INTRODUCTION

On 27 September 2002, the Government of Brazil requested consultations with the Government of the United States pursuant to Articles 4.1, 7.1 and 30 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), Article 19 of the Agreement on Agriculture, Article XXII of the GATT 1994 and Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”) concerning certain subsidies provided to United States producers, users and exporters of upland cotton as well as legislation, regulations, statutory instruments and amendments thereto providing such subsidies. The United States and Brazil held consultations on 3, 4 and 19 December 2002 and on 17 January 2003, but failed to settle the dispute.

On 6 February 2003, Brazil requested the establishment of a panel pursuant to Article 6 of the DSU, Article XXIII:2 of the GATT 1994, Article 19 of the Agreement on Agriculture and Articles 4.4, 7.4 and 30 of the SCM Agreement. At its meeting on 18 March 2003, the Dispute Settlement Body (the “DSB”) established a Panel in accordance with Article 6 of the DSU to examine the matter referred to the DSB by Brazil in document WT/DS267/7. At that meeting, the parties to the dispute also agreed that the Panel should have standard terms of reference. The terms of reference are, therefore, the following:

In its request for establishment of a panel, Brazil requested that the DSB initiate the procedures provided in Annex V of the SCM Agreement pursuant to paragraph 2 of that Annex. At its meetings on 18 and 31 March, 15 April and 19 May 2003, the DSB discussed this request.

On 9 May 2003, Brazil requested the Director-General to determine the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU.