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USTR Statement on Awards in Brazil Cotton Dispute

August 31, 2009

Washington, D.C. - The Office of the United States Trade Representative issued a public statement today following issuance of awards by arbitrators in the Brazil Cotton dispute in the arbitrations over Brazil's request for authorization to suspend trade concessions against the United States.

The arbitration followed a 2008 WTO ruling that the United States had not complied with the original findings in the Cotton dispute.

Brazil is authorized to suspend concessions ("impose countermeasures") against U.S. trade.  The total amount may vary from year to year because part of the award is based on a detailed formula set out by the Arbitrators.  For the time periods analyzed by the Arbitrators, including fiscal year 2006 for the part based on the formula, the amount would be $294.7 million.

In response to Brazil's claim that it had an unconditional ability to suspend concessions against U.S. intellectual property and services, so-called "cross-sectoral" countermeasures, the Arbitrators denied Brazil's claim.  Furthermore, the Arbitrators found that Brazil may not impose cross-sectoral countermeasures unless the total amount of countermeasures for a particular year exceeds a threshold calculated for that year based on a subset of Brazil's imports from the United States.  For 2007, that threshold was $409.7 million.

USTR spokeswoman Carol Guthrie issued the following statement:

"While we remain disappointed with the outcome of this dispute, we are pleased  that the Arbitrators awarded Brazil far below the amount of countermeasures it asked for.  In its first requests for countermeasures in the Cotton dispute, Brazil asked for more than $4 billion in annual countermeasures.  During the arbitration proceedings, Brazil argued for more than $2 billion annually.   Further, we are grateful that the Arbitrators denied Brazil's request for unlimited ability to suspend concessions on intellectual property or services.  And we are pleased that the Arbitrators denied Brazil's request for an additional one-time $350 million in countermeasures in connection with the repealed Step 2 payment program for cotton.

"At this time, we do not know when or if Brazil will move to obtain final authorization to suspend concessions or when or if Brazil would act on any such authorization.

"The Administration will be actively consulting within the U.S. Government and with stakeholders on how to move forward."