This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

Current status

Key facts

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Summary of the dispute to date

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Consultations

Complaint by Brazil.

On 27 September 2002 Brazil requested consultations with the United States regarding prohibited and actionable subsidies provided to US producers, users and/or exporters of upland cotton, as well as legislation, regulations, statutory instruments and amendments thereto providing such subsidies (including export credits), grants, and any other assistance to the US producers, users and exporters of upland cotton (“US upland cotton industry”).

Brazil contended that these measures were inconsistent with the obligations of the United States under the following provisions: Articles 5(c), 6.3(b), (c) and (d), 3.1(a) (including item (j) of the Illustrative List of Export Subsidies in Annex I), 3.1(b), and 3.2 of the SCM Agreement; Articles 3.3, 7.1, 8, 9.1 and 10.1 of the Agreement on Agriculture; and Article III:4 of GATT 1994. Brazil was of the view that the US statutes, regulations, and administrative procedures listed above were inconsistent with these provisions as such and as applied.

On 9 October and 11 October 2002, Zimbabwe and India, respectively, requested to join the consultations. On 14 October 2002, Argentina and Canada requested to join the consultations. The United States informed the DSB that it had accepted the requests of Argentina and India to join the consultations.

On 6 February 2003, Brazil requested the establishment of a panel. At its meeting on 19 February 2003, the DSB deferred the establishment of a panel.

Panel and Appellate Body proceedings

Further to a second request by Brazil, the DSB established a Panel at its meeting on 18 March 2003. Argentina, Canada, China, Chinese Taipei, the European Communities, India, Pakistan and Venezuela reserved their third-party rights to participate in the Panel’s proceedings.

At that meeting, the Chairman of the DSB announced that he continued to consult with Brazil and the United States on the issue of appointing a DSB representative to facilitate the information-gathering process, pursuant to the Annex V procedures under the SCM Agreement, which had been invoked by Brazil in its panel request. Following a communication from the United States, on 20 March 2003, Brazil indicated, in conformity with paragraph 1 of Annex V, that it considered the following third-county markets as relevant: Argentina, Bangladesh, Colombia, Germany, India, Indonesia, Italy, Portugal, Philippines, Slovenia, South Africa, South Korea, Switzerland, Thailand and Turkey.

On 24 March 2003, Benin reserved its third-party rights. On 25 March 2003, Australia reserved its third-party rights. On 26 March 2003, Paraguay reserved its third-party rights. On 28 March 2003, New Zealand reserved its third-party rights. On 4 April 2003, Chad reserved its third-party rights. On 9 May 2003, Brazil requested the Director-General to compose the panel. On 19 May 2003, the Director-General composed the panel.

On 17 November 2003, the Chairman of the panel informed the DSB that it would not be able to complete its work in six months due to the complexity of the matter and that the panel expected to issue its final report to the parties in May 2004.

On 8 September 2004, the panel report was circulated to Members. The panel found that:

agricultural export credit guarantees are subject to WTO export subsidy disciplines and three United States export credit guarantee programmes are prohibited export subsidies which have no Peace Clause protection and are in violation of those disciplines;



the United States also grants several other prohibited subsidies in respect of cotton;



United States’ domestic support programmes in respect of cotton are not protected by the Peace Clause, and certain of these programmes result in serious prejudice to Brazil’s interests in the form of price suppression in the world market.

On 18 October 2004, the United States notified its intention to appeal certain issues of law and legal interpretations developed by the panel. On 16 December 2004, the Chairman of the Appellate Body informed the DSB that in light of the numerous and complex issues raised in this dispute, the increased burden on the Appellate Body as well as the translation services, the intervening holiday period, and the fact that the Appellate Body expects to be considering two or three other appeals in the coming weeks, the Appellate Body would not be able to circulate its Report by, 17 December 2004. The Chairman stated that the Appellate Body estimated that the Appellate Body report would be circulated no later than 3 March 2005.

On 3 March 2005, the Appellate Body report was circulated to Members. The Appellate Body found inter alia as follows:

A. As regards the applicability of the Peace Clause to this dispute, the Appellate Body:

upheld the panel’s finding that two challenged measures (production flexibility contract and direct payments) are related to the type of production undertaken after the base period and thus are not green box measures conforming fully to paragraph 6(b) of Annex 2 to the Agreement on Agriculture; and, therefore, are not exempt, by virtue of Article 13(a)(ii), from actions under Article XVI of GATT 1994 and Part III of the SCM Agreement;



of production undertaken after the base period and thus are measures conforming fully to paragraph 6(b) of Annex 2 to the Agreement on Agriculture; and, therefore, are not exempt, by virtue of Article 13(a)(ii), from actions under Article XVI of GATT 1994 and Part III of the SCM Agreement; modified the panel’s interpretation of the phrase “support to a specific commodity” in Article 13(b)(ii), but upheld the Panel’s conclusion that the challenged domestic support measures granted support to upland cotton; and



upheld the panel’s finding that the challenged domestic support measures granted, between 1999 and 2002, support to upland cotton in excess of that decided during the 1992 benchmark period and, therefore, that these measures are not exempt, by virtue of Article 13(b)(ii), from actions under Article XVI:1 of the GATT 1994 and Part III of the SCM Agreement;



B. As regards serious prejudice, the Appellate Body:

upheld the panel’s finding that the effect of the challenged price-contingent subsidies (marketing loan program payments, user marketing (Step 2) payments, market loss assistance payments, and counter-cyclical payments) are significant price suppression within the meaning of Article 6.3(c) of the SCM Agreement, by in turn upholding the panel’s findings that: (i) the “same market” in Article 6.3(c) may be a “world market”, a “world market” for upland cotton exists, and “the A-Index can be taken to reflect a world price in the world market for upland cotton”; (ii) “a causal link exists” between the price-contingent subsidies and significant price suppression, and that this link is not attenuated by other factors raised by the United States; (iii) it was not required to quantify precisely the benefit conferred on upland cotton by the price-contingent subsidies; and (iv) the effect of the price-contingent subsidies for marketing years 1999 to 2002 is significant price suppression in the same period;



found that the panel set out the findings of fact, the applicability of relevant provisions, and the basic rationale behind this finding, as required by Article 12.7 of the DSU; and



found it unnecessary to rule on the interpretation of the term “world market share” in Article 6.3(d) of the SCM Agreement and neither upholds nor reverses the panel’s finding that this term means world supply share;

C. As regards user marketing (Step 2) payments, the Appellate Body:

upheld the panel’s findings that Step 2 payments to domestic users of United States upland cotton, under Section 1207(a) of the FSRI Act of 2002, are subsidies contingent on the use of domestic over imported goods that are inconsistent with Articles 3.1(b) and 3.2 of the SCM Agreement; and



of United States upland cotton, under Section 1207(a) of the FSRI Act of 2002, are subsidies contingent on the use of domestic over imported goods that are inconsistent with Articles 3.1(b) and 3.2 of the SCM Agreement; and uphelds the Panel’s findings that Step 2 payments to exporters of United States upland cotton, pursuant to Section 1207(a) of the FSRI Act of 2002, are subsidies contingent upon export performance within the meaning of Article 9.1(a) of the Agreement on Agriculture that are inconsistent with Articles 3.3 and 8 of that Agreement and Articles 3.1(a) and 3.2 of the SCM Agreement;

D. As regards export credit guarantee programs, the Appellate Body:

in a majority opinion, upheld the panel’s finding that Article 10.2 of the Agreement on Agriculture does not exempt export credit guarantees from the export subsidy disciplines in Article 10.1 of that Agreement;



opinion, upheld the panel’s finding that Article 10.2 of the Agreement on Agriculture does export credit guarantees from the export subsidy disciplines in Article 10.1 of that Agreement; one Member of the Division, in a separate opinion, expressed the contrary view that Article 10.2 of the Agreement on Agriculture exempts export credit guarantees from the disciplines of Article 10.1 of that Agreement until international disciplines are agreed upon;



opinion, expressed the contrary view that Article 10.2 of the Agreement on Agriculture export credit guarantees from the disciplines of Article 10.1 of that Agreement until international disciplines are agreed upon; found that the panel did not improperly apply the burden of proof in finding that the United States’ export credit guarantee programs are prohibited export subsidies under Article 3.1(a) of the SCM Agreement and are consequently inconsistent with Article 3.2 of that Agreement;



improperly apply the in finding that the United States’ export credit guarantee programs are prohibited export subsidies under Article 3.1(a) of the SCM Agreement and are consequently inconsistent with Article 3.2 of that Agreement; upheld the panel’s finding that “the United States export credit guarantee programmes at issue-GSM 102, GSM 103 and SCGP-constitute a per se export subsidy within the meaning of item (j) of the Illustrative List of Export Subsidies in Annex I of the SCM Agreement”, and upheld the panel’s findings that these export credit guarantee programs are export subsidies for purposes of Article 3.1(a) of the SCM Agreement and are inconsistent with Articles 3.1(a) and 3.2 of that Agreement; and



found that the panel did not err in exercising judicial economy in respect of Brazil’s allegation that the United States’ export credit guarantee programs are prohibited export subsidies, under Article 3.1(a) of the SCM Agreement, because they confer a “benefit” within the meaning of Article 1.1 of that Agreement;

