Comments of the united states on the answers of brazil to further questions from the panel to the parties following the second panel meeting
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- The Categories of Farms for the Aggregated Data Files Responsive to Part “(b)” of the Panel’s Request
- Data on Farms Without Privacy Interests Under the Privacy Act of 1974 As Set Out in Item (a) of the Panel’s Request
- 264. The Panel asks the United States to clarify certain aspects of Exhibit US‑128
- ANNEX I-26
- III. CALCULATION OF SUPPORT TO UPLAND COTTON UNDER VARIOUS ALLOCATION METHODOLOGIES 831 IV. THE UNITED STATES MY 1999-2002 SUPPORT TO UPLAND COTTON
- II. THE US 3 MARCH 2004 DATA REGARDING PART B OF THE PANEL’S 3 FEBRUARY 2004 REQUEST IS GENERALLY USABLE AND SHOULD BE RELIED ON BY THE PANEL
- III. CALCULATION OF SUPPORT TO UPLAND COTTON UNDER VARIOUS ALLOCATION METHODOLOGIES
- Cotton-to-Cotton Methodology 1154
How the Data was Compiled 22. The United States now explains the source of the data. We have previously mentioned the limitations of crop reports, which is from where all the planting data in the aggregations presented here are derived. Crop reports were not generally required until 2002, at which point they were required for persons seeking benefits for crops other than peanuts in the form of direct payments, counter-cyclical payments, or marketing loans. As for peanuts, similar reporting requirements apply where the payments are in connection with farms for which a base is assigned. Hence, the peanut reporting provision only begins to apply with the 2003 crop. 23. We note that the total number of acres accounted for in 2002 may exceed the total cropland numbers set out in the 18-19 December 2003 data, as corrected on 28 January 2004. Differences may result because: (1) farmers may have reported plantings of grass on noncropland; (2) there can be double-cropping in some areas; and (3) CRP acres may not have been reported and counted as available cropland. The Categories of Farms for the Aggregated Data Files Responsive to Part “(b)” of the Panel’s Request 24. We have sorted and aggregated the relevant farms into those categories set out in the 3 February supplementary request from the Panel. Category A farms are those for which the farms underplanted their cotton base. The panel also asked for farms that did not plant any other covered commodities and we have classified those as “A1" farms. 25. Category B farms are farms that overplanted their base. Subcategory B1 farms are farms that, in total for all base crops, planted exactly their covered commodity base, while B2 farms under-planted and B3 farms over-planted those total bases. 26. Category C farms planted cotton but had no base. Data on Farms Without Privacy Interests Under the Privacy Act of 1974 As Set Out in Item (a) of the Panel’s Request 27. We now address what was item (a) of the Panel’s 3 February supplementary request for information. The Panel asked for information relating to those farms that do not have a privacy interest and thus who could potentially be subject to a detailed release of planted and base acreage information. This information appears to be of little interest to Brazil at this point as Brazil indicated in its 13 February letter that “because the United States apparently intends only to provide farm-specific information for far less than the total amount of farms (i.e., those that are not held by ‘individuals’) this information will be useless for calculating the exact amount of total contract payments.”1123 By way of contrast, Brazil commented that, “[i]f the United States provides the complete information requested in part (b) of the 3 February 2004 Request, then most of Brazil’s 28 January Data Comments would be rendered moot,” and “[w]ith the actual and complete data, the Panel would be in a position to apply any methodology it deems acceptable.”1124 28. For non-closely held corporations, information voluntarily received from a corporation is to be withheld if it is not the type of information customarily released by the corporation to the public. See Center for Auto Safety v. National Highway Traffic Safety Administration, 244 F.3d 144 (D.C. Cir. 2001). 29. Such is the case with respect to plantings prior to 2002. It would therefore, be necessary to examine, on a case by case basis, the circumstances of each “corporate” farming operation to determine if it is a closely held corporation which might enjoy a privacy interest and if the information was voluntarily submitted and not the type of information customarily released by the corporation to the public. 