WT/DS353/ARB/Add.1  
 
13 October 2020  
(20-7037) Page: 1/64 
  Original: English  
 
  
UNITED STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL 
AIRCRAFT (SECOND COMPLAINT)  
RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES  
DECISION BY THE ARBITRATOR  
Addendum  
BCI deleted, as indicated [[***]]  
This addendum  contains Annexes A to C to the Decision of the Arbitrator to be found in document  
WT/DS353/ARB . 
 
_______________  
 
 
  WT/DS353/ARB/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES OF THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures for the Protection of Business Confidential 
Information and Highly Sensitive Business Information ("BCI/HSBI 
Procedures")  9 
Annex  A-3 Additional Working Procedures for the Substantive Meeting with the Arbitrator  21 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the European Union  23 
Annex  B-2 Integrated executive summary of the arguments of the United States  40 
ANNEX  C 
DECISION  AND OTHER COMMUNICATIONS OF THE ARBITRATOR  
Contents  Page  
Annex C -1 Arbitrator's communication to the parties regarding the timetable and Working 
Procedures, dated 8  July 2019 49 
Annex  C-2 Arbitrator's communication to the parties regarding certain HSBI, dated 
6 February  2020 50 
Annex  C-3 Arbitrator's communication regarding the United  States' request for extension 
of the date for responses to questions, dated 14  February  2020 51 
Annex C -4 Arbitrator's communication to the parties regarding restrictions on access to 
the WTO premises and to HSBI due to Covid -19, dated 1  April 2020 52 
Annex C -5 Arbitrator's communication to the parties regarding access to HSBI in the 
context of Covid -19, dated 23  April 2020 54 
Annex C -6 Arbitrator's communication to the parties regarding phased relaxation of 
restrictions on access to WTO premises due to Covid -19, dated 4  May 2020 55 
Annex C -7 Arbitrator's decision on the United  States' request for leave to file an additional 
submission regarding the implications of the purported elimination of the 
Washington State B&O tax rat e reduction on the permitted level of 
countermeasures, dated 17  June 2020 56 
Annex C -8 Arbitrator's communication to the parties, dated 26  June 2020 61 
Annex C -9 Arbitrator's communication to the parties requesting authorization to discuss 
specific EU HSBI, dated 5  August  2020 62 
Annex C -10 Arbitrator's communication to the parties requesting authorization to discuss 
additional specific EU HSBI, dated 19  August  2020 63 
Annex C -11 Arbitrator's communication to the parties regarding media reports containing 
the Arbitrator's calculated level of countermeasures, dated 9 October 2020  64 
 
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX  A 
WORKING PROCEDURES OF THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures for the Protection of Business Confidential 
Information and Highly Sensitive Business Information ("BCI/HSBI 
Procedures")  9 
Annex  A-3 Additional Working Procedures for the Substantive Meeting with the Arbitrator  21 
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX  A-1 
WORKING PROCEDURES OF THE ARBITRATOR  
Adopted 8 July  2019 
 
General  
 
1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").  In 
addition, the following Working Procedures apply.  
 
(2) The Arbitrator reserves the right to modify these procedures as necessary, after 
consultation with the parties.  
 
Confidentiality  
 
2. (1) The deliberations of the Arbitrator  and the documents submitted to it  shall be kept 
confidential. Members shall treat as confidential information that is submitted to the Arbitrator 
by another Member which the submitting Member has designated as confidential.  
 
(2) Nothing in the DSU or in these Working Procedures shall preclude a party from disclosing  
statements of its own positions to the public.   
 
(3) If a party submits a confidential version of its written submissions to the Arbitrator , it 
shall also, upon request of a Member, provide a non -confidential summary of the information 
contained in its su bmissions that could be disclosed to the public.  
 
(4) The parties shall treat business confidential information and highly -sensitive business 
information in accordance with the procedures set forth in the Additional Working Procedures 
of the Arbitrator Co ncerning Business Confidential Information and Highly -Sensitive Business 
Information.   
 
Submissions  
 
3. (1) Before the substantive meeting of the Arbitrator with the parties, the European Union  
shall transmit to the Arbitrator and to the United States  a communication explaining the basis 
for its request, including the methodology and data supporting it, in accordance with the 
timetable adopted by the Arbitrator.   
 
(2) Each party to the dispute shall also transmit to the Arbitrator a written submission in 
which it presents the facts of the case and its arguments, in accordance with the timetable 
adopted by the Arbitrator.  
 
a. To facilitate the efficient conduct of this proceeding, the written submissions referenced in 
the Arbitrator's timetable ( European Union 's written communication explaining the basis 
for its request (Methodology Paper), the United States'  written submission, and the  
European Union's  written submission) shall not exceed 125 pages (single -spaced, font size 
10), or 160 pages (single -spaced, fo nt size 12)  each. This limit excludes exhibits 
accompanying written submissions.  
b. The Arbitrator may grant an extension of this page limit upon a request from a party. A 
party shall submit any such request in accordance with the procedures concerning servi ce 
of documents set out in paragraph 21 below and no later than seven days (one calendar 
week) before the deadline to file the submission at issue. The request shall include the 
number of additional pages requested by the party for the submission at issue and explain 
the circumstances that in its view warrant exceeding the page limit by the specified 
number of pages. The Arbitrator shall rule on such requests promptly.   WT/DS353/ARB/Add.1  
 
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  (3) The Arbitrator may invite the parties t o make  additional submissions in the course of 
the proceeding, including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.   
 
Preliminary  rulings  
 
4. (1) If either party  considers that the Arbitrator  should make a ruling prior to the issuance 
of the Decision  that certain issues are not properly before the Arbitrator , the following 
procedure applies . Exceptions to this procedure shall be granted upon a showing of good 
cause.   
 
a. A party  shall submit any such request for a preliminary ruling at the earliest possible 
opportunity. The other party shall submit its response to the request at a time to be 
determined by the Arbitrator in light of the request.  
b. The Arbitrator  may issue a preliminary ruling on the issues raised in such a preliminary 
ruling request before, during or after the substantive meeting , or the Arbitrator  may defer 
a ruling on the issues raised by a preliminary ruling until it issues its Decision  to the parties.  
c. In the event that the Arbitrator  finds it appropriate to issue a preliminary ruling prior to 
the issuance of its Decision , the Arbitrator  may provide  reasons for the ruling at the time 
that the ruling is made, or subsequently in its Decision .   
(2) This procedure is without pre judice to the parties' right to request other types of 
preliminary or procedural rulings in the course of the proceeding, and to the procedures that 
the Arbitrator  may follow with respect to such requests.  
 
Evidence  
 
5. (1) Each party shall submit all evid ence to the Arbitrator  no later than the substantive 
meeting , except evidence necessary for purposes of rebuttal, or evidence necessary for 
answers to questions or comments on answers provided by the other party. Additional 
exceptions may be granted upon a  showing of good cause.  
 
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator  
shall accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
 
6. (1) Where the  original language of an exhibit  or portion thereof is not a WTO working 
language, the submitting party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the submission . The Arbitrator may grant 
reasonable extensions of t ime for the translation of exhibits upon a showing of good cause.  
 
(2) Any objection as to the accuracy of a translation should be raised promptly  in writing, 
preferably no later than the next filing or the meeting (whichever occurs earlier) following the  
submission which contains the translation in question. Any objection shall be accompanied by 
a detailed explanation of the grounds for the  objection and an alternative translation.  
 
7. (1) To facilitate the maintenance of the record of the dispute and ma ximize the clarity of 
submissions, each party shall sequentially number its exhibits throughout the course of the 
dispute, indicating the submitting Member and the number of each exhibit on its cover page. 
Exhibits submitted by the European Union should be numbered EU -1, EU -2, etc. Exhibits 
submitted by the United States should be numbered USA -1, USA -2, etc. If the last exhibit in  
connection with a submission was numbered XXX-5, the first exhibit in connection with the 
next submission thus would be  numbered XXX-6.  
 
(2) Each party shall provide a n updated  list of exhibits  (in Word or Excel format) together 
with each of its submissions, oral statements, and responses to questions.  
 
(3) If a party submits a document that has already been submitted as an exhibit by the 
other party, it should explain why it is submitting that document again.  
 WT/DS353/ARB/Add.1  
 
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  (4) Insofar as a party cons iders that the Arbitrator should take into account a document 
already submitte d as an exhibit in the prior panel proceeding s, it should r esubmit that 
document as an exhibit for the purpose of this proceeding. In its list of exhibits, it should refer 
to the number of the original exhibit in the original panel proceeding (OP) and Article 21.5 
panel proceedings (CP) , if applicable  (for example : XXX-1 (XXX-21-OP), XXX-2 (XXX-11-CP)).  
 
Editorial  Guide  
 
8. In order to facilitate the work of the Arbitrator , each party is invited to make its submissions 
in accordance with the WTO Editorial Guide for Submissio ns (electronic copy provided).  
 
Questions  
 
9. The Arbitrator may pose questions to the parties at any time  during the proceedings , 
including  by: 
 
a. sending a list of  written  questions  prior to the meeting,  or a list of topics it intends to 
pursue in questioning orally in the course of the meeting. The Arbitrator may ask different 
or additional questions at the meeting; and   
b. putting questions to the parties orally in the course of the meeting, and in writ ing following 
the meeting, as provided for in paragraph 16 below.  
Substantive  meeting  
 
10. The Arbitrator shall conduct its internal deliberations in closed session. The Arbitrator may 
open its substantive meeting with the parties to the public subject to  appropriate procedures to be 
adopted by the Arbitrator after consulting with the parties.  
 
11. The parties shall be present at the meetings only when invited by the Arbitrator  to appear 
before it.  
 
12. (1) Each party has the right to determine the compos ition of its own delegation when 
meeting with the Arbitrator .  
 
(2) Each party shall  have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures,  particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties.  
 
13. Each party shall provide to the Arbitrator and the other party the list of members of its 
delegation no later than 5:00  p.m. (Geneva time ) three wo rking days pr ior to  the first day of the 
meeting with the Arbitrator .  
 
14. A request for interpretation by any party should be made to the Arbitrator as early as possible, 
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.  
 
15. There shall be one substantive meeting with the parties.  
 
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:  
 
a. The Arbitrator shall invite the United States to make an opening  statement to present its 
case first. Subsequently, the Arbitrator shall invite the European Union to present its point 
of view. Before each party takes the floor, it shall provide the Arbitrator and the other 
party with a provisional written version of it s statement. In the event that interpretation 
is needed, each party shall provide additional copies for the interpreters.  
b. After the conclusion of the opening statements, the Arbitrator shall give each party the 
opportunity to make comments or ask the other party questions.  
c. The Arbitrator may subsequently pose questions to the parties.  WT/DS353/ARB/Add.1  
 
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  d. Once the questioning has concluded, the Arbitrator shall afford each party an opportunity 
to present a brief closing statement, with the United States presenting its sta tement first. 
Before each party takes the floor, it shall provide the Arbitrator  and the other party  at the 
meeting with a provisional written version of its closing statement , if available .  
e. Following the meeting:  
i. Each party shall submit a final written v ersion of its opening statement no later than 
5:00 p.m. (Geneva time) on the first working day following the meeting.  At the same 
time, each party should also submit a final written version of any prepared closing 
statement that it delivered at the meeting .  
ii. Each party shall send in writing, within the timeframe established by the Arbitrator 
prior to the end of the meeting, any questions to the other party to which it wishes to 
receive a response in writing.  
iii. The Arbitrator shall send in writing, within the  timeframe established by the Arbitrator  
prior to the end of the meeting , any questions to the parties to which it wishes to 
receive a response in writing.  
iv. Each party shall respond in writing to the questions from the Arbitrator, and to any 
questions pose d by the other party, within the timeframe established by the Arbitrator  
prior to the end of the meeting . 
Descriptive  part and executive summaries  
 
17. The description of the arguments of the parties in the Decision  of the Arbitrator shall consist  
of execu tive summaries provided by the parties, which shall be annexed  as addenda to the Decision. 
These executive summaries shall not in any way serve as a substitute for the submissions of the 
parties in the Arbitrator's examination of the case.  
 
18. Each party  shall submit one integrated executive summary , which shall summarize the facts 
and arguments as presented to the Arbitrator  in the party's  submissions and statements , and where 
possible, its responses to questions and comments thereon  following the substantive  meeting.  
 
19. Each integrated executive summary shall be limited to no more than 15 pages.   
 
20. The Arbitrator  may request the partie s to provide executive summaries of facts and arguments 
presented in any other submissions to the Arbitrator  for which a deadline may not be specified in 
the timetable.  
 
Service  of documents  
 
21. The following procedures regarding service of documents apply  to all documents submitted by 
parties in the course of the proceeding (including exhibits):  
 
a. Each party shall submit all documents to the Arbitrator  by submitting  them with the 
DS Registry (office No. 2047) .  
b. Each party shall submit one (1)  paper co py of all documents it submits to the Arbitrator 
by 5:00 p.m. (Geneva time) on the due dates established by the Arbitrator. The 
DS Registrar shall stamp the documents with the date and time of submission. The paper 
version submitted to the DS Registry shal l constitute the official version for the purposes 
of submission deadlines and the record of the dispute.  
c. Each party shall also submit two CD -ROMs or two DVDs to the DS Registry, at the same 
time that it submits the paper versions, each containing an el ectronic copy of all 
documents that it submits to the Arbitrator , preferably in both Microsoft Word and PDF 
format.  WT/DS353/ARB/Add.1  
 
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  d. In addit ion, each party is invited to submit all documents through the Digital Dispute 
Settlement Registry (DDSR) within 24 hours follow ing the deadline for the submission of 
the paper versions.  If the parties  have any questions or technical difficulties relating to 
the DDSR, they are invited to consult the DDSR User Guide (electronic copy provided) or 
contact the DS Registry at DSRegistry@wto.org.  
e. Each party shall serve any document submitted to the Arbitra tor directly on the other 
party. A party may submit  its documents to another party on a CD -ROM or DVD only,  
unless  the recipient party has previously requested a paper copy. Each party shall confirm, 
in writing, that copies have been served on the parties,  as appropriate, at the time it 
provides each document to the Arbitrator.  
f. Each party shall submit  its documents with the DS Registry and serve  copies on the other 
party by 5:00  p.m. (Geneva time) on the due dates established by the Arbitrator.   
g.  All communications from the Arbitrator  to the parties will be via email . 
Correction  of clerical errors in submissions  
 
22. The Arbitrator  may grant leave to a party to correct clerical errors in any of its submissions 
(including paragraph numbering and typogr aphical mistakes). Any such request should identify the 
nature of the errors to be corrected, and should be made promptly following the filing of the 
submission in question.  
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX A -2 
ADDITIONAL WORKING PROCEDURES  FOR THE PROTECTION OF BUSINESS CONFIDENTIAL 
INFORMATION  AND HIGHLY SENSITIVE BUSINESS INFORMATION  
("BCI/HSBI PROCEDURES")  
 
Adopted 8 July  2019 and amended 9 October 2020  
 
I. GENERAL  
 
The following Procedures apply to all business confidential information ("BCI") and highly sensitive 
business information ("HSBI") on the Arbitration record.  These Procedures do not diminish the rights 
and obligations of the Parties to request, disclose, or m aintain the confidentiality of any information 
within the scope of the SCM  Agreement1 or the DSU.2  
 
II. DEFINITIONS  
 
For the purposes of these Procedures:  
 
1. "Approved Persons"  means Representatives or Outside Advisors of a Party, when 
designated in accordance with these procedures.  
 
2. "Arbitrator" means the DS353  Arbitrator  under Article 22.6 of the DSU.  
 
3. "Business Confidential Information"  or "BCI" means any business infor mation regardless 
of whether contained in a document provided by a public or private body that a Party has "Designated 
as BCI" because it is not otherwise available in the public domain and its disclosure could, in the 
Party's view, cause harm to the origi nators of the information.  Each Party shall act in good faith 
and exercise restraint in designating information as BCI, and will endeavour to designate information 
as BCI only if its disclosure would cause harm to the originators of the information.  
 
4. "Conclusion of the Arbitration Process"  means  the earliest to occur of the following 
events:  
 
(a) the date of circulation of the decision of the Arbitrator ; or 
(b) pursuant to Article 3.6 of the DSU, a mutually satisfactory solution is notified to 
the DSB. 
5. "Desi gnated as BCI"  means : 
 
(a) for printed information, text that is set off with bolded square brackets in a 
document clearly marked with the notation "BUSINESS CONFIDENTIAL 
INFORMATION" and with the name of the Party that submitted the information;  
(b) for electron ic information, characters that are set off with bolded square 
brackets (or with a heading with bolded square brackets on each page) in an 
electronic file that contains the notation "BUSINESS CONFIDENTIAL 
INFORMATION", has a file name that contains the let ters "BCI", and is stored 
on a storage medium with a label marked "BUSINESS CONFIDENTIAL 
INFORMATION" and indicating the name of the Party that submitted the 
information; and  
(c) for uttered information, declared by the speaker to be "Business Confidential 
Information" prior to utterance.3 
 
1 Agreement on Subsidies and Countervailing Measures  (“SCM Agreement”).  
2 Understanding on Rules and Procedures Governing the Settlement of Disputes  (“DSU”).  
3 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of 
the BCI in question.  WT/DS353/ARB/Add.1  
 
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  (d) In case either Party objects to the designation of information as BCI under 
paragraphs  5(a)-(c), the dispute shall be resolved by the Arbitrator.  If the 
Arbitrator disagrees with designation of information as BCI, the submitting Party 
may either designate it as non -BCI or withdraw the information.  In the case of 
withdrawal, the Arbitrator shall either destroy such information or return it to 
the submitting Party.  Each Party may at any time designate as non -BCI 
information previously desi gnated by that Party as BCI.  
This paragraph shall apply to all submissions, including exhibits, by a Party.  
 
6. "Designated as HSBI"  means : 
 
(a) for printed information, text that is set off with double bolded square brackets 
in a document clearly marked with the notation "HIGHLY SENSITIVE BUSINESS 
INFORMATION" and with the name of the Party that submitted the information;  
(b) for electronic information, in characters that are set off with double bolded 
square brac kets (or a heading with double bolded square brackets on each 
page) in an electronic file that contains the notation "HIGHLY SENSITIVE 
BUSINESS INFORMATION", has a file name that contains the letters "HSBI", 
and is stored on a storage medium with a label m arked "HIGHLY SENSITIVE 
BUSINESS INFORMATION" and indicating the name of the Party that submitted 
the information; and  
(c) for uttered information, declared by the speaker to be "Highly Sensitive 
Business Information" prior to utterance.4  
This paragraph sha ll apply to all submissions, including exhibits, by a Party.  
 
7. "Electronic information"  means any information stored in an electronic form (including but 
not limited to binary -encoded information).  
 
8. "Highly Sensitive Business Information"  or "HSBI" means any business information 
regardless of whether contained in a document provided by a public or private body that a Party has 
"Designated as HSBI" because it is not otherwise available in the public domain and its disclosure 
could, in the Party' s view, cause exceptional harm to its originators.  Each Party shall act in good 
faith and exercise the utmost restraint in designating information as HSBI.  Each Party may at any 
time designate as non -BCI/HSBI or as BCI information previously designated b y that Party as HSBI.  
 
(a) The following categories of information may be Designated as HSBI:  
(i) information indicating the actual selling or offered price of any large civil 
aircraft (LCA) manufacturer's products or services5, and, except as provided 
in subpar agraph 8 (d)(i) below, any graphs or ot her use of the data which 
reflect the movement of prices, pricing trends or actual prices of an LCA 
model or a family of LCA;   
(ii) information gathered or produced in the context of LCA sales campaigns;  
(iii) information concerning market forecasts, analyses, busin ess plans and 
share/business valuations generated by LCA producers, consultants, or 
 
4 The erroneous failure  by a speaker to make such a prior declaration shall not affect the designation of 
the HSBI in question.  
5 This category includes (but is not limited to) information on individual LCA prices, prices per seat, or 
information allowing the operating cost per seat of an LCA to be determined, calculated or reflected; the 
negotiated or offered prices for the airframe; all concessions offered or agreed to by an LCA manufacturer 
including financing, spare parts, maintenance, pilot training, asset value and other gu arantees, buy back options, 
remarketing arrangements or other forms of credit support.  This category shall also include the actual pricing 
information relating to any number of individual LCA offers and prices (including concessions) aggregated by 
model o r other category.  WT/DS353/ARB/Add.1  
 
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  investment banks or the European Investment Bank, with regard to LCA 
products; or  
(iv) information concerning an LCA manufacturer's costs of production, including 
but not limite d to data regarding pricing by suppliers.  
(b) Each Party may also Designate as HSBI other categories of business information 
that are not otherwise available in the public domain and the disclosure of which 
could, in the Party's view, cause exceptional harm to  its originators.    
(c) Each Party shall Designate as HSBI any information described in subparagraph 
8(a) that pertains to LCA produced by an LCA manuf acturer headquartered 
within the territorial jurisdiction of either of the Parties.  
(d) The following categories of information may not be Designated as HSBI:   
(i) aggregated pricing data for a particular LCA model or family of LCA within a 
particular market tha t is indexed (i.e., does not reflect actual prices but 
rather movements in prices off a base of 100 for a particular year).  Such 
data shall be treated as BCI;   
(ii) general legal conclusions based on HSBI (e.g., that HSBI demonstrates that 
a producer engaged in price undercutting).  Such conclusions shall be 
treated as neither BCI nor HSBI;  
(iii) contracts on the granting of launch aid or reimbursable launch investment 
and project appraisal documents relating thereto, other than information 
described in subparagrap h 8(a); 
(iv) the terms and conditions of loans, other than information described in 
subparagraph 8 (a); and  
(v) intergovernmental agreements and government decisions, other than 
information described in subparagraph 8 (a). 
(e) Information may not be Designated as HSBI simply because it is subject to bank 
secrecy or banker -client confidentiality.  
(f) In case either Party objects to the designation of information as HSBI under 
paragraphs 8(a) -(e), the dispute shall be resolved by the Arbitrator.  I f the 
Arbitrator disagrees with designation of information as HSBI, the submitting 
Party may either designate it as BCI, as non -BCI/HSBI or withdraw the 
information.  In the case of withdrawal, the Arbitrator shall either destroy such 
information or return  it to the submitting Party. Each Party may at any time 
designate as non -BCI/HSBI or as BCI information previously designated by that 
Party as HSBI.  
9. "HSBI Approved Persons"  means  Approved Persons specifically designated by the Parties  
as having the rig ht to access HSBI (according to the procedures laid down in Section  IV). 
 
10. "HSBI location"  means a room to be kept locked when not occupied and the access to which 
shall be possible only for HSBI Approved  Persons, located:   
 
(a) for HSBI submitted by the United States, on the premises of (i) the United 
States Mission to the European Union in Brussels and (ii) the Office of the United 
States Trade Representative in Washington, DC;  
(b) for HSBI submitted by the European Union, on the premises of the Delegation 
of the European Union to the United States in Washington, DC and (ii) the 
Directorate General for Trade of the European Commission in Brussels.  WT/DS353/ARB/Add.1  
 
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  11. "Locked CD"  means a CD -ROM that is not rewritable.  
 
12. "Outside Advisor"  means a legal counsel or other advisor of a Party, who:  
 
(a) advises a Party in the course of the dispute;  
(b) is not an employee, officer or agent of an entity or an affiliate of an entity 
engaged in the manufacture of LCA, the provision of supplies to an entity 
engaged in the manufacture of LCA,  or the supply of air transportation services;  
and 
(c) is subject to an enforceable code of professional conduct that includes an 
obligation to protect confidential information, or has been retained by another 
outside advisor who assumes responsibility for co mpliance with these 
procedures and is subject to such a code of professional conduct.  
For purposes of this paragraph, outside legal counsel representing an LCA producer 
headquartered in the territory of one of the Parties in connection with these proceedi ngs or 
outside consultants who have been retained by such counsel to provide advice with regard to 
these proceedings  are not considered agents of an entity listed in subparagraph  (b). 
 
13. "Party"  means  the European Union or the United States.  
 
14. "Party -BCI" means  BCI originally submitted by a Party.  
 
15. "Representative"  means  an employee of a Party.  
 
16. "Sealed laptop computer"  means a laptop computer having (software and hardware) 
characteristics considered necessary by the submitting Party for protection of that HSBI, provided 
that it has software installed that permits such HSBI to be searched and printed in accordance with 
the provisions of Section  VI.  However, HSBI may not be edited on the sealed laptop computer.  
 
17. "Secure site"  means a facility  to be kept locked when not occupied and the access to which 
shall be possible only for Approved Persons, located:  
 
(a) in the case of the European Union, the offices of WTO Team of the Legal Service 
of the European Commission (Rue de la Loi 200, Brussels, Be lgium), the offices 
of Directorate General for Trade of the European Commission (Rue de la Loi 
170, Brussels, Belgium), the offices of the Permanent Mission of the European 
Union to the International Organisations in Geneva (Rue du Grand -Pré 66, 1202 
Genev a, Switzerland), and three additional sites specified in accordance with 
subparagraph  (c); 
(b) in the case of the United States, the offices of the Office of the United States 
Trade Representative (600 17th Street, NW,  and 1724 F Street NW,  
Washington, DC, USA ), the Mission of the United  States to the World Trade 
Organization (11, route de Pregny, 1292 Chambésy, Switzerland), and three 
additional sites specified in accordance with subparagraph  (c);  and  
(c) three sites other than a government office that are design ated by each Party 
for use by its Outside Advisors;  provided that the identity of those sites has 
been submitted to the other Party and the Arbitrator, and the other Party has 
not objected to the designation of that site within ten days of such submission . 
(d) Any objections raised under subparagraph (c) may be resolved by the 
Arbitrator.  
18. "Stand -alone computer"  means  a computer that is not connected to a network.  
 
19. "Stand -alone printer"  means a printer that is not connected to a network.   
 WT/DS353/ARB/Add.1  
 
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  20. "Submissi on" means any written, electronic, or uttered information transmitted to the 
Arbitrator, including but not limited to, correspondence, written submissions, exhibits, oral 
statements, and answers to questions.  
 
21. "WTO Approved Persons"  means  the members o f the Arbitrator and persons employed or 
appointed by the Secretariat who have been authorized by the Secretariat to work on the dispute 
(and includes translators and interpreters as well as any transcribers present at Arbitrator meetings 
involving BCI and /or HSBI).  
 
22. "WTO Rules of Conduct"  means the Rules of Conduct for the Understanding on Rules and 
Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996 
(WT/DSB/RC/1).  
 
III. SCOPE  
 
23. These procedures  apply to all BCI and HSBI received by an Approved Person and by WTO 
Approved Persons as a result of the Arbitration.   
 
24. Unless specifically  otherwise provided herein, these procedures do not apply to a Party's 
treatment of its own BCI and HSBI.  
 
25. The Arbitrator  is aware that the European Union may need to submit information that it 
internally classifies as "EU Top Secret", "EU Secret" or "EU Confidential".  The Arbitrator will to the 
extent possible implement procedures for the protection of such cl assified information in the event 
that either Party informs the Secretariat that it will be submitting such classified information and 
has not already designated it as BCI or HSBI.  In such cases, the submitting Party shall propose 
appropriate procedures f or the protection of such classified information.  
 
IV. DESIGNATION OF APPROVED PERSONS  
 
26. At the latest by 12:00 p.m. (noon) on 12 July 2019 , each Party shall submit to the other 
Party, and to the Arbitrator, a list of the names and titles of any Represe ntatives and Outside 
Advisors who need access to BCI submitted by the other Party and whom it wishes to have 
designated as Approved Persons, along with any clerical or support staff that would have access to 
the BCI.  On that list, each Party shall indicat e which Approved Persons need access to HSBI 
submitted by the other Party and whom it wishes to have designated as HSBI Approved Persons. 
Each Party may designate new Approved Persons, remove, or replace Approved Persons by 
submitting amendments to its lis t of Approved Persons to the other Party and to the Arbitrator.  
 
27. Each Party shall keep the number of Approved Persons as limited as possible.  Each Party may 
designate no more than a total of 30 Representatives and 20 Outside Advisors as "HSBI Approved 
Persons".  
 
28. WTO Approved Persons  shall have access to BCI.  The Director -General of the WTO, or his or 
her designee, shall submit to the Parties, and to the Arbitrator, a list of the WTO Approved Persons 
and shall identify which of those WTO Ap proved Persons shall additionally have access to HSBI.  
 
29. Unless a Party objects to the designation of an Outside Advisor of the other Party, the 
Arbitrator shall designate those persons as Approved Persons.  A Party also may object within ten 
days of becoming  aware of information that was not available to the Party at the time of the filing 
of a list under paragraph 26 that would suggest that designation of an individual is not appropriate.  
If a Party objects, the Arbitrator shall decide on the objectio n within ten  working days.  
 
30. An objection  may be based on the failure to satisfy the definition of "Outside Advisor" or on 
any other compelling basis, including conflicts of interest.   
 
31. The Parties or the Director -General of the WTO, or his or her designee, may submit 
amendments to their lis ts at any time, subject to the overall limits set out in paragraph 27 and to 
objections for the addition of new Approved Persons in accordance with paragraphs 29 and 30. Any 
such amendments or objections by a Party shall be submitted to the Arbitrator and communicated 
to the other Party on the same day. Any amendments to the list of WTO Approved Persons shall be 
promptly communicated to the Parties.   WT/DS353/ARB/Add.1  
 
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V. BCI 
 
32. Only Approved Persons and WTO Approved Persons may have access to BCI submitted in this 
procee ding.  Approved  Persons and WTO Approved Persons shall use BCI only for the purposes of 
this dispute.  No Approved Person or WTO Approved Person shall disclose BCI, or allow it to be 
disclosed, to any person except another Approved Person or WTO Approved P erson.  These 
obligations apply indefinitely.  
 
33. A Party shall make no more than one copy of any BCI submitted by the other Party for each 
Secure site provided for that Party in paragraph  17. 
 
34. Parties may incorporate BCI in internal memoranda for the  exclusive use of Approved Persons.  
Any memorandum  and the BCI it contains shall be marked in accordance with paragraph  5. 
 
35. BCI submitted  pursuant to these procedures shall not be copied, distributed, or removed from 
the Secure site, except as necessa ry for submission to the Arbitrator .  
 
36. The treatment  in a Party's submissions to the Arbitrator of any BCI shall be governed by the 
provisions of this paragraph, which shall prevail to the extent of any conflict with the other provisions 
of the Working  Procedures (including these Procedures) relating to BCI.  
 
(a) Parties may incorporate BCI in submissions to the Arbitrator, marked as 
indicated in paragraph  5. In exceptional cases, parties may include BCI in an 
appendix to a submission.  
(b) A Party submitting a submission or appendix containing BCI shall also submit, 
within a time period to be set by the Arbitrator, a version redacting any BCI.  
This shall be ref erred to as the "Non -BCI Version".  However, a Party is not 
required to submit a "Non -BCI Version" of any exhibit containing BCI, unless 
specifically directed to do so by the Arbitrator;  
(c) A Non -BCI Version shall be sufficient to permit a reasonable underst anding of 
its substance.  In order to prepare such a Non -BCI Version:  
(i) A Party may request the Party that originally submitted the BCI, as soon as 
possible, to indicate with precision portions of documents containing BCI 
that may be included in the non-BCI Version and, if necessary to permit a 
reasonable understanding of the substance of the information, produce a 
Non-BCI summary in sufficient detail to achieve this aim.  
(ii) Upon receipt of such a request, the Party that originally submitted the BCI 
shall, as soon as possible, indicate with precision portions of documents 
containing BCI that may be included in the Non -BCI Version and, if necessary 
to permit a reasonable understanding of the substance of the information, 
produce a Non -BCI summary in suffic ient detail to achieve this aim.  
(iii) The Arbitrator shall resolve any disagreement as to whether the Party that 
originally submitted the BCI failed to indicate with sufficient precision 
portions of documents containing BCI that may be included in the Non -BCI 
Version and to produce, if necessary, a Non -BCI summary in sufficient detail 
to permit a reasonable understanding of the substance of the information, 
and may take appropriate action to ensure that the provisions of this 
paragraph are satisfied.  
(d) The Europea n Union  may designate the personal offices of up to four of its 
Approved Persons as additional Secure sites for the sole purpose of storing and 
permitting review of the BCI versions of the Parties' submissions to the 
Arbitrator.  All of the protections app licable to BCI under these procedures, 
including the storage rules in paragraph  39, shall apply to such submissions.  
BCI exhibits to submissions may not be stored or reviewed at these additional WT/DS353/ARB/Add.1  
 
- 15 - 
 
  Secure sites.  The EU shall submit the address (including ro om number) of each 
of the additional Secure sites to the Arbitrator and the complaining Party.  
37. Any document containing BCI shall not be copied in excess of the number of copies required 
by the Approved Persons.  The making of electronic copies shall be  avoided whenever possible.  Such 
documents may be transmitted electronically only by using secure e -mail, or by means of encrypted  
electronic communication.  If a Party submits to the Arbitrator an original document that cannot be 
transmitted electronical ly, it shall on the day of submission deliver a copy of that document to one 
of the Secure sites listed in paragraph  17.  The Parties shall designate one of the Secure sites listed 
in paragraph 17 for this purpose.  
 
38. A Party that wishes to submit or ref er to BCI at an Arbitration meeting shall so inform the 
Arbitrator and the other Party.  The Arbitrator shall exclude persons who are not Approved Persons 
or WTO Approved Persons from the meeting for the duration of the submission and discussion of 
BCI. 
 
39. Approved Persons and WTO Approved Persons shall store BCI only in locked security 
containers or in computers or computer systems that prevent access to such documents by non -
approved persons.  In the case of BCI submitted to the Arbitrator, such locked security containers 
shall be kept on the WTO Secretariat's premises, except that members of the Arbitrator may 
maintain a copy of all relevant documents and materials containing BCI at their places of residence.  
Such documents and materials shall be store d in locked security containers when not in use.  BCI 
shall be appropriately protected against improper inspection and eavesdropping when being 
consulted and will be transmitted in sealed heavy duty double envelopes only.  All work papers ( e.g., 
draft subm issions, worksheets, etc.) containing BCI shall, when no longer needed, be shredded or 
burned consistent with normal government practice for destroying sensitive documents.  
 
40. The Arbitrator shall not disclose BCI in its decision, but may make statement s or draw 
conclusions that are based on the information drawn from the BCI.  Before the Arbitrator makes its 
decision publicly available, the Arbitrator shall give each party an opportunity to ensure that the 
decision does not contain any information that it has designated as BCI.  
 
VI. HSBI  
 
41. Unless otherwise  provided below, HSBI shall be subject to all the restrictions in Section  V 
applicable to BCI.  
 
42. HSBI shall be submitted to the Arbitrator  in electronic form, using L ocked CDs or two Sealed 
laptop computers connectable  to 19" - 21" monitors, or in hard copy form, for access by WTO 
Approved Persons designated pursuant to paragraph 28 as being additionally authorized to access 
HSBI.  All such HSBI shall be stored in a co mbination safe in a designated secure location on the 
premises of the WTO Secretariat. Any computer in that room shall be a Stand -alone computer.  A 
Stand -alone printer may be used to make hard copies of any HSBI.  Such hard copies shall be made 
on distinc tively colored paper and marked in accordance with paragraph 6.  Such hard copies shall 
either be stored in a combination safe at the designated secure location referred to above, or 
destroyed at the end of the relevant working session. HSBI shall not be r emoved from this designated 
secure location, except in the form of handwritten notes that may be used only  for working sessions  
on the WTO Secretariat's premises by WTO Approved Persons designated pursuant to paragraph 28 
as being additionally authorized t o access HSBI and which shall be destroyed once no longer in use.   
Also, documents containing HSBI may be removed if stored on a Sealed laptop computer provided 
by the Party that submitted the information , if stored on  Locked CDs provided by the Party that  
submitted the information , or if stored on a Stand -alone computer on which HSBI has been saved  
pursuant to paragraph 47,  to the extent necessary for working sessions of the Arbitrator and WTO 
Approved Persons designated pursuant to paragraph 28 as being a dditionally authorized to access 
HSBI, subject to the following conditions:  
 
(a) the Sealed laptop computer , Locked CDs , or Stand -alone computer  on which 
HSBI has been saved  pursuant to paragraph 47  shall remain on the premises of 
the WTO  at all times ;  
(b) the S ealed laptop computer , Locked CDs , or Stand -alone computer  on which 
HSBI has been saved  pursuant to paragraph 47  shall at all times be in the WT/DS353/ARB/Add.1  
 
- 16 - 
 
  exclusive and direct custody of a WTO Approved Person designated pursuant to 
paragraph 28 as being additionally au thorized to access HSBI;  
(c) the WTO Approved Person  in exclusive and direct custody of  the Sealed laptop 
computer, L ocked CDs , or Stand -alone computer  on which HSBI has been saved  
pursuant to paragraph 47  shall ensure that no reproductions of any kind of 
information stored on the Sealed laptop , the L ocked CDs , or Stand -alone 
computer  on which HSBI has been saved  pursuant to paragraph 47  are created  
in any way ;  
(d) information contained on the Locked CDs shall  only be viewed or processed 
using  a Stand -alone computer  that is neither connected to a network nor 
capable of being connected to a network. When not in use, such Stand -alone 
computers shall be kept in locked security containers on the premises of the 
WTO Secretariat;  and 
(e) at the conclusion of the relevant working session, the Sealed laptop computer, 
Locked CDs , or Stand -alone computer on which HSBI has been saved  pursuant 
to paragraph 47  shall be immediately returned to the combination safe in the 
designat ed secure location referenced above.  
Any working sessions  involving HSBI that occur outside of the d esignated secure location 
referred to above  shall only occur in the personal work spaces (on the premises of the WTO 
Secretariat) of WTO Approved  Persons de signated pursuant to paragraph 28 as being 
additionally authorized to access HSBI , or, for internal meetings of the Arbitrator and/or of 
WTO Approved Persons  designated pursuant to paragraph 28 as being additionally authorized 
to access HSBI , only in close d meeting rooms on the premises of the WTO Secretariat.  During 
all such working sessions, and with respect to all spaces in which such working sessions occur, 
special care shall always be taken to ensure the security of HSBI.  
 
43. Each Party shall maintain an additional copy (electronic or hard) of the HSBI it submits to the 
WTO, for access by HSBI Approved Persons acting on behalf of the other Party, in the HSBI locations 
listed in paragraph  10.  A Stand -alone printer may be used t o make hard copies of any HSBI.  Such 
hard copies shall be made on distinctively colored paper.  Such hard copies shall either be stored in 
a safe at the relevant HSBI location, or destroyed at the end of the relevant working session.  
 
44. Except as other wise provided in these procedures, HSBI shall not be stored, transmitted or 
copied either in written or electronic form.  
 
45. HSBI Approved Persons may view HSBI on the Sealed laptop computer maintained by the 
other Party or, in  the case of HSBI submitted on L ocked CDs on a Stand -alone computer, only in a 
designated room at one of the HSBI locations indicated in paragraph 10 or at the designated secure 
location on the premises of the WTO Secretariat referred to in paragraph  42, u nless otherwise 
mutually agreed by the Parties. The designated rooms shall be available to HSBI Approved Persons 
from 9:00 a.m. to 5:00  p.m. (local time) during official working days at the respective HSBI location.  
The designated secure location referred  to in paragraph 42 shall be available to HSBI Approved 
Persons by prior arrangement with the WTO Secretariat.  HSBI Approved Persons may not bring into 
such room any electronic recording or transmitting devices.  HSBI Approved Persons may not remove 
HSBI from such room, except in the form of handwritten notes or aggregated information generated 
on a Stand -alone computer.  In either case, such notes or information shall be used exclusively for 
this dispute in connection with which the HSBI has been submitte d.  Each person viewing the HSBI 
in the HSBI location or designated secure location referred to in paragraph 42 shall complete and 
sign a log identifying the HSBI that the person reviewed or, alternatively, such a log can be generated 
automatically.  Each Party shall, for the HSBI location within its territory referenced in paragraph  
10, maintain such log until one year after the Conclusion of the Arbitration Process .  The WTO 
Secretariat shall, for the designated secure location referred to in paragraph 42 , maintain such log 
until one year after the Conclusion of the Arbitration Process.  Before entering and when leaving 
such room, Outside Advisors who are HSBI Approved Persons may be subject to appropriate controls.  
 
46. No HSBI Approved Person or WTO Appr oved Person designated pursuant to paragraph 28 as 
being additionally  authorized to access HSBI shall disclose HSBI to any person except another HSBI 
Approved Person or WTO Approved Person designated pursuant to paragraph 28 as being WT/DS353/ARB/Add.1  
 
- 17 - 
 
  additionally authorize d to access HSBI, and then only for the purpose of this dispute.  This obligation 
applies indefinitely.  
 
47. HSBI may be processed only on Stand -alone computers.  WTO Approved Persons designated 
pursuant to paragraph 28 as being additionally authorized to a ccess HSBI  may create electronic files 
containing HSBI and may save such files on a Stand -alone computer that is neither connected to a 
network nor capable of being connected to a network . Any electronic file  containing HSBI shall not 
be transmitted electr onically, whether by e -mail, facsimile, or otherwise.   
 
48. A Party that wishes to submit or refer to HSBI at an Arbitration meeting shall so inform the 
Arbitrator and the other Party.  The Arbitrator shall exclude persons who are not HSBI Approved 
Person s or WTO Approved Persons designated pursuant to paragraph 28 as being additionally 
authorized to access HSBI from the meeting for the duration of the submission and discussion of 
HSBI.  
 
49. All HSBI shall be stored  in a safe at the relevant HSBI location or in accordance with 
paragraph  42. 
 
50. The treatment  in a Party's submissions to the Arbitrator of any HSBI shall be governed by the 
provisions of this paragraph, which shall prevail to the extent of any conflict with the other provisions 
of the Working Procedures (including these Procedures) relating to HSBI.  
 
(a) HSBI may be incorporated into a separate appendix to, but not the body of, a 
Party's submission, which appendix shall be comprehensible in itself.  The 
document containing the HSBI shall be referred to as the "Full HSBI Version 
Appendix";  
(b) A Party submitting an appendix containing HSBI shall also submit, within a time 
period to be set by the Arbitrator, a version redacting any HSBI.  This shall be 
referred to as the "Redacted Version Appendix" ;  
(c) At the request of a Party, information contained in the Redacted Version 
Appendix may be treated as BCI, in accordance with the provisions of Section  V;   
(d) A Redacted Version Appendix shall be sufficient to permit a reasonable 
understanding of its substa nce.  In order to prepare such a Redacted Version 
Appendix:  
(i) A Party may request that the Party that originally submitted the HSBI, as 
soon as possible, indicate with precision portions of documents containing 
HSBI that may be included in the Redacted Versi on Appendix and, if 
necessary to permit a reasonable understanding of the substance of the 
information, produce a non -HSBI summary in sufficient detail to achieve 
this aim. 
(ii) Upon receipt of such a request, the Party that originally submitted the HSBI 
shall,  as soon as possible, indicate with precision portions of documents 
containing HSBI that may be included in the Redacted Version Appendix and, 
if necessary to permit a reasonable understanding of the substance of the 
information, produce a non -HSBI summary  in sufficient detail to achieve 
this aim. 
(iii) The Arbitrator shall resolve any disagreement as to whether the Party that 
originally submitted the HSBI failed to indicate with sufficient precision 
portions of documents containing HSBI that may be included in t he Redacted 
Version Appendix and to produce, if necessary, a non -HSBI summary in 
sufficient detail to permit a reasonable understanding of the substance of 
the information, and may take appropriate action to ensure that the 
provisions of this paragraph are  satisfied.  WT/DS353/ARB/Add.1  
 
- 18 - 
 
  (e) The Full HSBI Version Appendix shall be kept in an HSBI location and in the 
designated secure location referred to in paragraph 42, as  appropriate, in the 
form of a L ocked CD.  If it is not practical to keep the Full HSBI Version Appendix 
in an HSBI location, the Party may keep it in a locked security container in a 
Secure site in the form of a L ocked CD.  
(f) The L ocked CD containing the Full HSBI Version Appendix shall bear the label 
marked "FULL VERSION OF HSBI APPENDIX TO SUBMISSION" and indicat e the 
name of the Party that submitted the HSBI.  In addition, the HSBI Appendix 
itself shall be marked with a heading with double bolded square brackets on 
each page in an electronic file that contains the notation "FULL VERSION OF 
HSBI APPENDIX TO SUBMIS SION".  The electronic file containing the HSBI 
Appendix shall have a file name that contains the letters "HSBI".  
(g) The Party shall submit one copy of the Full HSBI Version Appendix to the 
Arbitrator (through a WTO Approved Person identified by the Arbitrator ) and 
two copies to the other Party in the form of two L ocked CDs.  The Full HSBI 
Version Appendix shall not be t ransmitted via e -mail.  Parties shall agree 
between themselves beforehand on the name of the Approved Person  that is to 
receive the L ocked CD s.   
(h) The Party shall commence transfer of the L ocked CDs containing the Full HSBI 
Version Appendix no later than th e deadline for the submission concerned, and, 
at the same time, provide the Arbitrator and the other Party with proof that this 
has been done.   
(i) No more than one working day in advance of a n Arbitration meeting with the 
parties, a Party may, exclusively at  that Party's Perman ent Mission in Geneva, 
use the L ocked CD to produce no more than one hard copy of the Full HSBI 
Version Appendix for each HSBI Approved Person planning to attend that 
Arbitrat ion meeting. All paper versions produced pursuant to this sub paragraph 
shall be collected by the Party concerned and destroyed immediately after the 
conclusion of the meeting.  
(j) WTO Approved Persons designated pursuant to paragraph 28 as being 
additionally authorized to access HSBI may, exclusively on the WTO premises , 
produce paper versions of the Full HSBI Version Appendix for the purpose of, 
and immediately prior to, a n Arbitration meeting with the parties and/or an 
internal meeting.  When not in use, these paper  versions shall be stored in a 
locked container in the  designated secure location referred to in paragraph 42.  
All paper versions produced pursuant to this subparagraph shall be destroyed 
after the Conclusion of the Arbitration Process as defined in paragraph 4. 
(k) Parties are encouraged to submit versions of e xhibits containing HSBI from 
which all HSBI has been deleted.  Such exhibits shall be referred to as "HSBI -
Redacted Version Exhibits".  HSBI -Redacted Version Exhibits may contain BCI.   
(i) A Party may submit HSBI -Redacted Version Exhibits prepared by that Par ty 
to the Arbitrator, and serve them on the other Party in accordance with the 
applicable procedures, at the time it serves the submission to which the 
exhibit relates.  
(ii) If a HSBI -Redacted Version Exhibit is not submitted by the Party submitting 
the exhibit , an HSBI -Approved Person representing the other Party may 
prepare an HSBI -Redacted Version Exhibit of any such exhibit.  
(iii) HSBI-Redacted Version Exhibits may be prepared by an HSBI -Approved 
person, at an HSBI location, by deleting the HSBI in the exhibit (id entified 
by double brackets) from such exhibit and either printing or photo -copying 
the resulting document containing no HSBI.  The deletion of HSBI from the 
resulting document shall be verified by a person authorized for this purpose WT/DS353/ARB/Add.1  
 
- 19 - 
 
  by the Party that sub mitted the exhibit(s) in question.  The resulting 
document containing no HSBI (but which may contain BCI) will constitute 
the HSBI -Redacted Version Exhibit of such exhibit, and may be removed 
from the HSBI location.    
(iv) The Parties shall cooperate to the ma ximum extent possible to make 
available necessary facilities, including printers, photo -copiers, and physical 
means for the deletion of text from a document, to enable the preparation 
of HSBI -Redacted Version Exhibits, including making available an 
HSBI-Approved Person for purposes of the verification provided for in 
paragraph (iii) above.  HSBI -Redacted Version Exhibits may be prepared by 
HSBI-Approved Persons upon request during the times the designated room 
at the relevant HSBI location is available.     
(v) The Arbitrator shall resolve any disagreement arising from the operation of 
this sub -paragraph, and may take appropriate action to ensure that the 
provisions of this paragraph are satisfied.  
(l) The Arbitrator reserves the right, after consulting the parties,  to amend the 
provisions of this paragraph at any time in order to accommodate situations 
arising during Arbitrat ion meetings, and the preparation of the decision .  
51. The Arbitrator shall not disclose HSBI in its decision, but may make statements or draw  
conclusions that are based on the information drawn from the HSBI. Before the Arbitrator makes its 
decision publicly available, the Arbitrator shall give each party an opportunity to ensure that the 
decision does not contain any information that it has de signated as HSBI.  
 