At its meeting on 21 March 2005, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report. The resulting DSB recommendations and rulings include the recommendation that the United States withdraw, by at the latest within six months of the date of adoption of the Panel report by the DSB or 1 July 2005 (whichever is earlier), the following prohibited subsidies: (i) the export credit guarantees under the GSM 102, GSM 103 and SCGP export credit guarantee programmes in respect of exports of upland cotton and other unscheduled agricultural products supported under the programmes, and in respect of one scheduled product (rice); (ii) Section 1207(a) of the Farm Security and Rural Investment (FSRI) Act of 2002 providing for user marketing (STEP2) payments to exporters of upland cotton; and (iii) Section 1207(a) of the FSRI Act of 2002 providing for user marketing (STEP2) payments to domestic users of upland cotton. As for the actionable subsidies the recommendation is that the United States takes appropriate steps to remove the adverse effects of certain subsidies or withdraw these subsidies within six months from the date of adoption of the Panel and Appellate Body reports, i.e. the compliance period expired on 21 September 2005.

Compliance proceedings

Following the suspension of the arbitration proceedings under Article 22.6 triggered by Brazil's request to take countermeasures with respect to the prohibited and actionable subsidies (see below), on 18 August 2006, Brazil requested the establishment of a compliance panel. At its meeting on 1 September 2006, the DSB deferred the establishment of a compliance panel. Further to a second request, at its meeting on 28 September 2006, the DSB agreed, if possible, to refer the matter raised by Brazil to the original panel. Argentina, Australia, Canada, China, the European Communities, India, Japan and New Zealand reserved their third party rights. Subsequently, Chad and Thailand reserved their third party rights. On 18 and 20 October 2006, Brazil and the United States respectively requested the Director-General to compose the compliance panel. On 25 October 2006, the Director-General composed the panel.

On 9 January 2007, the Chairman of the panel informed the DSB that given the particular circumstances of this case and the schedule adopted after consultations with parties to this dispute, it had not been possible for the panel to complete its work within the 90-day period as foreseen in Article 21.5. The panel expected to complete its work in July 2007.

On 18 December 2007, the compliance panel report was circulated to Members. The Panel found that with respect to the measure taken by the United States to comply with the DSB recommendations and rulings relating to the original panel's finding of inconsistency with Articles 5 and 6 of the SCM Agreement:

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-cyclical payments provided to US upland cotton producers pursuant to the FSRI Act of 2002 is significant 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. By acting inconsistently with Articles 5(c) and 6.3(c) of the SCM Agreement the United States had failed to comply with the DSB recommendations and rulings. Specifically, the United States had failed to comply with its obligation under Article 7.8 of the SCM Agreement “to take appropriate steps to remove the adverse effects or ... withdraw the subsidy”.



Brazil had not made a prima facie case that the effect of marketing loan and counter-cyclical payments provided to US upland cotton producers pursuant to the FSRI Act of 2002 is an increase in the US world market share in upland cotton as compared to the average US world market share during the previous period of three years and that this increase follows a consistent trend over a period when subsidies have been granted. Therefore, it had not been established that the United States acted inconsistently with Articles 5(c) and 6.3(d) of the SCM Agreement.

With respect to the measure taken by the United States to comply with the DSB recommendations and rulings 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, the panel found:

Regarding GSM 102 export credit guarantees issued after 1 July 2005 the United States acted inconsistently with Article 10.1 of the Agreement on Agriculture by applying export subsidies in a manner which results in the circumvention of US export subsidy commitments with respect to certain unscheduled products and certain scheduled products, and as a result acted inconsistently with Article 8 of the Agreement on Agriculture. Regarding GSM 102 export credit guarantees issued after 1 July 2005, the United States also acted inconsistently with Articles 3.1(a) and 3.2 of the SCM Agreement by providing export subsidies to unscheduled products and by providing export subsidies to scheduled products in excess of the commitments of the United States under the Agreement on Agriculture. By acting inconsistently with Articles 10.1 and 8 of the Agreement on Agriculture and Articles 3.1(a) and 3.2 of the SCM Agreement, the United States had failed to comply with the DSB recommendations and rulings. Specifically, the United States had failed to bring its measures into conformity with the Agreement on Agriculture and had failed “to withdraw the subsidy without delay”.



