I got abnormally excited when I saw Susan’s post about the Brazillian cotton case, as it relates to both my undergraduate thesis and my student note. So, I felt the need to note a few quick things for the fellow WTO nerds out there.
Brazil can’t get countermeasures when the U.S. has already complied. My undergraduate thesis tried to determine why the United States (seemingly against its own interests) complied with a WTO decision ruling U.S. “Step 2″ cotton subsidies illegal. So, I was surprised to see that Brazil recently sought countermeasures from the U.S. because they didn’t comply with the Step 2 decision. Huh? Was my thesis all wrong?! As it turns out, Brazil admitted that the U.S. repealed the Step 2 program a few years ago. Nevertheless, they tried to ignore one of the basic principles of WTO law: there’s no such thing as retroactive countermeasures. Essentially, Brazil argued that the U.S. did not repeal its Step 2 program fast enough and should be punished. But the arbitrators reminded Brazil that countermeasures are meant to induce compliance, not punish others. Since the U.S. had already complied (even though it was tardy compliance), Brazil couldn’t be awarded any goodies.
Brazil can probably force the United States to cough up GSM-102 numbers. Susan asked what sort of powers Brazil has to make the U.S. cough up numbers about its export subsidies. I’m guessing its powers are substantial, as the WTO arbitrator specifically included in its report a demand that the U.S. provide such figures:
The United States shall provide the most recent fiscal year data on GSM 102 transactions. The data on GSM 102 transactions by commodity and by obligor shall be supplied in the exact format (and software) as Exhibit US-78. Should the United States not be able to provide the most recent fiscal year data on GSM 102 transactions, Brazil shall use the data from the last available fiscal year.
I’m not aware of any specific sanction for failing to comply with a WTO arbitrator’s decision. Article 25.4 of the DSU says that Articles 21 and 22 (which are the important sections about compliance) apply mutatis mutandis to arbitration. Maybe this means that you can impose sanctions when a member doesn’t comply with an arbitrator’s demand? Nevertheless, I am sure that the WTO (as a body) would take action if the U.S. does not fork over the numbers requested by Brazil.
TRIPS-based sanctions remain a secondary remedy, but it’s not taboo. Although my student law review advocates note otherwise, the cotton decision emphasized that countries cannot simply jump straight to TRIPS-suspension whenever a country fails to comply with a WTO decision. TRIPS is the WTO’s intellectual property agreement; allowing a country to suspend that agreement essentially permits legal piracy (pirated copies of I Know Who Killed Me for everyone!) Although legal piracy sounds like the ulitmate punishment, you can’t engage in legal piracy anytime there’s an argument over grapes or cotton or undershirts.