil’s specific request – a request to release contr act data associated with a farm’s
planting information would raise the same privacy concerns because of the potential to link such data back to
farm and recipient information that could be separately obtained.

 The United States further notes the Panel’s statemen t that “[a] refusal by the United States to
provide the information as requested without an adeq uate explanation may lead to adverse inferences
being drawn”. As explained, the United States does not have the authority to provide the farm-
specific planting information in the format request ed. Further, the United States has provided both
farm-specific and aggregated contract data that would permit the Panel to make the assessment it
identifies, that is, an assessment of total expenditu res of decoupled payments to farms planting upland
cotton. The situation here is thus very different from the one in Canada - Aircraft where the Appellate
Body first opined that “a panel should be willing expressly to remind parties – during the course of
dispute settlement proceedings – that a refusal to provide information requested by the panel may lead
to inferences
6 being drawn about the inculpatory character of the information withheld”. 7 There is no
basis for an “inference” of any kind, adverse or otherwise.8

 Finally, we of course recognize that the Pa nel has the right to seek information which it
deems appropriate pursuant to Article 13.1 of the DSU. We wish to recall, however, that panels must
take care not to use the information gathered under this authority to relieve a complaining party from
its burden of establishing a prima facie case of WTO inconsistency based on specific legal claims
asserted by it. In Japan – Measures Affecting Agricultural Products , the Appellate Body explained
that it is for a complaining party to make argumen ts supporting its specific legal claims and that the
panel had erred in using information it had obtained to make a finding of inconsistency on the basis of
an argument and claim not explicitly advanced by the complaining party.
9 In this dispute, Brazil has
not advanced legal claims and arguments that d ecoupled payments should attribute across the total
value of the recipients’ production, nor has Brazil advanced claims and arguments setting forth any
methodology for calculating the total amount of paym ents it challenges, as reflected in Question 258
from the Panel to Brazil. The Panel may not relieve Brazil of its burden of advancing and establishing
claims and arguments relating to the value of dec oupled payments benefiting upland cotton, a crucial
element in Brazil’s prima facie case under Articles 5 and 6 of the Agreement on Subsidies and
Countervailing Measures.

6 The United States notes that in the same report the Appellate Body was careful to distinguish
“adverse” inferences from other “inferences”, remarkin g that: “We note, preliminarily, that the ‘adverse
inference’ that Brazil believes the Panel should have drawn is not appropriately regarded as a punitive inference
in the sense of a ‘punishment’ or ‘penalty’ for Canada’s withholding of information. It is merely an inference
which in certain circumstances could be logically or reasonably derived by a panel from the facts before it.”
Canada – Measures Affecting the Export of Civilian Aircraft , WT/DS70/AB/R, adopted 20 August 1999,
para. 200 (“Canada – Aircraft”).
7 Canada – Aircraft, WT/DS70/AB/R, para. 204.
8 The United States also notes that it is even less appropriate to draw “adverse inferences” in this
dispute than in Canada - Aircraft in that Annex V, which was referred to by the Appellate Body in Canada -
Aircraft, was rendered inapplicable by the Peace Clause in this dispute.
9 Appellate Body Report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted
19 March 1999, paras. 129-30.

ANNEX K-43

LETTER FROM THE UNITED STATES

28 January 2004

Enclosed with this letter the United States is providing a CD containing revised versions of
the 6 electronic data files relating to the production flexibility contract era and the direct and counter-
cyclical payment era that were transmitted to Brazil on 18 and 19 December 2003, and to the Panel on
18 and 22 December 2003. The enclosed CD contains six revised data files. The file names are
identical to those previously submitted but with an “r” preceding the original file name. Thus, the
files are now titled “rDcpsum.xls” (aggregate data f ile), “rDcpby.txt’ (farm-by-farm base and yield
data file), “rDcpplac.txt” (planted acres file), “rPf csum.xls” (aggregate data filed), “rPfcby.txt” (base
and yield data file), and “rPfcplac.txt” (planted acres file). We have prepared these revised
electronic files after becoming aware of certain errors in the original data files submitted.

In the limited time available to reply to Brazil’ s request for data, certain programming errors
appear to have resulted. As indicated in our le tter of 18 December to the Panel, responding to the
Brazilian request involved extracting pertinent info rmation from approximately 10 million data files;
because that request sought information relati ng to up to 10 programme crops on nearly 250,000
farms, the information provided by the United Stat es ultimately spanned nearly 220 megabytes of
data. Because that data was not the product of an y established procedure with a protocol for cross-
checking and verification, it was perhaps inevitable that certain errors should have occurred.

In preparing comments on Brazil’s answer to question 258 from the Panel, the United States
became aware that certain fields in the aggregate data files (“Pfcsum.xls” and “Dcpsum.xls”) that the
United States had prepared to assist the Panel and Brazil in interpreting the voluminous data in the
farm-by-farm files contained no data (indicated by a zero (“0”) or a dash (“-”)). For example, looking
at the original summary file for the direct and counter-cyclical payment er a (“Dcpsum.xls”), those
farms that in marketing year 2002 had upland cott on base acreage (4.7 million acres) but planted no
cotton at all (0 acres), are also listed as having pl anted no acres of wheat, oats, rice, corn, sorghum,
barley, flax, sunflower, safflower, soybeans, ra peseed, mustard, canola, crambe, or sesame on
15.9 million acres of cropland.

The United States has now expended significant e ffort correcting for programming errors and
re-running the pertinent search. These efforts reveal ed that, while the cotton data continues to be
correct (that is, farms with 4.7 million base acres of upland cotton planted not a single acre of cotton
in marketing year 2002), in fact these farms plan ted approximately 10.3 million acres of these other
crops and not zero as originally reported.

The corrected programming and new search gene rally corrected for instances in which the
original search apparently failed to capture relevant data. The most significant revisions relate to
(1) additional planted acres for other crops for tho se farms with upland cotton base acres that planted
no cotton and (2) additional base acres for other cr ops for those farms without any upland cotton base
acres that did plant cotton.

ANNEX K-44

LETTER FROM THE UNITED STATES

30 January 2004

The United States is in receipt of a document filed by Brazil with the Panel on
28 January 2004, providing Brazil’s comments rega rding data provided by the United States on 18
and 19 December 2003, and related matters. Brazil’s filing of these comments was made 8 days after
the deadline set by the Panel in communications dated 8 December and 24 December 2003, and on
the date that had been established by the Panel for the United States to comment on Brazil’s materials.
Accordingly, my authorities have instructed me to respectfully request the Panel to specify the new
date for the United States to file comments. The United States further suggests that since the Panel
had originally provided that the United States would have eight days to provide its comments, the US
comments could now be due eight days from the date the Panel establishes the new deadline.

As you know, on 8 December 2003, the Panel comm unicated to the Parties a revised schedule
following the second panel meeting. The second paragraph of that c overfax and timetable reads: “As
stated by the Chairman on 3 December, the United States will be given until 18 December to respond
to Brazil's request made in Exhibit BRA-369. Brazil will be given until 12 January 2004 , to
comment on the US response.” The third paragr aph reads: “The parties may submit any further
comments on each other's comments by 19 January 2004.”

On 24 December 2003, the Panel amended the timetable, stating that “all submissions
originally due 12 January 2004 would now be due Tuesday, 20 January 2004 ” and “all submissions
originally due 19 January 2004 would now be due Wednesday, 28 January 2004.” Thus, Brazil had
until 20 January 2004, to file its comments on the US data, and the United States had until
28 January 2004, to file its comments on Brazil’s comments.

Brazil did not file its comments on 20 January, nor did it seek an extension of time from the
Panel. Instead, Brazil simply delayed filing its 48 pages of detailed comments (with accompanying
exhibits) until 28 January.
1 Providing the United States eight days to comment from the date of the
Panel’s communication of the new deadline would preserve the procedural balance originally
established by the Panel.

1 The United States finds Brazil’s eight-day delay in meeting the Panel’s deadline particularly ironic in
light of Brazil’s letters, such as its letter of 23 December 2003, complaining about the time of US filings.

ANNEX K-45

LETTER FROM BRAZIL

2 February 2004

 The Government of Brazil is in receipt of a letter from the United States dated
30 January 2004 requesting an additional eight days to respond to Brazil’s 28 January 2004 Comments
and Requests Regarding Data Provided by the United States on 18/19 December 2003 and the US
Refusal to Provide Non-Scrambled Data on 20 January 2004 (“Brazil’s Comments”). Brazil would
comment on the US request as follows:

 First, the US 30 January 2004 letter su ggests that Brazil was late in filing Brazil’s Comments.
This is incorrect. The US letter ignores the fact and the effect of the Panel’s 12 January 2004
Communication, in which the Panel requested the United States to produce complete and unscrambled
data concerning contract payment base and curr ent plantings of upland cotton farms. This
Communication necessarily mooted, at least temporarily, any comments by Brazil on the
18/19 December 2003 US “scrambled” data. It woul d have made little sense for Brazil to comment
on the data deficiencies (and the implications th ereof) on 20 January 2004, since Brazil trusted that
the United States would have lived up to the Pane l’s repeated request and produced the data by
20 January 2004, as required by DSU Article 13.1. Only after the United States failed to produce the
requested data was Brazil able to properly comment on the US data – and it did so on 28 January 2004
(in a much shorter time - 8 days - than originally foreseen by the Panel’s 12 January 2004 deadline).

 Second, the United States requests the oppor tunity to comment on Brazil’s Comments and
requests eight days to do so. Brazil is of th e view that eight days from 28 January would be
acceptable, which would make the US submission due on 5 February 2004. The United States already
has had access to Brazil’s Comments for five days (since 28 January 2004). The US request for what
would amount to essentially two weeks to respond w ould further delay these proceedings. It would
also violate Brazil’s due process rights if the United States were given more time to comment on these
documents than Brazil had to comment on the failure of the United States to produce the information
on 20 January 2004.

 Third, in order to preserve Brazil’s due process rights, the Panel should limit the scope of the
US “Comments” to responding to arguments that the United States has not yet had an opportunity to
respond. For example, Sections 4, 5, 11 of Brazil’s Comments simply respond to arguments and facts
already presented in US letters of 18 December 2003 and 20 January 2004 in which the United States
sought to justify the refusal to produce farm-specifi c data. The United States should not be given yet
another opportunity to comment on Brazil’s comments.

 Fourth, the Panel should reject any attempt by the United States to present positive evidence
in any comments without also giving Brazil an opportunity to respond. For example, the
United States never presented the Panel with any application of its own proposed methodology for
calculating and allocating the amount of contract payments to current upland cotton farmers. It would
be manifestly unfair for the United States to present, in its last submission, positive evidence based on
incomplete (non-farm specific da ta) in support of its defence when it has refused to provide any
calculation, or even an estimate, for thirteen m onths – let alone produced the requested data that
would permit Brazil or the Panel to do so.

 Fifth, Brazil notes that the U.S. letter of 28 January 2004 provides Brazil and the panel with
“revised” data files to correct for “certain errors” in the original data submitted forty days earlier on
18 December 2003. None of these “corrections” provi de any useable farm-specific contract payment
base and current planting data. Thus, the Un ited States continues to violate the Panel’s
8 December 2003 and 12 January 2004 requests for su ch information. Further, the 28 January 2004
revised data continues to suffer from the various a ggregation problems identified in paragraphs 8-15,
22, 76-81, 90-98, of Brazil’s Comments. Nor does the corrected data include complete information on
market loss assistance payments (as identified in paragraphs 20, 22, 43, 82 and 95 as well as notes 40,
43, 75, 163, 164, 166, 195 and 197 of Brazil’s Comments), or information on MY 2002 peanut base
payments (as identified in paragraphs 21-23, 43 and 98 as well as notes 75, 132, 161, 166, 195 and
196 of Brazil’s Comments). Thus, Brazil does not believe that this “revised” data, arriving after the
11
th hour, is either timely or useful. If, however, th e Panel believes that it w ould be useful for Brazil
to provide revised calculations (based on the revi sed US summary data) replacing those set out in
paragraphs 83 and 96 of Brazil’s Comments, or comment in any other way on the revised US
“scrambled” data, Brazil will be pleased to do so. Brazil recalls, however, that it provided the figures
in those two paragraphs based on the flawed US summa ry data to demonstrate the existence of further
support for its “14/16th” methodology estimated figures.

ANNEX K-46

LETTER FROM THE UNITED STATES

3 February 2004

The United States is in receipt of a letter file d by Brazil on 2 February 2004, commenting on
the US request for the Panel to establish a new d eadline for the United States to file comments on
Brazil’s comments regarding data provided by the United States on 18 and 19 December 2003, and
related matters.

My authorities have instructed me to inform the Panel that the United States welcomes
Brazil’s statement that it has no objection to the Panel establishing a new deadline for the
United States to comment on Brazil’s comments. Brazil, however, objects to the United States being
given eight days from the Panel’s communication establishing the new deadline, arguing that it would
“violate Brazil’s due process rights if the United States were given more time to comment on these
documents than Brazil had to comment on the failure of the United States to provide the information
on 20 January 2004”. With respect, this fundamentally misstates the issue.

Brazil had access to the 18 and 19 December data for nearly six weeks before filing its
comments, due on 20 January but submitted on 28 January , and evidently used that time in order to
prepare quite lengthy and detailed comments (over 50 pa ges plus exhibits). Yet Brazil objects to the
Panel providing the United States with notice that it h as eight days to prepare its response. Brazil
would have the Panel upset the balance of time set out in its communications for the preparation of
the respective comments of Brazil and the United States.

We also note Brazil’s argument that the Panel’s 12 January letter “necessarily mooted, at least
temporarily”, the 20 January date for the filing of Brazil’s comments. It is ironic, to say the least, that
Brazil should have complained about delays (measu red in minutes) in filing certain US documents
and then unilaterally have decided that it was entitled to an additional eight days in filing its
comments since, in Brazil’s view, “[i]t would have made little sense” for Brazil to comply with the
Panel’s 20 January deadline. Brazil did not request the Panel to modify the deadlines as a result of the
Panel’s 12 January letter. Brazil simply decided not to abide by the dead lines established by the
Panel. Indeed, Brazil should have filed its comme nts on the 18 and 19 December data on 20 January
as scheduled and has provided no reason why it was unable to do so.

If Brazil wanted a further opportunity from th e Panel to comment on any response to the
Panel’s 12 January letter, it could have so requested . Brazil did not do so. Instead it simply ignored
the Panel’s deadline and used a nearly six-week period to provide comments on the US data. Thus,
Brazil’s February 2 letter continues to evince its one-sided tactics on procedural issues, in which
Brazil seeks (or simply provides to itself) substantial periods of time to prepare its filings but seeks to
deny adequate time to the United States to prepare its responses.
1

1 For example, the United States reca lls that at the panel organizational meeting, Brazil objected to the
United States having more than two weeks to prepare its first submission while at the same arguing that Brazil
would need a full two weeks to prepare the executive summary of its own first submission. (Brazil did not
volunteer that it had already drafted a first submission that would ultimately turn out to be more than 135 pages
in length, with over 100 exhibits.) As the United States noted at the time, it seemed implausible that the United
States could prepare a substantive response to a submission in two weeks if Brazil was unable to prepare a
summary of that submission in less than that time.

We note Brazil’s request that the Panel ex ante “limit the scope of the US ‘Comments’ to
arguments [to which] the United States has not ye t had an opportunity to respond” and prevent the
United States from “present[ing] positive evidence”. However, the Panel had previously established
that the United States “may submit any further comments on [Brazil’s] comments” by
19 January, 2004
2, later revised to 28 January 2004. 3 Therefore, Brazil’s request does not comport
with the Panel’s previous communication, woul d prejudge what comments the United States may
provide (and perhaps preclude relevant comment s on new information presented by Brazil), and
would impose a limitation with respect to arguments and evidence on the United States that was not
imposed on Brazil.

