I. Terms of Reference 278 II. Economic Data 279 III. Domestic Support 291 IV. Export Credit Guarantees 293
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| 97. The A-Index on the graph is the solid black line. The Panel can see that over the four year period, US and Brazilian export prices closely follow the movements in the A-Index. In addition, as discussed in greater detail in the answer to Question 235, Brazilian prices are at times equal to, slightly greater than US prices or slightly lower than US prices.
98. The Brazilian export data can be used as a proxy for third country market prices in a handful of countries where there were extensive Brazilian exports. This is illustrated in the cases of three of the larger markets for Brazilian exports – Argentina, India, and Portugal as set out in the graph below:134 
99. Because US exports were so much greater than Brazilian exports, a better way to examine the relationship between A-Index prices and prices in the 40 countries is to examine US export prices, particularly where there were large volumes of US exports. This is illustrated in the graphs below for China, Indonesia, South Korea and the Philippines (as well as other graphs in Exhibit Bra-388):135 
100. Brazil presents in Exhibit Bra-383 the underlying data on all 40 of the markets where Brazil and the United States export their upland cotton. This underlying data is presented in a variety of different graphs; one set compares Brazilian exports to the A-Index;136 another compares US exports to the A-Index,137 and a third combines Brazilian and US export prices.138 101. Many of the 40 markets show only very limited amounts of Brazilian exports. Compared to the volume of US exports, Brazilian exports during MY 1999-2002 were relatively small (representing approximately 1 per cent of total world market share).139 Thus, when the monthly export data is examined on a country-by-country basis, there are very few third country markets where Brazil exported in each of the 48 months in MY 19999-2002, i.e., where there is a complete set of 48 data points. Nevertheless, even the limited data points for each of the 40 countries shows that Brazilian export prices generally tracked A-Index prices. 102. Many of the graphs also reflect fairly widely ranging data point prices, particularly where the import volumes are not very great.140 By contrast, country markets with very high volumes of imports141 tend to have much more stable import prices that closely follow the A-Index. This is why the US high-volume import data graphs provide reliable evidence of pricing trends in some of the 40 country markets examined. There are various reasons that explain the widely ranging pricing data points. First, while US and Brazilian cottons may have the same staple length, their quality may differ significantly which, in turn, impacts their respective price.142 For example, California A-Index cotton is consistently sold at a premium in world markets because its superior quality allows it to be used in production of finer cotton fabric.143 During certain period between MY 1999-2002, both Brazil and the United States exported cotton with a high staple length or a particularly good quality to a third country market, resulting in higher prices. This no doubt accounts for much higher US prices compared to Brazilian cotton in some markets such as France, Germany, and Portugal. 103. Second, smaller monthly export sales to a third country market with relatively few imports may result in much higher prices than large volume sales to large importers. Larger consuming countries (with larger consumers) can demand volume price premiums and sellers can export at higher volumes and lower prices based on economies of scale. The country data of the world’s largest importers such as China, Hong Kong, Taiwan, and Indonesia, for example, closely match A-Index price trends.144 But even larger importing countries data reflects an occasional month where prices diverge from the overall trend. This may be due to the fact that smaller shipments were purchased quickly on a spot basis at higher prices. 104. Third, some exports or forward contracts for export sales are fixed-price contracts, which may be executed months before export takes place.145 For example, a yarn spinner or textile producer in Brazil may contract to purchase 100 tons of US cotton on 1 January 2002 at an import price fixed at 40 cents per pound at that date, but when the cotton is actually exported on 1 June 2002 the A-Index price may be 50 cents. This type of contract with terms fixed at execution rather than on delivery may explain a number of country market graphs where there is a delayed reaction of the country price to declines or increases in the A-Index prices. However, even where there is a delay in response, the longer-term trends in most markets thereafter track the downward or upward climb of A-Index prices. 105. But even with the limitations in the monthly data for individual country markets, the data on the whole strongly supports the conclusion that world prices do influence local export market prices. Any anomalies in smaller importing country markets are notably eliminated by using the weighted average analysis of monthly data from all 40 markets where Brazil and US cotton exports are found. With the vast bulk of US – and most of Brazilian cotton – being exported to large volume markets, the combined analysis shows the close relationship between A-Index prices and both Brazilian and US prices. Indeed, the Chief Statistician of the ICAC, who has extensive experience with individual country and world market pricing data, came to the following conclusions: For all importing non-producing countries, domestic prices follow the Cotlook A Index, taking into account appropriate location and quality differentials and the quality differential for the particular type of cotton needed by the spinning industry. Prices of imported cotton in producing countries also follow the Cotlook A Index, with appropriate location and quality differentials. The international market for raw cotton is relatively open, with rather low imports taxes (averaging less than 5 per cent. The US having one of the highest). Domestic prices of cotton produced and consumed locally are influenced by the supply and demand situation in the country but are not disconnected from international prices.146 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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