VII. RESPONSIBILITY FOR COMPLIANCE  
 
52. Each Party is responsible for ensuring that its Approved Persons comply with these procedures 
to protect  BCI and HSBI submitted by each Party, as well as with enforceable codes of professional 
conduct to which its Approved Persons or other Outside Advisors are subject.  WTO Approved Persons 
shall comply with these procedures to protect BCI and HSBI submitted  by a Party.  WTO Approved 
Persons are covered by the WTO Rules of Conduct.  As provided for in the WTO Rules of Conduct, 
evidence of breach of these Rules may be submitted to the Chair of the DSB or to the Director -
General of the WTO, or his or her design ee, as appropriate, for appropriate action pursuant to Section 
VIII of the WTO Rules of Conduct.  
 
VIII.  ADDITIONAL PROCEDURES  
 
53. After consulting with the Parties, the Arbitrator may apply any other additional procedures 
that it considers  necessary to pr ovide additional protections to the confidentiality of BCI or HSBI or 
other types of information not explicitly covered by these Procedures.  
 
54. The Arbitrator may, with the consent of both Parties, waive any part of these procedures.  
Such "waiver" shall  be specifically set forth in writing and signed by a representative of both Parties.  
 
IX. RETURN AND DESTRUCTION  
 
55. Except as provided for in paragraph 56 immediately below, after the Conclusion of the 
Arbitration Process as defined in paragraph 4, with in a period to be fixed by the Arbitrator, WTO 
Approved Persons and the Parties (along with all Approved Persons) shall destroy or return all 
documents (including electronic material) or other recordings containing BCI to the Party that 
submitted such docu ments or other recordings.  At the same time, WTO Approved Persons and the 
Parties shall destroy or return any electronic material containing  HSBI, together with any typed or 
manuscript record thereof . 
 
56. The WTO Secretariat shall retain one hard copy and one electronic version of the  Decision of 
the Arbitrator containing BCI, and one electronic version of all documents containing BCI (except 
documents destroyed or returned pursuant to paragraph 55 immediately above because such 
documents contained HSBI ) that were submitted to the Arbitrator. The Decision and the documents WT/DS353/ARB/Add.1  
 
- 20 - 
 
  containing BCI referred to in the preceding sentence shall be recorded on locked CD(s), to be kept 
in sealed containers in a locked cabinet on the premises of the WTO Secretariat . 
 
57. The hard drive of each Stand -alone computer that has been used to store HSBI at any time 
and all media used to back up such computers shall be destroyed within the period fixed by the 
Arbitrator pursuant to paragraph 55 . 
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX A -3 
ADDITIONAL WORKING PROCEDURES FOR THE SUBSTANTIVE MEETING WITH  THE ARBITRATOR  
Adopted 6 December 2019  
 
1. During the meeting with the parties, the following persons will be ad mitted into the meeting 
room: (a ) the Arbitrator ; and (b ) all Approved Persons, HSBI  Approved Persons, and WTO Approved 
Persons. The Arbitrator will invite the United States  to first present its full opening oral statement 
before the floor is given to the European Union  to present its full opening oral statement. The opening 
oral statemen ts will be videotaped and be made available for later viewing, as set out in paragraph 
5 below.  
2. BCI or HSBI in the texts of the opening oral statements provided to the Arbitrator  and the 
other party during the meeting and prior to the delivery of the opening oral statements shall be 
bracketed in accordance with the BCI/HSBI Procedures. In addition, a party including HSBI in its 
opening oral statement shall provide, prior to delivery of the opening oral statement, one paper copy 
to each member of the Arbitr ator and one paper copy to the other party, on coloured paper, with 
the HSBI included in double brackets. This document shall be subject to the same confidentiality 
rules as an HSBI Appendix to a written submission.   
3. Paragraphs 38 and 48 of the BCI/ HSBI Procedures  shall be observed at  all times during the 
meeting.  Further i n that context , if at any point during its opening oral statement a party intends to 
utter BCI or HSBI, it shall request that the videotaping be discontinued for the relevant portion of 
the opening oral statement, after which videotaping will be resumed.  The party that requests the 
discontinuation of the videotaping shall also indicate when the BCI or HSBI portion has ended so 
that the videotaping can be resumed.  A party is invited to  first deliver a part of its opening oral 
statement that contains no BCI or HSBI, and then ask for the videotaping to be discontinued, before 
delivering a second part of its opening oral statement containing BCI or HSBI.  
4. After both opening oral statement s have been delivered, the Arbitrator  will ask the parties 
whether they can confirm that no BCI or HSBI was pronounced during the videotaped portion s of 
the opening oral statement s. If each party so confirm s, the showing of the videotape will proceed 
according to schedule. If either party , within a deadline to be established by the Arbitrator,  requests  
to review the videotape  after the meeting , both parties will be invited to attend that review, 
accompanied by one or more  representative s of the Secretariat responsible for editing, on the 
premi ses of the WTO at an appropriate time after the meeting. The parties should be prepared to 
advise the WTO Secretariat representative(s) which portion of the opening oral statement presents 
a concern, and limit review to those portions of the videotape to t he maximum extent possible. If 
either party considers that a specific portion of the videotape must be deleted — because it is BCI 
or HSBI — the specific portion of the videotape will be deleted.  
5. The showing of the videotape of the opening oral stateme nts of the parties shall take place on 
a date to be established by the Arbitrator after consulting the parties . It will be open to officials of 
WTO Members and Observers, and, upon registration with the Secretariat, to accredited journalists, 
accredited re presentatives of non -governmental organizations, and other interested persons, 
including members of the public.  The WTO Secretariat will place a notice on the WTO website no 
later than four weeks before the date of the public viewing  to inform the public o f the showing. The 
notice shall include a link through which persons  can register with the WTO  Secretariat to attend the 
showing . 
 
_______________  
 
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the European Union  23 
Annex  B-2 Integrated executive summary of the arguments of the United States  40 
 
 WT/DS353/ARB/Add.1  
 
- 23 - 
 
  ANNEX  B-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION   
I. INTRODUCTION  
1. More than 14 years after the European Union ("EU") had requested consultations in this 
dispute, the compliance adjudicators agreed with the EU that the United States ("US") had still not 
brought its WTO -inconsistent subs idies to Boeing into compliance with its WTO obligations.  While 
the US asserted  that it had taken steps to comply with the DSB recommendations and rulings from 
the original proceedings, the compliance adjudicators disagreed.  The Appellate Body preserved  the 
entirety of the compliance panel's findings in the EU's favour ; rejected every US appeal; and, agreed 
with additional EU appeals.   
2. The EU, therefore, requested  the Arbitration Panel to resume its work under Articles 7.10 
and 7.9 of Agreement on Subsidies and Countervailing Measures (" SCM Agreement ").  Under those 
provisions, the EU  has the right to request and obtain authorisation to impose countermeasures at 
a level "commensurate" with the "adverse effects determined to exist", until the US secures a 
"multilaterally confirmed" finding of compliance (or the Parties find a mutually agreed solution) .1  
The EU has developed a methodology that values the adverse eff ects determined to exist, and that 
arrives at an annual amount of countermeasures that is "commensurate" with the degree and nature 
of the adverse effects determined to exist, as required under Articles 7.10 and 7.9.  The EU 
methodology is, moreover, fully  consistent with the methodology applied by the DS316 arbitration 
panel.2   
3. The US has failed to meet its burden of demonstrating that the EU methodology is 
"inconsistent" with Articles 7.10 and 7.9.  Indeed, many of the US arguments in these proceedin gs 
are themselves inconsistent with Articles 7.10 and 7.9.  Some even imply that the DS316 arbitration 
panel report is WTO -inconsistent, when it followed the very same methodology that the EU adopts 
here.   
4. It follows that the Arbitration Panel and, in turn, the Dispute Settlement Body ("DSB"), 
should authorise the EU's proposed countermeasures.  Those countermeasures are based on the 
"precise findings"3 of adverse effects determined to exist as a result of US subsidies operating 
through, first, a price  effects causal mechanism (Section II); and, second , a technology effects 
causal mechanism (Section III).  The EU summarises the technical implementation of its 
methodology in Section IV.  
II. THE VALUATION OF THE "ADVERSE EFFECTS DETERMINED TO EXIST " AS A RESULT OF US SUBSIDIES 
OPERATING THROUGH A PRICE EFFECTS CAUSAL MECHANISM  
5. The Parties agree that the "adverse effects determined to exist" as a result of US subsidies 
operating through a price effects causal mechanism are (i)  three "lost sales" ( i.e., the 2013 Air 
Canada lost sale; the 2013 Icelandair lost sale; and, the 2014 Fly Dubai lost sale) that took place in 
the post -implementation period; and, (ii)  "threat of impedance" in the US and UAE markets, 
respectively, for which the compliance reports rel ied, inter alia , on intermediate findings regarding 
two sales ( i.e., the 2011 Delta Airlines lost sale; and, the 2008 Fly Dubai lost sale) that took place 
before the end of the implementation period.4  However, the Parties disagree on how to value these 
adverse effects.  Whilst the EU adopts a methodology that values the adverse effects in a manner 
consistent with Articles 7.10 and 7.9 of the SCM Agreement , with the adopted findings, and with the 
DS316 decision, the US asks the Arbitration Panel to deviate  from this approach in several important 
and erroneous ways for both (i)  the three lost sales (Section II.A); and, (ii)  the threat of impedance 
in the US and UAE markets (Section II.B).  
 
1 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.52.   
2 The EU made certain adjustments to its initial methodology to reflect the subsequent DS316 
arbitration decision.  
3 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.  
4 See, e.g., EU Methodology Paper, paras. 40 -48; US Written Submission, para. 3.  WT/DS353/ARB/Add.1  
 
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  A. Lost sales  
6. To value the three "lost sales" in the post -implement ation period, the EU adopts a 
methodology that is consistent with Articles 7.10 and 7.9 of the SCM Agreement  and the adopted 
findings, and mirrors the approach of the DS316 arbitration panel.  The US, however, asks the 
Arbitration Panel to deviate from thi s approach in at least three erroneous ways (Section II.A.1, 
Section II.A.2, and Section II.A.3).    
1. The US has failed to demonstrate that the Arbitration Panel should reduce 
the value of lost sales by a "probability" that Boeing would still have won 
those sales  
7. The EU methodology proceeds on the basis that, absent the Business and Occupation 
("B&O") tax rate reduction, Airbus – instead of Boeing – would have won the three sales at issue.5  
Indeed, the compliance adjudicators found that, as an "ef fect of the subsidy", within the meaning of 
Article 6.3 of the SCM Agreement , Airbus had "failed to obtain"6 these sales, such that they were 
determined to be "lost sales".7       
8. By contrast, the US asks the Arbitration Panel to "alter" and "invalida te" these adopted 
findings.8  Despite the express findings, the US argues that, absent the subsidies, Airbus had, " at 
most", a "chance  of winning" each sale.9  According to the US, the Arbitration Panel must, therefore, 
"incorporate the probability  that Boeing still would have made the relevant sales in the 
counterfactual".10  Specifically, based on a "model" proposed for the first time in these proceedings, 
the US submits that, absent the B&O tax rate reduction, Airbus still faced a [ [***]]  chance of lo sing 
each "lost sale".11 
9. The US argument is (i)  wrong as an interpretative  matter (Section II.A.1.a); (ii)  wrong as a 
matter of fact, in light of the specific compliance findings (Section II.A.1.b); and, (iii)  based on a 
methodology  that is neither fit  for purpose, nor reliable (Section II.A.1.c)1. 
a. The US argument that Boeing still would have made the "lost sales" 
is wrong as an interpretative matter  
10. As the Appellate Body explained, "lost sales" are "sales that suppliers {i.e. , Airbus}  of the 
complaining Member {i.e. , the EU}  'failed to obtain ' and that instead  were won by suppliers { i.e., 
Boeing} of the respondent Member { i.e., the US}".13  With respect  to each of the sales at issue, the 
compliance adjudicators concluded that Airbus " failed to obtain " the sale as an " effect of the 
subsidy ", within the meaning of Article 6.3(c) of the SCM Agreement .14   
11. The US argues that there would remain a [ [***]]  probability that Boeing would still have 
won the lost sales, resulting in a net present value of the "lost sale" at issue of "$0".15  The US 
approach, therefore, "invalidate{s}" the adopted findings that the sales at issue were "lost" as an 
"effect of th e subsidy".  In particular , the "lost sale" would no longer  be the "effect of the subsidy".16  
This is in direct conflict with the adopted findings, which establish that, as a matter of law, the "lost 
sale" is "the effect of the subsidy".   
12. The US ass erts that its approach is justified in light of the applicable causation standard.  
According to the US, it follows from the Appellate Body's confirmation of the causation standard 
(i.e., that the subsidy must "contribute" as a "genuine and substantial" ca use to the lost sales for 
them to be the "effect of the subsidy") that the value of Airbus' lost sales that the compliance 
 
5 As well as the two sales underlying the threat of impedance findings ( see Section II.B, below).  
6 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.331; Appellate Body 
Report, EC – Large Civil Aircraft , paras. 1214, 1220.   
7 See, e.g., EU Methodology Paper, paras. 72 -77.  See footnote 14, below.  
8 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.210.   
9 US Written Submission, para. 84 (emphasis added).  
10 US Written Submission, para. 84 (emphasis added).  
11 See Annex to US Written Submission.   
1 See e.g., EU Written Submission, paras. 16 -124. 
13 Appellate Body, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.331 (emphasis added).  See also 
Appellate Body Report, EC – Large Civil Aircraft , paras. 1214, 1220.  
14 Panel Report, US – Large Civil Air craft (Article 21.5 – EU), paras. 9.404, 9.404 (footnote 3329), 
9.406, 9.406 (footnote 3335), 9.438, 9.443, 9.446 (footnote 3375), 11.8(c), 11.8(d); Appellate Body Report, 
US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.476, 5.477, 5.526, 6.13.  
15 US Responses to Arbitration Panel Questions 49 (para. 34), 13 (paras. 58 -59). 
16 See, e.g., EU Opening Statement, paras. 20 -37. WT/DS353/ARB/Add.1  
 
- 25 - 
 
  adjudicators determined to exist must be reduced by a probability that Boeing would still have won 
them in the counterfactual.   
13. The US reasoning is a non sequitur .  Either the causation standard was met, or it was not.  
As the Appellate Body upheld the compliance panel's lost sales findings, the causation standard was 
met, and the sale was found, as a matter of law, to be a "lost s ale" caused by the subsidies.  In 
other words, the lost sale is "the effect of the subsidy", within the meaning of Article 6.3(c).  These 
are the adopted findings that the Parties must accept, and that the Arbitration Panel must value.   
14. The US reasoni ng also has broad systemic implications for the mandate of arbitration panels.  
It implies that "unless a panel/the Appellate Body finds a subsidy to be the sole cause of a serious 
prejudice phenomenon", "an arbitrator under Article 7.10 of the SCM Agreeme nt must assess the 
degree of contribution of a subsidy to that serious prejudice phenomenon".17  Yet, assessing the 
degree of contribution of a subsidy to a market phenomenon – such as lost sales – implies re -visiting 
the causation findings made by prior adjudicators.  Thus, the US argument implies that, in most 
instances, determining what constitutes a "commensurate" level of countermeasures would require 
an arbitration panel to revisit the very causation findings already made.  Under its mandate, it cann ot 
do so.  
b. The US argument that Boeing still would have made the "lost sales" 
is wrong as a matter of fact, in light of the specific compliance 
findings  
15. Next, the specific findings underlying the ultimate "lost sales" determination also eliminate 
any basis for the US assertion that there is a [[***]] probability that Boeing would still have won 
the sales at issue.18 
16. First, the US "probability" argument mischar acterises the compliance findings regarding 
differences in net prices between Airbus' and Boeing's offers.19  In the US' view, the compliance 
adjudicators found that the subsidy amount was "not necessarily enough to cover observed gaps 
between the net pri ces offered by Airbus and Boeing".20  However, with respect to each of the three 
lost sales arising during the compliance reference period, the US' assertion is directly contradicted 
by the compliance adjudicators' explicit findings that the per -aircraft subsidy fully closed  the gap 
between the net prices in Airbus' and Boeing's offers.21  On its own terms, the US argument must, 
therefore, fail for the three lost sales arising during the compliance reference period.  
17. Second , and more importantly , for e ach of the five lost sales,22 the compliance adjudicators 
did not rest the causation finding on a comparison of net prices.  The US ignores – as it did before 
the Appellate Body23 – that the compliance adjudicators properly understood that net prices are not 
determinative, in light o f the need to account for the value of non-price differences  between the two 
offers, by way of a net present value ("NPV") assessment.24  Having assessed all factors, the 
compliance adjudicators found that all five sales were price -sensitive,  in the sense  that "there were 
no non -price factors  that explain Boeing's success in obtaining the sale".25  In fact, for two lost sales 
(i.e., 2008 Fly Dubai and 2014 Fly Dubai), the compliance adjudicators found that the US had not 
even advanced any non -price factor s that could explain Boeing's success in obtaining those sales.26  
For the three remaining sales, the compliance panel found that "Boeing appeared to be under 
particular pressure to reduce its prices in order to secure the sale, and there were no non -price 
factors that explain Boeing's success in obtaining the sale ".27  These findings  directly contradict the 
US assertion that the adopted findings "left open the possibility that a buyer may have determined 
that the totality of Boeing's offer, including the  quality of its products and associated services, was 
 
17 Arbitration Panel Question 13 (emphasis in original).  
18 See also  EU Written Submission, paras. 44 -86. 
19 See e.g.,  US Openin g Statement, para. 21; US Written Submission, paras. 44, 86.  
20 US Opening Statement, para. 21.    
21 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.402.  See also  Appellate Body 
Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.474.  
22 For the 2011 Delta Airlines and 2008 Fly Dubai sales, the "lost sale" finding was an intermediate 
finding used by the compliance adjudicators to find adverse effects in the form of "threat of impedance".  
23 Appellate Body Report, US – Large  Civil Aircraft (Article 21.5 – EU), paras. 5.510 -5.512.   
24 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.473.  See also  Statement 
of K. Rao, 7 October 2015, (Exhibit EU -33-HSBI) , as cited by Panel Report, US – Large Civil Aircraft 
(Article  21.5 – EU), paras. 9.399, 9.402; Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), 
paras. 5.473, 5.510, 5.511, 5.515, 5.517, 5.520, 5.523.  
25 Panel Report, US – Large Civil Aircraft ( Article 21.5 – EU), para. 9.383 (emphasis added).  
26 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.461.  
27 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.461 (emphasis added).  WT/DS353/ARB/Add.1  
 
- 26 - 
 
  preferable to Airbus's even at a price unaffected by the subsidy".28  The compliance adjudicators 
have explicitly dismissed the relevance of such non -price factors.   
18. Third, the adopted findings co ncerning the role of an assessment of NPV differences 
eliminate the probability that Boeing would have won any of the five sales at issue.  The compliance 
adjudicators found that the per -aircraft subsidy " does exceed the NPV difference that the evidence 
before us suggests can be determinative of the outcomes  of sales campaigns involving single -aisle 
aircraft", including in the five price -sensitive sales.29  Because these five sales were price -sensitive, 
the NPV differences between the two competing offers were close, falling within a range where 
subsidies change the outcome of each campaign.30  In other words, the adopted findings concerning 
the NPV evidence establish that, absent the subsidy, Airbus, instead of Boeing, would have won the 
five price -sensit ive sales.  
19. For all the reasons above, the compliance adjudicators in this dispute fully closed the door 
for a re -assessment of causation.  The situation here is no different from DS316, where the 
arbitration panel accepted that the door was closed for a re-assessment of the causation finding.31   
c. The US argument that Boeing still would have won the "lost sales" 
is based on a methodology that is neither fit for purpose, nor reliable  
20. Finally, and in any event, t he EU has explained, in detail, that  the US model is not fit for 
purpose and unreliable.  Throughout the proceedings, the US failed entirely  to engage with any of 
the EU criticisms.  
21. First, the US model is not fit for purpose.  No model from the family of "random utility 
models", to which the US model belongs, is able to predict the outcome of a set of individual sales  
that are taken from a non-random  group of observations.  Such models can  only make average  
market -wide predictions, and cannot be used to predict the outcome of any individual  sale, let alone 
the outcome of sales that are distinctly not average , like the particularly price -sensitive sales  at 
issue.32   
22. Second , the model i s unreliable.  The model is mis -specified, as it fails to capture the basic 
realities of the Large Civil Aircraft ("LCA") market, including many relevant demand -side and supply -
side factors.  Moreover, the model implementation is flawed, because fundamenta l parameters are 
mis-specified.  Finally, key data points necessary to operationalise the model are either inappropriate 
for the purpose at hand (such as cost and margin data) or incompatible with each other (such as 
different metrics for Boeing and Airbus  LCA prices, respectively), making it impossible for the model 
to produce reliable predictions.33  
2. The US has failed to demonstrate that the EU relied on the wrong number 
of aircraft  
23. The EU methodology values the number of Boeing aircraft already delivered, and to be 
delivered in the future, in the sales at issue.  The EU methodology mirrors that adopted by the 
DS316 arbitration panel, a methodology that the US itself had considered, i n DS316, to be consistent 
with Articles 7.10 and 7.9 of the SCM Agreement , the adopted findings, and the demand -side needs 
in the LCA market.34  Yet, the US asks the Arbitration Panel to deviate from this approach, and to 
rely, instead, on the number of a ircraft deliveries proposed in Airbus' final offers.  The US errs.   
24. First, the EU approach is consistent with the adopted findings.  As in DS316, the adopted 
findings of adverse effects are based on the number of Boeing  deliveries made and due under e ach 
 
28 Annex to US Wr itten Submission, para. 2.  
29 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.402 (emphasis in original); 
Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.473, 5.510, 5.511, 5.515, 5.517, 
5.520, 5.523.  
30 See Statement of K. Rao, 7 October 2015, (Exhibit EU -33-HSBI) , cited by Panel Report, US – Large 
Civil Aircraft (Article 21.5 – EU), paras. 9.399, 9.402; Appellate Body Report, US – Large Civil Aircraft 
(Article  21.5 – EU), paras. 5.473, 5.510, 5.511, 5.51 5, 5.517, 5.520, 5.523.  
31 See, e.g., Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), paras. 6.79, 
6.104, 6.200, 6.211, 6.213, 6.477.  
32 See EU Written Submission, paras. 94 -111.    
33 See EU Written Submission, paras. 112 -123. 
34 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.221 
(footnote  377).  WT/DS353/ARB/Add.1  
 
