CLAIMS OF BRAZIL REGARDING PRESENT SERIOUS PREJUDICE

General

Questions to both parties

Could the parties explain how they interpret the phrases “take appropriate steps to remove the adverse effects” and “withdraw the subsidy” in Article 7.8 of the SCM Agreement?

1. The phrases “take appropriate steps to remove the adverse effects” and “withdraw the subsidy” in Article 7.8 of the SCM Agreement require action that secures the full and complete removal of any adverse effects, or the full withdrawal of any actionable subsidy found to cause adverse effects.

2. As Brazil stated in its answer to Question 22, the terms used in Article 7.8 require action by a defending Member, rather than inaction, and that removal of the adverse effects or withdrawal of the subsidy must be complete, rather than partial.

3. Before addressing this interpretive question, Brazil notes a threshold question that must be addressed by a compliance Panel confronted with recommendations under Article 7.8 of the SCM Agreement – what is the “subsidy” to be withdrawn, or the adverse effects of which must be removed in the present dispute?

4. In its 26 February response to question 11, Brazil explained that the subsidy subject to the Article 7.8 recommendation includes both the legislative and regulatory subsidy programs in the FSRI Act of 2002 and the price-contingent and mandatory payments made under those programs.