Finally, Brazil continues to mischaracterize the s ituation when it asserts that the United States
should have breached US law regarding the protec tion of individual privacy in order to produce
additional data relating to planting and contract pa yment information on a farm-by-farm basis. We
have previously explained in our letters of 20 January 2004, and 18 December, 2003 why under US
law we are unable to provide the data requested. In part, this results from Brazil’s refusal at the
second panel meeting to allow any deviation from the request set out in Exhibit BRA-369, which
specifically requested that the data be provided by farm with its associated FSA farm number. The
United States responded to that request to the maximum extent permissible under US law.

In sum, the Panel had intended for the United States to provide comments and have 8 days
from the 20 January deadline for Brazil’s comments to do so. However, Brazil seeks to impose
limitations that were not applied to its own co mments, and which would significantly impair the
information available to the Panel in evaluating the material before it and US rights of defence. We
request that the Panel reject Brazil’s unbalanced suggestions and suggest that the US comments be
due eight days from the Panel’s confirmation of the new deadline for filing those comments.

2 Panel Communication of 8 December 2003.
3 Panel Communication of 24 December 2003.

ANNEX K-47

LETTER FROM THE UNITED STATES

11 February 2004

Attached please find answers of the United States to 29 additional questions from the Panel
following the second substantive meeting in the dispute United States – Subsidies on Upland Cotton
(DS267) and the comments of the United States on Brazil’s 28 January 2004 comments and new
arguments on the extensive data provided by the United States.

The United States wishes to inform the Pane l that it continues to work on preparing
information requested by the Panel in its supplementary request for information pursuant to Article 13
of the DSU as well as certain information requ ested under the Panel’s additional questions.
Unfortunately, the very extensive nature of those requests for information have rendered it impossible
for the United States to prepare and provide that in formation within the eight days requested by the
Panel.

· For example, the Panel has requested that th e United States provide “such of the information
requested on 12 January 2004 in the format requ ested, as regards payment recipients who do
not have interests protected under the Privacy Act [of] 1974, if any”.
1 More than 250,000
farms fell within the farm criteria set out in Brazil’s request in Exhibit BRA-369 2, to which
the Panel’s January 12 request referred. While it would not be possible to examine singly the
records relating to each of these 250,000 farms, the United States continues to seek some
means by which the identities of payment recipients who may not have protectable privacy
interests could be identified. Eight days has not been sufficient time to complete that effort.

· In addition, the Panel has asked for a very substantial amount of acreage information for
“covered commodities” over four marketing y ears under four different programmes and for
all commodities for which planting information is maintained in marketing year 2002. A
significant amount of time was required to genera te the data in respon se to the Panel’s earlier
requests. That effort and the programming erro rs encountered in that response demonstrate
that the response to the supplemental request also requires more than eight days.

Thus, the United States continues to work on responses to item (a) and all the bulleted
subparts of item (b) of the Panel’s supplementary request for information, as well as to Question
264(b) of the Panel’s additional questions. Based on the work completed to date, our current
understanding of the scope of the Panel’s request s, and our experience completing (and revising) a
similar, but smaller, computerized search for elect ronic files in December, the United States estimates
that it would be able to provide the requested information by fo ur weeks from the date the Panel
provides the clarifications requested below. Of course, should the United States complete its
preparation of the requested information prior to th at date, we would make th at information available
to the Panel and Brazil at that time.

1 Panel’s Supplementary Request for Information Pursuant to Article 13 of the DSU, item (a)
(3 February 2004).
2 See US Letter to the Panel at 3 (December 18, 2003).

With respect to item (b) of th e Panel’s supplementary request for information, the United
States would seek clarification of that request. Firs t, the United States would ask the Panel to specify
which commodities are “covered commodities” as that te rm is used in several of the bullet points and
subbullets. Second, the United States would seek conf irmation that, with respect to the information
sought for marketing year 2002 “with respect to all crops on cropland covered by the acreage reports”,
the relevant portions of the “above questions” are those that ask for planted acreage information for
each Category of farm. Clarifications of these points will assist the United States greatly in preparing
data responsive to the Panel’s request.

Finally, the United States notes that the Pane l’s communication of 3 February invites the
parties “to submit, by Wednesday 18 February 2004, any comments on material submitted on 11
February by the other party”. The United States understands this procedure to mean that, with respect
to Brazil’s 28 January comments on the data subm itted by the United States on 18 and 19 December
2003, Brazil would be permitted to file comments on th e US comments filed today. If this is not the
case, the United States would appreciate the Panel provi ding clarification to the parties at its earliest
convenience.

However, to the extent that the Panel has given Brazil the opportunity to file a reply on
18 February to the US comments filed today, a nd Brazil chooses to do so, the United States would
request an opportunity to respond to Brazil’s comment s. The procedure set out by the Panel in its
communications of 8 and 24 December 2003, originally set out one opportunity for Brazil to comment
on the US data (on 20 January 2004) and one opportunity for the United States to respond to Brazil’s
comments (on 28 January 2004). As the respondi ng party, the United States believes that it is
important that it have the opportunity to respond to Brazil’s arguments, particularly in this dispute
where Brazil’s arguments and legal positions have changed from submission to submission. To the
extent that Brazil as complaining party is now being provided two opportunities to comment on the
US data, the United States would feel bound to reque st a similar second opportunity to comment. We
suggest that the deadline for the US reply could be set for Wednesday, 25 February.