- 27 - 
 
  of the sales at issue.35  That is, the number of aircraft deliveries that the losing manufacturer – in 
this case, Airbus – "lost" as a result of the subsidy  equals the number of aircraft involved in the 
order from the winning manufacturer – in this ca se, Boeing.   
25. Second , the EU approach is consistent with the demonstrated demand -side needs of the 
airline customers.  The DS316 arbitration panel decided to rely on the number of Airbus deliveries 
in light of "the substitutability of the closest compe ting Boeing and Airbus models, and the 
demonstrated customer demand for the specified number of aircraft involved in the lost sales".36  
The exact same demand -side considerations are present when a sale is lost by Airbus, instead of 
Boeing.37   
26. Third, the EU approach is consistent with the approach in DS316.  The Arbitration Panel's 
Question whether it could, nonetheless, deviate from the DS316 approach revealed an apparent 
misunderstanding of the DS316 decision.38  As in DS316, " direct evidence of …  {Airbus'} 
counterfactual negotiating results "39 is absent in the present proceedings.  In fact, "direct evidence" 
of the counterfactual delivery numbers Airbus would have secured had it won the sales at issue is, 
by definition, never available, because i t is counterfactual .  Indeed, when referring to the absence 
of "direct evidence of the counterfactual negotiating results ", the DS316 arbitration panel was not 
referring to the absence of Boeing final offers , because (i)  Boeing's  final offers were not absent  
from the record of the DS316 arbitration panel proceedings; and, (ii)  more importantly, final offers 
represent actual  negotiating proposals  – not counterfactual  negotiating results .  Importantly, the 
Parties agree that final o ffers remain subject to further negotiations, including potentially with 
respect to the number of aircraft involved.  In these circumstances, it is the Boeing  purchase 
agreement that shows, most directly, what the airline actually procured from Boeing, in terms of the 
number of aircraft, and thus did not procure from Airbus.  Accordingly, the most direct evidence of 
the number of counterfactual deliveries is the Boeing purchase agreement, not the Airbus final offer.  
Consistent with the approach in DS316, t he Arbitration Panel should, therefore, rely on Boeing's 
actual purchase agreements to identify the delivery numbers.  
3. The US has failed to demonstrate that the EU used the wrong reference 
period over which to annualise the value of the three lost sales at issue  
27. Finally, to express the level of countermeasures as an annual value, the EU methodology 
distributes the total value of the three lost sales over the 33 -month reference period used in the 
compliance proceedings – i.e., between January 2013 and September 2015.  In so doing, the EU 
methodology ensures, as it must, consistency between the numerator  (i.e., the total value of adverse 
effects over the reference period) and the denominator  (i.e., the same  reference period, over which 
the total value of  adverse effects is distributed).  This approach mirrors the approach adopted by 
the DS316 arbitration panel, is consistent with Articles 7.10 and 7.9, and is dictated by basic logic 
and mathematics.   
28. The compliance adjudicators found adverse effects during a " temporally circumscribed 
reference period "40 of 33 months.41  To obtain an annual  average value of a total sum that derives 
from a period other than 12 months ( i.e., the 33 -month reference period), the total sum must be 
annualised based on the same  period ( i.e., the 33 -month reference period), and not based on a 
different period.  Otherwise, the denominator does not achieve its intended  purpose, which is to 
 
35 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 9.381 (Table 12),  9.406, Appendix 2 
(HSBI) (Iceland Air,  title before para. 245; Fly Dubai, title before para. 266) .  See also  Appellate Body Report, 
US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.472, 5.480, 5.498 (footnote 1117).  
36 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Articl e 22.6 – EU), para. 6.221 
(footnote  377).  
37 See Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 9.247 -9.248; Appellate Body 
Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.459.  
38 Arbitration Panel Question 9, citing  Decision by the Arbitration Panel, EC – Large Civil Aircraft 
(Article  22.6 – EU), para. 6.263.  
39 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.263 (emphasis 
added).  
40 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.46 (emphasis 
added).  
41 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.432 (footnote 3368).  See also 
Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.480.  The US agrees on the end 
point of the reference period, i.e., September 2015.  See e.g. , US Written Submission, paras. 100, 111, 133.  WT/DS353/ARB/Add.1  
 
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  annualise  a total sum obtained over a period of time other than one year, so as to " obtain  the 
average annual  value" thereof.42 
29. While the US agrees that there needs to be consistency between the numerator and the 
denominator,43 it asks the Arbitration Panel t o distribute the lost sales not over the 33 -month 
reference period (as logic dictates), but over a much longer 105 -month period (or 8.75 years), 
allegedly reflecting " the evidence included  in the numerator".44  The US errs.   
30. First, given a numerator that consists of the value of the adverse effects determined to exist 
in the 33 -month reference period, the US approach of distributing the adverse effects over a different 
period (105 months) creates a mismatch  between the numerator ( i.e., the adverse eff ects 
determined to exist during the reference period) and the denominator ( i.e., annualisation over a 
much longer 105 -month period), and must be rejected.  For the numerator , the US accepts, as it 
must, that the compliance reference period was certainly not 105 months, but much shorter (33 
months, or, according to the US, 36 months).45  On that basis alone, and given the requirement for 
consistency, the Arbitration Panel should reject the US argument using a 105 -month annualisation 
period ( i.e., the denomi nator ).46 
31. Second , the US approach is also inconsistent with the practice of previous arbitration panels, 
including DS316, which selected "short -term periods immediately following or including the time at 
which the responding party should have come int o compliance".47  By spanning 8.75 years, of which 
more than 5.5 years are before  the end of the implementation period, the US approach is 
inconsistent with that guidance.  
32. Third, the US asserts that its approach is justified because, according to the US, "it is clear 
that the five lost sales at issue occurred over the 105 -month period".48  Here, the US misrepresents 
the "adverse effects determined to exist".  The adopted findings do not concern adverse effects in 
the form of five lost sales over 105 months.  Rather, the adopted findings concern (i)  three lost sales 
and (ii)  threat of imped ance in the US and UAE markets, each of which arose during  the 33 -month 
reference period.   
33. Fourth , the US itself accepts that, if a so -called "threat of impedance" approach were adopted 
for the US and UAE markets, the three lost sales should not be distributed over 105 months, but 
rather over the much shorter 33 -month reference period (or 36 months, according to the US).49  The 
US' acceptance of this proposition illustrates that its own approach defies logic.  Under the US 
approach, the exact same three lost sales are valued fundamentally differently, depending on how 
the Arbitration Panel decides to value separate and additional  types of adverse effects ( i.e., the 
threat of impedance in the US and UAE markets).  Indeed, depending on the valuatio n methodology 
for other  adverse effects, the annual value of the same  three lost sales would be reduced by nearly 
70 percent .   
34. Fifth, and finally, the US approach is illogical for another reason.  Under the US approach, 
the total level of countermeasu res would be higher , had there been no finding of threat of 
impedance .  Specifically, higher countermeasures result (i) in a scenario with only three lost sales 
(which must be annualised over a 33 -month, or, in the US view, 36 -month period),  than (ii) in a  
scenario with three lost sales and threat of impedance findings (which, in the US view, must be 
annualised over a 105 -month period).  Thus, under the US approach, the level of countermeasures 
would have been higher  had the compliance adjudicators found fewer adverse effects, namely only 
three lost sales, without  a threat of impedance in the US and UAE markets.     
B. Threat of impedance in the US and UAE markets  
35. With respect to the valuation of the "threat of impedance" in the US and UAE markets, the 
Parties agreed that, in light of the adopted findings, the "lost sales" approach  discussed above could 
be used.  Specifically, to value the threat of impedance in the US market, the Parties agreed to value 
 
42 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.475 (emphasis  
added).  
43 US Responses to Arbitration Panel Questions 35 (para. 107), 74 (para. 124).  
44 US Response to Arbitration Panel Question 74, paras. 124, 126 (emphasis added).  
45 US Responses to Arbitration Panel Questions 66 (para. 98), 71 (para. 115), 33 (par a. 105), 
35 (para.  110), 37 (para. 117); US Written Submission, para. 36. 
46 US Response to Arbitration Panel Question 74, para. 124.  
47 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.56.  
48 US Response to Arbitra tion Panel Question 35, para. 109.  
49 US Response to Arbitration Panel Question 66, para. 98.     WT/DS353/ARB/Add.1  
 
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  the 2011 Delta Airlines lost sale.50  To value the  threat of impedance in the UAE market, the Parties 
agreed to value the 2008 Fly Dubai lost sale (including deliveries that occurred before  the reference 
period).51  The Parties' disagreement in this respect was limited to the same three issues discussed 
in the context of the valuation of the three "lost sales".  For reasons explained above, the US failed 
to demonstrate that the EU approach is inconsistent with Articles 7.10 and 7.9 ( i.e., Sections II.A.1, 
II.A.2, and II.A.3, above).   
36. Nonetheless, the  Arbitration Panel asked the Parties to adopt a different approach.  The 
Arbitration Panel suggested the use of a "delivery -centric" approach, which it defined as an approach 
that values "deliveries", rather than a "lost sales" approach "that values the un derlying lost sales at 
the time they occurred".52  The term "delivery -centric" does not, however, properly characterise an 
appropriate alternative approach, because it wrongly suggests that the Arbitration Panel would value 
a finding of present (or actual) impedance, whereas the Arbitration Panel is obliged, under the 
adopted findings, to value a threat  of impedance finding.  The EU, therefore, uses the term "threat 
of impedance approach" .   
37. The valuation of the threat of impedance in the US market must reflect the precise findings 
that grounded the "threat of impedance" finding – i.e., the 2011 Delta Airlines transaction for 100 
aircraft (and 30 option aircraft, for which the same arguments apply).  Similarly, the valuation of 
the threat of i mpedance in the UAE market must reflect the precise findings that grounded the 
"threat of impedance" finding – i.e., the 2008 Fly Dubai transaction for 50 aircraft (together with the 
other matters referred to in the compliance reports).  In this respect, i t is relevant that:  
a) For the 2011 Delta Airlines transaction, as a factual matter, all deliveries occurred 
either during  or after the reference period.  Accordingly, to value the threat of 
impedance in the US market, the Arbitration Panel must value the threat related to all 
deliveries resulting from the 2011 Delta Airlines transaction, since all deliveries 
occurred during  or after the reference period; and,  
b) For the 2008 Fly Dubai transaction, as a factual matter, all deliveries occurred either 
before or during  the reference period.  To value the threat of impedance in the UAE 
market, the Arbitration Panel must, therefore, value the threat related to deliveries 
resulting from the 2008 Fly Dubai transaction that occurred during  the reference period.  
38. Thus, subject to conditions (a) through (c) below , the EU would agree that, if the Arbitration 
Panel were to adopt a genuine "threat of impedance" approach, as set out below, it need not value 
the 2008 Fly Dubai deliveries that occurred before  the start o f the reference period.  The conditions 
attached to the EU's agreement are as follows:  
a) The Arbitration Panel must value  the entirety of the threat of impedance arising in the 
reference period ( i.e., the numerator);53   
b) It must annualise  the value o f that threat over the reference period ( i.e., the 
denominator); and,  
c) It must reject the US argument that there is a probability that, in the counterfactual, 
Boeing would still have made some of these deliveries.   
39. The US disagrees with each element  of the calculation, but fails to demonstrate that the EU 
approach is inconsistent with Articles 7.10 and 7.9 of the SCM Agreement , as explained below.54  
1. The US has failed to demonstrate that the inclusion of the threat of future 
deliveries, whether during or after the reference period, is inconsistent with 
Articles 7.10 and 7.9 of the SCM Agreement    
a. The EU approach is consistent with the adopted findin gs, and with 
Articles 7.10 and 7.9 of the SCM Agreement  
40. In "plac{ing} a value"55 on the threat of impedance in the US and UAE markets, the 
Arbitration Panel must value the entirety  of the threat of impedance arising in  the reference period.  
Any appro ach that would ignore a portion of the value of the threat of deliveries arising in  the 
 
50 EU Written Submission, paras. 248 -250; US Written Submission, para. 105; US Response to 
Arbitration Panel Question 30.  
51 EU Written Submission, paras. 283, 284, 390; US Written Submission, paras. 148 (footnote 171), 
105; US Responses to Arbitration Panel Questions 30 (para. 87), 31 (paras. 89 -92). 
52 Arbitration Panel Question 66.  
53 The threat of impedance covers the threat of deliveries later in , or after, the reference period.   
54 The EU addressed the flawed US probability argument in Section II.A.1, above.  
55 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.210.  WT/DS353/ARB/Add.1  
 
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  reference period would be inconsistent with Articles 7.10 and 7.9, and an unacceptable breach of 
the Arbitration Panel's mandate, which is circumscribed by findings mul tilaterally adopted by WTO 
Members acting through the DSB.   
41. The compliance adjudicators made "precise findings"56 regarding the existence of the "threat 
of impedance" in those markets.  Those findings were (i) based on specific sales transactions in the 
pre-reference period, and (ii) reflected the particularities of the LCA industry (in which there is 
typically a sig nificant time lag of some years between order and delivery).  That is, when Boeing 
won and Airbus lost the transactions at issue (on 25 August for the 2011 Delta Airlines transaction; 
and, on 4 July 2008 for the 2008 Fly Dubai transaction), it was the fact  of those lost transactions 
that gave rise to the threat of impedance in, respectively, the US and UAE markets.  In other words, 
the contractual order created the threat of impedance.  It is for that reason that the impedance was 
threatened – i.e., "clearl y foreseen and imminent "57 – with effect from the date on which the Boeing 
contract was concluded.  Indeed, as the compliance panel found, "owing to Airbus losing the 2011 
Delta Airlines sales campaign { i.e., on 25 August 2011} …, its imports of single -aisle LCA to the 
United States market will, to that extent  {i.e., for 100 aircraft} be obstructed, hindered or held 
back".58  On this basis, the compliance panel found a threat of impedance in the US market.  
Likewise, the compliance panel explicitly relied  on "Fly Dubai's 2008 … orders of 50 "59 Boeing LCA, 
which Airbus lost on 4 July 2008, to find a "threat" of impedance in the UAE market.      
42. The US accepts that the contract created the threat of impedance, explaining that, as a 
result of the " lost s ales" in the pre - implementation period, "{t} he deliveries associated with lost 
orders are then impeded ", giving rise to " the threat of impedance " "in the post -implementation 
period ".60 
43. It follows from these findings, and the Parties' agreed view ther eon, that the correct temporal 
perspective, and the one adopted by the compliance adjudicators, is that the threat of impedance 
arose on the date of order.  The findings by the compliance adjudicators then addressed the future 
in relation to that point in time and, insofar as is legally relevant, the start of the reference period 
(1 January 2013).  The threat of impedance was, to that extent, present in the reference period.  It 
is uncontested that, at the start of the reference period, none of the aircraft  associated with the 
2011 Delta Airlines transaction had been delivered; and, about half of those associated with the 
2008 Fly Dubai transaction had not been delivered.  All these aircraft must, therefore, be valued as 
threat of impedance arising in the re ference period.  
b. The US mischaracterises the EU approach and the adopted findings  
44. In its attempt to rebut the EU approach, the US mischaracterises both the EU approach, and 
the adopted findings.  
45. First, the compliance panel considered the existenc e of adverse effects arising in  the 
reference period – i.e., at any time  during this period ( e.g., at the time of the 2013 Air Canada lost 
sale (11 December 2013)).61  In so doing, the compliance panel did not take a "snapshot of the 
market situation"62 on the first day of the reference period.  Rather, consistent with its mandate, 
the compliance panel determined the presence of serious prejudice, and threat thereof, arising at 
any time  during  this period.  Thus, the US errs in characterising the EU position, and by extension 
the compliance panel's findings, as considering a "snapshot of the market situation"63 on the first 
day of the reference period.  
46. Second , the US then asks the Arbitration Panel to accept the erroneous proposition that the 
compliance panel adopted a snapshot of the market situation as of the last day of the compliance 
period ( i.e., 30 September 2015).  Again, the US errs.  In making its findings  of threat of impedance, 
the compliance panel did not (and did not have to) situate itself solely at the end of the reference 
period (30 September 2015), and did not (and did not have to) consider data on actual deliveries 
arising during  the reference peri od (1 January 2013 to 30 September 2015) separate from data on 
threatened deliveries after the reference period ( i.e., after 30 September 2015).  Nor did the 
compliance panel then determine that a threat of impedance arose in the reference period, solely 
 
56 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.   
57 Appellate Body Report, EC – Large Civil Aircraft , para. 1171 (emphasis added).  
58 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.437 (italics in original; bold added).  
59 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.443 (emphasis added).  
60 US Response to Arbitration Panel Question 66, p aras. 101 -102 (emphasis added).  
61 See, e.g., EU Opening Statement, para. 106.  
62 US Response to Arbitration Panel Question 69, para. 107.  
63 US Response to Arbitration Panel Question 69, para. 107.  WT/DS353/ARB/Add.1  
 
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  with reference to threatened deliveries after the reference period.  Any such assertion would 
contradict the findings actually made by the compliance panel in this particular case.   
47. Moreover, if the compliance panel had taken the end of the reference p eriod (30 September 
2015) as its temporal viewpoint, it could not have relied on "Fly Dubai's 2008 … orders of 50 "64 
Boeing LCA as a basis for a threat of impedance finding, given that all deliveries under that 
transaction occurred before  the end of the r eference period ( i.e., before 1 October 2015).  The fact 
that the compliance panel explicitly  relied on the 2008 Fly Dubai transaction, therefore, confirms 
that the "threat" of impedance includes the threat of deliveries arising at any time during the 
reference period.65 
48. Third, implicit in the US mischaracterisation of the EU position may also be the assumption 
that a threat must remain extant throughout the entirety of  the reference period, and must not have 
materialised as (alleged) present impedance  during the reference period.  The US assertion is, again, 
incorrect.  Since the compliance adjudicators found a threat of impedance arising "in" the reference 
period, the Arbitration Panel must value that adverse effect.  The Arbitration Panel is not rele ased 
from its obligation to value that threat of impedance because the responding Member asserts, before 
the Arbitration Panel , that some deliveries occurred during the reference period, that these might 
have constituted present impedance, and that this mu st diminish the adverse effects determined to 
exist.   
49. As a matter of law and fact, it is perfectly possible that particular facts and evidence are 
capable of supporting findings of two different types of adverse effects.  Here, the facts and evidence 
regarding the lost transactions fully supported the threat of impedance findings for all the relevant 
aircraft, irrespective of whether deliveries were scheduled to occur later in the reference period or 
after the reference period.66  At the same  time, the facts and evidence regarding deliveries during 
the reference period might, as the US asserts, have supported a separate finding of impedance 
(though the compliance adjudicators made no such findings).  However, the US affirmation that they 
do is incapable, as a matter of law, of diminishing the adverse effects determined to exist (threat of 
impedance arising in the reference period).  
c. The US approach is inconsistent with Articles 7.10 and 7.9 of the 
SCM Agreement, and with the adopted findings  
50. In light of the adopted findings, the US cannot meet its burden of demonstrating that the 
inclusion of threatened deliveries during and after the reference period  as part of the threat of 
impedance that arose during  the reference period is inconsistent with Articles 7.10 and 7.9.  
Nonetheless, the EU goes further, and explains that the alternative US approach is inconsistent with 
Articles 7.10 and 7.9.  
i. The US approach "invalidate{s}" and "alter{s}" the adopted 
findings  
51. The US does not explain how its position is consistent with the "precise findings"67 of threat 
of impedance.  Instead, the US points to a single footnote in which the compliance panel stated, 
unremarkably, that threat claims "necessarily require  evidence of projected future deliveries".68   
52. It does not follow from this footnote that the threat of future deliveries is partially negated 
with respect to deliveries occurring later on in the reference period, merely because those deliveries 
could  also have grounded a finding of present impedance.  The compliance panel made no finding 
of present impedance, as the US seems to accept.  Indeed, even the US only purports to find an 
"indicat{ion} "69 of support in this footnote.  In truth, the footnote merely indicates that "threat" is 
about the future, looking forward from the relevant temporal view point.  On the facts of this case, 
that is the date of the lost transactions, and by extension, the beginning of the reference period.  
 
64 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.443 (emphasis added).  
65 See also  EU Response to Arbitration Panel Question 66, pa ras. 221 -226. 
66 This was complemented by certain additional observations made with respect to the UAE market 
(observations which, as both Parties agree, do not diminish the threat of impedance resulting from the 2008 
Fly Dubai transaction).  US Responses to Arbitration Panel Questions 66 (para. 102), 31 (para. 90); US Written 
Submission, para. 105 . 
67 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.   
68 US Responses to Arbitration Panel Questions 66 (paras. 84-85) (citing  Panel Report, US – Large Civil 
Aircraft (Article 21.5 – EU), para. 9.432 (footnote 3368)), 69 (para. 107).    
69 US Response to Arbitration Panel Question 66, para. 85 (emphasis added).  WT/DS353/ARB/Add.1  
 
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  53. Thus, the fact th at threat claims " necessarily  require evidence of projected future deliveries" 
does not mean that evidence of a threat of deliveries later in the reference period is irrelevant to 
establish the existence of a threat of impedance arising in the reference pe riod.  In light of the facts 
and the particular findings at issue, the correct temporal viewpoint reveals that evidence of future 
scheduled deliveries during  the reference period necessarily constitutes evidence of threat.   
ii. The US approach requires th e Arbitration Panel to accept two 
erroneous propositions, and to step outside its mandate   
54. To accept the US approach, the Arbitration Panel would have to ignore not only the adopted 
findings; it would also have to accept two erroneous propositions, ea ch requiring it to step outside 
its mandate.  The US asks the Arbitration Panel to agree that, "{i}f the compliance panel considered 
that deliveries during the reference period supported findings of serious prejudice, it would have 
made findings of present  impedance, not threat of impedance" ( First Proposition ).70  The US errs.  
55. First, and foremost, the Arbitration Panel is not allowed  to place itself in the position of the 
compliance panel, and to speculate that, as a compliance panel, it may have foun d impedance during 
the reference period (a finding that the compliance panel did not make).  Nor may the Arbitration 
Panel, on that erroneous basis, diminish the harm covered by the threat of impedance, by refusing 
to value the deliveries that subsequently  occurred later during the reference period.   
56. Second , while it is not the Arbitration Panel's mandate to speculate what the compliance 
panel would or could  have found, there is no basis to assume that, in relation to the deliveries during 
the referenc e period, the compliance panel "would have made findings of present impedance, not 
threat  of impedance".71  As noted, facts and evidence may be capable of supporting findings of two 
different types of adverse effects.   The question is not, thus, whether one or the other finding would 
have been appropriate.  Here, the "threat" findings were particularly apt because they captured the 
threat of all the relevant deliveries.  By contrast, an impedance finding would have bee n too limited 
to reflect the " extent " to which the transactions at issue " held back " Airbus LCA, because it would, 
by its nature, have been confined to deliveries during the compliance reference period (and would 
not have related to post -reference period d eliveries, which also threatened to impede Airbus LCA 
imports).72  That is, the threat finding was faithful to the root cause – i.e., the lost transaction in the 
pre-reference period.  
57. Third, while it is not the Arbitration Panel's mandate to speculate  why the compliance panel 
made findings of a threat of impedance, the EU notes that the compliance panel explicitly found a 
threat of impedance on the basis of deliveries scheduled to occur in the future, irrespective of 
whether that was later during the r eference period or after the reference period.  As noted, that 
finding was particularly apt in light of the facts and evidence before it.  The compliance panel did 
not need to make an additional finding that deliveries during the reference period would also give 
rise to present impedance:  one finding suffices, and one finding was made in this particular instance.   
58. Fourth , and finally, if the compliance panel had adopted the US position ( quod non ), and 
found a "threat" in relation to post -reference per iod deliveries only, then the compliance panel would 
have been under an obligation to make an additional  impedance finding in order to cover the 
deliveries during  the reference period.  If the threat of deliveries during  the reference period had 
not been c overed by the compliance panel's threat of impedance findings, the compliance panel 
would have failed to make an objective assessment of the entire matter placed before it under Article 
11 of the DSU.  Instead, consistent with its obligation to make an obj ective assessment, the 
compliance panel found that the threat of impedance includes the threat of deliveries scheduled to 
occur during the reference period, as well as the threat of post -reference -period deliveries.  It is not 
within the Arbitration Panel' s mandate to adopt a reading of the compliance panel's findings that 
would imply a finding that the compliance panel violated its obligation under Article 11 of the DSU.    
59. In addition, the US asks the Arbitration Panel to accept the erroneous proposit ion that "there 
can only be threat of impedance findings if there is no present impedance" ( Second Proposition ).73  
The US errs.  
60. In US – Cotton , on which the US relies for its erroneous proposition, the Appellate Body 
explicitly found that "{a} claim  of serious prejudice may relate to a different situation  than a claim 
of threat of serious prejudice", and that, therefore, "a threat of serious prejudice claim does not 
 
