Farm Definitions3 March 2004 Data18/19 December 2003

1151 Any possible distortion stemming from slightly higher or lower contract yields in Categories A, B1, B2 and B3 than the average contract yield that was reported for category 1 farms in the 28 January 2004 summary data is due to the failure of the United States to provide more specific information.

1152 85 per cent of the product of base acres and contract yields (using the applicable contract yields).

1153 Exhibit Bra-394 (Agricultural Outlook Tables, USDA, November 2003, Table 17).

1154 For details of the calculations, see Exhibit Bra-433 (‘Calculations Acreage Based Methodologies.xls’).

1155 As in previous calculations (see Brazil’s 28 January 2004 Data Comments, Section 9 and 10; Brazil’s 18 February 2004 Data Comments, Annex A), market loss assistance payments have been calculated by adjusting the PFC payment according to the ratio of total upland cotton market loss assistance payments to total upland cotton PFC payments (Exhibit Bra-4 (“Fact Sheet: Upland Cotton,” USDA, January 2003, p. 6). The United States has never criticized this approach and, in fact, confirmed its accuracy in paragraphs 8-9 of its 3 March 2004 response to the 3 February 2004 Request by the Panel.

1156 See Brazil’s 20 January 2004 Answers to Questions, paras. 43-55; Brazil’s 28 January 2004 Data Comments, Section 9 and Brazil’s 18 February 2004 Data Comments, paras. 50-51, Section 6 and Annex A.2.

1157 For instance, Brazil has deducted the amount of upland cotton base held by farms that hold upland cotton base but do not produce upland cotton (as provided by the United States on 28 January 2004) from the amount of upland cotton base held by Category A farms (as provided by the United States in 3 March 2004). A similar deduction has been applied to base and planted acres for each crop for which such data was available in the 28 January 2004 US summary data.

1158 See above discussion in the context of the “Cotton-To-Cotton” Methodology and Section II.

1159 Exhibit Bra-394 (Agricultural Outlook Tables, USDA, November 2003, Table 17).

1160 Brazil has used the following files: ‘PFC1999W.xls’, ‘PFC2000W.xls’, ‘PFC 2001W.xls’ and ‘DCP2002W.xls’ as provided by the United States on 3 March 2004.

1161 Brazil’s 20 January 2004 Answers to Additional Questions, paras. 43-55.

1162 Brazil recalls that the United States has informed Brazil and the Panel that there were no such soybean payments in MY 2001. See US 3 March 2004 Response to the 3 February 2004 Request by the Panel, para. 10.

1163 See also the more detailed discussed in the context of the Modified Annex IV Methodology, below.

1164 Brazil’s 28 January 2004 Data Comments, Section 9 and Brazil’s 18 February 2004 Data Comments, paras. 50-51, Section 6 and Annex A.2.

1165 Brazil’s 20 January 2004 Answers to Additional Questions, paras. 43-55.

1166 See Brazil’s 28 January 2004 Data Comments, Section 9.

1167 For details of the calculations, see Exhibit Bra-433 (‘Calculations Acreage Based Methodologies.xls’).

1168 As in previous calculations (see Brazil’s 28 January 2004 Data Comments, Section 9 and 10; Brazil’s 18 February 2004 Data Comments, Annex A), market loss assistance payments have been calculated by adjusting the PFC payment according to the ratio of total upland cotton market loss assistance payments to total upland cotton PFC payments (Exhibit Bra-4 (“Fact Sheet: Upland Cotton”, USDA, January 2003, p. 6). The United States has never criticized this approach and, in fact, confirmed its accuracy in paragraphs 8-9 of its 3 March 2004 response to the 3 February 2004 Request by the Panel.

1169 Brazil has used the following files: ‘PFC1999W.xls’, ‘PFC2000W.xls’, ‘PFC 2001W.xls’ and ‘DCP2002W.xls’ as provided by the United States on 3 March 2004.

1170 For Category A farms, Brazil has used the amount of upland cotton planted acres, since on those farms upland cotton base acres exceed upland cotton base acres. For the three Categories B1, B2 and B3, Brazil has used upland cotton base acres since for those farms upland cotton planted acres exceed upland cotton base acres. Finally, for Category C farms, Brazil has used “0,” since those farms have no upland cotton base acres.

1171 Brazil has discussed this methodology in paragraphs 50-51 and in Annex A.3 of its 18 February 2004 Data Comments.

1172 See above discussion in the context of the “Cotton-To-Cotton” Methodology and in Section II.

1173 This exclusion of soybeans does not apply to MY 2002, for which complete summary data is available.

1174 Consequently, Brazil has used to following files as the basis for its calculations: ‘PFC1999W.xls’, ‘PFC2000W.xls’, ‘PFC 2001W.xls’ and ‘DCP2002W.xls’ as provided by the United States on 3 March 2004.

