I. Terms of Reference 278 II. Economic Data 279 III. Domestic Support 291 IV. Export Credit Guarantees 293
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- 235. Please comment on paragraphs 8, 9 and 10 of the US 2 December oral statement, in particular, why the average Brazilian price is shown as lower than the average US price. BRA
- Cumulative Analysis of 8 Country Export Prices
- Cumulative Analysis of US and Brazilian Prices in 40 Third-Country Markets
Conclusion 113. The evidence outlined above and in Brazil’s earlier submissions shows that world market prices were transmitted to other markets during MY 1999-2002, and that this continues today. Whether the data is viewed collectively or individually, the data generally shows that Brazilian, US and other exporters’ prices to these 42 countries are consistent with movements and trends in the A-Index price. While there are some (particularly low volume) graphs that show monthly differences from A-Index trends or movements, Brazil has set forth the quality, contract, and timing factors accounting for such anomalies. The collective statistical evidence supports the conclusion of the ICAC’s chief statistician that “[a]ctual prices of imported cotton, in non-producing as well as in producing countries, are based on the Cotlook A Index or on the New York futures” and “the prices of the major types of cotton … are affected by the supply and demand situation facing the market as a whole.”152 All of this evidence is consistent with the conclusion that these third country market prices are heavily influenced by A-Index and New York futures prices. Professor Sumner analysis and the studies by USDA economists undeniably show that the US subsidies have suppressed A-Index and New York futures prices. Since these indices are the benchmarks for prices in those “same markets” where US and Brazilian upland cotton were exported, it is indisputable that the US subsidies have suppressed the prices in each of the “markets” cited in the introductory paragraph of Brazil’s answer to this question. 234. Does "significant" price suppression under Article 6.3(c) necessarily amount to "serious" prejudice within the meaning of Article 5(c)? Could the level of "significance" of any price suppression under Article 6.3(c) determine whether any prejudice under Article 5(c) rises to the level of "serious prejudice"? USA, BRA Brazil’s Answer: 114. In response to both questions, Brazil, New Zealand, and Argentina have argued previously that whether price suppression is “significant” cannot be judged solely by reference to a non-textually based “objective” amount of price suppression.153 Rather, the “significance” of price suppression must be assessed with reference to the quality of the impacts of whatever level of price suppression exists on the producers of the like product. For example, a panel could find that even large amounts of price suppression are not “significant” where the complaining party producers had de minimis production, or no exports, and/or that the total value of lost revenue from suppressed prices was minimal. On the other hand, very large producers of a commodity product like upland cotton would suffer serious prejudice from even smaller “objective” levels of price suppression in terms of the amount of lost revenue. 115. The Panel’s question really comes down to whether Article 6.3 of the SCM Agreement requires a two step process – first, an objective finding of an amount of price suppression that is “significant,” and second, whether the complaining party Member suffers serious prejudice from such “significant” levels of price suppression. Brazil does not believe the text requires such a two-step process for the reasons outlined above and in previous submissions. However, the facts of this case show that even if such a test were required, the amount of price suppression caused by the US subsidies is significant and far from de minimis. Brazil has also submitted undisputed evidence that its producers have suffered considerable losses in revenue from suppressed prices that could have been used for further investment in high-yielding lower cost production.154 By any measure, this evidence establishes both “significance” of the price suppression and “serious prejudice” to the interests of Brazil. 235. Please comment on paragraphs 8, 9 and 10 of the US 2 December oral statement, in particular, why the average Brazilian price is shown as lower than the average US price. BRA Brazil’s Answer: 116. Brazil previously has set forth its reasoning why evidence of lower Brazilian prices in some markets is irrelevant to the issue of whether or not all the prices in those markets were suppressed by the global effects of US subsidies.155 This global price transferral mechanism is and remains the relevant analysis of Brazil’s Article 6.3(c) price suppression claim as Brazil has outlined in its Answer to Question 233. Brazil sets forth its comments and rebuttal to paragraphs 8, 9 and 10 of the US 2 December Oral Statement and Exhibit US-75 below. Cumulative Analysis of 8 Country Export Prices 117. With respect to the US “price undercutting” argument, and in particular the US chart set out in Exhibit US-75, the factual assertion that cumulative US prices in the 8 countries examined are consistently much higher than Brazilian prices is simply wrong. One fundamental error with Exhibit US-75 is that the United States did not “weight-average” the data regarding export prices for Argentina, Bolivia, Italy, Philippines, Portugal, Indonesia, Paraguay and India. Rather, Exhibit US-75 is based on a simple average, not taking into account whether Brazilian shipments on a monthly basis were 2 tons or US shipments the same month were 100,000 tons. In addition, the US chart (and accompanying data) in Exhibit US-75 provides no volumes on monthly shipments, provides no published backup material, uses a non-public source of information, and inexplicably does not use official USDA Foreign Agricultural Service (FAS) published data on export prices. 118. Using the proper monthly weighted average methodology and FAS’s own official export pricing data together with the Brazilian Government’s official export pricing data,156 the collective situation in the eight countries examined in Exhibit US-75 looks completely different than the US chart in that exhibit: 
119. The graph shows that US and Brazilian prices fluctuate with Brazilian prices at times higher than US prices and US prices higher than Brazilian prices at other times. The chart shows that beginning in November 2000, US prices plunged along with the A-Index prices and that Brazilian prices quickly followed, with both US and Brazilian prices remaining at record lows until near the end of 2002 when both started rising again. Finally, the chart shows that US prices generally followed the movements or trends in A-Index prices (the solid line in the graph). As discussed in Brazil’s Answer to Question 233, this is what is relevant for a price suppression claim under Article 6.3(c) as opposed to any alleged “undercutting” by Brazilian cotton in individual markets as the US claims. Cumulative Analysis of US and Brazilian Prices in 40 Third-Country Markets 120. Moving beyond the 8 countries in Exhibit US-75 to all 41 countries (including Brazil) where Brazil and the US both sold at least some upland cotton between MY 1999-2002 further demonstrates the absence of so-called “price undercutting” by Brazilian products as alleged by the United States. For the period MY 1999-2002, the weighted average price covering a total of 10.5 billion pounds of US upland cotton exported to these same 41 countries (including Brazil) is 45.33 cents per pound.157 By contrast, the average weighted price of 709 million pounds of exported Brazilian upland cotton to 40 export markets is 44.65 cents per pound.158 This is a difference of 0.68 cents per pound. For marketing year 2001 – the year when prices plunged to record lows – the weighted average price of US upland cotton in all markets where Brazilian cotton was also exported was 38.83 cents per pound while Brazilian weighted average prices to the same markets was significantly higher at 44.05 cents per pound.159 Brazilian prices were lower than US prices during MY 2000 and 2002, but were higher than US prices in MY 1999.160 This is hardly evidence of “price undercutting” by Brazilian upland cotton. 121. These very close relationships – as well as movements – of Brazilian and US cumulative prices in the 41 countries are reflected in cumulative weighted average monthly prices in the graph below:161 
122. This graph illustrates the absolute closeness of prices between Brazilian and US prices, particularly after mid-2001. But it also shows very similar movements in prices between Brazilian and US exports. And, as discussed in Brazil’s Answer to Question 233, these similar movements are further evidence of the influence of the global pricing mechanisms on prices received by US and Brazilian exporters in third country markets. Directory: english -> tratop e -> dispu e dispu e -> Annex g list of exhibits submitted by the parties dispu e -> World Trade Organization dispu e -> World Trade Organization Download 3.13 Mb. Share with your friends:
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