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Annex a Initial Briefs of Parties and Third Parties

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Annex a Initial Briefs of Parties and Third Parties WT/DS267/R/Add.1 Page A-1 ANNEX A INITIAL BRIEFS OF PARTIES AND THIRD PARTIES Contents Page Annex A-1 Initial Brief from Brazil (5 June 2003) A-2 Annex A-2 Initial Brief from the United States (5 June 2003) A-10 Annex A-3 Third Party Initial Brief from Argentina (10 June 2003) A-15 Annex A-4 Third Party Initial Brief from Australia (10 June 2003) A-18 Annex A-5 Third Party Initial Brief from the European Communities A-20 (10 June 2003) Annex A-6 Third Party Initial Brief from India (10 June 2003) A-25 Annex A-7 Third Party Initial Brief from New Zealand (10 June 2003) A-27 Annex A-8 Third Party Initial Brief from Paraguay (10 June 2003) A-28 Annex A-9 Comments of Brazil on the Initial Briefs (13 June 2003) A-29 Annex A-10 Comments of the United States on the Initial Briefs (13 June 2003) A-38 WT/DS267/R/Add.1 Page A-2 ANNEX A-1 BRAZIL’S BRIEF ON PRELIMINARY ISSUE REGARDING THE “PEACE CLAUSE” OF THE AGREEMENT ON AGRICULTURE 5 June 2003 TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARY ............................................................................... 2 II. ANALYSIS OF THE PHRASE "EXEMPT FROM ACTIONS" ................................... 3 III. THE CONTEXT OFF ARTICLE 13 DEMONSTRATES THAT THERE IS NO LEGAL REQUIREMENT FOR THE PANEL TO FIRST MAKE A FINDING ON THE PEACE CLAUSE BEFORE PERMITTING BRAZIL TO SET OUT ITS ARGUMENT AND CLAIMS REGARDING US VIOLATIONS OF THE SCM AGREEMENT ................................................................................................. 5 IV. RESOLUTION OF THRESHOLD ISSUES PRIOR TO PROVIDING PARTIES THE OPPORTUNITY TO PRESENT ALL OF ITS EVIDENCE IS CONTRARY TO THE PRACTICE OF EARLIER PANELS ................................... 6 V. BRAZIL WILL BE PREJUDICED BY SEPARATE HEARINGS ON THE PEACE CLAUSE ISSUE .................................................................................................... 8 VI. CONCLUSION .................................................................................................................... 9 I. INTRODUCTION AND SUMMARY 1. Brazil responds to the Panel’s 28 May 2003 request for a briefing on the following issue: Whether Article 13 of the Agreement on Agriculture precludes the Panel from considering Brazil’s claims under the Agreement on Subsidies and Countervailing Measures in these proceedings in the absence of a prior conclusion by the Panel that certain conditions of Article 13 remain unfulfilled.1 1 The Panel also “invites the parties to explain their interpretation of the words ‘exempt from actions’ as used in Article 13 of the Agreement on Agriculture, as well as bringing to the Panel’s attention any other relevant provisions of the covered agreements and any other relevant considerations which the parties consider should guide the Panel’s consideration of this issue.” WT/DS267/R/Add.1 Page A-3 2. The short answer to this question is “no”. There is no procedural rule or legal requirement for a panel to make such a preliminary finding. The phrase “exempt from actions” in Article 13(b)(ii) and 13(c)(ii) of the Agreement on Agriculture (AoA) means that if all the conditions of Article 13(b)(ii) and 13(c)(ii) are fulfilled (i.e., there is peace clause protection), a complaining Member cannot receive authorization from the DSB to obtain a remedy against another Member’s domestic and export support measures that otherwise would be subject to the disciplines of certain provisions of the Agreement on Subsidies and Countervailing Measures (ASCM or SCM Agreement) or Article XVI of GATT 1994. But neither the phrase “exempt from actions” nor AoA Article 13 compel the Panel to first make a peace clause finding before considering the substance of Brazil’s ASCM and GATT Article XVI claims. 3. Article 13 of the Agreement on Agriculture is not a “special and additional” rule set out in Appendix 2 to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). Article 19 of the AoA makes all DSU provisions applicable to the AoA. Pursuant to DSU Article 11, a panel must make an “objective assessment of the facts of the case”. Assessing and weighing all relevant facts – including rebuttal facts – obtained during the normal two meeting panel process is essential to resolve properly fact-intensive issues relating to the peace clause. This Panel should follow the lead of previous panels that made similar complex threshold findings in final panel reports. 