Brazil is claiming damages of $1.3 billion for the GSM program operating as a prohibited subsidy; $350 million in one-time damages from Step 2 as a prohibited subsidy; and “serious prejudice” damages from the upland cotton marketing loan and counter-cyclical programs of $1 billion. These claims come despite the fact that the Step 2 program ended almost three years ago and export credit programs have been altered or discontinued. In addition, claims of injury due to the cotton program are unreasonable given the realities of the world fiber market and recent declines in U.S. cotton production.
A frustrating aspect of the case, Maguire noted, is the WTO's use of the 1999-2005 period for analysis.
“Unfortunately, changes in the world and U.S. cotton market and programs since 2005 are not fully appreciated in the current dispute deliberations,” he said. “More recent data will be extremely important when the U.S. seeks a compliance panel to demonstrate the response to the Brazil dispute panel findings.”
Maguire explained to the group that the size of potential damages will be important in determining the scope and type of countermeasures Brazil will be allowed to use. He also noted that it is possible that any retaliation by Brazil could look beyond agriculture.
National Cotton Council of America
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