Statement by the United States
at the Meeting of the WTO Dispute Settlement Body (DSB)

Geneva,
July 15, 2005

Item 1. UNITED STATES – SUBSIDIES ON UPLAND COTTON

A. RECOURSE TO ARTICLE 4.10 OF THE SCM AGREEMENT AND ARTICLE 22.2 OF THE DSU BY BRAZIL (WT/DS267/21)

· Mr. Chairman, on July 5, 2005, Brazil and the United States informed the DSB that they had agreed on procedures under Articles 21 and 22 of the DSU and Article 4 of the SCM Agreement in the follow-up to this dispute. This agreement was circulated to Members on July 8 as document WT/DS267/22.

· Pursuant to this agreement, Brazil has requested authorization to suspend concessions or other obligations pursuant to Article 22.2 of the DSU and to adopt appropriate countermeasures pursuant to Article 4.10 of the SCM Agreement “[i]n order to fully safeguard its rights under the [DSU].”

· In response to this procedural step by Brazil, on July 14, 2005, the United States objected to the appropriateness of the countermeasures and the level of suspension of concessions or other obligations proposed by Brazil and claimed that the principles and procedures set forth in DSU Article 22.3 had not been followed, thereby referring the matter to arbitration. Thus, today’s meeting did not need to be held. Nevertheless, we have no objection if the DSB wishes to take note of that fact and confirm that it may not consider Brazil’s request for authorization, which is the agenda item today, since the matter is being referred to arbitration.

· Mr. Chairman, pursuant to our agreement that I just mentioned, Brazil and the United States “will, at the earliest possible moment,” jointly request the Article 22.6 arbitrator to suspend its work.

· The United States has taken significant steps to implement the recommendations and rulings of the DSB in this dispute. As noted in the chapeau to our understanding with Brazil, the United States announced, effective July 1, administrative changes to the three agricultural export credit guarantee programs at issue in this dispute. On July 5, the U.S. Administration announced a legislative proposal to repeal the user marketing “Step 2” cotton program and to make further changes to the guarantee programs.

· As stated at the April 21 DSB meeting, the United States fully intends to implement the recommendations and rulings of the DSB in this dispute. Thus, we do not believe that the Article 22.6 arbitration, once suspended, will need to be re-activated.

· Thank you, Mr. Chairman.