With respect to certain export credits guarantees issued prior to 1 July 2005, Brazil had not established that the United States had failed to “withdraw the subsidy without delay”.

The panel also considered that to the extent that the measures taken by the United States to comply with the recommendations and rulings adopted by the DSB in the original proceeding were inconsistent with the objections of the United States under the covered agreements, these recommendations and rulings remain operative.

On 12 February 2008, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the compliance panel report and certain legal interpretations developed by the panel. On 25 February 2008, Brazil notified its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the compliance panel report. On 11 April 2008, the Chairman of the Appellate Body informed the DSB that it would not be possible to circulate its report within 60 days in light of the numerous and complex issues raised in this appeal, and the increased burden on translation services. It estimated that the Appellate Body report would be issued no later than 2 June 2008.

On 2 June 2008, the Appellate Body report was circulated to Members.

As regards the scope of the Article 21.5 proceedings, the Appellate Body upheld the Panel's finding that Brazil's claims relating to export credit guarantees for pig meat and poultry meat are properly within the scope of these Article 21.5 proceedings. Because the condition on which it was predicated had not been fulfilled, the Appellate Body did not find it necessary to consider Brazil's other appeal that the Panel erred when it found that the measure that is the subject of Brazil's claims is not the revised GSM 102 programme itself.

The Appellate Body also upheld the Panel's finding that Brazil's claims against marketing loan and counter-cyclical payments made by the United States after 21 September 2005 were properly within the scope of these Article 21.5 proceedings. Because the condition on which it was predicated has not been fulfilled, the Appellate Body did not find it necessary to consider Brazil's other appeal that the Panel erred in finding that the original panel's conclusions and recommendations addressed only the payments made under the marketing loan and counter-cyclical payments programmes, and not the programmes themselves.

As regards the revised GSM 102 export credit guarantee programme, the Appellate Body found that the Panel failed to make an objective assessment of the matter, under Article 11 of the DSU, because it dismissed the import of the re-estimates data submitted by the United States on the basis of internally inconsistent reasoning. Consequently, the Appellate Body reversed the Panel's intermediate finding that “the initial subsidy estimates provide a strong indication that GSM 102 export credit guarantees are provided against premia which are inadequate to cover the long-term operating costs and losses of the GSM 102 programme”.

The Appellate Body upheld the Panel's finding that “the GSM 102 programme is not designed to cover its long term operating costs and losses” and, albeit for reasons that differ from those of the Panel, the Panel's conclusion that “the GSM 102 export credit guarantee programme constitutes an 'export subsidy' because it is provided against premiums which are inadequate to cover its long term operating costs and losses under the terms of item (j) of the Illustrative List”.

Consequently, the Appellate Body upheld the Panel's finding that GSM 102 export credit guarantees issued after 1 July 2005 are export subsidies within the meaning of Article 3.1(a) of the SCM Agreement and Article 10.1 of the Agreement on Agriculture; and that regarding export credit guarantees issued under the revised GSM 102 programme after 1 July 2005 the United States acts inconsistently with Article 10.1 of the Agreement on Agriculture by applying export subsidies in a manner which results in the circumvention of United States' export subsidy commitments with respect to certain unscheduled products and certain scheduled products, and as a result acts inconsistently with Article 8 of the Agreement on Agriculture. Regarding export credit guarantees issued under the revised GSM 102 programme after 1 July 2005, the Appellate Body also found that the United States also acts inconsistently with Articles 3.1(a) and 3.2 of the SCM Agreement by providing export subsidies to unscheduled products and by providing export subsidies to scheduled products in excess of the commitments of the United States under the Agreement on Agriculture.

The Appellate Body further found that, by acting inconsistently with Articles 10.1 and 8 of the Agreement on Agriculture and Articles 3.1(a) and 3.2 of the SCM Agreement, the United States had failed to comply with the DSB recommendations and rulings and specifically, had failed to bring its measures into conformity with the Agreement on Agriculture and “to withdraw the subsidy without delay”.

As regards whether the effect of marketing loan and counter-cyclical payments is significant price suppression, the Appellate Body upheld the panel's findings 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-cyclical payments provided to United States upland cotton producers pursuant to the FSRI Act of 2002 is significant 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. The Appellate Body also found that, by acting inconsistently with Articles 5(c) and 6.3(c) of the SCM Agreement, the United States had failed to comply with the DSB's recommendations and rulings and, specifically, failed to comply with its obligation under Article 7.8 of the SCM Agreement “to take appropriate steps to remove the adverse effects or ... withdraw the subsidy”.

The Appellate Body further found that the Panel did not fail to make an objective assessment of the matter before it, as required by Article 11 of the DSU, in its analysis of Brazil's claim that the effect of the marketing loan and counter-cyclical payments is significant price suppression.

The Appellate Body recommended that the DSB request the United States to bring its measures, found to be inconsistent with the Agreement on Agriculture and the SCM Agreement, into conformity with its obligations under those Agreements.

At its meeting on 20 June 2008, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

Proceedings under Article 22 of the DSU (remedies)

On 4 July 2005, prior to the initiation of the compliance proceedings (see above), and in respect of the “prohibited subsidies”, Brazil requested, the DSB for authorization to take appropriate countermeasures pursuant to Article 4.10 of the SCM Agreement and to suspend concessions or other obligations pursuant to Article 22.2 of the DSU. Brazil asserted that the reasonable period of time had expired on 1 July 2005. Brazil stated it intended to take appropriate countermeasures in the form of the suspension of tariff concessions and related obligations under the GATT 1994 by imposing additional customs duties on a list of products imported from the United States, to be defined by Brazil. In addition, given that it considered that it was not practicable or effective to exclusively apply additional import duties and that it considered that the circumstances were serious enough, Brazil stated it may resort, to the extent necessary, to countermeasures in the form of suspension of certain obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the General Agreement on Trade in Services (GATS).

With regard to the prohibited subsidies, on 5 July 2005 the parties to the dispute jointly notified the DSB of “Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding and Article 4 of the SCM Agreement”. On 14 July 2005, the United States submitted its objections to the request for authorization by Brazil pursuant to Article 22.6 of the DSU and Article 4.11 of the SCM Agreement challenging the appropriateness of the countermeasures, the proposed level of suspension and asserting that the principles and procedures set forth in Article 22.3 of the DSU had not been followed. At its meeting on 15 July 2005, the DSB referred the matter raised by the United States to arbitration. On 17 August 2005, the parties to the dispute jointly requested the Chairman of the Arbitrator to suspend the Article 22.6 arbitration proceedings in accordance with the Agreed Procedures under Articles 21 and 22 of the DSU, and the Arbitrator suspended the proceedings accordingly.

On 6 October 2005, in respect of the “actionable subsidies” Brazil requested the DSB for authorization to suspend concessions or other obligations under Article 7.9 of the SCM Agreement and Article 22.2 of the DSU. Brazil asserted that the reasonable period of time had expired on 21 September 2005. Brazil stated that in principle, these countermeasures would take the form of suspension of tariff concessions and related obligations under the GATT 1994 by means of the imposition of additional import duties on a list of products imported from the United States, to be defined by Brazil. In addition, Brazil contended that it was not practicable or effective to suspend concessions or other obligations exclusively with respect to the same sector/agreement as that in which the Panel and the Appellate Body have found the violations and that the circumstances are serious enough to justify the suspension of concessions or obligations under other covered agreements. Therefore it affirmed it may, to the extent necessary, resort to countermeasures in the form of suspension of certain obligations under the TRIPS Agreement and the GATS.

On 17 October 2005, the United States submitted its objections to the request for authorization by Brazil pursuant to Article 22.6 of the DSU and Article 7.10 of the SCM Agreement arguing that the countermeasures proposed are not commensurate with the degree and nature of the adverse effects determined to exist within the meaning of Article 7.9 of the SCM Agreement and that the level of suspension proposed is not equivalent to the level of nullification or impairment within the meaning of Article 22.7 of the DSU. With respect to Brazil's request for “cross-retaliation”, the United States claimed that the principles and procedures set forth in Article 22.3 of the DSU have not been followed. At its meeting on 18 October 2005, the DSB referred the matter raised by the United States to arbitration. On 21 November 2005, the parties to the dispute jointly requested the Chairman of the Arbitrator to suspend the Article 22.6 arbitration proceedings in accordance with the Agreed Procedures under Articles 21 and 22 of the DSU, and the Arbitrator suspended the proceedings accordingly.

On 25 August 2008, and following the completion of the compliance proceedings (see above), Brazil requested that the two arbitration proceedings be resumed. At the time that Brazil requested the resumption of the arbitration proceedings, two of the arbitrators had become unavailable to serve in these proceedings. On 1 October 2008, the parties agreed to the replacement arbitrators. On 31 August 2009, the two Decisions by the Arbitrator were circulated to Members.