ANNEX K-48

LETTER FROM BRAZIL

13 February 2004

 The Government of Brazil is in receipt of a letter from the United States dated
11 February 2004 in which it informs the Panel that it is not providing the requested information by
the 11 February 2004 deadline. Further, the letter requests (1) four additional weeks to provide data,
and (2) the opportunity to respond to Brazil’s 18 February 2004 comments on the “US data”. Brazil
asks the Panel to reject both of these requests.

 In putting these requests into perspective, Br azil recalls that the entire contract payment
exercise is to provide the Panel with sufficient data to determine and calculate (using whichever
methodology the Panel deems appropriate) the amo unt of “support to” upland cotton for MY 1999-
2002. The best way for the Panel to do this is if it has the actual data to calculate the amount of
contract payments received by producers that pl anted cotton in MY 1999-2002. As the Panel knows,
it does not yet have this actual data. Any objective assessment of the record indicates that Brazil has
sought this contract payment information since N ovember 2002, and that the Panel has sought it since
it posed Question 67 bis to the United States in August 2003.

 The immediate focus of this lengthy exercise is the Panel’s 3 February 2004 “Supplementary
request for information pursuant to Article 13 of the DSU and additional questions.”
(“3 February 2004 Request”). In part (a) of th at request, the Panel asked for “such information
requested on 12 January 2004 in the format requested , as regards payment recipients who do not have
interests protected under the Privacy Act of 1974, if any”. In a completely separate request (not
conditioned on the Privacy Act), the Pa nel asked in part (b) for summary aggregated information that
required the United States to compare farm-specific contract acreage data with farm-specific planting
data. Data provided in response to part (b) coul d not possibly include any confidential information
since it is aggregated.

 The United States letter of 11 February 2004 states that it needs four additional weeks to
complete the part (a) analysis. Brazil notes that because the United States apparently intends only to
provide farm-specific information for far less than the total amount of farms ( i.e., those that are not
held by “individuals”) this information w ill be useless for calculating the exact amount of total
contract payments. Therefore, Brazil does not be lieve that the United States should be given any
additional time to produce this information. In this re gard, it is important to stress that even if part of
the farm-specific information were confidential under US law (which Brazil believes is not the case),
the United States would still be required to produ ce the information requested by the Panel on
8 December 2003 and 12 January 2004 subject to WTO confidentiality procedures.

 With respect to part (b) of the Panel’s 3 Febr uary 2004 Request, the United States also claims
it needs four additional weeks to complete this analys is. And it asks the Panel to “clarify” its request
regarding what are “covered commodities” and “with respect to all crops on cropland covered by the
acreage reports”. The Panel’s 3 February 2004 Request provided a chart which listed the “covered
commodities”. If the United States had any questions desp ite the clarity of this chart, then why did it
wait 8 days to raise these questions? Further, the request for “crops on cropland covered by the
acreage reports not simply commodities covered by the programmes ” could not be clearer. Again,

why did the United States wait 8 days to bring this to the Panel’s attention if it was truly puzzled by
this condition of the Panel’s request?

 With respect to the enormous amount of time the United States claims it will take to produce
information in response to part (b) of the Pane l’s 3 February 2004 Request, Brazil notes that the
format of the Panel’s Request was very similar to the rice FOIA request that is set out in Exhibit Bra-
368. The testimony of Mark Somers before the Panel on 3 December 2003 indicated that the rice
FOIA documents showed that USDA took less than a week to process the data and respond to the rice
FOIA request once USDA’s statistical experts began work on the project (and the time from filing the
request to issuance of the data was 15 days). Indeed , Brazil was easily able to calculate the aggregate
rice farm-specific base and acreage information in just a few days as set forth in Christopher
Campbell’s statement in Exhibit Bra-368. With its access to a number of USDA statistical experts,
not to mention the centralized database with all of the records already inputted, it is simply not
credible for the United States to cl aim that it needs more than five weeks to respond to the Panel’s
request.

 As the Panel knows from reviewing Exhibit Br a-368, the data delivered by USDA’s Kansas
City office permitted the ready tabulation of the ex act number of rice farms holding contract acreage
and the amount of their rice acreage. The Panel’s request for contract and planted acreage
information on farms planting cotton is not fundamentally different from the rice request in terms of
the type of data files at issue. The raw data in the contract and planted acreage (for all planted
commodities) files that the United States would use to respond to the Panel’s 3 February 2003 request
are the same raw data files that have been in the centralized Kansas City database throughout this
dispute. If there were any doubt about this, the United States demonstrated that it examined all the
farm-specific data in its 18/19 December 2003 re sponses (albeit producing them in a scrambled
format). Thus, part (b) of the Panel’s 3 February 2004 Request did not involve any new data files –
simply the writing of a programme that would allow the production of the data in an aggregated, non-
confidential summary form, as defined and requested by the Panel.