4. Brazil will be prejudiced by delays in the process because a number of Brazil’s claims are not dependent on any resolution of the “peace clause”. Much of the proof required for demonstrating that the US has no peace clause protection under Articles 13(b)(ii) and 13(c)(ii) is the same evidence demonstrating US violations under the SCM Agreement. Requiring separate briefings, hearing, presentation of factual evidence and legal argument for such inter-connected “peace clause” issues would seriously disrupt Brazil’s presentation of its evidence, lead to duplication of its efforts, delay the proceeding, and increase Brazil’s financial and human resource costs. II. ANALYSIS OF THE PHRASE “EXEMPT FROM ACTIONS” 1. The Panel has requested that Brazil address the meaning of the phrase “exempt from actions” in AoA Article 13. In the view of Brazil, this phrase means that a complaining Member cannot receive authorization from the DSB to obtain a remedy against another Member’s domestic or export support measures that otherwise would be subject to the disciplines of certain ASCM and GATT 1994 provisions if those measures are in compliance with the various peace clause provisions. It does not mean that a Panel may not hear evidence or consider Brazil’s ASCM or GATT 1994 claims while it decides whether all the peace clause conditions have been fulfilled. In sum, this phrase in no way suggests that a panel must make a finding that the peace clause provisions are unfulfilled before proceeding with the other claims. 2. The phrase “exempt from actions” is used, as relevant to this dispute, in AoA Articles 13(a), 13(b)(ii), and 13(c)(ii). The dictionary definition of “actions” is “the taking of legal steps to establish a claim or obtain a remedy.”2 In a multilateral system such as the WTO (like GATT 19473 before it), “actions” are taken collectively by Members. DSU Article 2.1 (last sentence) emphasizes this notion 2 New Shorter Oxford Dictionary, Volume 1 (1993 Edition), at 22. 3 Article XXV of GATT 1994 provides for “joint action” by the contracting parties to “further the objectives of this Agreement”. The decision by the contracting parties to approve the Tokyo Round results in 1979 was entitled “Action by the CONTRACTING PARTIES on the Multilateral Trade Negotiations”. BISD 26S/201. WT/DS267/R/Add.1 Page A-4 in stating that “only those Members that are parties to that Agreement may participate in decisions or actions taken by the DSB with respect to that dispute.” (emphasis added) “Actions” include decisions made by the Dispute Settlement Body (DSB) to adopt rulings and recommendations of panels and the Appellate Body. Article XVI:1 of GATT 1994 also provides for another action, a decision by the relevant WTO body to hold consultations with a subsidizing Member to discuss what steps that Member will take to remove the serious prejudice or threat caused by its subsidies.4 And “actions” also include the enforcement of remedies authorized by the DSB pursuant to DSU Article 22. In sum, “actions” are multilaterally agreed decisions of WTO bodies including the DSB. 3. The ordinary meaning of the word “exempt” is “grant immunity or freedom from liability to which others are subject”.5 The chapeau of Article 13 states that the period of exemption is “during the implementation period”, i.e., until 1 January 2004. 4. Combining these definitions of “actions” and “exempt,” the term “exempt from action” in Article 13(b)(ii) means that before 1 January 2004, a complaining Member cannot receive authorization from the DSB to obtain a remedy against another Member’s domestic support measures that otherwise would be subject to the disciplines of Article XVI:1 and ASCM Articles 5 and 6. And “exempt from action” in the context of Article XVI:1 would mean that the WTO could not take a decision to require a Member to consult with the WTO on how the Member will eliminate serious prejudice or the threat of serious prejudice caused by that subsidy. However, the immediate context of the phrase “exempt from actions” in Articles 13(a), 13 (b)(ii) and 13(c)(ii) make clear that the “exemption” is not absolute but rather subject to a number of conditions: Article 13(a) only permits green box domestic subsidies to be exempt from the types of determinations listed in Article 13(a) (i), (ii) or (iii) if they “conform fully to the provisions of Annex 2” of the AoA. If a domestic support measure does not comply with one of a number of requirements of the “green box” provisions of Annex 2, then such domestic support would be evaluated under the peace clause provisions of Article 13(b) and could be subject to a remedy determination by the DSB and/or the WTO. Under the provisions of peace clause Article 13(b)(ii), “amber” and “blue” box domestic support measures provided during any marketing year between 1995-2003 are only exempt from determinations by the DSB and/or the WTO relating to paragraph 1 of Article XVI of GATT 1994 (not Article XVI, paragraph 3) and Articles 5 and 6 (not Article 3) of the SCM Agreement “provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year”. If the quantity of amber and/or blue box support granted in any marketing year from the 1995-2003 period is greater than that decided during marketing year 1992, then the subsidy programme is not “exempt” from such determinations.
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