With respect to the “prohibited subsidies” at issue, the Arbitrator determined that Brazil may request authorization from the DSB to suspend concessions or other obligations under the Agreements on trade in goods in Annex 1A, at a level not to exceed the value of USD 147.4 million for FY 2006, or, for subsequent years, an annual amount to be determined by applying a methodology described in the Decision of the Arbitrator. The Arbitrator also determined that, in the event that the total level of countermeasures that Brazil would be entitled to in a given year should increase to a level that would exceed a threshold described in the decisions, updated to account for the change in Brazil's total imports from the United States, then, Brazil would also be entitled to seek to suspend certain obligations under the TRIPS Agreement and/or the GATS with respect to any amount of permissible countermeasures applied in excess of that figure.

With respect to the “actionable subsidies” at issue, the Arbitrator determined that Brazil may request authorization from the DSB to suspend concessions or other obligations under the Agreements on trade in goods in Annex 1A, at a level not to exceed the value of USD 147.3 million annually. The Arbitrator also determined that, in the event that the total level of countermeasures that Brazil would be entitled to in a given year should increase to a level that would exceed a threshold described in the decisions, updated to account for the change in Brazil's total imports from the United States, then, Brazil would also be entitled to seek to suspend certain obligations under the TRIPS Agreement and/or the GATS with respect to any amount of permissible countermeasures applied in excess of that figure.

With respect to the “prohibited subsidies”, on 6 November 2009, Brazil requested authorization from the DSB to suspend the application to the United States of concessions or other obligations in conformity with the Arbitrators' Decision pursuant to Article 22.7 of the DSU and Article 4.10 of the SCM Agreement. At its meeting on 19 November 2009, the DSB authorized Brazil to suspend the application to the United States of concessions or other obligations.

With respect to the “actionable subsidies”, on 6 November 2009, Brazil requested authorization from the DSB to suspend the application to the United States of concessions or other obligations in conformity with the Arbitrators' Decision pursuant to Article 22.7 of the DSU and Article 7.9 of the SCM agreement. At its meeting on 19 November 2009, the DSB authorized Brazil to suspend the application to the United States of concessions or other obligations.

On 8 March 2010, Brazil notified the DSB that, starting on 7 April 2010, it would suspend the application to the United States of concessions or other obligations under the GATT 1994 in the form of increased import duties on certain products when they are imported from the United States. However on 30 April 2010, Brazil notified the DSB that it had decided to postpone the imposition of countermeasures vis-à-vis the United States indicating that no countermeasures would enter into force before 21 June 2010, since Brazil and the United States were engaged in a dialogue with a view to reaching a mutually satisfactory solution to the dispute.

Implementation of adopted reports

On 25 August 2010, Brazil and the United States notified the DSB they had concluded a Framework for a Mutually Agreed Solution to the Cotton Dispute (Framework) which in itself does not constitute a mutually agreed solution to the dispute but sets out parameters for discussions on a solution with respect to domestic support programs for upland cotton in the United States, as well as a process of joint operation reviews as regards export credit guarantees under the program GSM-102. Brazil and the United States also agreed to hold consultations not less than four times a year, unless they agree otherwise, with the aim of obtaining convergence of views in respect of a solution to the Cotton dispute. The Framework also provides that, upon enactment of successor legislation to the US Food, Conservation and Energy Act of 2008, Brazil and the United States will consult with a view to determining whether a mutually agreed solution to the Cotton dispute has been reached. The joint communication also specified that as long as the Framework is in effect, Brazil will not impose the countermeasures authorized by the DSB.

At the DSB meeting on 23 October 2012, Brazil said that on 30 September 2012, the 2008 US Farm Bill had expired without the enactment of a successor legislation. However, taking into account that the current US agricultural support programs remained unchanged, Brazil had decided not to terminate the Memorandum of Understanding and the Framework Agreement and would thus not impose any countermeasures at this time.

On 16 October 2014, Brazil and the United States notified the DSB that, in accordance with Article 3.6 of the DSU, they had concluded a Memorandum of Understanding, and agreed that this dispute was terminated. As a result, no suspension of concessions or other obligations pursuant to the authorization previously granted by the DSB shall be applied and no further action shall be taken under Article 21.5 of the DSU based on a disagreement as to the existence or consistency of any measure taken to comply with the DSB recommendations and rulings.