70 US Responses to Arbitration Panel Questions 66 (para . 85) (emphasis in original), 69 (para. 109).  
71 US Responses to Arbitration Panel Questions 66 (para. 85) (emphasis in original), 69 (para. 109).  
72 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 9.437 (emphasis in original).  
73 US Res ponse to Arbitration Panel Question 69, para. 108 (emphasis added).  WT/DS353/ARB/Add.1  
 
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  necessarily  capture and provide a remedy  with respect to the same scenario as a claim  of present 
serious prejudice".74  Thus, the Appellate Body did not foreclose the possibility that, in particular 
circumstances, a claim of present serious prejudice ( e.g., impedance) may relate to the same 
situation as a threat of serious  prejudice ( e.g., threat of impedance); and that a threat of serious 
prejudice claim  may capture and provide a remedy also with respect to the same scenario as a claim 
of present serious prejudice.  Nor did the Appellate Body foreclose that, as a matter of law, there 
could be an overlap in the evidence on which a claim of "threat" of impedance and a claim of present 
impedance could be established.  On  the facts of this case, the threat of impedance findings 
"capture{d} and provide{d} a remedy " for the economic harm resulting from threatened deliveries 
during the reference period.75    
61. Finally, and in any event, it is not for the Arbitration Panel to decide, based on some 
generalised concept of "threat", whether the compliance panel's characterisation of threat of 
impedance was or was not in its view proper.  The compliance adjudica tors have definitively spoken 
on the characterisation of the transaction as threat of impedance arising in the reference period, and 
the DSB has adopted those findings.  Those findings are definitive, and must be accepted by the 
Arbitration Panel.  
2. The U S has failed to demonstrate that the EU used the wrong reference 
period over which to annualise the threat of impedance  
62. Consistent with its approach to the three lost sales, the EU methodology distributes the total 
value of the threat of impedance in t he US and UAE markets over the 33 -month reference period in 
order to obtain an annual level of countermeasures.  As explained above,76 this approach mirrors 
the DS316 approach, is consistent with Articles 7.10 and 7.9, and is dictated by basic logic and 
mathematics.   
63. The US agrees, first, that a "threat" of impedance was found in the "compliance proceeding 
reference period";77 and, second , that under the threat of impedance approach, "the objective would 
be to value the threat of impedance that exist ed during the compliance proceeding reference 
period ".78  Thus, the Parties agree that the value of the numerator  is the value of "the threat of 
impedance that existed during the compliance proceeding reference period ",79 which the EU 
established extends  over 33 months.  In order to achieve consistency between the numerator and 
the denominator  (a requirement on which the Parties agree), the EU annualises the threat of 
impedance over the same  33-month reference period.   
64. Yet, the US disagrees with the EU approach.  The US does not annualise the value of the 
threat of impedance over the same  reference period ( i.e., the denominator), but over a conceptually 
and temporally different  period, namely the delivery years after the reference period .  It is uncle ar 
how the US can adopt this approach, given its acceptance that a threat arose in the reference period 
and must be annualised over the same period ( see paragraph 63).  Indeed, the mismatch alone 
means that the US approach is not consistent with Articles 7 .10 and 7.9.  Yet, even if the US 
approach were appropriate ( quod non ), its application to the UAE market must nonetheless be 
rejected because it artificially inflates the denominator by collapsing the threat of impedance in that 
market with the separate t hreat of impedance in the US market, despite the fact that these are 
distinct  adverse effects, occurring in distinct  markets (and under the US logic, over distinct periods 
of time).  
III. THE VALUATION OF THE "ADVERSE EFFECTS DETERMINED TO EXIST " AS A RESULT OF US SUBSIDIES 
OPERATING THROUGH A TECHNOLOGY EFFECTS CAUSAL MECHANISM  
65. The original panel and the Appellate Body found that the US provided WTO -inconsistent 
aeronautics research and development ("R&D") subsidies that cause, through a technology  effects 
causal mechanism, adverse effects related to certain twin -aisle LCA.80  In the compliance 
proceedings, the panel found that the US had failed to withdraw the pre -2007 aeronautics R&D 
 
74 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 244 (emphasis added).  
75 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 244 (emphasis added).  
76 See paragraphs 27 -34, above.  
77 US Responses to Arbitration Panel Questions 35 (para. 110), 33 (para. 105), 37 (para. 117); US 
Written Submission, paras. 36, 109, 111.  
78 US Response to Arbitration Panel Question 66, para. 94 (emphasis  added).   
79 US Response to Arbitration Panel Question 66, para. 94 (emphasis added).  
80 Panel Report, US – Large Civil Aircraft , paras. 7.1797, 7.1854(a), 8.3(a)(i); Appellate Body Report, 
US – Large Civil Aircraft , paras. 1126, 1127, 1350(d)(i).    WT/DS353/ARB/Add.1  
 
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  subsidies at issue ("aeronautics R&D subsidies").81  Moreover,  agreeing with the EU, the Appellate 
Body reversed the compliance panel's finding that the US had removed the adverse effects caused 
by these subsidies.82  As a result, there is no multilaterally adopted finding that the US has achieved 
"substantive compl iance" with regard to the effects of the aeronautics R&D subsidies at issue.83  In 
contrast, there is a multilaterally adopted finding from the original proceedings that the aeronautics 
R&D subsidies at issue cause adverse effects through a technology eff ects causal mechanism, and a 
consequent multilateral DSB recommendation directing the US to withdraw these subsidies or 
remove their adverse effects.   
66. Lest it diminish the US' obligations and the EU's rights, the Arbitration Panel must rely on 
"the ad verse effects determined to exist" in the original proceedings to place a value on the adverse 
effects caused by the aeronautics R&D subsidies.  The EU methodology, therefore, values the original 
lost sales findings, based on the same "lost sales" approach  that it applied to the valuation of the 
adverse effects caused by subsidies operating through a price effects causal mechanism.  Authorising 
countermeasures on this basis provides the only means for the EU to induce the US to bring its WTO -
inconsistent su bsidies into compliance, as mandated by the multilateral DSB recommendation that 
flowed from the original proceedings, and that has not been satisfied.  
A. The allocation of burdens in the compliance proceedings does not bar the 
EU from requesting and obtai ning authorisation to impose countermeasures  
67. The US has not argued that the "lost sales" approach would be inappropriate in this context.  
Moreover, the US accepts that there is no multilateral finding that it has complied with the DSB's 
recommendatio n relating to its aeronautics R&D subsidies.  Nonetheless, the US submits that the 
EU is barred from requesting and obtaining authorisation to impose any countermeasures.   
68. The US initially argued that the EU is so barred because, as the complainant, t he EU bore 
the burden of proof in the compliance proceedings.84  However, under the pressure of argument, 
the US conceded that the allocation of the burden of proof in the underlying compliance proceedings 
is irrelevant to deciding whether the EU is authorised to adopt countermeasures.85   
69. Fundamentally , the Part ies are, therefore, in agreement that the Arbitration Panel must 
decide on a novel question, not yet addressed by prior arbitration panels.  That is, "which Party 
bears the consequence"86 of the absence of a finding of compliance in the compliance proceed ings?  
70. Is it the complainant, here the EU , that bears those consequences, in circumstances where 
that Party:  
a) In the original proceedings , successfully demonstrated  that the respondent grants 
subsidies causing adverse effects to its interests, thus triggering a DSB 
recommendation that the respondent withdraw the subsidy or take appropriate steps to 
remove the adverse effects;  
b) In the compliance proceedings , succes sfully demonstrated  that the respondent failed 
to withdraw the WTO -inconsistent subsidies;  
c) In the compliance proceedings , successfully demonstrated  before the Appellate Body 
that the compliance panel erred in finding that the adverse effects of the WTO -
inconsistent subsidies have been removed; and,  
d) Before  the arbitration panel , submitted evidence  demonstrating that the non -
withdrawn sub sidies continue to cause adverse effects in the post -implementation 
period?   
71. Or, is it the respondent, here the  US, that bears those consequences, in circumstances where 
that Party:  
a) In the original proceedings , was found to provide WTO-inconsistent subsidies  causing 
adverse effects to the complainant's trade interests;  
b) As a consequence, following the origina l proceedings , was directed by the DSB  to 
withdraw those subsidies or take appropriate steps to remove their adverse effects;  
 
81 Panel Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 11.7(a).   
82 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.386 -5.421, 6.11.  
83 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.52.  See also 
ibid., paras. 6.49 (including footnote 148), 6.53, 6.54.  
84 See e.g. , US Written Submission, paras. 55, 56, 57, 69, 70, 71.  
85 US Response to Arbitration Panel Question 47, para. 31.  See also  EU Opening Statement, paras. 
130-135; EU Comment on US Responses to Arbitration Panel Question 47.  
86 US Response to Arbitration Panel Question 45, para. 24.  WT/DS353/ARB/Add.1  
 
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  c) In the compliance proceedings , was found to have failed  to withdraw  the subsidies 
that have been found to cause adverse effects ;  
d) In the compliance proceedings , was found by the compliance panel to have removed 
the adverse effects, in a finding that was reversed  by the Appellate Body, such that it 
remains subject to the DSB recommendation to withdraw the subsidies or to take 
appropriate steps to remove the adverse effects;  
e) Before  the arbitration panel , nonetheless unilaterally asserts  that it has removed any 
adverse effects  caused by the unwithdrawn subsidies in the post -implementation 
period; and,  
f) Before  the arbitration panel , fails to address – let alone rebut  – the complainant's 
evidence that the non -withdrawn subsidies continue to cause adverse effects in the 
post-implementation period?   
72. The US maintains that the EU bears those consequences because the US asserts  that it has 
achieved compliance with respect to the aeronautics R&D subsidies.  Specifically, f or the US, "where 
the original responding party asserts  that it has removed the adverse effects or withdrawn the 
subsidy",87 the default position is that compliance has been achieved, even where the Appellate Body 
has reversed  findings of compliance in compliance proceedings, and no "multilaterally confirmed"88 
finding of compliance exists.89  In the US' view, it is "a prerequisite " for authorising 
countermeasures that the complaining party has obtained an affirmative finding of non -compliance 
in the post -implementation period.90  According to the US, since t he "EU failed to obtain that 
prerequisite finding", the Arbitration Panel is not allowed to value related countermeasures.91   
73. The US' position is inconsistent with both Articles 7.10 and 7.9 of the SCM Agreement , and 
the findings of the DS316 arbitra tion panel (Section III.B).  Even if the Arbitration Panel were to 
disagree, the EU has, in any event, demonstrated non -compliance in the post -implementation period 
(Section III.C).  
B. The US errs in arguing that a finding of non -compliance in the post-
implementation period is a "prerequisite" for authorising countermeasures  
74. First, the US effectively asks the Arbitration Panel to rewrite Articles 7.10 and 7.9.  The US 
asserts that the " adverse effects determined to exist " in Article 7.10 (and Ar ticle 7.9) are "those 
'determined to exist'  after the six months {implementation} period ".92  However, Article 7.9 
does not require a finding  of non -compliance with respect to a reference period after the end of the 
implementation period "{a}s a prerequis ite to imposing countermeasures".93  Instead, Article 7.9 
simply sets out a trigger condition for a complaining Member to request and obtain authorisation to 
impose countermeasures.  Specifically, the "DSB shall grant authorization" to impose 
countermeasu res "{i}n the event the {responding} Member has not taken appropriate steps to 
remove the adverse effects of the subsidy or withdraw the subsidy within six months from the date 
when the DSB adopts the panel report or the Appellate Body report".   
75. Nothi ng in Article 7.9 requires the trigger condition to be met through a finding  of non -
compliance after the end of the implementation period.  Indeed, the US itself accepts that a finding 
of non -compliance is not a "prerequisite" to imposing countermeasures, if non -compliance is 
conceded .94  Importantly, the question of when  a complaining Member is allowed to obtain 
authorisation to impose countermeasures (as defined in the introductory clause in Article 7.9), is 
different from the question of what  amount of countermeasures a complaining Member is entitled 
to request, and which  adverse effects determined to exist the arbitration panel is directed to value 
(as defined by the phrase "the degree and nature of the adverse effects determined to exist" in 
Articles 7 .10 and 7.9).  When properly separating those questions, it is clear that the Arbitration 
Panel would not "assume" that the aeronautics R&D subsidies cause adverse effects in the post -
implementation period, as the US alleges.  Rather, once the trigger cond ition in Article 7.9 is met, 
the Arbitration Panel must place a value on the "adverse effects determined to exist", as its mandate 
under Article 7.10 prescribes.   
 
87 US Response to Arbitration Pa nel Question 2, para. 9 (emphasis added).  
88 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.52.   
89 US Opening Statement, paras. 11 , 12; US Written Submission, para. 74, Section III; US Responses to 
Arbitration P anel Questions 2 (paras. 7, 9), 3, 4.  
90 US Opening Statement, para. 11 (emphasis added).  Ibid., para. 12.    
91 US Opening Statement, para. 12.  
92 US Response to Arbitration Panel Question 43, para. 9 (emphasis added).  
93 US Response to Arbitration Panel Question 44, para. 11.  
94 US Response to Arbitration Panel Question 44, para. 12.  WT/DS353/ARB/Add.1  
 
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  76. In the present circumstances, the trigger in Article 7.9 has been met by virtue of the 
Appellate Body's reversal of the compliance panel's finding that the US achieved compliance in 
relation to aeronautics R&D subsidies.  Through the Appellate Body's reversal, the multilaterally -
adopted DSB recommendations from the original proceedings "remai n operative",95 and provide a 
valid basis to request and obtain countermeasures until a future adjudicator issues a "multilaterally 
confirmed"96 finding of compliance (or a mutually agreed solution is achieved).   
77. Turning to the required valuation, the only "precise findings"97 of adverse effects 
"determined to exist" as a result of the aeronautics R&D subsidies are those found by the panel a nd 
the Appellate Body in the original proceedings, which the Arbitration Panel may rely on.98  Indeed, 
while the US argues, erroneously,  that the phrase "determined to exist" in Article 7.10 (and 7.9) 
refers, as a matter of law, to adverse effects determi ned to exist in the post -implementation period ,99 
it ultimately concedes that this phrase does not exclude, as a matter of law, reliance by an arbitration 
panel on adverse effects determined to exist by the original  adjudicators, before  the end of 
impleme ntation period.100   
78. Second , as confirmed  by the DS316 arbitration panel, absent a "multilaterally confirmed"101 
finding of compliance, the default position is not compliance  – as the US argues – but that which is 
expressed by the recommendation of t he Members sitting collectively as the DSB, i.e., non-
compliance .  The US cannot convert the absence  of a finding  of compliance into an affirmative finding 
that it has complied with the DSB's recommendation, on the sole basis of its own unilateral assertio n 
of compliance.  Indeed, for the Arbitration Panel to accept the US position would mean to accept the 
untenable proposition that, based on a unilateral  assertion of compliance, a multilaterally -adopted  
DSB recommendation to bring a WTO -inconsistent measur e into compliance becomes moot and of 
no legal effect, even absent a multilateral determination that " the problem " has been "fixed".102   
79. Third, and finally, if the Arbitration Panel were to deny the EU's right to impose 
countermeasures in the present circumstances, the Arbitration Panel would effectively "invalidate" 
and "alter" both the Appellate Body's reversal of the compliance panel's finding that the US achieved 
compliance in relation to the aeronautics R&D subsidies, and the multilaterall y-adopted DSB 
recommendations to comply from the original proceedings that " remain  operative"103 as a result of 
the compliance Appellate Body's reversal.  In the scenario envisioned by the US, the Arbitration 
Panel would erroneously put a value on the "ad verse effects determined to exist" as if the Appellate 
Body had upheld the compliance panel's finding of compliance , thus satisfying and exhausting the 
DSB's recommendation that the US comply.  
C. In any event, the EU has demonstrated non -compliance in the post-
implementation period  
80. In the alternative, if the Arbitration Panel were to disagree with the EU position that a finding 
of non -compliance in the post -implementation period is not a prerequisite under Article 7.9, the EU 
has, in any event, establis hed the prerequisite non -compliance in at least two ways.   
81. First, in the compliance proceedings , the EU demonstrated non -compliance after the end of 
the implementation period with respect to the B&O tax rate reduction subsidy .  That is, the EU 
success fully demonstrated that, 14 years after the EU requested consultations in this dispute, the 
US continues to provide WTO -inconsistent subsidies to Boeing that cause adverse effects to EU 
interests.  
82. Second , before the Arbitration Panel , the EU has demons trated non -compliance after the 
end of the implementation period with respect to the aeronautics R&D subsidies .  The US accepts 
that "an original complaining Member arguably could establish non -compliance after the end of the 
RPT through arguments and evid ence in an arbitration under Article 22.6 of the DSU and Article 7.10 
of the SCM Agreement ".104  The EU has established such non -compliance  before this Arbitration 
 
95 Panel Report, US – FSC (Article 21.5 – EC II) , para. 7.36.   Ibid., paras. 7.40 -7.43, 7.52.  See also  
Appellate Body Report, US – FSC (Article 21.5 – EC II), paras. 83, 94 -96. 
96 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 6.52.   
97 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.  
98 See EU Methodology Paper, paras . 171-174.  See also  EU Written Submission, Section III.  
99 See e.g. , US Response to Arbitration Panel Question 43, para. 9 (emphasis added).  
100 US Response to Arbitration Panel Question 44, para. 12.  
101 Decision by the Arbitration Panel, EC – Large Civi l Aircraft (Article 22.6 – EU), para. 6.52.   
102 See footnote 95, above.  
103 See footnote 95, above.  
104 US Response to Arbitration Panel Question 44, para. 13 (emphasis added).  WT/DS353/ARB/Add.1  
 
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  Panel,105 while the US explicitly declined to address , let alone rebut , the EU evidence an d 
argument.  In these circumstances, if the Arbitration Panel were to consider that Article 7.9 requires 
a showing of non -compliance in the post -implementation period in relation to the aeronautics R&D 
subsidies ( quod non ), the Arbitration Panel must concl ude, based on the uncontested  EU evidence 
and argument before it, that the US has failed to take appropriate  steps to remove the adverse 
effects of the aeronautics R&D subsidies.  Deciding otherwise would mean that the Arbitration Panel 
has made the case f or the US, in violation of its duty to make an objective assessment.  As the 
Appellate Body explained, in making an objective  assessment under Article 11 of the DSU, an 
adjudicator "may not take upon itself to rebut the claim (or defence) where the responding party 
(or complaining party) itself has not done so".106 
83. In sum, irrespective of which interpretation of Articles 7.10 and 7.9 the Arbitration Panel 
adopts, there is no basis to deny the EU's right to authorisation of "commensurate" countermeasures 
designed "to induce {US} compliance "107 with the DSB recommenda tion concerning the aeronautics 
R&D subsidies.  
IV. TECHNICAL IMPLEMENTATION OF THE EU APPROACH  
84. In light of the above, the EU values the adverse effects determined to exist as follows.  First, 
to value  the "lost sales" caused by the US subsidies operat ing through a price effects causal 
mechanism  (i.e., the 2013 Air Canada lost sale; the 2013 Icelandair lost sale; and, the 2014 Fly 
Dubai lost sale), the EU applies the following steps:  
a) Determine the counterfactual delivery numbers and schedules:  Consi stent with 
the DS316 approach,108 the EU  determines the counterfactual delivery numbers and 
schedules using the number and pace of Boeing 's deliveries in the lost sales at issue.  If 
the Arbitration Panel were to base counterfactual delivery numbers and s chedules on 
Airbus final offers (which it should not do),109 it would have to use not only firm orders, 
but also [[***]]  the number of Boeing LCA actually sold.110 
b) Adjust for order cancellations triggered by demand -side factors:   Consistent 
with the D S316 approach,111 the EU reduces the counterfactual delivery numbers for 
those deliveries that would also have been cancelled in the counterfactual.  The Parties 
agree that a single LCA (one 737 -800 NG as part of the 2014 Fly Dubai transaction) 
was cancel led due to demand -side factors that would likewise have occurred in the 
counterfactual.112 
c) Determine the counterfactual delivery price for each year of expected delivery:   
The EU selects the appropriate Net Fly -away Prices and the appropriate escalatio n 
factors, as reflected in the respective Airbus final offers.  The EU demonstrated (and the 
US acknowledged)113 that there is no justification to exclude [[***] ].114    
d) Perform downward -adjustment for future cancellation risk:  Consistent with the 
DS316 approach,115 the EU reflects the risk of cancellation of future deliveries triggered 
by demand -side factors.  For every outstanding delivery, the EU adjusts the 
counterfa ctual delivery price by the estimated future survival rate, which is a function of 
expected cancellation rates.  The most reliable, robust, and relevant proxy for future 
Airbus cancellation risk is derived from actual cancellations  that Boeing experienced in 
 
105 See EU Written Submission, paras. 359 -360 (footnotes 477 -479), and eviden ce and argument cited 
therein.  See also EU Written Submission, para. 358 (footnote 476); EU Opening Statement, para. 141 ("the 
EU explicitly offered that, on request, it is willing to provide the underlying exhibits on short notice").  
106 Appellate Body Report, US – Gambling , para. 282 (emphasis added).   
107 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para. 5.2.  
108 Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), para.  6.221 (including 
footnote 377).   
109 See, e.g., EU Opening Statement, paras. 39 -62; EU Responses to Questions 8, 9, 54.    
110 See EU Written Submission, paras. 228 -229; EU Opening Statement, para. 50.   
111 See Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), paras. 6.225, 
6.478.  
112 See US Responses to Arbitration Panel Questions 20 (para. 80), 57 (para. 55), 60 (para. 66); EU 
Written Submission, para. 216; Historic order cancellations in the single -aisle and twin -aisle LCA sales 
campaigns at issue, (Exhibit EU -46-BCI).   
113 See Letter by the United States to the Chairperson, dated 4 February 2020.  
114 See, e.g., EU Comment on US Response to Arbitration Panel Question 79, paras. 427 -430. 
115 See Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), paras. 6.237 -
6.241, 6.484.  WT/DS353/ARB/Add.1  
 
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  the five price -sensitive single -aisle LCA transactions at issue  as a fraction of all Boeing 
deliveries effectuated to date in these transactions ( i.e., 0.40 percent).116 
e) Perform temporal backward -adjustment, using Airbus' cost of debt as discount 
rate:  Next, the EU performs a backward -adjustment to express each counterfactual 
Airbus delivery price (modified by its future cancellation risk, if applicable) in terms of 
the delivery price at the time the sale was lost, i.e., in order -year US dollar term s.  The 
EU again follows the DS316 approach, and applies Airbus' cost of debt as discount 
factor.117  The US failed to demonstrate that this approach is inconsistent with Articles 
7.10 and 7.9; in any event, the EU demonstrated that the alternative approa ch 
suggested by the US ( i.e., using as the discount rate Airbus' weighted average cost of 
capital) is an inferior discount rate in present circumstances, and was properly rejected 
by the DS316 arbitration panel.118 
f) Express values of lost sales in terms  of a "common basis" (2015 dollars):   
Consistent with the DS316 approach,119 the EU converts 2013 and 2014 US dollar 
values into 2015 US dollars, so as to express all lost sales in terms of a "common 
basis".  The factor used to effectuate this forward -adjustment is the Airbus LCA inflation 
index ("ALII"), which is based on Airbus' contractual escalation rates, thereby reflecting 
[[***]] changes in labour and material costs resulting from inflation and other 
economic changes.120   
g) Determine the aggregated annualised  value of the adverse effects from the 
lost sales at issue:  The EU divides the total value by 33 (the number of months in 
the reference period), and multiplies that amount by 12, so as to generate an amount 
of annual adv erse effects from the three lost sales.  
85. The annualised 2015 value of these adverse effects is USD  [[***]] billion (based on Boeing 
delivery schedules) and USD  [[***]] billion (based on Airbus delivery schedules).121   
86. Second , to value the "threat of impedance" in the US and UAE markets that were caused by 
US subsidies operating through a price effects causal mechanism, the EU applies the steps described 
above (at paragraph 84) to, respectively, the 2011 Delta Airlines and 2008 Fly Dubai transaction s, 
with two differences.  First, to implement a threat  of impedance approach under step (a), the 
Arbitration Panel must value the threat of deliveries that occurred during  and after the reference 
period, but does not need to value deliveries that occurred before  the reference period.122  Second , 
to perform the temporal backward -adjustment under a threat of impedance approach (step (e)), the 
EU does not discount delivery prices back to the order year, but to the start of the reference period 
(January 2013).123  The annualised 2015 value of these adverse effects is USD  [[***]] billion (based 
on Boeing delivery schedules) and USD  [[***]]  billion (based on Airbus delivery schedules).124   
87. Third, and finally, to value the "lost sales" that were caused by US subsidies operating 
through a technology effects causal mechanism  (i.e., 2005 Qantas lost sale; 2005 Ethiopian Airlines 
lost sale; 2005 Icelandair lost sale; and, 2006 Kenya Airways lost sale), the EU applies the steps 
described above (at para graph 84), with one difference.  To determine the aggregated annualised  
value of the adverse effects (step (g)), the EU divides the total value by the length of the original 
reference period ( i.e., 36 months) instead of the compliance reference period ( i.e., 33 months).  The 
annualised 2015 value of these adverse effects is USD  [[***]]  billion (based on Boeing delivery 
schedules) and USD  [[***]]  billion (based on Airbus delivery schedules).125 
 
116 See EU Response to Arbitration Panel Question 61, para. 177 (footnote 187).  
117 Decision by the Arbitration Panel, EC – Large Civil Aircraft (A rticle 22.6 – EU), paras. 6.352 -6.354.     
118 See EU Comment on US Response to Arbitration Panel Question 75, paras. 407 -413. 
119 See Decision by the Arbitration Panel, EC – Large Civil Aircraft (Article 22.6 – EU), 
paras.  6.495 -6.497.  
120 See EU Methodology Paper, para. 101.  
121 2RPQ valuation of single -aisle lost sales – Boeing delivery schedules, (Exhibit EU -84-HSBI) ; 
2RPQ  valuation of single -aisle lost sales – Airbus delivery schedules, (Exhibit EU -85-HSBI) . 
122 For the conditions that need to be fulfilled under a genuine "threat of impedance" approach,  see 
paragraph 38, above.  
123 See EU Response to Arbitration Panel Question 66, paras. 269, 270.  
124 2RPQ valuation of single -aisle threat of impedance – Boeing delivery schedules, (Exhibit EU -76-
HSBI) ; and 2RPQ valuation of single -aisle threat of impedance – Airbus delivery schedules, (Exhibit EU -77-
HSBI) .    
125 2RPQ valuation of twin -aisle lost sales – Boeing delivery schedules, (Exhibit EU -86-HSBI) ; 2RPQ 
valuation of twin -aisle lost sales – Airbus delivery schedules, (Exhibit EU -87-HSBI) . WT/DS353/ARB/Add.1  
 
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  88. The EU therefore requests the Arbitration Panel and, in tur n, the DSB, to authorise an annual 
level of countermeasures in these amounts.  
 WT/DS353/ARB/Add.1  
 
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  ANNEX  B-2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES   
1  INTRODUCTION  
I. Legal Framework for Assessing the EU Proposed Countermeasures  
1. Pursuant to Article 7.10 of the Agreement on Subsidies and Countervailing Measures 
("SCM  Agreement"), the Arbitrator's task is to "determine whether countermeasures {proposed b y 
the EU} are commensurate with the degree and nature of the adverse effects determined to exist."  
The Oxford English Dictionary  defines degree as "the relative intensity, extent, or amount of a 
quality, attribute, or action" and nature as the "inherent o r essential quality of constitution of a 
thing."  In US – Upland Cotton (22.6 II) , the arbitrator considered that the ordinary meaning of 
these terms in Article 7.10 was consistent with these definitions.  
2. Determining the degree and nature of adverse eff ects invites a case -specific inquiry that seeks 
to understand the causal findings and rationale in the underlying proceedings.  The arbitrator in US – 
Upland Cotton (22.6 II)  indicated that " 'commensurate' essentially connotes 'correspondence' 
between two elements," but that " 'commensurate' does not suggest that exact or precise equality is 
required between the two elements to be compared, i.e., in this case, the proposed countermeasures 
and the 'degree and nature of the adverse effects determined to exist' ."  Thus, the arbitrator 
continued, " 'commensurate' connotes a less precise degree of equivalence than exact numerical 
correspondence'."  In addition, as explained further in Section II, in the circumstances here, "the 
adverse effects determined to exist" refers to those determined in the compliance proceeding reports 
adopted by the DSB.  
II. The EU Improperly Requests Countermeasures for Measures for Which the EU Failed 
to Obtain Findings of WTO Inconsistency in the Compliance Proceeding.  
3. The EU improper ly requests countermeasures for pre -2007 R&D subsidies operating through 
a technology effects causal mechanism.  There is no basis for any countermeasures with respect to 
R&D measures.  In the compliance proceeding, the EU alleged that pre -2007 R&D subsidi es, 
operating through a technology effects causal mechanism, continued to cause adverse effects in the 
post-implementation period.  However, the adopted compliance proceeding reports made no such 
finding.   
4. Having failed to obtain the finding of WTO inc onsistency that it sought, the EU nonetheless 
requests the Arbitrator to determine that the EU should be authorized to take countermeasures 
commensurate with the adverse effects that the original panel found with respect to the pre -2007 
R&D subsidies for i ts 2004 -2006 reference period.  The EU attempts to justify this by pointing to the 
compliance appellate report's inability to complete the analysis on certain questions in the 
compliance proceeding.  This is clearly erroneous.  
5. Article 7.9 authorizes cou ntermeasures only "{i}n the event the Member has not taken 
appropriate steps to remove the adverse effects of the subsidy or withdraw the subsidy. "  A subsidy 
found to cause adverse effects in an original proceeding – prior to any reasonable period of time  
("RPT") – cannot  be presumed  to continue to cause adverse effects in the post -implementation 
period.  Therefore, absent agreement between the parties, the original complaining party must 
establish  that any such subsidy that is unwithdrawn does, in fact, c ontinue to cause adverse effects 
in the post -implementation period; this is a prerequisite to  imposing c ountermeasures under 
Article  7.9.   
6. Furthermore, findings of adverse effects in an original reference period are based on 
arguments and evidence relevant to that period.  While those findings can serve as the starting point 
for analyzing the continued existence of adverse effects in the post  implementation period, they 
certainly cannot be relied upon without more to assume non -compliance after the end of the RPT.  
Thus, as observed in the compliance appellate report in this dispute:  WT/DS353/ARB/Add.1  
 
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  {A}lthough original findings of adverse effects necessarily serve as the starting point 
of the analysis in compliance proceedings, it is incumbent on a complaining Member 
to establish afresh through arguments and evidence whether, and to what extent, 
the specific serious prejudice phenomena from the original procee dings continue to 
exist in the post -implementation period.  
7. It is also telling that the EU cites no support from prior reports for its flawed interpretation of 
Articles 7.9 and 7.10 of the SCM Agreement.  Its only recourse is to repeatedly cite to the DS 316 
arbitrator's statement that " 'there remains a valid rationale for granting'  countermeasures '{u}ntil 
and unless substantive compliance has been achieved and is multilaterally confirmed  or a mutually 
agreed solution has been reached'."  However, this st atement provides the rationale for authorizing 
annual countermeasures, and does not signal that countermeasures are available to a Member 
without demonstrating non -compliance in the post -implementation period.  Therefore, the "valid 
rationale" statement pr ovides no support for the EU's attempt to avoid the DS316 arbitrator's 
statement as to the "basic purpose" of an arbitration.  
8. On a final note, the EU's methodology is inconsistent with the positions it has taken previously.  
Specifically, the EU has pre viously maintained that, where a party considers that it has achieved 
compliance following findings of WTO inconsistency in an original proceeding, it is that subsequent 
scenario of alleged compliance that governs suspension of concessions or other obligat ions (including 
countermeasures under the SCM Agreement), not the original scenario that resulted in adopted 
reports finding WTO inconsistencies.  The EU's position has also been that an arbitrator under Article 
22.6 of the DSU is precluded from even asses sing the WTO consistency of the measures in the post -
implementation period, i.e., the revised factual scenario.  
9. Based on these prior positions, the EU would be precluded from even having an opportunity 
to demonstrate that the pre -2007 R&D measures (or a ny other measures beside the Washington 
B&O tax rate reduction) continue to cause adverse effects in the post -implementation period.  
Moreover, if the EU maintains even just the first position – that countermeasures cannot be based 
on the factual scenario evaluated during the original proceeding, but rather must be based on the 
WTO consistency of the measures in the new scenario prevailing in the post -implementation period 
– it would foreclose the EU's reliance on the findings that it cites from the origina l proceedings.  
III. The EU Methodology Improperly Assumes that Airbus Would Have Won All of the 
Price -Sensitive Campaigns but for the Washington B&O Tax Rate Reduction.  
10. The EU's methodology adopts as an invalid premise that, but for the subsidy, Airbu s would 
have won all of the price -sensitive sales campaigns that served as the bases for the adverse effects 
findings in the compliance proceeding.  The EU argues that "the adopted findings demonstrate that, 
in the counterfactual, there is no probability t hat Boeing would still have won the lost sales at issue."  
But the adopted findings demonstrate no such thing.   
11. In fact, the United States pursued an appeal on this very basis, arguing that because it was 
not established that Airbus would have won the  price-sensitive sales campaigns but for the subsidy, 
there was no basis to find that the lost sales were the effect of the subsidy for purposes of Articles  5 
and 6.3 of the SCM Agreement.  The EU, relying on US – Upland Cotton (Article 21.5 – Brazil) , 
argued that but -for causation was too demanding and that the absence of but -for causation was not 
dispositive of whether the subsidy met the genuine and substantial standard for causation.  The 
compliance appellate report agreed with the EU, finding that, eve n if Boeing would have won a sale 
in the counterfactual by maintaining a pricing advantage, this does not prevent a finding that the 
lost sale was the effect of the subsidy for purposes of Articles 5 and 6.3 of the SCM Agreement.  
12. Yet, in this Arbitrati on stage, the EU argues the exact opposite proposition: that finding 
causation for purposes of Article 6.3 – i.e., finding that lost sales are "the effect of" the subsidy – 
necessarily means that, but for the subsidy, Airbus would have won the relevant sal es campaigns in 
the counterfactual.  It would fail to reflect the compliance proceedings findings to turn around in the 
arbitration and start from the premise that, but for the subsidy, Airbus certainly would have won all 
of the price -sensitive campaigns.   
13. The findings left uncertain which producer would have won a given price -sensitive sales 
campaign absent the subsidy, just as the findings of lost sales left uncertain whether some deliveries 
associated with those sales would have been cancelled.  Thu s, by accounting for the uncertainty WT/DS353/ARB/Add.1  
 
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  inherent in the causation findings in a probabilistic manner, the United States' methodology reflects 
the compliance proceeding findings.  It does not invalidate any findings because there were no 
findings of but -for ca usation.  
14. The United States' methodology takes into account the probability of Airbus obtaining orders 
in price -sensitive campaigns in the absence of the B&O tax rate reduction.  Because there remains 
a complementary probability that Boeing would win a  price-sensitive sales campaign in the 
counterfactual absent the subsidy, the level of the adverse effects of the subsidy cannot be the full 
revenue from each of the price -sensitive campaigns.  The value of each campaign must instead be 
reduced to reflect the probability that Boeing might have won it in the counterfactual.  
15. The U.S. methodology incorporates a standard economic approach to valuing an economic 
outcome in the presence of uncertainty by calculating an "expected value."  The methodology 
asses ses the probability that Airbus would have won a sale in a price -sensitive campaign if the 
absence of the subsidy had resulted in Boeing increasing its price by $1.99 million per airplane .  
Under this approach, the value of an outcome in which Airbus won a  price-sensitive campaign is the 
full net present value ("NPV") of the aircraft ordered in that campaign.  Likewise, the NPV of an 
outcome in which Airbus did not win a price -sensitive campaign, even in the absence of the subsidy, 
is $0.  The expected valu e is just the weighted average of those two outcomes according to the 
probability that Airbus would win a sale in a price -sensitive campaign in the absence of the subsidy.  
As such, the United States provides an economic approach to valuing the adverse eff ects that reflects 
the multiple counterfactual outcomes inherent in the adopted compliance proceeding findings.  
16. The EU accuses the United States of invalidating the compliance proceeding findings that: (1) 
"there were no non -price factors that explain Boeing's success in obtaining the sale;" and (2) the 
per-aircraft subsidy amount exceeds "the NPV difference that the evidence before us suggests can 
be determinative of the outcomes of sales campaigns."  However, the U.S. arguments do not 
invalidate eithe r of these findings.  
17. First, the finding that "no non -price factors explain Boeing success" was part of the 
determination that a particular campaign was price -sensitive.  The opposite finding, that a non -price 
factor explained Boeing's success, meant th at some non -price factor was so significant that there 
was no basis to consider that the subsidy -enabled price difference was a genuine and substantial 
causal factor.  But the finding that no non -price factor explained the outcome without respect to 
price,  did not mean that all non -price factors were completely irrelevant.   
18. Moreover, the EU misunderstands the relevance of non -price factors in the U.S. argument.  
According to the EU's misconception of the U.S. argument, Boeing would still have won the f ive sales 
campaigns at issue "as a result of non -price factors."  However, as the EU recognizes elsewhere, the 
U.S. position is that Boeing may have won price -sensitive campaigns in the counterfactual based on 
"the totality of Boeing's offer" – which would  include both price and non -price factors.  The United 
States certainly is not making any arguments about Boeing winning price -sensitive campaigns on 
the basis of non -price factors alone.   
19. Second, the United States does not seek to invalidate or ignor e the finding regarding the NPV 
difference that evidence suggested can be determinative of the outcomes of sales campaigns.  
Contrary to the EU's position, the NPV evidence, and the compliance appellate report's references 
to it, support  the U.S. position.   As the EU indicates, there was evidence that the $1.99 million 
subsidy amount exceeds the magnitude of the NPV difference "that could  change the outcome" of 
a single -aisle price sensitive campaign.  Rather than having ignored this evidence, the United St ates 
has emphasized that this evidence was generic, not campaign -specific.  It indicated how small an 
NPV difference could be; not how small it was in any of the relevant sales campaigns.   
20. Furthermore, the compliance appellate report's reliance on the  generalized NPV evidence 
further underscores that it found it necessary only to determine that the per -aircraft subsidy amount 
was large enough to be a genuine and substantial factor, without regard to whether it was large 
enough to flip the outcome of a particular sales campaign.  The notion that a subsidy altering 
Boeing's price by $1.99 million could  flip a price -sensitive sales campaign is distinct from a finding 
that it did flip particular campaigns.  Importantly, the reliance on evidence of what could, or could 
not, flip a price -sensitive sales campaign reinforces the uncertainty that the U.S. approach takes 
into account, and undermines the certainty reflected in the EU's approach.  WT/DS353/ARB/Add.1  
 
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  IV. The EU Methodology Improperly Assumes that Airbus Would Have Sold the Same 
Number of Aircraft as Boeing If It Had Won a Particular Sales Campaign.  
21. The EU's calculation improperly incorporates Boeing order numbers and delivery schedules 
into the valuation of the Airbus lost sales.  It relies on Airbus's final offer i n the lost sales campaigns 
to establish the models Airbus would have sold in the counterfactual and the counterfactual prices, 
but then ignores the number of firm order aircraft that Airbus included in those final offers and relies 
instead on the number of  firm orders in the Boeing  sales that actually occurred.  In accordance with 
the findings of the compliance panel, Airbus's final offer – including the number of aircraft sold – 
represents the offer that the customer would have chosen if it indeed would ha ve chosen Airbus 
absent the subsidy.  Therefore, the calculation of the countermeasures should be based on the 
number of firm orders offered by Airbus in its final offer, not the number of firm orders that Boeing 
obtained.  
22. Sales campaigns are an iterat ive process where the manufacturers work with the customers 
to understand their fleet planning needs, and attempt to put together the best offer possible, in light 
of their profit -maximizing interests.  By its very nature, and in each instance, Airbus's fi nal offer 
consists of a variety of elements ( e.g., model, per -aircraft price, quantity of firm orders, delivery 
schedule, etc.) that Airbus believed gave it the best chance of winning new orders from the customer 
at issue from among the options to which it  was willing to commit.     
23. The EU argues that "the sales that Boeing actually won as a result of the US subsidies at issue 
in this dispute 'represent' lost sales to Airbus, as much as the sales that Airbus won as a result of 
the subsidies at issue in DS316 'represented' lost sales to Boeing."  The EU is mistaken.     
24. In DS316 , the adopted compliance reports used a counterfactual significantly different from 
the real world and significantly different from the counterfactual adopted by the compliance  panel 
in this proceeding.  In the counterfactual in DS316, Airbus would not have offered the relevant model 
competing with certain Boeing models because that Airbus model would not have existed  and, 
therefore, Boeing would have won all of the relevant ord ers and made all of the relevant deliveries 
(in the case of present impedance) in the absence of the subsidy.  There was no obvious real world 
information that would have been probative of the counterfactual competition in which the relevant 
Airbus aircraf t did not exist.  By contrast, it was much more reliable that the customer's preferences 
in the real world would reflect the customer's preferences in the counterfactual.  In other words, in 
the counterfactual in DS316, while customer preferences, i.e., demand -side pressures, were 
reasonably reliable, supply -side factors were particularly unreliable because the nature of the 
competition in the counterfactual would have differed so drastically from the observed real -world 
competition.  
25. The findings and ap plicable counterfactual, as well as the available evidence, in this dispute 
are significantly different.  First, there are no findings that Boeing's LCA offerings would have been 
absent in the sales campaigns in the counterfactual.  Instead, the adopted fi ndings indicate that 
Boeing would have bid for the sales, albeit at prices that were higher by some unspecified amount 
up to $1.99 million per aircraft.  Therefore, the counterfactual should entail competing offers 
between Boeing and Airbus almost identica l to what actually occurred, with the only difference being 
that the prices in the Boeing offer would have been slightly higher.  Had the customer chosen Airbus 
in the counterfactual in light of the higher Boeing pricing, it is Airbus's actual final offer that the 
customer would have chosen.  
26. Second, contrary to the claims of the EU, there is "an evidentiary distinction between these 
proceedings and those in DS316."  Specifically, in DS316, there were some lost sales and deliveries 
for which Boeing did n ot even submit an offer.  However, adverse effects findings were still made 
even where Boeing submitted no formal offer because of the counterfactual in that dispute – namely, 
that absent the subsidies the relevant Airbus aircraft would not exist.  By cont rast, in this dispute, 
Airbus did submit a final offer in all five of the relevant sales campaigns, and each of those final 
offers is on the record before the Arbitrator.   
27. Thus, the EU errs in asserting that "the circumstances in DS316 and in these pr oceedings are 
largely identical."  To the extent that Airbus would have won a campaign in the counterfactual, it 
would have done so based on the terms it actually offered – including the number of firm orders it 
committed to provide each customer.  WT/DS353/ARB/Add.1  
 
- 44 - 
 
  V. The EU Unjustifiably Includes Options for Additional Aircraft in its Countermeasure 
Valuation.  
28. According to the EU, if the Arbitrator were to base the delivery numbers and schedules on 
Airbus's final offers, then it "will need to take into account all of t he offer terms contained in these 
proposal documents" and "include LCA options contained in Airbus' final offers in the calculations of 
adverse effects from lost sales."  It simply does not follow that, if counterfactual firm order delivery 
numbers and sch edules are sourced from Airbus final offers, then Airbus's proposed options must 
be treated as equivalent to a firm order and thereby included in the countermeasures calculation.   
29. The compliance panel drew a clear distinction between firm orders and o ptions.  It rejected 
the EU's attempt to demonstrate a threat of lost sales by treating options as "firm orders that are 
waiting to materialize," finding that "{w}e do not consider that the mere fact that an LCA customer 
was additionally granted options or  purchase rights is sufficient to demonstrate that lost sales in 
relation to these options and purchase rights are clearly foreseen and imminent, and thus give rise 
to a threat of significant lost sales."  Thus, regardless of whether Airbus final offers in clude proposed 
options or an actual Boeing sale included options, including the value of the options would result in 
countermeasures not commensurate with the adverse effects determined to exist.   
30. This is true notwithstanding the EU's reference to "th e airline's express need for the specific 
number of Boeing aircraft actually ordered."  An airline order for a specific number of Boeing aircraft 
does not mean that Airbus could have and would have sold the airline the same number of Airbus 
aircraft, as Ai rbus's final offer materials demonstrate.   Accordingly, there is no reason to add 
proposed options to the number of firm orders Airbus proposed.      
31. Similarly unavailing is the EU's assertion that "LCA options are an integral part of LCA 
purchasing a greements."  Many things are an integral part of LCA purchasing agreements, but that 
does not mean that they are all the same.  As the compliance panel recognized, a firm order and an 
option are two different things, and the panel excluded the latter from the adverse effects with which 
the countermeasures must be commensurate.  
32. LCA producers seek a reliable stream of firm orders that can support smooth and efficient 
production operations, as opposed to volatile swings between higher and lower production that are 
costly and inefficient.   At the same time, LCA producers recognize that "not all orders and 
commitments (such as options) will materialize as scheduled:  some delivery dates may shift later 
or earlier in time, some options will never be exercised , and in rarer cases, some firm orders may 
be cancelled."  Therefore, LCA producers engage in sophisticated "skyline management" practices, 
one of which is to overbook, or overcommit, delivery slots.   
33. Moreover, an option – as the term connotes – gives the customer the right to exercise or not 
to exercise it.  In the latter case, the customer could decide that it does not need to order additional 
aircraft before the option's expiration.  Furthermore, even if a customer does need additional aircraft, 
it may decline to exercise options and instead conduct another campaign between Boeing and Airbus, 
which offers the customer the potential of winning additional concessions from the producers or 
otherwise altering terms based on revised priorities.   
34. In addition, the decision whether to exercise an option will tend to be influenced by the 
customer's experience operating the aircraft it has taken delivery of pursuant to firm orders in the 
original sales campaign.  In particular, because LCA are differentiat ed products, a positive experience 
with a given Boeing model does not necessarily mean it would have had a similarly positive 
counterfactual experience with a given Airbus model.  In these respects, options represent new, 
subsequent customer decision point s after a sale has been won or lost.  Even if Airbus would have 
had the capacity to satisfy a firm order placed through an option exercise, that does not mean the 
customer necessarily would have exercised the option.  
35. The speculative nature of options w as among the reasons the compliance panel did not find 
that the options at issue were equivalent to allegedly lost firm orders.  Accordingly, options were not 
included in the adverse effects determined to exist.  For this reason alone, it would be improper  to 
value options in calculating the maximum level of countermeasures because it would render them 
in excess of what is commensurate with the adverse effects determined to exist.  Furthermore, the 
proposition that options can be treated identically to firm  orders directly contradicts the compliance 
panel's reasoning.  WT/DS353/ARB/Add.1  
 
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  VI. The EU's Methodology Fails to Appropriately Account for the Risk of Cancellation.  
36. The United States considers that each counterfactual delivery should be assigned a 
probabilistic risk of cancellation, and the value of that delivery adjusted accordingly.  Because the 
deliveries, even if scheduled for a date in the past, are counterfactua l, there is no certainty that any 
would (or would not) have been delivered.  Unlike the counterfactual Airbus model or number of 
aircraft, which are evidenced by the final Airbus offer, there is no equivalent indication in the Airbus 
final offer or any oth er document of how many aircraft would have been cancelled following a firm 
order, or when such cancellations would have occurred.   
37. The EU ignores this completely and simply assumes that, if a delivery in an Airbus final offer 
was scheduled to have oc curred by the present day, then it necessarily would have been delivered 
in the counterfactual.  No basis exists for such an assumption.  In fact, as both parties acknowledge, 
there were actual cancellations related to these orders that need to be taken in to account.  
38. One way to approach the problem would be to look at an Airbus -specific survival rate and 
apply it to each counterfactual delivery.  This would ignore Boeing's experience in the real world with 
deliveries stemming from these sales campaigns . 
39. There are good reasons to think Airbus's experience in the counterfactual could have differed 
from Boeing's actual experience.  First, these aircraft are differentiated products.  A customer's 
assessment regarding the economics of one manufacturer's aircraft may differ from its assessment 
of even the closest competing model from the other manufacturer.  Second, cancellations can 
sometimes be caused, or at least influenced, by seller -side factors.  Delays in the ability to deliver 
a model provide an ob vious example.  But less obvious factors may also influence cancellation 
decisions, such as trouble meeting mechanical reliability or fuel efficiency expectations, which can 
affect the projected operating economics of an aircraft from a customer's perspect ive.  Third, the 
contractual consequences of buyer cancellation may differ.  From a purely legal perspective, the 
contractual penalty in one contract could be lower than it was in the competitor's offer.  Moreover, 
an airline may have a longer -standing, be tter relationship with one manufacturer, which in turn 
could lead it to believe that the manufacturer would show greater flexibility in accommodating a 
near-term cancellation where such a cancellation served the customer's financial interests.  All of 
these reasons suggest that, just because a Boeing aircraft was or was not cancelled, it is not certain 
that an Airbus aircraft would have experienced the same fate had Airbus won the campaign in the 
counterfactual.  
40. On the other hand, there are reasons to b elieve that Boeing's real -world experience does offer 
probative evidence of what would have transpired in the counterfactual.  Where the cancellation was 
driven exclusively, or even primarily, by the customer, that would of course be relevant to assessing 
the likelihood of cancellation in the counterfactual.  This evidence of customer preferences is specific 
to the deliveries associated with the relevant sales campaigns.  By contrast, a generic Airbus 
cancellation rate would not be specific to the preferenc es of the particular customers involved in the 
relevant sales campaigns.  
41. The United States considers that both approaches could be reasonable under the 
circumstances.  That is, the Arbitrator could reasonably rely on Airbus's experience more generally,  
which reflects supply -side factors influencing cancellations, or Boeing's experience for these specific 
sales, which in part reflects demand -side factors, to develop a theoretical cancellation rate.  
42. However, to be conservative, the rate incorporated i n the United States' latest revised 
calculation is based on Boeing's actual experience for known cancellations and Airbus's rate for any 
future deliveries not yet cancelled.   
VII. The EU's Methodology Fails to Use the Appropriate Discount Factor.  
43. The EU erroneously advocates for the use of Airbus's cost of debt, rather than its WACC, as a 
discount rate for purposes of valuing the adverse effects determined to exist.  This is based, in part, 
on the arbitrator's use of cost of debt in DS316, but the arb itrator in that dispute recognized that 
WACC was superior to cost of debt as a discount rate.  It simply could not overcome certain 
evidentiary issues there that are not present in this proceeding.  Therefore, as this Arbitrator has 
the necessary evidence,  it should use the WACC instead of cost of debt.  WT/DS353/ARB/Add.1  
 
- 46 - 
 
  44. The United States agrees that both the WACC and the cost of debt depend on the risk that 
investors associate with a company and its investments.  As measures of the overall risk associated 
with the busin ess, the rates would reflect risks faced by the company, including, among others, 
cancellation risk, the risk of aircraft design or performance issues, cost overruns, and fluctuating 
demand.  The WACC remains the best discount rate for expected cash flows because the WACC 
represents the opportunity cost of alternative investments in projects within the company.  
45. The EU makes a series of assertions – often unsupported – to justify use of the cost of debt 
over the WACC as a discount rate for the value of f uture payments for aircraft.  In evaluating these 
assertions, it is important to keep in mind the purpose of a discount rate.  
46. At the conceptual level, a discount rate is applied to account for the time value of money, 
which reflects the opportunity co st of money.  In short, the discount rate is applied because a dollar 
tomorrow is not worth as much as a dollar today.  This is applicable in the case of specific LCA 
delivery streams because these delivery streams will generate revenue for the aircraft ma nufacturers 
at various points in the future.  Therefore, a delivery scheduled 10 years from now that will generate 
$10 million at the time of delivery is not worth $10 million today; it is worth less than $10 million.  
The value today is the amount of mone y that the aircraft manufacturer would have to invest today 
so that, compounded over 10 years, the aircraft manufacturer would have $10 million in 10 years, 
i.e., at the time of scheduled delivery.  
47. At a practical level, the current value of future inc ome is determined by calculating the dollar 
amount in today's dollars that would garner the future amount assuming a specific rate of return.  
In the example above, this would be measured by establishing what amount of money in today's 
dollars would result  in $10 million ten years from now, assuming a certain return on investment.  
The correct discount rate, therefore, reflects this assumed return on investment.  The United States 
has used Airbus's WACC because the WACC represents the minimum return that th e investors in 
Airbus require the firm to earn on its investments, as measured by the weighted average of the cost 
of debt and the cost of equity for the firm.  In other words, a company can always earn a return 
equal to its WACC by using available cash to  proportionally repay its debt and return capital to 
shareholders (through dividends or buybacks).  
48. Critically, a discount rate must be applied in addition to  a cancellation rate to account for the 
risk of cancellation.  In the example above, even if on e discounts the $10 million that the aircraft 
manufacturer would have received, one must still apply a cancellation rate to calculate the correct 
net present value.  This is because the aircraft manufacturer will only receive the $10 million if the 
order i s not cancelled.  If the order is cancelled, the aircraft manufacturer will receive $0.  If there 
is a five percent likelihood that the order will be cancelled, the aircraft manufacturer would expect 
to receive $0 five percent of the time and $10 million 9 5 percent of the time.  This means that the 
expected value in 10 years for the delivery of the aircraft is $9.5 million.  To arrive at the expected 
value of the sale today, one has to additionally account for the time value of money by applying a 
discount rate.   
49. The cost of debt does not correctly measure the opportunity cost of money because it reflects 
only one potential alternative use – reduction of debt.  These considerations alone demonstrate the 
error in the EU's advocacy of the cost of debt exc lusively as the discount rate.   
VIII.  Valuation of Threat  
A. Lost Sales Approach  
50. The United States' primary position with respect to the valuation of threat is that because the 
threat of impedance findings are based entirely, from a causation standpoi nt, on the lost sales 
findings, these adverse effects can best be valued by following the same approach applied to the 
significant lost sales findings – that is, calculating a net present value of the aircraft Airbus would 
have sold in the counterfactual.   
51. Under this approach, the five price -sensitive campaigns (the three underlying the significant 
lost sales finding and the two underlying the threat of impedance finding) are valued identically.  
Once these values are placed on a common basis in 2015 d ollars, the resulting value must be 
analyzed over the 105 months, or 8.75 years, during which they occurred.  When implemented in 
this manner, the lost sales approach would accurately reflect the degree and nature of the adverse WT/DS353/ARB/Add.1  
 
- 47 - 
 
  effects determined to exist  – namely that a campaign resulting in adverse effects occurs 
approximately once every 21 months.   
52. The calculation would need to include all deliveries resulting from each campaign to accurately 
reflect the degree of the adverse effects determined to exist.  However, there would be no basis to 
include the Fly Dubai 2014 sale in the threat of impedance valuation if it were already being valued 
in the significant lost sales valuation.  This would be literal double counting – that is, counting the 
same ex act airplanes twice.  Additionally, as discussed above, the EU's inclusion of options under a 
lost sales approach is baseless.  Thus, regardless of whether Airbus final offers include proposed 
options or an actual Boeing sale included options, quantifying them would result in countermeasures 
not commensurate with the adverse effects determined to exist.  
B. Delivery -centric Approach  
53. If the Arbitrator determines to use a "delivery -centric" approach to value the threat of 
impedance findings, it should incl ude only those deliveries occurring in the future , after the end of 
the compliance proceeding reference period.  The compliance panel considered market share trends 
for delivery data over a period that "extends both prior to and beyond the reference period  of 2013 -
2015 that we use elsewhere in our findings."  The compliance panel understood the need to "discern 
the existence of clear trends," noting that such an approach "is particularly important for the 
European Union's threat of displacement and impedanc e claims, which necessarily require evidence 
of projected future deliveries."  In other words, for threat of impedance – that is impedance that is 
imminent but has not yet materialized  – the compliance panel found it necessary to establish clear 
trends bas ed on evidence of projected future deliveries.  
54. Thus, as the compliance panel report indicates, the threat of impedance findings reflect future 
deliveries, not deliveries made prior to and during the reference period.  (If the compliance panel 
considere d that deliveries during the reference period supported findings of serious prejudice, it 
would have made findings of present impedance, not threat  of impedance.)  Accordingly, only 
deliveries that occurred after the reference period should be included in the calculation of adverse 
effects if a "delivery -centric" approach is used.  
55. Under this approach, the deliveries included in this valuation should be limited to the deliveries 
included in the 2008 Fly Dubai and the 2011 Delta Airbus final offers schedu led to occur after the 
end of the reference period.  As the 2014 Fly Dubai lost sale is included in the significant lost sales 
valuation, it cannot also be included in the threat of impedance valuation because valuing identical 
deliveries from a single sal es campaign twice – i.e., including them in both the significant lost sales 
and the threat of impedance valuations – would double count those deliveries.   
56. Further, for the reasons discussed above, any deliveries scheduled in the Airbus final offers to  
occur before the beginning of the reference period should not be included in the valuation of the 
adverse effects for the threat of impedance findings because – by making a threat  of impedance 
findings – the compliance panel concluded that impedance had n ot yet materialized.  Therefore, 
counterfactual Airbus deliveries scheduled prior to or during the reference period, should not be 
included in any delivery -centric valuation of threat of impedance.  
57. The objective would be to value the threat of impedanc e that existed during the compliance 
proceeding reference period, the last year of which was 2015.  Because the finding was of threat, 
however, the relevant deliveries were in the future – that is, after the compliance proceeding 
reference period.  Therefo re, the objective would be to calculate the 2015 expected value of those 
future deliveries from Airbus's perspective.  Accordingly, Airbus's WACC remains the appropriate 
discount rate.  
58. Annualizing the deliveries associated with the threat of impedance findings is relatively 
straightforward.  However, separate annualization calculations will be required for the significant 
lost sales valuation and the threat of impedance calculation.  Wei ght-averaging is the best approach 
if these two annual figures must be combined, but it is not ideal and inferior to other approaches to 
valuing the adverse effects, which further reinforces the rationale for using the U.S. lost sales 
approach.   
_________ ______  WT/DS353/ARB/Add.1  
 
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  ANNEX  C 
DECISION  AND OTHER COMMUNICATIONS OF THE ARBITRATOR  
Contents  Page  
Annex C -1 Arbitrator's communication to the parties regarding the timetable and Working 
Procedures, dated 8  July 2019 49 
Annex  C-2 Arbitrator's communication to the parties regarding certain HSBI, dated 
6 February  2020 50 
Annex  C-3 Arbitrator's communication regarding the United  States' request for extension 
of the date for responses to questions, dated 14  February  2020 51 
Annex C -4 Arbitrator's communication to the parties regarding restrictions on access to 
the WTO premises and to HSBI due to Covid -19, dated 1  April 2020 52 
Annex C -5 Arbitrator's communication to the parties regarding access to HSBI in the 
context of Covid -19, dated 23  April 2020 54 
Annex C -6 Arbitrator's communication to the parties regarding phased relaxation of 
restrictions on access to WTO premises due to Covid -19, dated 4  May 2020 55 
Annex C -7 Arbitrator's decision on the United  States' request for leave to file an additional 
submission regarding the implications of the purported elimination of the 
Washington State B&O tax rat e reduction on the permitted level of 
countermeasures, dated 17  June 2020 56 
Annex C -8 Arbitrator's communication to the parties, dated 26  June 2020 61 
Annex C -9 Arbitrator's communication to the parties requesting authorization to discuss 
specific EU HSBI, dated 5  August  2020 62 
Annex C -10 Arbitrator's communication to the parties requesting authorization to discuss 
additional specific EU HSBI, dated 19  August  2020 63 
Annex C -11 Arbitrator's communication to the parties regarding media reports containing 
the Arbitrator's calculated level of countermeasures, dated 9 October 2020  64 
 
 
 WT/DS353/ARB/Add.1  
 
- 49 - 
 
  ANNEX  C-1 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING THE TIMETABLE  
AND WORKING PROCEDURES, DATED 8 JULY 2019  
Please find accompanying this communication the Working Procedures and BCI/HSBI Procedures, as 
adopted by the Arbitrator on 8 July 2019, and a revi sed draft Timetable for this arbitration. In 
finalizing the Working Procedures and BCI/HSBI Procedures, the Arbitrator has carefully considered 
the comments provided by the parties at the Organizational Meeting and subsequently in writing on 
1 July 2019.  
 
As regards the parties' requests to hold an open substantive meeting , the Arbitrator has decided 
that it will open the meeting. It will revert to the parties at a later stage with proposed procedures 
for the open meeting. The Arbitrator also takes note of the United States' suggestion that it adopt 
the same open meeting pr ocedures as adopted by the arbitrator in DS316.  
 
Regarding the revised draft Timetable , after carefully considering the European Union's letter of 
25 June 2019, as well as the comments provided by the parties at the Organizational Meeting and 
subsequently in writing on 1 July 2019, the Arbitrator wishes to note the following:  
 
• The Arbitrator has carefully considered the European Union's proposed amendments to the 
Timetable that would envisage the meeting with the parties being held in December 2019 
rather than February 2020.  
• The Arbitrator is fully cognizant of the importance to the European Union that the Timetable 
in these proceedings does not enlarge the existing time -gap with the DS316 arbitration 
proceedings. The Arbitrator is also aware t hat its members, all of whom have been recently 
appointed, require adequate time to become fully -acquainted with the background to this 
dispute, to carefully read the parties' submissions, to review all relevant evidence prior to the 
meeting, and to be abl e to demonstrate that at the meeting. This level of preparation is 
necessary for the members of the Arbitrator to make a substantial contribution to the quality 
of the Arbitrator's report and the Arbitrator understands that this would also be consistent 
with the parties' expectations of the Arbitrator.  
• Moreover, the Arbitrator regards this preparation as essential to the ensuring that the 
proceedings are conducted as expeditiously as possible.  
• To this end, the Arbitrator considers that it is preferable to  allow both parties adequate time 
to prepare concise  written submissions clearly identifying the relevant issues, and all relevant 
factual material, which can then be fully examined at the meeting. The Arbitrator expects that 
this process will minimize the  need for excessive or multiple rounds of questioning following 
the meeting and will be conducive overall to a more efficient and timely process.  
• Therefore, the Arbitrator does not agree with the European Union that, in order not to enlarge 
the time -gap w ith the DS316 arbitration proceedings, the meeting with the parties must be 
held in the week of 16 December 2019. On the contrary, the Arbitrator considers that rushing 
the parties' preparation of submissions and the Arbitrator's preparation for the meetin g is very 
likely to lead to delays later in the process which could have been prevented had there been 
adequate preparation time prior to the meeting.  
• That said,  after considering the availability of the members of the Arbitrator and consulting 
with the Secretariat, the Arbitrator has decided that it would be possible to bring the meeting 
date forward by two weeks without unduly compromising the Arbitrator's abili ty to adequately 
prepare for the meeting. The Arbitrator therefore proposes revising the dates for the meeting 
with the parties to the last week of January 2020 (i.e. 28 -30 January). In this regard, the 
Arbitrator notes that the United States has requested  that the Arbitrator first propose the 
alternative dates and allow the parties to comment. The parties are therefore requested to 
indicate by cob on 9 July  2019 whether the proposed dates of 28 -30 January 2020 present 
any actual conflicts .WT/DS353/ARB/Add.1  
 
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  ANNEX C -2 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING CERTAIN HSBI,  
DATED 6 FEBRUARY 2020  
The Arbitrator is in receipt of the United States' letter dated 27 January 2020, in which the United 
States objects to the European Union's inclusion of certain HSBI i n the European Union's responses 
to the first set of Arbitrator questions to the parties and, based on that objection, requests that the 
Arbitrator take certain actions. The Arbitrator is further in receipt of the European Union's letter 
dated 31 January 2 020, explaining the circumstances surrounding the inclusion of the relevant HSBI 
in its responses to questions. Finally, the Arbitrator is in receipt of the United States' letter dated 4 
February 2020, stating that, in the light of the European Union's exp lanations, the United States 
withdraws the objection contained in the United States' previous letter. The Arbitrator therefore 
notes that the United States' letter of 4 February 2020 effectively moots the United States' objection 
and associated requests fo r Arbitrator action included in its letter of 27 January 2020. The Arbitrator 
thus considers it unnecessary, and accordingly declines, to rule on the United States' objection and 
its associated requests for Arbitrator action.  
 
Additionally, t he Arbitrator recalls that the European Union, in its letter of 31 January 2020, claimed 
that the United States compromised the European Union's due process rights because the United 
States "deprived the {Arbitrator} and the European Union of the opportunity for a fulsome exchange 
of views at the oral hearing on the issues covered by Questions 23 and 26 {of the Arbitrator's 
questions to the parties}", and requested that the Arbitrator issue a ruling to the effect that the 
United States "should not be allowed t o develop further its arguments and evidence on those issues 
for the remainder of these proceedings".1 The Appellate  Body has explained that, "{a}s a general 
rule, due process requires that each party be afforded a meaningful opportunity to comment on the  
arguments and evidence adduced by the other party".2 Such an opportunity must be "meaningful in 
terms of that party's ability to defend itself adequately".3 We are unable to discern a way in which 
the European Union has been deprived of a meaningful opp ortunity to comment on any particular 
issue before the Arbitrator relating to the topics covered in Questions 23 and 26.  In particular, the 
European Union has objected to the fact that the United States did not, in the European Union's 
view, adequately eng age, at the oral hearing, with the European Union's own answers to 
Questions  23 and 26 regarding the [[*** ]] issue. The European Union does not, however, identify 
any instance in which it was deprived of an opportunity to respond to any arguments or eviden ce 
that the United States has put forward in this proceeding in this context. We further note that the 
European Union has had an opportunity to comment on the issues presented by the Arbitrator in 
Questions 23 and 26 in its responses to those questions, an d the European Union will have an 
opportunity to further offer its comments with respect to [[*** ]]-related  issues following the 
Arbitrator's second set of questions to the parties.  
 
 
1 European Union's letter of 31 January 2020, p. 5.  
2 Appellate  Body Repor t, Thailand – Cigarettes (Philippines) , para.  150. 
3 Appellate  Body Report, US – Gambling , para.  270. According to the Appellate  Body, due process is also 
intrinsically connected to notions of fairness, impartiality and the rights of parties to be heard an d to be 
afforded an adequate opportunity to pursue their claims, make out their defences, and establish the facts in 
the context of proceedings conducted in a balanced and orderly manner, according to established rules. 
(Appellate Body Report, Thailand –Cigarettes (Philippines) , para.  147).  WT/DS353/ARB/Add.1  
 
- 51 - 
 
  ANNEX C -3 
ARBITRATOR'S COMMUNICATION REGARDING THE UNI TED STATES' REQUEST  
FOR EXTENSION OF THE DATE FOR RESPONSES TO QUESTIONS,  
DATED 14 FEBRUARY 2020  
The Arbitrator is in receipt of the United States' letter of 10 February 2020 and the European Union's 
response of 12 February 2020 regarding the deadlines a ssociated with the responses to the 
Arbitrator's second set of written question and comments thereon.  
  
Having carefully reviewed the contents of these letters and the relevant circumstances, the Arbitrator 
hereby grants the United States' extension reque st, and revises the relevant deadlines as follows: 
(i) responses to the Arbitrator's second set of written questions are now due on 2 March 2020; and 
(ii) comments thereon are now due on 16 March 2020. A copy of the revised timetable is attached.  
  
The Arb itrator considers that, on balance, granting the extension is in the interests of receiving 
complete and thoughtful responses to the Arbitrator's questions, supported by appropriate evidence. 
The Arbitrator appreciates, however, the European Union's commen ts to the effect that such 
extensions should not materially delay this arbitration proceeding. The Arbitrator thus notes that it 
does not expect this extension to materially delay the Arbitrator's work overall. The Arbitrator further 
notes that it does not  anticipate granting any further extensions and intends to complete its work in 
this proceeding without material delays. To that end, the Arbitrator reminds each party to deploy 
maximum efforts to adhere to the dates set out in the timetable as modified he rein. 
 
 WT/DS353/ARB/Add.1  
 
- 52 - 
 
  ANNEX C-4 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING RESTRICTIONS ON ACCESS TO 
THE WTO PREMISES AND TO HSBI DUE TO COVID -19, DATED 1 APRIL 2020  
As the parties would be aware, in his communication of 14 March 2020 to WTO Heads of Delegation, 
the WTO Director -General directed that WTO staff should work from home as from 16 March 2020.  
 
In that communication, the Director -General also advised WTO staff that, starting on 16 March 2020, 
access to the WTO premises would be limited to designated critical staff only, i.e. staff whose 
presence on the WTO's Centre William Rappard (CWR) site is necessary to ensure that WTO's critical 
functions can be continued, and particularly, functions necessary to support staff working from 
home. As of 16 March 2020, the Secretariat staff assisting the Arbitrator in these proceedings had 
been, on an exceptional basis, granted by the WTO Coronavirus Health Task Force (HTF) limited 
access to the CWR solely for the purpose of facilitating the fil ing of new HSBI materials and their 
storage in the secure location on the WTO premises, allowing access to representatives of the 
parties, and reviewing that HSBI on behalf of the Arbitrator.  
 
Since the initial restrictions on access to the CWR were put in place, however, the situation with 
regard to the new Coronavirus 2019 (Covid -19) in Geneva (and Switzerland more broadly) has 
become ever more serious. The HTF guidelines have been revised to further restrict the number of 
staff authorized to work in th e CWR. The HTF has also underlined that no staff member can be 
required to work in the CWR in current circumstances. In addition, the current "Working from Home" 
arrangements were further extended on 26 March to the end of April 2020.  
 
Against this backgro und, the Arbitrator wishes to advise the representatives of the parties that the 
current situation has implications for the access of Secretariat staff to the CWR for HSBI related 
reasons, in the period between now and the end of April. The Arbitrator will  update the parties by 
the end of April on further developments in this regard.  
 
The Arbitrator appreciates the sensitivity of the HSBI materials and the need for special safeguards 
for preserving their confidentiality. The following alternative arrangemen ts are being proposed in 
light of the extraordinary restrictions on working from the CWR that have been implemented in 
response to the Covid -19 pandemic.  
 