 Brazil believes that the Panel should not provide the United States with any additional time to
respond to part (b) of its 3 February 2004 Requ est. The United States stood by and waited while the
deadline approached without making any effort to re quest additional time or to seek clarifications.
Yet, the United States had no difficulty during th e same 8-day period in making extensive comments
on Brazil’s 28 January 2004 Comments and Requests Re garding Data Provided by the United States
on 18/19 December 2003 and the US Refusal to Provi de Non-Scrambled Data on 20 January 2004.
(“Brazil’s 28 January Data Comments”). The United States provides no legitimate explanation why it
could not complete part (b) of the Panel’s requ est within the Panel’s deadline. Indeed, the
United States – in a non-litigation context – demonstrat ed in the rice FOIA request just how easy and
fast it is to provide this information.

 The Panel is now only one month away from the one-year anniversary of its establishment,
and almost two months beyond the nine-month deadline for completing its work set out in DSU
Article 12.9. Brazil has not objected to the Panel’ s laudable attempts to coax the United States into
producing the actual non-scrambled data that woul d permit calculation of the amount of support
provided to upland cotton producers from the four diffe rent contract payments. Brazil was willing to
go along with the delays that each of these requests necessitated because it, presumably like the Panel,
wanted the Panel to make use of the most complete and accurate information available to decide these
important issues. Starting with its Question 67 bis, the Panel has now asked for contract payment
information data on five separate occasions (Question 125(9) and 8 December 2003, 12 January 2004
and 3 February 2004 Requests). The Panel now has be fore it a pattern of delay by the United States
that is seriously impinging on Brazil’s due process rights to receive a timely resolution of its claims in
this dispute.

 Therefore, Brazil strongly believes that the Un ited States has been given more than sufficient
time (seven months) and opportunities (five) to pro duce the requested contract payment information
in one form or another. If the Panel believes, however, that the required balance between ensuring
high-quality panel reports and not unduly delayi ng the panel process requires providing yet another
opportunity to the United States to produce the data requested in part (b) of the Panel’s
3 February 2004 Request, then Brazil has the follo wing additional comments. If the United States
provides the complete information requested in part (b) of the 3 February 2004 Request, then most of
Brazil’s 28 January Data Comments would be rendered moot. The purpose of those comments was to
(a) demonstrate the inadequacy of the US data production, (b) request the drawing of adverse
inferences, and (c) in the absence of the actual data , to apply the inadequate summary data. Because
the US 11 February 2004 comments on Brazil’s 28 January 2004 Data Comments are only relevant to
these underlying Brazilian comments, the US 11 February 2004 Comments will also similarly be
largely rendered moot if the United States provides the data requested in part (b). With the actual and
complete data, the Panel would be in the positio n to apply any methodology it determines to be
acceptable. Further, by producing the complete aggr egated information, there would no longer be a
need to draw adverse inferences. Nor, would ther e be any need for Brazil to comment on the US use
of the incomplete and inadequate data in applying the US methodology.

 Accordingly, if the Panel provides the United States with additional time to provide the data
(which Brazil opposes), it should allow Brazil the opportunity to file comments, to the extent any are
still relevant, to the United States 11 February 2004 Comments to Brazil’s 28 January 2004 Data
Comments until 8 days after the United States has provided the info rmation responsive to part (b) of
the Panel’s 3 February 2004 Request. By using th is modified procedure, Brazil hopes to alleviate
some of the considerable legal costs it has incurre d in this extraordinary process. It would deny
Brazil’s due process rights to incur such unnecess ary expenses by filing a response which would not
assist the Panel in resolving the relevant issues in this dispute, assuming the United States provides
the complete data requested in part (b).

 Brazil also opposes the unjustified attempt by the United States to further delay this
proceeding by seeking yet another opportunity to comment on Brazil’s 18 February 2004 Comments.
Brazil notes that the United States 11 February 2004 Comments to Brazil’s 28 January 2004 Data
Comments go far beyond what are legitimate comments on Brazil’s original 28 January 2004 Data
Comments. In particularly, in a number of inst ances, the US 11 February 2004 Comments address
issues raised in Brazil’s 28 January 2004 Comments on US Answers to Questions Posed by the Panel
Following the Second Substantive Meeting of the Panel.

 Thus, the United States, having already abused the Panel’s procedures, now seeks yet another
opportunity to comment. The Panel’s 3 February 2004 Communication made it clear that the deadline
for the United States to comment would be 11 Febr uary 2004. The US request would only serve to
further delay these proceedings, to the detriment of Brazil.

 Finally, Brazil asks the Panel to reject the Un ited States’ unilateral decision to take additional
time to respond to Question 264(b). There is absolu tely no legitimate reason for the United States to
have failed to respond to this question; nor has th e United States indicated any such reasons. The
Panel’s question in no sense called for a complicated analysis, and a response could readily have been
provided within the 8-day response period. After reviewing the US response, Brazil was able to set up
a table comparing the US and Brazilian figures in less than an hour.

ANNEX K-49

LETTER FROM THE UNITED STATES

16 February 2004

The United States is in receipt of a letter fro m Brazil dated 13 February 2004, requesting the
Panel not to afford the United States additional time to provide certain requested information and the
opportunity to respond to Brazil’s anticipated 18 Fe bruary 2004, comments on certain data submitted
by the United States. My authorities have instructed me to make the following reply to these issues.