30. Given the time available, we used the year 2002 when in all cases, crop reports were mandatory with the limits indicated above. The United States conducted an electronic sort of cotton farms to narrow the number of files to a manageable number, which we then examined on a farm-by-farm basis to see if they were closely-held corporations. The data file containing farm-by-farm base, yield, and planted acreage information for these farms is described below. The Data Files 31. The United States is providing the following data files via CD-ROM. This information is sensitive, and we do not consent to the release of this information to the public domain. Therefore, as with the data submitted on 18 and 19 December 2003, as corrected on 28 January 2004, pursuant to paragraph 3 of the Panel’s working procedures, we designate this information as confidential. 32. File Name: PFC1999W.xls: This file is the first 1999 PFC and MLA file treating soybeans as a non-base crop and showing soybeans plantings. 33. File Name: PFC99-2W.xls: This file is the second 1999 PFC and MLA file. Soybeans is treated as a crop with a zero base on all farms. 34. File Name: PFC2000W.xls: This file is the 2000 PFC and MLA files with soybeans treated as a non-base crop and showing soybeans plantings. 35. File Name: PFC00-2W.xls: This file is the 2000 PFC and MLA files treating soybeans as a crop with a zero base on all farms. 36. File Name: PFC2001W.xls: This file is the 2001 PFC and MLA file. 37. File Name: DCP2002W.xls: This file is the 2002 Direct and Counter-cyclical file with peanuts treated as a non-base crop and showing peanuts plantings. 38. File Name: DCP02-2W.xls: This file is the 2002 Direct and Counter-cyclical file with peanuts treated as a crop with a zero base on all farms. 39. File Name: notclose.xls: This is the result of the search for not closely held farms as described above. (Each line corresponds to one farm. The base, yield, and planting fields are set out in the file and are the same as those in the base/yield and planted acres data files provided on 28 January 2004 (as set out in Exhibit US‑145).) Annex I-25 UNITED STATES' RESPONSE TO QUESTION 264(B) DATED 3 FEBRUARY 2004 FROM THE PANEL TO THE PARTIES FOLLOWING THE SECOND MEETING OF THE PANEL
BRAZIL'S COMMENTS ON US 3 MARCH 2004 DATA 10 March 2004 Table of Contents I. INTRODUCTION 829 II. THE US 3 MARCH 2004 DATA REGARDING PART B OF THE PANEL'S 3 FEBRUARY 2004 REQUEST IS GENERALLY USABLE AND SHOULD BE RELIED ON BY THE PANEL 829 III. CALCULATION OF SUPPORT TO UPLAND COTTON UNDER VARIOUS ALLOCATION METHODOLOGIES 831 IV. THE UNITED STATES MY 1999-2002 SUPPORT TO UPLAND COTTON EXCEEDS THE MY 1992 SUPPORT TO UPLAND COTTON UNDER ANY METHODOLOGY 838 List of Exhibits
I. INTRODUCTION 1. Brazil thanks the Panel for the opportunity to comment on the US data produced on 3 March 2004. Section II of this submission provides Brazil’s comments on the completeness and usability of the 3 March 2004 US data. In Section III, Brazil presents the results of its calculations applying the same allocation methodologies as used in Brazil’s 18 February 2004 Data Comments. In Section IV, Brazil offers four tables comparing MY 1992 support to upland cotton with MY 1999-2002 support to upland cotton as determined under the four allocation methodologies. 2. Brazil’s results – whether based off the 3 March 2004 US summary data or the earlier US 18/19 December 2003 or 28 January 2004 summary data – remain unchanged. Under any reasonable methodology for allocating contract payment support to upland cotton, the US support to upland cotton in MY 1999-2002 exceeds the support decided in MY 1992, within the meaning of Article 13(b)(ii) of the Agreement on Agriculture. Thus, the US domestic support measures challenged by Brazil in this dispute are not “exempt from actions” under the SCM Agreement and GATT Article XVI. II. THE US 3 MARCH 2004 DATA REGARDING PART B OF THE PANEL’S 3 FEBRUARY 2004 REQUEST IS GENERALLY USABLE AND SHOULD BE RELIED ON BY THE PANEL 3. Given the US refusal to provide farm-specific data, the aggregated data provided by the United States on 3 March 2004 in response to part (b) of the Panel’s 3 February 2004 Request is the best information available before the Panel. While certain problems with the US 3 March 2004 data remain (which particularly affect any value-based Annex IV-type allocation methodology), the Panel can and should rely on this data in making its peace clause determination. Thus, Brazil notes that it no longer considers that relying on its “14/16th” methodology would be appropriate. 4. With respect to part (b) of the Panel’s 3 February 2004 Request, the United States appears to have provided complete summary base and complete summary planted acreage data covering all crops for which data was requested by the Panel and all farms covered by the Panel’s request. 