United States - Subsidies on Upland Cotton Recourse to Article 21.5 byBrazil, WT/DS267/AB/RW (2 June 2008)

Two of the four issues in this Appellate Body Report concerned the proper scope of Article 21.5 DSU compliance panel proceedings; the other two issues concerned the Appellate Bodyʹs review of the Panelʹs use of evidence. On the Article 21.5 issues, the Appellate Body essentially ruled that an Article 21.5 compliance proceeding could evaluate the WTO consistency of: (i) the entirety of an implementation measure (including parts of the measure that did not specifically implement DSB recommendations and rulings) and (ii) new subsidy grants made under a program in respect of which prior subsidy grants had been found to cause serious prejudice so as to determine whether the new grants also resulted in serious prejudice. On the evidentiary issues, the Appellate Body upheld the Panelʹs conclusions, although it modified certain of the Panelʹs reasoning. Probably the most interesting aspect of the case was the substantial deference showed by the Appellate Body to the Panelʹs consideration of causation and non-attribution issues. This deference was striking compared to the lack of deference that the Appellate Body has given to national authorities on those issues. We detect, however, a welcome interest on the part of the Appellate Body to require the use of analytical tools on the part of panels evaluating serious-prejudice cases.