U.S. and Brazilian trade negotiators reached agreement on June 17, 2010, on a ¿Framework Agreement¿ regarding a World Trade Org. (WTO) dispute settlement case over U.S. cotton subsidies and agr¿l. export credit guarantees. The Agreement represents a path toward the goal of reaching a negotiated solution to the dispute, while avoiding trade retaliation by Brazil against U.S. goods and services. Contents of this report: (1) Overview; (2) Background on the U.S. Cotton Sector; (3) Brazil¿s WTO Dispute Settlement Case Against the U.S. Cotton Program; (4) WTO Compliance Panel Review and Ruling; (5) WTO Arbitration of Brazil¿s Proposed Countermeasures; (6) Retaliation or Settlement?; (7) Policy Implications of WTO Panel Ruling. Illus.