The United States has communicated to the Pane l that work continues in response to the
Panel’s supplemental request for information and that the United States expects to complete this work
within four weeks from the date the Panel provid es certain clarifications to its request. The
United States provided this time estimate on the basis of its work completed to date and questions that
arose with respect to the Panel’s request (the subject of our request for clarifications).1 We also noted
that item (a) in the Panel’s request presented the challenge of seeking some means by which to review
the identities of payment recipients on approximately 250,000 farms within the scope of the request, a
task which was impossible to complete within the eight days the Panel had requested. Finally, in
producing this time estimate, United States reflect ed on its experience in producing data for this
dispute in December 2003. That data was provided within 15 days of its re quest, and, on subsequent
review, contained a number of inaccuracies that had to be cured by a subsequent filing.2 In addition to
explaining the reasons supporting our estimate, we also made clear that “should the United States
complete its preparation of the requested inform ation prior to that date, we would make that
information available to the Panel and Brazil at that time”.3

If anything, the data requested by the Panel on 3 February 2004, is more extensive than the
information requested in December as it requests that additional da ta be sought and that different
aggregations be provided. By way of example, for marketing year 2002, we understand that the Panel
has requested planted acreage data for all “crops” fo r each Category of farm set out in the request. 4
The Panel will recall that in marketing year 2002, the “crops” for which crop insurance premium
subsidies were available included:

Almonds, apples, avocado, avocado trees, barley, blackberries, blueberries, burley
tobacco, cabbage, canola, cherries, chile peppers, cigar binder tobacco, cigar filler

1 With respect to the first point of clarification sought by the United States, Brazil points to a table in
the Panel’s supplemental request for information. We note that two of the headings in that table, “soybeans”
and “other oilseeds”, are marked with an aste risk, which denotes “[w] here applicable”. See Panel’s
Supplemental Request for Information, at 2 (3 February 2004). The United States has requested clarification of
the Panel’s supplemental request because, even with that table, the precise scope of the term “covered
commodity” and where soybeans and other oilseeds are “applicable” are not clear.
2 See US Letter to Panel of 28 January 2003 (transmitting CD-ROM with revised data files).
3 See US Letter to Panel of 11 February 2004, at 2.
4 Whether the data sought was planted acreage only for farms falling within each Category of farm was
the second point of clarification raised by the United States. See US Letter to Panel of 11 February 2004, at 2.
The United States was not asking for a list of “crops” covered by that request, a point which Brazil evidently
misunderstands. Brazil’s Letter to the Panel of 13 February 2004, at 2 (“Further, the request for ‘crops on
cropland covered by the acreage reports not simply commodities covered by the programmes’ could not be
clearer.”).

tobacco, cigar wrapper tobacco, citrus (grapefruit, lemons, limes, mandarins,
murcotts, navel orange dollar, oranges, tangelos, tangerines), citrus trees, corn,
cotton, cotton extra long staple, crambe, cra nberries, cultivated clams, cultivated wild
rice, dark air tobacco, dry beans, dry peas, figs, fire-cured tobacco, flax, Florida fruit
trees, carambola, flue-cured tobacco, forage production, forage seed, forage seeding,
fresh apricots, fresh nectarines, fresh mark et beans, fresh market sweet corn, fresh
market tomatoes, grain sorghum, grapes, green peas, hybrid corn seed, hybrid
sorghum seed, macadamia nuts, macadamia trees, mango trees, Maryland tobacco,
millet, mint, mustard, nursery, oats, onions, peaches, peanuts, pears, pecans, peppers,
plums, popcorn, potatoes, processing apricots, processing beans, processing
cucumbers, prunes, raisins, rangeland, rapeseed, raspberries, rice, rye, safflower,
soybeans, stonefruit (processing apricots, processing cling peaches, processing
freestone), strawberries, sugar beets, sugarcane, sunflowers, sweet corn, sweet
potatoes, table grapes, tomatoes (canning and processing), walnuts, wheat, and winter
squash.
5

Thus, this one element of the Panel’s supplemental request would seem to require the United States to
gather and organize a substantial amount of information not previously provided.

We do note again that the Panel’s request fo r aggregated acreage data does not involve
privacy issues and thank the Panel for seeking the data in this format, which allows the United States
both to provide data in a manner consistent with its domestic law and to do so in a way that may be of
assistance to the Panel. Had Brazil requested data in a similar aggregated format or responded
positively to the US request at the second panel m eeting for alternatives that would allow farmer
privacy interests to be protected, a brief delay would not be necessary while the United States seeks to
provide the requested data. Brazil did not respond po sitively to that request, insisted on receiving the
data in a format that would reveal farmer identitie s, and never requested the Panel to seek data from
the United States in aggregated form – despite the fact that only Brazil was aware of its invented
methodology until it responded to the Panel’s Question 258 on 20 January 2004. Had Brazil included
its methodology in its first submission on Peace Cl ause issues (on 24 June 2003), all the time now
being devoted to these topics coul d quite likely have been saved. Brazil’s complaint that the
United States is responsible for any perceived delays in the Panel’s schedule would thus appear to be
sorely misdirected.

We note Brazil’s suggestion that, should the Pa nel accept the data the United States is
preparing in response to item (b) of the Panel’s supp lemental request for information, “then most of
Brazil’s 28 January Data comments would be rendered moot”.
6 We are not exactly sure what that
statement means or how it relates to Brazil’s objection to the United States requiring additional time
to provide a response to the inform ation that the Panel has requested. However, Brazil further states
that “by producing the complete aggregated informa tion, there would no longer be a need to draw
adverse inferences”.7 The United States welcomes this bela ted recognition by Brazil that disclosure
of farm-specific information of contract acreage and planted acreage is not necessary under Brazil’s
invented allocation methodology.

