미국 농업의 핵심 산업의 하나인 면화에 대한 다양한 보조금을 문제 삼아 경쟁국인 브라질이 2002년 WTO에 제소한 이 사건은 2004년 9월 WTO 분쟁해결 패널은 몇 가지 핵심 이슈에 대해 미국에 불리한 판정을 내렸고, 2005년 3월 WTO 상소기구(AB)에서도 대부분 그대로 받아들여졌다. WTO 분쟁해결 패널과 상소기구는 (1) 미국의 국내 면화보조금은 이른바 “평화조항” 적용대상이 아니며, (2) 2가지 직불(直拂) 형태 즉, 생산유연화계약(PFC) 지불과 직불금(DP)은 별개의 소득지원으로써 WTO 예외조건을 충족하지 못하고, (3) Step 2는 금지보조금이며, (4) 수출신용보증은 사실상의 수출보조금에 해당하고, (5) “시장가격에 따라” 지원하는 미국 국내 지원조치들은 면화의 과잉생산과 국제가격 하락을 초래, 제소국인 브라질에 “심각한 손상”을 주었다는 것이다. WTO의 이러한 결정에 따라 미국은 Step 2를 폐지하는 등 몇 가지 면화프로그램을 변경하였지만, 이행패널과 상소패널에서도 그대로 확인되었다. 이에 따라 브라질은 2009년 3월 3일 제네바에서 개최된 분쟁해결기구 회의에서 총 25억 달러의 보복조치와 함께 지적재산권, 서비스 등 대한 ‘교차보복조치권’ 행사를 요구하였지만 받아들여지지 않았고, 2009년 8월 31일 중재패널은 브라질은 미국에 대해 연간 총 2억 9,470만 달러의 대응조치(보복)를 할 수 있다고 판정한 것이다. 그러나 패널은 미국의 직불금이 감축의무 예외는 아니지만 추가적인 조치를 내리거나 부합의무를 부과하지 않은 점, 생산유연화계약(PFC)과 직불금(DP)을 감축대상보조금(“amber box”)으로 특별히 분류하지도 않고 향후 “amber box”로 통보해야 한다는 권고도 하지 않은 것은 또다시 불씨가 될 수 있다. 캐나다와 브라질은 2007년 미국이 PFC와 DP를 허용보조금으로 잘못 통보하였다며 미국을 WTO 분쟁해결기구에 이미 제소해 놓은 상태이다. 또한 EU 등은 WTO 패널의 판정 형태를 보고 유사한 형태의 보조금을 지급하려 할 수 있다. 특히 이번 사례는 브라질의 협의 요청 이래 패널, 상소기구 패널, 이행패널 및 상소, 보복조치 승인요구 및 중재 등 국제적으로 합의된 WTO의 분쟁해결절차 거의 모두를 거친 매우 드문 경우로써, 특히 GATT의 한계로 지목되었던 실효성 있는 이행 강제력 확보가 WTO 체제에서는 얼마나 가능할지도 관심거리이다. 무엇보다 국제적인 비난을 받아왔던 미국의 면화보조금 문제를 WTO 분쟁사례로 처음 다루었다는 것 또한 의미가 있다. 특히 이번 분쟁의 결과는 그동안 면화보조금 감축 또는 철폐에 대한 미국의 반대로 지금까지 교착상태에 빠져 있는 WTO DDA 농업협상에도 상당한 영향을 줄 것으로 예상된다.
In late 2002, Brazil initiated a World Trade Organization (WTO) dispute settlement case (DS267) against certain aspects of the U.S. cotton program. On September 8, 2004, a WTO dispute settlement panel ruled against the United States on several key issues in case DS267. The ruling was upheld on appeal to the WTO’s Appellate Body on March 3, 2005. Key findings included (1) U.S. domestic cotton subsidies do not afford to be protected by the “Peace Clause”; (2) the two major types of direct payments made under U.S. farm programs do not qualify for WTO exemptions from reduction commitments as fully decoupled income support; (3) Step 2 program payments are prohibited subsidies; (4) U.S. export credit guarantees are effectively export subsidies; and (5) U.S. domestic support measures that are “contingent on market prices” have resulted in excess cotton production and exports that caused low international prices and resulted in “serious prejudice” to Brazil. In response to the WTO ruling, the United States has made several changes to its cotton support programs. However, in August 2006, Brazil requested a WTO compliance panel to review whether the United States had fully complied. In December 2007, a compliance panel ruled that the United States had not fully complied with earlier WTO recommendations. The compliance panel ruling was upheld on appeal in June 2008.
On March 3, 2009, at a meeting of the World Trade Organization’s (WTO’s) Dispute Settlement Body (DSB) in Geneva, Brazil claimed the right to impose $2.5 billion in retaliatory sanctions against the United States in its long-running case against certain U.S. cotton subsidies. As part of its prohibited subsidy countermeasure, Brazil is seeking “cross-retaliation” rights that would permit retaliation in sectors other than just the goods sector such as intellectual property rights and trade in services. The United States has expressed strong disagreement both with the amount of countermeasure requested and with any right of “cross-retaliation.” Eventually Brazil and U.S. requested a resumption of the arbitration proceedings to review its proposed retaliatory countermeasures. On August 31, 2009, an arbitration panel ruled that Brazil can retaliate $294.7 million for the fiscal year 2006 (will change from year to year) against U.S. trade-distorting practices involving cotton subsidies. An arbitration ruling in favor of both Brazil’s retaliation amounts and the requested “cross-retaliation” feature could raise the stakes in this particular dispute by expanding retaliation into TRIPS and GATS. But the panel did not specifically reclassify U.S. PFC and DP payments as “amber box,” nor did the panel recommend that the United States should notify such future payments as “amber box.” This is a subtle but critical distinction because of the enormity of PFC and DP payments. The specific finding on the apparent failure of U.S. “decoupled” payments to meet WTO green box criteria leaves such programs open to future charges, and that third countries may feel emboldened by knowing how a WTO panel is likely to rule on such matters. Actually in 2007, Canada and Brazil initiated separate but similar WTO cases against certain U.S. farm programs that has exceeded the subsidy spending limit, and that the U.S. operates its agricultural export credit guarantee program in such a manner as to provide prohibited subsidies. The European Union (EU) is also likely to be concerned about this finding since the EU’s agricultural program relies heavily on “decoupled” payments similar to the those of the U.S. program. The U.S. response to the WTO cotton ruling is being watched closely by developing countries, particularly by a consortium of four African cotton-producing countries that has submitted its own proposal to the WTO calling for a global agreement to end all production-related support for cotton growers of all WTO member countries. This is rare case that takes the almost full tracks of WTO dispute settlement proceedings from request for consultations, initiation, Panel, Appellate Body, Compliance, countermeasure request and arbitration. Whether or not overcomes the GATT's innate enforcement limit to members and how effectively WTO's substantial enforcement can be taken is also a litmus paper of WTO's forseeable future. This results may affect the WTO DDA agricultural negotiations that came to impasse partially due to developed countries' refusal to reduce various agricultural subsidies and support.