1175 This correction of course concerns the amount of soybean and peanut acreage planted by farms that do not produce upland cotton.

1176 See Section II above.

1177 For which the United States has not provided any payment information.

1178 For which Brazil is not able to correct the Category A data given the respective data items missing in the 28 January 2004 US summary data.

1179 Compare crop base and crop plantings as reported by the US 3 March 2004 summary data (‘PFC1999W.xls’, ‘PFC2000W.xls’, ‘PFC 2001W.xls’ and ‘DCP2002W.xls’).

1180 Brazil notes that similar to its 18 February 2004 calculations it has used yields on planted acres for upland cotton and yields on harvested acres for all other contract payment crops, thereby overstating the latter’s value and leading to understated allocations of contract payments to upland cotton. See Brazil’s 18 February 2004 Data Comments, para. 73 and Annex A.3, notes to Tables 3.5-3.8 for further explanation and references to the data.

1181 Exhibit Bra-420 (Agricultural Outlook Tables, USDA, November 2003, Table 17). Brazil notes that the cover page of this exhibit appears to be wrong. The table is, however, correct.

1182 For details of the calculations, see Exhibit Bra-434 (‘Calculations Value Based Methodologies.xls’).

1183 As in previous calculations (see Brazil’s 28 January 2004 Data Comments, Section 9 and 10; Brazil’s 18 February 2004 Data Comments, Annex A), market loss assistance payments have been calculated by adjusting the PFC payment according to the ratio of total upland cotton market loss assistance payments to total upland cotton PFC payments (Exhibit Bra-4 (“Fact Sheet: Upland Cotton,” USDA, January 2003, p. 6). The United States has never criticized this approach and, in fact, confirmed its accuracy in paragraphs 8-9 of its 3 March 2004 response to the 3 February 2004 Request by the Panel.

1184 See Brazil’s 18 February 2004 Data Comments, para. 73 and Annex A.3, notes to Tables 3.5-3.8 for further explanation and references to the data.

1185 As long as only data concerning contract payment crops was relevant (excluding soybeans and peanuts under the Modified Annex IV Methodology), such an exclusion could be performed based on the 28 January 2004 US summary data, that provided congruous base and planted acreage summary information for these contract payment crops on farms that are now erroneously included in Category A. This allowed for deducting the base and planted acreage summary data for contract payment crops on farms that hold upland cotton base but do not produce upland cotton from the identical summary data items in Category A of the 3 March 2004 US summary data. For instance, Brazil has deducted the amount of upland cotton base held by farms that hold upland cotton base but do not produce upland cotton (as provided by the United States on 28 January 2004) from the amount of upland cotton base held by Category A farms (as provided by the United States in 3 March 2004). A similar deduction has been applied to base and planted acres for each crop for which such data was available in the 28 January 2004 US summary data.

1186 See Annex A.4 of Brazil’s 18 February 2004 Data Comments.

1187 Brazil’s 18 February 2004 Data Comments, para. 52 and note 75 thereto as well as Annex A.4, para. 40. While the missing soybean and peanut contract payments could be corrected for by excluding these crops from any allocations under the previous three methodologies, soybeans and peanuts are a firm part of the allocation calculations under the US Annex IV Methodology because they are part of the overall farm’s revenue. They were included in Brazil’s 18 February 2004 calculations based on the US 28 January 2004 summary data. Thus, it is only the payment data that remains missing from these calculations resulting in understating the amount of contract payments allocated to upland cotton.

1188 Brazil’s 18 February 2004 Data Comments, paras. 33-42.

1189 Suppose that a farm produces in two consecutive years the same amount of upland cotton and rice. The value of both crops is 50 in the first year leading to an allocation of half of the contract payments received by that farm. In the second year, prices for upland cotton fall to half their pervious level, while rice prices remain the same. Thus, the same amount of upland cotton is only worth 25 in the second year with the value of the rice crop remaining at 50. It follows that upland cotton receives a third of the contract payments allocations (its value is 25 out of a total crop value of 75) and rice receives two thirds of the contract payment allocations. The same principle would apply if rice prices had fallen by half with upland cotton remaining constant. In this case rice would receive an allocation of a third of the contract payments while upland cotton would receive two thirds of the contract payments allocations. In both cases the crop whose price is falling receives a smaller share of the support, contrary to the counter-cyclical (not pro-cyclical) approach of the payments involved.