5. However, the United States has engaged in a completely incorrect reading of the Panel’s request for data on Category A farms. The Panel defined Category A farms as “farms [that] had fewer upland cotton planted acres than upland cotton base acres”.1128 Unfortunately, the United States read this request as covering all farms that had upland cotton base and planted less than their full upland cotton base to upland cotton or that planted no upland cotton at all.1129 There is no basis for any such interpretation. Farms with no planted acres do not have “fewer upland cotton planted acres” – which refers to a positive amount – they have none. Indeed, from the context of the Panel’s 3 February 2004 Request is becomes clear that the entire purpose of the Panel’s request was to facilitate the calculation of support to upland cotton, within the meaning of Article 13(b)(ii) of the Agreement on Agriculture. Neither Brazil, nor the United States, has ever argued that farms, which do not even plant upland cotton, receive any “support to upland cotton”. Including these farms in the calculations would inevitably lead to major distortions, as the calculations are impacted by base and planted acreage on farms that are of no relevance to a determination of the “support to upland cotton”.1130 Had the United States interpreted the Panel’s request according to its ordinary meaning, or, alternatively, provided the farm-specific information requested by the Panel on 8 December 2003, 12 January 2004 and 3 February 2004 (as part (a) of the Panel’s Request1131), this would not have been a problem. 6. Nevertheless, Brazil has been able to use the 28 January 2004 US summary data to largely correct for this erroneous inclusion of additional non-upland cotton producing farms in Category A. The 28 January 2004 US summary data contains a separate category for farms that hold upland cotton base but do not produce upland cotton. Brazil has used this aggregate information to subtract out of Category A data any base and planted acreage on farms that do not produce upland cotton.1132 However, this approach was not feasible for the US Annex IV Methodology, since the 28 January 2004 US summary data does not contain all the data items contained in the 3 March 2004 US summary data. In particular, specific data on planted acreage for non-contract payment crops is missing from the 28 January 2004 US summary data, limiting Brazil’s ability to correct all Category A farm data items for the purposes of applying the data to the US Annex IV Methodology. Similarly, a correction was not feasible for soybean planted acreage during MY 1999-2001 and for peanut planted acreage in MY 2002, as discussed below. Thus, any remaining distortions that might result from the necessary exclusion of soybeans and peanuts of Brazil’s calculations under Brazil’s Methodology and under the Modified Annex IV Methodology are directly a result of the US erroneous inclusion of non-upland cotton producing farms in Category A (and its continued refusal to produce farm-specific data). 7. In addition, and again in contrast with the 28 January 2004 US summary data, the United States’ 3 March 2004 response does not provide contract payment yields or payments units that would allow for a precise calculation of the total amounts of contract payments received by a category of farms. While Brazil recognizes that the Panel’s 3 February 2004 Request does not ask for this information, the United States should have produced in good faith the information on payment units in order to avoid potential distortions (as it did when providing its 18/19 December 2003 and 28 January 2004 summary data). Brazil has been required, therefore, to use the contract payment yield information set out in the 28 January 2004 US summary data. Brazil believes this contract payment yield information to be a useful proxy and the potential distortions that might result from the use of this data to be relatively minor.1133 8. The United States’ 3 March 2004 summary data is furthermore inadequate because it does not permit the calculation of support from soybean market loss assistance payments and peanut direct and counter-cyclical payments. The United States notes that MY 1999-2000 soybean market loss assistance payments and MY 2002 peanut direct and counter-cyclical payments were not “farm-based” but “producer-based”.1134 Therefore, payments were received by (historic) producers, rather than farms (or their owners). While the United States produced data on soybean and peanut planted acreage on upland cotton farms1135, the United States did not produce any information that would allow the calculation of “producer-based” soybean market loss assistance and peanut direct and counter-cyclical payments received by producers operating upland cotton farms.1136 Yet, these payments should be considered under any allocation exercise (except the “Cotton-To-Cotton” Methodology). The absence of this information prevents Brazil from including these payments in its allocation calculations and, thus, biases Brazil’s calculations downward, as discussed below. Any distortions resulting from this shortcoming of the 3 March 2004 us summary data are a consequence of the US failure to produce data on these soybean and peanut payments. 