Brazil also questions the United States’ comme nt that it will require additional time to
respond to Question 264(b), saying that “Brazil was able to set up a table comparing the US and
Brazilian figures in less than an hour.” It does not appear to the United States that the Panel’s
question simply called for “set[ting] up a table” to co mpare the data referenced in that question. For

5 Exhibit Bra-62 (US Department of Agriculture, Crops Covered Under the 2002 Crop Insurance
Programme) (www.rma.usda.gov/policies/02croplist.html).
6 Brazil’s Letter to Panel of 13 February 2004, at 5.
7 Id.

example, Brazil asserted in paragraph 135 of its 28 January 2004, comments on US answers that “the
difference between the chart provided by the United States in Exhibit US-128 and Brazil's chart in
para. 165 of its 11 August Answers lies in the treatme nt of rescheduled debt”. To provide a helpful
answer would seem to require that the United States examine what goes into each of the figures that
are represented in Brazil’s chart. The United States was not able to complete that analysis within the
eight days provided – but was able to generate and provide in its 11 February answers copious
amounts of numbers and data in response to the 29 Panel questions. Rather than seek an extension
with respect to all questions, we provided the data we c ould on 11 February and will provide any
other data in response to Question 264(b) within th e time indicated (and sooner if the data can be
collected and examined in less time).

With respect to comments by the Parties on the materials that the United States is preparing,
we would not object to the Panel granting Brazil an opportunity to comment on the data to be
provided by the United States in response to item (b ) of the Panel’s supplemental request. However,
we cannot understand nor accept Brazil’s suggestion th at the United States should not be afforded an
opportunity to reply to Brazil’s comments. Since Brazil is seeking another opportunity to comment
(eight days after the United States has provided the information in response to item (b)), there would
be no significant “further delay in these proceed ings, to the detriment of Brazil” were the
United States to file its reply to Brazil’s comments w ithin, say, one week of those comments. In this
respect, we note that Brazil continues its one-sided approach to procedural issues by seeking to
provide itself with an opportunity to comment but to deny the same to the United States. Since this
would be the first time Brazil’s comments on the item (b) data would be presented, the United States
as responding party must be given an opportunity to respond.
8

Finally, the United States regrets that Brazil ha s repeated its suggestion that the United States
should provide data protected by the Privacy Ac t and that the United States should rely on WTO
confidentiality provisions in doing so. Apart from the fact that the United States is not able under its
domestic law simply to ignore US persons’ Privacy Act interests on that basis, the growing number of
press articles revealing non-public in formation about this dispute makes that suggestion even less
tenable.
9

8 In this connection we would like to draw the Panel’s attention to a previous proceeding in which
Brazil’s last-minute submission of evidence and legal ar gumentation raised difficulties for the other party
involved. Report of the Arbitrator in Canada – Export Credits and Loan Guarantees for Regional Aircraft ,
Recourse to Arbitration by Canada, WT/DS222/ARB, para s. 2.14 and 2.16. We recall that in the present
dispute, Brazil first failed to explain its invented a llocation methodology until 20 January 2004 – eight months
into this dispute – when compelled to do so by the Pa nel. Then, Brazil delayed submitting its comments on the
US December data until 28 January 2004 – eight days afte r the deadline set by the Pa nel. Now, Brazil would
seek to have an opportunity to comment on the item (b) data – despite the necessary “delay in the proceeding”
that would entail – but simultaneously seeks to deprive the United States of its “right – as respondent – to speak
last.” In this dispute, it would be singularly inappropriate to allow Brazil the final chance to comment.
9 The most recent example contains a reference to the statement in a Panel communication to the
United States that a failure to provide certain requested information without adequate explanation could lead to
adverse inferences being drawn. (Exhibit US-155.) As far as the United States is aware, any communication
from the Panel to the parties are subject to the confidentiality rules of the proceeding.

ANNEX K-50

LETTER FROM THE UNITED STATES

23 February 2004

The United States thanks the Panel for its communication of 20 February 2004, in which the
Panel extends to the United States the opportunity to respond to Brazil’s 18 February submission
relating to certain data provided by the United States on 18 and 19 December 2003. The
United States would like to confirm that it does wish to comment on this Brazilian submission. The
Panel has asked the United States to file any co mments within five days, that is, by Wednesday,
25 February. In light of the extensive materi al submitted by Brazil and US efforts to respond
simultaneously to the Panel’s supplemental request for information, the United States would like to
ask the Panel to extend the deadline to provide these comments, to Wednesday, 3 March, the same
due date for the US response to the Panel’s supplemental request for additional information.

This extension would greatly assist the United States in providing useful comments for the
Panel on Brazil’s lengthy 18 February comments, which totalled 79 pages. Of these 79 pages,
41 pages were devoted to setting forth results of numerous calculations. The personnel who would
need to review these calculations are also involved in the ongoing US efforts to provide data in
response to the Panel’s supplemental request for a dditional information. The extension requested
would permit these personnel to better advance US efforts to respond fully and accurately to the
Panel’s supplemental request wh ile simultaneously reviewing a nd providing comments on Brazil’s
18 February submission.

In addition, we note that the extension requested would not impact any other dates set by the
Panel in this proceeding. Thus, the United Stat es respectfully requests the Panel to extend the
deadline to provide the US comments, to Wednesday, 3 March.

 The United States is providing a copy of this letter directly to Brazil.