1190 Exhibit Bra 111, (“The Six Year World Outlook for Cotton and Peanuts: Implications for Production and Prices,” Bob McLendon, National Cotton Council, p.1).

1191 Brazil recalls that given the manner in which the United States presented its 3 March 2004 summary data, Brazil was prevented to provide an updated US Annex IV Methodology calculation based on the 3 March 2004 US summary data. See Section III, above. Further, neither of the two methodologies captures all support to upland cotton with the “Cotton-To-Cotton” Methodology not capturing any non-upland cotton contract payments that constitute support to upland cotton and the US-Proposed Annex IV Methodology suffering from various data problems, including the non-availability of data on soybean market loss assistance payments for that year.

1192 The table below includes the updated contract payment allocations to upland cotton and otherwise reproduces the table at paragraph 73 of Brazil’s 22 August 2003 Rebuttal Submission as updated by paragraph 8 of Brazil’s 22 December 2003 Answers to Questions and paragraphs 12-14 of the US 22 December 2004 Answers to Questions. Step 2 and marketing loan payments have been updated in light of the US answer to Question 196. See US 22 December 2004 Answers to Questions, para. 12.

1193 “Other Payments” have been included in the marketing loan figures.

1194 The table below includes the updated contract payment allocations to upland cotton and otherwise reproduces the table at paragraph 73 of Brazil’s 22 August 2003 Rebuttal Submission.

1195 “Other Payments” have been included in the marketing loan figures.

1196 See Brazil’s 18 February 2004 Data Comments, Annex A.4 Table

1197 The table below includes the updated contract payment allocations to upland cotton and otherwise reproduces the table at paragraph 73 of Brazil’s 22 August 2003 Rebuttal.

1198 “Other Payments” have been included in the marketing loan figures.

1199 The table below includes the updated contract payment allocations to upland cotton and otherwise reproduces the table at paragraph 73 of Brazil’s 22 August 2003 Rebuttal Submission.

1200 “Other Payments” have been included in the marketing loan figures.

1201 See Brazil’s results in its 28 January 2004 and 18 February 2004 Data Comments.

1202 For Brazil’s views on this aspect of the US cash-basis accounting methodology for making an assessment under item (j), see Brazil’s 18 February 2004 Comments, paras. 34-40; Brazil’s 28 January 2004 Comments, paras. 134-137; Brazil’s 11 August 2003 Answers, para. 162; Brazil’s 22 July 2003 Oral Statement, para. 122.

1203 Exhibit US-147 also lists (undocumented) data for fiscal years 1992, 2003 and 2004. Including the additional revenue and expense figures for these years does not change the fact that revenue for the CCC export credit guarantee programmes fails to cover the costs and losses of the programs. Exhibit US-147 alleges additional revenue of $38.5 million for 1992, $185.6 million for 2003, and $35.4 million for 2004; and additional costs and losses of $3 million for 1992, $130.1 million for 2003, and $22.8 million for 2004. Accounting for this data (($38.5 + $185.6 + $35.4) – ($3 + $130.1 + $22.8) = $103.6 million) would bring the total net costs and losses down from $1.083 billion, arrived at in Exhibit Bra-431, to $979.4 million.

1204 See e.g. Appellate Body Report, Japan – Apples, WT/DS245/AB/R, para. 157 (“It is important to distinguish, on the one hand, the principle that the complainant must establish a prima facie case of inconsistency with a provision of a covered agreement from, on the other hand, the principle that the party that asserts a fact is responsible for providing proof thereof.”). Moreover, Brazil again notes that the United States bears the burden, under Article 10.3 of the Agreement on Agriculture, of proving that quantities exported in excess of its reduction commitments have not benefited from export subsidies.

1205 See chart included in paragraph 165 of Brazil’s 11 August 2003 Answers (reproduced in paragraph 129 of Brazil’s 28 January 2004 Comments).

1206 In paragraph 2 of its response, the United States asserts that “a significant portion of” the principal recovered on its reschedulings is not included in line item 88.40 and column 2(a) of Exhibit Bra-341 – not that none of the principal recovered is included in that column.

1207 Exhibit Bra-431 shows that the operating costs and losses outpace revenue by $1.083 billion. Deducting the $205 million cited by the United States yields a loss of $878 million by the CCC export credit guarantee programmes.

1208 Brazil’s Comments on US 3 March 2004 Data (10 March 2004) (“Brazil’s 10 March Comments”).

1209 Comments of the United States of America on the Comments of Brazil to US Data Submitted on 18 and 19 December 2003 (11 February 2004) (“US 11 February Comments”).

1210 Comments of the United States of America on the 18 February 2004, Comments of Brazil (3 March 2004) (“US 3 March Comments”).

1211 Agreement on Agriculture, Article 13 (“Agreement on Agriculture”).

1212 Brazil’s 10 March Comments, paras. 2-3.

1213 Brazil’s Answer to Question 41 from the Panel, para. 58 (footnote omitted; italics added).

1214 See US Comment on Brazil’s Answer to Question 204 from the Panel, paras. 36-39 (providing additional citations) (28 January 2004).

1215 Brazil’s Answer to Question 67 from the Panel, para. 130 (table fn. 2-5) (11 August 2003).

1216 See, e.g., Brazil’s Rebuttal Submission, para. 32, 38 (22 August 2003).

1217 Brazil’s Further Submission, para. 335; see also id., para. 331.

1218 See Brazil’s Answer to Question 125(7), para. 38 (27 October 2003) (“Testimony from NCC representatives indicated that a number of producers in the south-eastern part of the United States grew upland cotton on corn base acreage during MY1999-2001.”) (footnote omitted).

1219 Brazil’s Answer to Question 125(8), para. 40 (27 October 2003).

1220 Brazil’s Further Rebuttal Submission, para. 50.

1221 Brazil’s Further Rebuttal Submission, para. 48 (italics added).

1222 Panel Communication of January 12, 2004 (Question 258).

1223 The United States has elsewhere explained that Brazil has not brought forward evidence and arguments to allow the Annex IV methodology to be applied for purposes of its subsidies claims. See, e.g., US 3 March Comments, paras. 29-35, 45-56.

1224 Brazil’s 18 February Comments, para. 46 (“Brazil first presents the results of using a slight variation of Brazil’s methodology.”).

1225 Brazil’s 18 February Comments, para. 50 (“Brazil also applied the revised US summary data to a modified ‘Annex IV’ methodology allocating total contract payments to farms producing upland cotton over the value of contract payment crops produced on these farms.”).

1226 Brazil’s 18 February Comments, para. 84.

1227 US 11 February Comments, paras. 47-50.

1228 See US Comments on Brazil’s Answer to Question 204 from the Panel, paras. 34-42 (28 January 2004).

1229 See, e.g., US 3 March Comments, paras. 3-16.

1230 Brazil’s 10 March Comments, paras. 3-4 (italics added).

1231 Brazil’s 10 March Comments, para. 10 fn. 14.

1232 Brazil 13 February 2004, Letter to the Panel, at 5.

1233 Given Brazil’s repeated complaints in this dispute, it is ironic that Brazil now, in effect, complains that the United States has provided too much information.

1234 Panel’s Supplementary Request for Information, item (b) (3 February 2004).

1235 Brazil’s 10 March Comments, para. 6 & fn. 5.

1236 Brazil’s 10 March Comments, para. 7.

1237 Brazil’s comment that the United States should have provided information on payment units in “good faith” as it did in its data submissions of 18 and 19 December 2004, and 28 January 2004, fails to mention that Brazil’s request for data specifically asked for contract yields to be provided. Exhibit BRA-369 (second paragraph, fourth bullet: requesting “payment yield for each programme crop”) (3 December 2003). The United States has responded to all requests for data in this dispute in “good faith” by providing all the data (within the limits of US law) requested.

1238 See, e.g., Response of the United States of America to the Panel’s 3 February 2004, Data Request, As Clarified on 16 February 2004, paras. 10-13.

1239 Brazil’s 10 March Comments, para. 8.

1240 See Panel’s Supplementary Request for Information, item (b) (first solid bullet: “How many farms had fewer upland cotton planted acres than upland cotton base acres, or equal numbers of each? We refer to these as ‘Category A’ farms.”; second solid bullet: “How many farms had more upland cotton planted acres than upland cotton base acres? We refer to these as ‘Category B’ farms.”; third solid bullet: “How many farms had upland cotton planted acres but no upland cotton base acres? We refer to these as ‘Category C’ farms.”) (3 February 2004).

1241 See US 3 March Comments, paras. 3-16; US 11 February Comments, paras. 7-14.

1242 Agreement on Subsidies and Countervailing Measures, Annex IV, paras. 2-3 (“Subsidies Agreement”).

1243 See, e.g., US 3 March Comments, paras. 29-35; US 11 February Comments, paras. 18-21.

1244 See, e.g., US 3 March Comments, paras. 36-56; US 11 February Comments, paras. 35-60.

1245 See, e.g., US 3 March Comments, paras. 37-38.

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