9. With respect to part (a) of the Panel’s 3 February 2004 Request pursuant to DSU Article 13, the US 3 March 2004 response provided – after four weeks of what the United States characterizes as an analysis “involving much time and effort”1137 – a file (“NotClose.xls”) containing farm-specific data on 28 farms for MY 2002 that would not be covered by the US Privacy Act. At the same time, the United States indicated that, in MY 2002, 197,084 farms produced upland cotton and/or received upland cotton direct and counter-cyclical payments. It is obvious that the farm-specific data covering these 28 farms cannot provide information relevant to this dispute.1138 10. Brazil reiterates that it does not consider farm-specific planting information to be covered by the US Privacy Act.1139 (Certainly, Brazil’s summary calculations in Sections III and IV below, based on the 3 March 2004 US summary data, could not possibly be considered confidential.) But even if the farm-specific planting information were confidential under US law, DSU Article 13 would oblige the United States to produce the information for the Panel and Brazil.1140 Brazil also emphasizes that it remains of the view that farm-specific data would permit the most precise calculation of the amount of contract payments that constitute support to upland cotton, under whichever allocation methodology the Panel deems appropriate.1141 III. CALCULATION OF SUPPORT TO UPLAND COTTON UNDER VARIOUS ALLOCATION METHODOLOGIES 11. In this Section, Brazil presents the results of applying the four allocation methodologies discussed in Section 5 of Brazil’s 18 February 2004 Data Comments. That is, Brazil has applied two acreage-based allocation methodologies (“‘Cotton-To-Cotton’ Methodology” and “Brazil’s Methodology”) and two value-based methodologies (“Modified Annex IV Methodology” and “US Annex IV Methodology”) to the 3 March 2004 US summary data.1142 The results under Brazil’s Methodology replace the estimated amount of support to upland cotton under Brazil’s so-called “14/16th” methodology. Cotton-To-Cotton Methodology1143 12. First, Brazil has applied the “Cotton-To-Cotton” Methodology to the 3 March 2004 US summary data.1144 This methodology is not affected by the Category A “over-inclusiveness” problem.1145 The “Cotton-To-Cotton” Methodology allocates for each planted acre of upland cotton payments associated with one upland cotton base acre – if available for that category of farms. For Category A farms this means that for each acre planted to upland cotton, payments associated with one upland cotton base acre are allocated.1146 For Category B1 to B3 farms this means that for each acre planted to upland cotton, payments associated with one upland cotton base acre are allocated – up to the amount of upland cotton base acres held by these farms.1147 For category C farms this means that no allocations are made.1148 13. Since the 3 March 2004 US summary data did not include information on contract payment yields or payment units by farm category, Brazil used the contract payment yield figures provided or implied in the 28 January 2004 US summary data to calculate payment amounts.1149 After correcting for and eliminating the non-upland cotton producing farms in Category A, Categories A, B1, B2 and B3 consist of farms that previously were included in Category 1 under the US 18/19 December 2003 and 28 January 2004 summary data, as farms planting upland cotton and holding upland cotton base.1150 Accordingly, Brazil applied the contract payment yield for Category 1 farms from the 28 January 2004 US summary data to these four categories of farms in the 3 March 2004 US summary data.1151 The contract payment yield for Category C farms under the 3 March 2004 US summary data corresponds to that of Category 3 farms under the 28 January 2004 US categorization. 14. Next, Brazil calculated the payment units by category of farms1152 and multiplied them by the payment rate.1153 The details of Brazil’s calculations are presented (by farm category) in electronic form as Exhibit Bra-433 (‘Calculations Acreage Based Methodologies.xls’). 15. The following table shows the amount of contract payments allocated as support to upland cotton under the “Cotton-To-Cotton” Methodology.
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