Bridges Weekly Trade News Digest • Volume 9 • Number 40 • 23rd November 2005

Brazil Suspends Cross-Retaliation Request Against US In Cotton Case

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Brazil has suspended its efforts to seek over USD 1 billion in annual retaliation against US goods, patents, and services providers after striking a bilateral deal to halt proceedings in its WTO dispute against US cotton subsidies.

In October, Brazil formally asked WTO Members for the right to impose sanctions on the US for failing to comply with a March WTO ruling against its cotton subsidy programme (see BRIDGES Weekly, 12 October 2005). Arguing that imposing large amounts of retaliatory tariffs on US goods imports would be harmful to its domestic industry, Brazil sought to ‘cross-retaliate’ against US services providers and intellectual property as well. Although no WTO Member has ever applied such cross-retaliatory measures, some trade analysts believe that they would be more effective than higher goods tariffs at getting large economies to comply with WTO rules in disputes with smaller ones.

At the 18 October meeting of the Dispute Settlement Body (DSB), the US rejected both the type and amount of retaliation that Brazil was seeking as inappropriate, and filed for arbitration in the dispute (see BRIDGES Weekly, 19 October 2005).

This arbitration has been suspended by the US and Brazil’s agreement. In a joint letter dated 21 November, US Ambassador Peter Allgeier and Brazilian Ambassador Clodoaldo Hugueney asked the WTO arbitrator to halt proceedings, citing the US’ reaffirmation during the 18 October DSB meeting that it would implement the cotton ruling. As per the terms of the US-Brazil agreement, arbitration proceedings are suspended until either country asks for their resumption. Each country promised to notify the other 30 days before doing so.

A similar agreement in July suspended arbitration on Brazil’s USD 3 billion sanction request with regard to a different set of subsidies in the same dispute (see BRIDGES Weekly, 13 July 2005).

ICTSD reporting; "Brazil suspends WTO move on US cotton," DAILY TIMES, 23 November 2005.

SMALL ECONOMIES CALL FOR SPECIAL ACCESSION, REGIONAL TREATMENT

A proposal (WT/COMTD/SE/W/17) to ensure that small and vulnerable economies are not faced with "unreasonable" demands during the WTO accession process met with resistance in the Committee on Trade and Development Dedicated Session (small economies) on 16 November. The paper, presented by non-resident Members who were at the WTO for Geneva Week (a bi-annual event to facilitate the participation of small delegations that don’t have a representative in Geneva), suggests that the terms of reference for the working parties on the accession of such countries should make clear that membership-seekers "will only be required to undertake commitments commensurate with their level of development." It also proposes allowing Working Party members to request the establishment of a special panel of experts appointed by the Director-General if it believes that these terms are not being observed.

In spite of the sympathy expressed by many Members, the proposal failed to garner consensus and was explicitly rejected by Switzerland, the US, Japan and Brazil. Several delegations questioned the plan’s feasibility, pointing out that differentiation among developing countries was a controversial issue and that the Doha Declaration stipulated that the ongoing talks would "not create a new category of Member" (see BRIDGES Weekly, 19 October 2005).

The meeting also considered proposals calling for the recognition of regional bodies to provide technical support, notification and implementation functions for SVEs for the Agreements on Technical Barriers to Trade (TBT, WT/COMTD/SE/W/15), Sanitary and Phytosanitary Measures (SPS, WT/COMTD/SE/W/16) and Trade-related Aspects of Intellectual Property Rights (TRIPS, WT/COMTD/SE/W/18), which most Members supported. Members agreed to a text for the draft Hong Kong Ministerial Declaration that broadly confirms that the CTD-DS has "made progress." In addition, the group approved a report prepared by Chair Ambassador Gomi Theraka Senadhira (Sri Lanka) for the General Council (WT/COMTD/SE/4) that reviews discussions in the CTD-DS negotiations since July 2003.

ICTSD reporting.