UNITED STATES – SUBSIDIES ON UPLAND COTTON
Document: Recourse to Article 21.5 of the DSU by Brazil Notification of an Appeal by the United States under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
Date: 19 February 2008
Document codes: WT/DS267/33
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

UNITED STATES – SUBSIDIES ON UPLAND COTTON

Recourse to Article 21.5 of the DSU by Brazil

Notification of an Appeal by the United States
under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 12 February 2008, from the Delegation of the United States,
is being circulated to Members.

Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review, the
United States hereby notifies its decision to app eal to the Appellate Body certain issues of law
covered in the report of the panel in : Recourse to
Article 21.5 of the DSU by Brazil () ("Panel Report") and certain legal interpretations
developed by the panel in this dispute.

1. The United States seeks review by the Appella te Body of the panel's finding that Brazil's
claims relating to GSM 102 export credit guarantees fo r exports of pig meat and poultry meat were
within the scope of this proceeding under Article 21.5 of the DSU.
1 This finding is in error and is
based on erroneous findings on issues of law and related legal interpretations.

2. The United States seeks review by the Appella te Body of the panel's finding that Brazil's
claim that the United States failed to comply with its obligation under Article 7.8 of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement") with respect to marketing loan payments
and counter-cyclical payments made by the Unite d States after September 21, 2005 was properly
before the panel.
2 This finding is in error and is based on erroneous findings on issues of law and
related legal interpretations.

3. The United States seeks review by the Appellate Body of the panel's legal conclusion that as
to GSM 102 export credit guarantees issued after July 1, 2005, the United States acted inconsistently
with Article 10.1 of the Agreement on Agriculture by applying export subsidies in a manner which
resulted in the circumvention of U.S. export su bsidy commitments with respect to unscheduled
products and certain scheduled products, and as a resu lt acted inconsistently with Article 8 of the
Agreement on Agriculture.3 The United States also seeks review by the Appellate Body of the panel's
related legal conclusion that the United States acted in consistently with Articles 3.1(a) and 3.2 of the

1 See, e.g., Panel Report, paras. 9.20-9.27.
2 See, e.g., Panel Report, paras. 9.75-9.81.
3 See , e.g. , Panel Report, paras. 14.89, 14.97, 14.110, 14.115, 14.120, 14.128-14.129, 14.131,
14.133(a)-(c), 14.134, 14.140, 14.149, 15.1(c).

SCM Agreement by providing export subsidies to unsche duled products and by providing export
subsidies to scheduled products in excess of U.S. commitments under the Agreement on Agriculture.
4
These conclusions are in error and are based on erro neous findings on issues of law and related legal
interpretations.

4. The United States requests the Appellate Body to find that the panel failed to make "an
objective assessment of the matter before it, including an objective assessment of the facts of the case
and the applicability of and conformity with the relevant covered agreements" as required by
Article 11 of the DSU with respect to Brazil's claims that the GSM 102 export credit guarantees
constituted prohibited export subsidies. The pa nel's failure to undertak e an objective assessment
includes, for example, the following:

 (a) The panel disregarded and misconstrue d the import of the GSM 102 export credit
 guarantee budgetary re-estimates data submitted by the United States
5;

 (b) When conducting its analysis under item (j) of the Illustrative List of Export
Subsidies to the SCM Agreement, the panel relied upon assumptions not supported by
evidence on the record6 and on inappropriate comparisons of fees.7

5. The United States seeks review by the Appellate Body of the panel's legal conclusion that the
United States failed to comply with the DSB's ruli ngs and recommendations relating to the original
panel's findings of inconsistency with Articles 10.1 and 8 of the Agreement on Agriculture and
Articles 3.1(a) and 3.2 of the SCM Agreement.
8 This erroneous conclusi on is based on the panel's
erroneous legal conclusions a nd failure to undertake an objec tive assessment, described in
paragraphs 3-4 above.

6. The United States seeks review by the Appella te Body of the panel's finding that the United
States acted inconsistently with its obligations under Articles 5(c) and 6.3(c) of the SCM Agreement in
that the effect of marketing loan and counter-c yclical payments provided to U.S. upland cotton
producers after September 21, 2005 was signifi cant price suppression within the meaning of
Article 6.3(c) of the SCM Agreement in the world market for upland cotton constituting "present"
serious prejudice to the interests of Brazil within the meaning of Article 5(c) of the SCM Agreement.
9
This conclusion is in error and is based on err oneous findings on issues of law and related legal
interpretations.

7. The United States requests the Appellate Body to find that the panel failed to make "an
objective assessment of the matter before it, including an objective assessment of the facts of the case
and the applicability of and conformity with the relevant covered agreements" as required by
Article 11 of the DSU with respect to Brazil's claims of present serious prejudice. The panel's failure
to undertake an objective assessment includes, for example, the following:

 (a) The panel disregarded and misconstrue d evidence on the record concerning the
structure, design, and operation of marketing loan and counter-cyclical payments
10;

4 See, e.g., Panel Report, paras. 14.156, 15.1(c).
5 See, e.g., Panel Report, paras. 14.80-14.81.
6 See, e.g., Panel Report, paras. 14.101, 14.125, 14.129.
7 See, e.g., Panel Report, paras. 14.94-14.103, 14.124-14.128, 14.129-14.131.
8 See, e.g., Panel Report, paras. 14.150, 14.157, 15.1(c), 15.2.
9 See, e.g., Panel Report, paras. 10.50, 10.58, 10.104, 10.111, 10.196, 10.222, 10.231, 10.239, 10.243,
10.247-10.256, 15.1(a).
10 See, e.g., Panel Report, paras. 10.61-10.82, 10.92-10.95.

 (b) The panel disregarded and misconstrued evidence on the record and its own finding
that the U.S. share of world upland cotton production and exports was stable over
MY 2002-2005
11;

 (c) The panel misconstrued the results of U.S. econometric modeling concerning the
effect of U.S. marketing loan and counte r-cyclical payments on the world price for
upland cotton
12;

 (d) The panel disregarded and misconstrue d evidence concerning the alleged gap
between the costs of production and the revenues of U.S. upland cotton farmers
13;

 (e) The panel disregarded evidence relevant to ensuring that the effect of other factors on
upland cotton prices was not improperly a ttributed to U.S. marketing loan and
counter-cyclical payments.14

8. The United States seeks review by the Appellate Body of the panel's legal conclusion that the
United States failed to comply with the DSB's ru lings and recommendations related to the original
panel's findings of inconsistency with Articles 5 and 6 of the SCM Agreement .15 This erroneous
conclusion is based on the panel's erroneous legal conclusions and fa ilure to undertake an objective
assessment, described in paragraphs 6-7 above.