The Arbitrator considers that, for the Secretariat staff assisting the Arbitrator in this proceeding to 
replicate the access that they would have to HSBI stored on the WTO premises during ordinary times 
when working from the WTO premises, it would be necessary to temporarily authorize such staff to 
access and store the HSBI at their homes. This authorizat ion thus would entail storage of the HSBI 
in alternative locations and in an alternative manner than is provided for in the Additional Working 
Procedure for the Protection of Business Confidential Information and Highly Sensitive Business 
Information (BCI/ HSBI Procedures) for the duration of the current prohibition on working from the 
WTO premises.  
 
Specifically, each of the five Secretariat staff members assisting the Arbitrator, listed below, would 
need to be authorized to take home one of the two Sealed laptops provided by the European Union 
and one of the Stand -alone computers provided by the WTO on which electronic files containing US 
HSBI and EU HSBI would have been created and saved. Those staff members would need to be 
further authorized to have indi vidual working sessions with HSBI, and to store HSBI, in their 
respective homes on those Sealed laptops and Stand -alone computers. Finally, the Secretariat staff 
members would also need to be authorized to discuss the HSBI materials with each other and wit h 
the Arbitrator through secure communication methods, such as Skype for Business.  
 
The above -referenced Secretariat staff members are:  [[omitted]]  
 
The Arbitrator requests the parties to advise whether they would agree to waive the restrictions on 
Secreta riat staff members working with HSBI at their homes in the manner detailed above so as to 
enable the Arbitrator and Secretariat staff to implement the above -referenced alternative 
arrangements.  WT/DS353/ARB/Add.1  
 
- 53 - 
 
   
The Arbitrator is willing to consider alternative arrangement s mutually proposed by the parties which 
would enable the Secretariat staff assisting the Arbitrator to work with the HSBI from their homes 
and otherwise maintain the social distancing protocols that are currently in place in Switzerland.  
 
The Arbitrator w ould welcome the views of the parties by 5pm on Wednesday , 8 April 2020 . 
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX C-5 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING ACCESS TO HSBI IN THE 
CONTEXT OF COVID -19, DATED 23 APRIL 2020  
The Arbitrator is in receipt of the p arties' responses of 8 April 2020 to the Arbitrator's communication 
of 1 April 2020, in which the Arbitrator requested the parties to advise on alternative arrangements 
regarding access to and storage of HSBI for the duration of the current restrictions on  access to the 
WTO's Centre William Rappard (CWR).  
 
The Arbitrator takes note of the absence of agreement between the parties on this issue, and 
accordingly advises that, for the time being, it will not be implementing the proposed alternative 
arrangement s regarding access to and storage of HSBI.  
 
The Arbitrator and the Secretariat staff assisting the Arbitrator continue to progress their work and 
expect to continue to do so while the current restrictions on access to the CWR remain in effect. The 
Arbitrator recalls that the current "Working from Home" arrangements were further extended on 
26 March to the end of April 2020. The Arbitrator advises that it will update the parties on further 
developments in this regard as soon as practicable thereafter . The Arbitrator also advises the parties 
that it will make every effort to minimize any delays occasioned by the COVID -19 pandemic.  
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX C-6 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING PHASED RELAXATION OF 
RESTRICTIONS ON ACC ESS TO WTO PREMISES DUE TO COVID -19, DATED 4 MAY 2020  
The Arbitrator wishes to inform the parties of recent developments concerning the restrictions on 
access of Secretariat staff members to the WTO's Centre William Rappard (CWR). The Arbitrator is 
advised  by the Secretariat that, on 24 April 2020, the WTO Health Task Force (HTF) announced that 
a phased reintroduction of staff members to the CWR is expected to begin on 11 May 2020. While 
specific procedures governing that phased reintroduction are still bei ng formulated by the HTF, the 
Arbitrator understands that, for the duration of the first phase that will start on 11 May 2020, a 
maximum of 20% of the staff members of each Division will be allowed to work from the CWR.  
 
The Arbitrator and the Secretariat  staff assisting the Arbitrator have continued to progress with their 
work in this proceeding since the Arbitrator's last communication to the parties, and expect to 
continue to do so while the current restrictions on access to the CWR remain in effect. Th e Arbitrator 
anticipates that, as of 11 May 2020, the above -mentioned phased reintroduction should 
progressively allow the staff members assisting the Arbitrator to access and work with HSBI stored 
in the secure location on the WTO premises. T he Arbitrator  will update the parties by the end of May 
2020 on additional developments regarding access to the CWR.  
 
 WT/DS353/ARB/Add.1  
 
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  ANNEX  C-7 
ARBITRATOR'S DECISION ON THE UNITED  STATES' REQUEST FOR LEAVE TO FILE AN ADDITIONAL 
SUBMISSION REGARDING THE IMPLICATIONS OF THE PURPORTED ELIMINATION OF THE 
WASHINGTON STATE B&O TAX RATE REDUCTION ON THE PERMITTED LEVEL OF 
COUNTERMEASURES, DATED 17  JUNE 2020 
1.1.  On 13 May 2020, the Arbitrator received a letter from the United States advising that the State 
of Washin gton had, effective 1 April 2020, eliminated the Business and Occupation (B&O) tax rate 
reduction. In that letter, the United States requests leave to file an additional "Submission of the 
United States regarding the Withdrawal of the Washington B&O Tax Ra te Subsidy", attached to the 
letter of 13 May 2020, (the Additional Submission), purporting to set out "the implications of the 
elimination of this measure on the permitted level of countermeasures".1 The European Union 
responded to the United States' req uest on 20 May 2020. The United States submitted a reply to 
the European Union's response on 22 May 2020. The European Union was invited, but declined, to 
submit further comments on the United States' reply.  
1.2.  In support of its request for leave to file the Additional Submission, the United States refers to 
paragraph 5(1) of the Arbitrator's Working Procedures, which permits the submission of evidence 
after the substantive meeting, to the extent necessary for purposes of rebuttal, or exceptionally 
upon a show ing of good cause. The United States argues that the Additional Submission constitutes 
critical rebuttal evidence and argumentation, and in any event, good cause exists to grant the United 
States leave to file the Additional Submission.  
1.3.  The United States advises that the new evidence and associated argumentation contained in 
its Additional Submission centres on the State of Washington's elimination of the B&O tax rate 
reduction, effective 1 April 2020.2 The United States argues that this development occur red after 
the most recent substantive submission of the parties, which was the submission of the parties' 
comments on each other's responses to the second set of Arbitrator questions on 16 March 2020. 
According to the United States, the majority of the Eur opean Union's request for countermeasures 
is based on the Washington State B&O tax rate reduction. The United States considers that the 
elimination of the Washington State B&O tax rate reduction as of 1 April 2020 is of paramount 
importance to the aims of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes (the DSU) and to the Arbitrator's assessment of the European Union's request for 
countermeasures under the Agreement on Subsidies and Countervailing Measures (the SCM 
Agreement)  because, according to the United States, elimination of a WTO -inconsistent measure 
necessarily affects the level of permitted countermeasures. In its argumentation in support of the 
Additional Submission, the United States expressly "does not ask the Arbi trator to make any findings 
about compliance".3 
1.4.  The European Union argues that the Arbitrator should reject the United States' request for 
leave to file the Additional Submission for three main reasons. First, the European Union argues that 
the request is  untimely, given that the measure in question was enacted on 25 March 2020, and the 
United States waited almost 50 days to request leave to file the Additional Submission. Second, the 
European Union argues that the subject of the United States' request (i. e. the purported elimination 
of the Washington State B&O tax rate reduction) is irrelevant to the Arbitrator's mandate under 
Articles 7.9 and 7.10 of the SCM Agreement. This is so, in the European Union's view, because its 
entitlement to countermeasures vis-à-vis the Washington State B&O tax rate reduction is based on 
the value of the "adverse effects determined to exist" in the prior compliance proceedings, and not 
by reference to the current situation. Third, the European Union argues that the Arbitrator' s decision 
 
1 United States' letter to the Arbitrator, dated 13 May 2020.  
2 The United States advises that the bill was enacted on 25 March 2020, but the revised tax treatment 
took effect on 1 April 2020. (United States' letter to t he Arbitrator, dated 13 May 2020).  
3 United States' letter to the Arbitrator, dated 22 May 2020. (emphasis original) See also United States' 
letter to the Arbitrator, dated 13 May 2020; and Additional Submission. We note that the United States, in a 
commun ication to the Dispute Settlement Body (DSB), indicated that the elimination of the B&O tax rate 
reduction means that " the United States has brought its measures into conformity with its obligations under 
the SCM Agreement and therefore fully implemented t he DSB's recommendations in this dispute ". 
(Communication by the United States, WT/DS353/34, para. 3).  WT/DS353/ARB/Add.1  
 
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  to accept information after the end of the briefing phase should take into account the requirement 
of securing a "prompt settlement" of the dispute, particularly in light of the expeditious nature of 
arbitration proceedings and, even more so, th e "specific circumstances of the present case", where 
the Arbitrator has previously acknowledged the importance to the European Union that the timetable 
in this proceeding not enlarge the existing time -gap with the arbitration proceeding in EC and certain 
member States – Large Civil Aircraft (Article 22.6 – EU) (the DS316 arbitration proceedings) .4 
1.5.  The Arbitrator notes that the content of the United States' Additional Submission is effectively 
an objection to the European Union's request for countermeasure s in the form of Annual Suspension 
with respect to the Washington State B&O tax rate reduction. The term "Annual Suspension" refers 
to a situation whereby an arbitrator "establishe{s} a single, maximum level of countermeasures or 
suspension of concessions or other obligations that the complaining party {is} then authorized to 
impose annually".5 This is what the European Union requests with respect to the Washington State 
B&O tax rate reduction, i.e. the European Union asks the Arbitrator to: (a) calculate a single 
maximum level of countermeasures based on the value of the effects of the measure in a past 
time-period occurring immediately after the time the United States should have come into 
compliance (i.e. the reference period used in the compliance proceeding); and (b) authorize the 
European Union to impose that maximum value annually.6  
1.6.  The United States did not challenge this general approach until now. Now, the United States 
asks the Arbitrator to find that, due to the purported elimination of the B&O tax rate reduction, "the 
EU is not currently  entitled to impose countermeasures of any amo unt as long as the preferential 
rate remains withdrawn", however, "the Arbitrator may make explicit that the EU would be entitled 
to impose countermeasures at the level determined by the Arbitrator in the event that, in the future, 
the State of Washington applies a B&O tax rate to aircraft manufacturing, wholesaling, or retailing 
that is lower than the generally applicable, standard B&O tax rate".7  
1.7.  In assessing the United States' request in this context, we recall that the arbitrator in EC and 
certain mem ber States – Large Civil Aircraft (Article 22.6 – EU) (the DS316 arbitrator)  explained in 
detail the legal rationale for Annual Suspension, generally, and specifically its consistency with an 
arbitrator's mandate under Article 7.10 in circumstances materially similar to those existing here. In 
that proceeding, as it effectively is  here, the relevant issue before the arbitrator was "whether {the 
Arbitrator} may accept countermeasures in the form of Annual Suspension at a level that reflects 
the level of the adverse effects determined to exist in the … Reference Period {used in the c ompliance 
proceedings}".8 The DS316 arbitrator answered this in the affirmative, analysing two key sub -issues: 
(a) whether the maximum level of countermeasures (taking the form of suspension of concessions 
or other obligations) could be reasonably determi ned based on the effects of the relevant subsidies 
during the compliance panel's reference period; and, if so (b) whether it was reasonable to allow 
that maximum level to be maintained indefinitely (i.e. the  duration of the maximum level of 
suspension). Th ose analyses are, in our view, instructive and directly relevant here. We thus review 
the arbitrator's key reasoning below and apply that reasoning to the present circumstances.  
1.8.  We therefore note that the United States' Additional Submission might be inter preted as an 
objection to the European Union's general proposed method of determining the maximum  level of 
countermeasures (taking the form of suspension of concessions or other obligations). With respect 
to this issue, the DS316 arbitrator explained that with respect to "the issue of what determines the 
level of countermeasures that may be granted", "{o}ur mandate under Article  7.10 is to determine 
whether the proposed 'countermeasures' are 'commensurate with the degree and nature of the 
 
4 European Union's letter to the Arbitrator, dated 20 May 2020 (referring to, inter alia , Decision by the 
Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU)). 
5 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.3.  
6 The European Union asks the Arbitrator to sum this amount with a separate amount calculated with 
respect to the effects of the pre -2007 aeronautics R&D subsidies to create a single, overall level of Annual 
Suspension. Issues concerning the pre -2007 aeronautics R&D subsidies will be addressed in the forthcoming 
Decision of the Arbitrator.  
7 United States' Additional Submission, para. 11. (emphasis original; internal quotation marks and fn 
omitted)  
8 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.42.  WT/DS353/ARB/Add.1  
 
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  adverse effects de termined to exist'".9 That arbitrator noted that in the context of that dispute the 
phrase "adverse effects determined to exist" required reference "to the findings on adverse effects 
made in the compliance proceedings that provide the basis for the DSB t o authorize the United  States 
to take countermeasures".10 The DS316 arbitrator also emphasized that no adverse effects were 
determined to exist at any point after the end of that reference period.11 The reference period used 
in the prior compliance proce edings, as it is in this current case, also occurred immediately after the 
time that the respondent should have come into compliance. Thus, valuing the effects of the 
subsidies in that reference period was deemed consistent with "the basic purpose of an ar bitration 
proceeding{, i.e.} to determine the harm to the complaining party caused by {the respondent's} 
failure {to comply}".12 Thus, that DS316 arbitrator indicated that it was consistent with the 
arbitrator's mandate in Article 7.10 that the maximum level of countermeasures be determined with 
respect to the effects of the relevant subsidies in the compliance panel's reference period.13 We 
concur.  
1.9.  In this arbitration, the Arbitrator's mandate is to value "the adverse effects determined to 
exist". The Eu ropean Union considers that the "adverse effects determined to exist" for purposes of 
the B&O tax rate reduction are those identified in the compliance proceedings, and specifically in the 
reference period used in the compliance proceedings using fact -specific analyses. The United States 
raises no specific objection to this general approach, apparently accepting even in the Additional 
Submission that the Arbitrator may determine a maximum (non -zero) level of countermeasures 
calculated with reference to the value of the adverse effects identified in the compliance proceedings. 
We see no reason to question the European Union's approach in this context, as no analysis regarding 
the presence of relevant adverse effects has been conducted vis-à-vis any time -period following the 
reference period used in the compliance proceedings.14 The compliance reference period also 
occurred immediately after the time the United States should have come into compliance, and thus 
the adverse effects identified therein represent t he harm to the European Union caused by the United 
States' failure to comply. We therefore discern no reason to calculate the maximum level of 
countermeasures vis-à-vis the B&O tax rate reduction with reference to anything other than the 
value of the adver se effects determined to exist during the compliance reference period. The value 
of such adverse effects, under the United States' newly proposed level of countermeasures, would 
be zero. We cannot accept that the asserted "elimination" of the Washington St ate B&O tax rate 
reduction in 2020 affects the level of countermeasures that the European Union is authorized to 
take. 
1.10.   We further note that the United States' request, insofar as it concerns the level of 
countermeasures, seems to advocate a way to vary the  level of countermeasures on a prospective 
basis according to the legal status of the relevant measure. The United States, however, could have 
proposed such an approach at any time during the briefing phase of this arbitration. The United 
States failed to do so, choosing only to do so now.15 
1.11.   Thus, insofar as the United States objects to the general manner in which the European Union 
proposes to determine the maximum level of Annual Suspension, the United States' request lacks 
substantive merit and is untim ely. 
 
9 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.43.  
10 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.43.  
11 Decision by the Arbitrator, EC and certain member Sta tes – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.44.  
12 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.56. See also Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 
22.6 – EU), para. 6.57.  
13 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.46.  
14 The only other adverse effects that have been identified as having been caused by the B&O tax r ate 
reduction in this dispute are those that the original panel determined were caused by the B&O tax rate 
reduction in the original reference period (i.e. 2004 -2006). Neither party advocates calculating a level of 
countermeasures with reference to those a dverse effects, and we discern no reason to do so under the 
circumstances.  
15 For example, the United States could have proposed in its written submission that the level of 
countermeasures should vary with the legal status of the measure in question, even if there had not yet been a 
change in that legal status that the United States deemed relevant.  WT/DS353/ARB/Add.1  
 
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  1.12.   We recognize that the United States' Additional Submission might also be interpreted as 
objecting to the European Union's proposal that the maximum level of countermeasures be 
maintained indefinitely (i.e. the duration of the maximum level of suspensi on). The DS316  arbitrator 
also examined "the question of the time -period during which countermeasures may be imposed at 
{the} level {determined by valuing the adverse effects determined to exist during the compliance 
panel's reference period}".16 In that context, the arbitrator explained that relevant articles of the 
DSU17 were consistent with the Appellate Body's explanation "that the authorization to maintain the 
Annual Suspension at issue would only lapse following confirmation, through WTO dispute set tlement 
proceedings or a mutually agreed solution, of the responding party's substantive compliance".18 That 
is, "it is the formal multilateral compliance status of the responding party that justifies the 
maintenance of Annual Suspension at the previously  authorized level, not the notion that the 
authorized level correctly reflects the relevant effects of the responding party's measures over 
time".19 
1.13.   We therefore note that the United States might effectively be asking the Arbitrator to limit 
the duration  of the maximum level of Annual Suspension to the period of time in which the B&O tax 
rate reduction (or perhaps a replacement measure) is in legal effect. Conceived as such, however, 
the United States' request is moot. That is so because, as explained, it is the respondent's 
compliance status that determines the duration of the maximum level of Annual Suspension, and 
the United States explicitly does not ask the Arbitrator to determine that the United States has come 
into compliance in any relevant manner.20 
1.14.   Thus, insofar as the United States might object to the manner in which the European Union 
proposes to determine the duration  of Annual Suspension, the United States' request is moot.21 
1.15.   We note that two recent arbitrators have rejected similar requests by respondents using 
similar and instructive reasoning. In US – Tuna II (Mexico) (Article 22.6 – US), the United States 
revised the relevant measure after the first compliance proceedings occurred, and claimed that the 
arbitrator should determine a level o f suspension with reference to the effects of the new revised 
measure, rather than the measure that existed at the time that the reasonable period of time to 
comply expired.22 The arbitrator rejected the United States' request, instead determining a 
maxim um level of Annual Suspension with respect to the effects of the measure that existed at the 
time the reasonable period of time to comply expired using a reference period occurring around that 
time. According to the arbitrator, this was justified because t he text of Article 22.6 of the DSU 
mandates an arbitrator to assess the level of nullification or impairment caused by the WTO -
inconsistent original measure (where no compliance measure was subsequently taken), or a 
subsequent WTO -inconsistent compliance m easure that was in existence at the time of the expiry of 
the reasonable period of time for implementation of the DSB recommendations and rulings.23 
 
16 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.48.  
17 The arbitrator cited Articles 22.2, 22.6 and 22.8 of the DSU in this context. (Decision by the 
Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), fn 147).  
18 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.51 (citing Appellate  Body Report, US – Continued Suspension , section IV.E). "In other words … pending 
such confirmation, the Annual Suspension may continue in place for a certain period of time, even though the 
relevant effects of the latest measures t aken to comply would, in fact, be valued at zero given that substantive 
compliance was achieved. This, in our view, further supports that it is the formal multilateral compliance status 
of the responding party that justifies the maintenance of Annual Suspe nsion at the previously authorized level, 
not the notion that the authorized level correctly reflects the relevant effects of the responding party's 
measures over time". (Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Arti cle 
22.6 – EU), para. 6.51).  
19 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.51. "Annual Suspension may remain in place at the authorized level until a WTO adjudicator finds the 
responding par ty to have achieved substantive compliance or the parties have found another solution". 
(Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), para. 
6.53).  
20 United States' letter to the Arbitrator, dated 22 May 2020. See also United States' Additional 
Submission, fn. 1. There has also been no mutually agreed solution between the parties.  
21 The United States cites Articles 3.7, 22.4, and 22.8 of the DSU and Articles 7.9 and 7.10 of the SCM 
Agreement in support of its arguments. We discern nothing in such provisions that calls our analysis into 
question.  
22 Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – US), para. 3.4.  
23 Decision by the Arbitrator, US – Tuna II (Mexico) (Article 22.6 – US), para. 3.24.  WT/DS353/ARB/Add.1  
 
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  1.16.   In US – Anti-Dumping Methodologies (China) (Article 22.6 – US), the arbitrator declined to 
exclude from its assessment of the level of nullification and impairment an anti -dumping order that 
had been revoked after the expiration of the reasonable period of time to comply, on the basis that 
to do so would be inconsistent with its mandate because it "woul d be ignoring the nullification or 
impairment caused by the failure of the United States to implement the DSB recommendations and 
rulings … by the expiry of the reasonable period of time".24 The arbitrator cited the Tuna II (Mexico)  
arbitration decision, discussed immediately above, in support of its reasoning.25 
1.17.   We further note that the United States argues that the arbitration decision in 
US – 1916 Act (EC) (Article 22.6 – US) supports its approach. We consider this arbitration decision 
inapposite in th is context. In that proceeding, the arbitrator, acting under Article 22.7 of the DSU, 
determined a prospective way for the European Communities to adjust the level of suspension of 
concessions over time with reference to the occurrence of certain applicati ons of the relevant 
measure found to be "as -such" WTO -inconsistent.26 That was considered appropriate in that 
arbitration because, in particular, there had been no demonstrated, relevant applications of the 
measure as of the date the arbitrator issued its  decision, yielding an initial level of suspension of 
zero.27 In short, nothing relevant had occurred yet for the arbitrator to value. Thus, the US – 1916 
Act (EC)  arbitration concerned facts and circumstances materially different than what we face here. 
It did not concern Annual Suspension or the propriety thereof, generally, or under Article 7.10 of 
the SCM Agreement, specifically.  
1.18.   Finally, we recall that many disputes in which arbitration proceedings occurred resulted in the 
complainant being granted An nual Suspension, including in both previous arbitrations occurring 
under Article 7.10 of the SCM Agreement, i.e.  the DS316 arbitration proceedings and US – Upland 
Cotton (Article 22.6 – US II) . The arbitrator in the former proceeding explained that the "le vels of 
such Annual Suspension have generally been determined based on the trade effects of relevant 
measures during past time -periods …. The past time -periods selected were usually short -term 
periods immediately following or including the time at which th e responding party should have come 
into compliance".28 Determining a maximum level of Annual Suspension in the general manner that 
the European Union requests is therefore an accepted practice.  
1.19.   For the foregoing reasons, we consider the United States' Ad ditional Submission to lack 
substantive merit, to be untimely, and/or to be moot. As such, we find that the Additional Submission 
is neither necessary for purposes of rebuttal nor that good cause exists to accept the Additional 
Submission at this time. The  United States' request for leave to file the Additional Submission is 
accordingly denied.  
 
 
 
24 Decision by the Arbitrator, US – Anti-Dumping Methodologies (China) (Article 22.6 – US), para. 3.10.  
25 Decision by the Arbitrator, US – Anti-Dumping Methodologies (China) (Article 22.6 – US), fn 49.  
26 Decision by the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), paras. 6.14 -6.17 and 7.8.  
27 Decision by the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), paras. 6 .5 and 6.11.  
28 Decision by the Arbitrator, EC and certain member States – Large Civil Aircraft (Article 22.6 – EU), 
para. 6.56. (fns omitted)  WT/DS353/ARB/Add.1  
 
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  ANNEX  C-8 
ARBITRATOR'S COMMUNICATION TO THE PARTIES, DATED 26 JUNE 2020  
The Arbitrator acknowledges receipt of the European Union's letter of 22 June 2020, objecting to the 
indication provided by the Arbitrator in its communication of 17 June 2020 regarding its best 
estimate of the time at which it expects to deliver its decision to the parties.  
 
The Arbitrator unequivocally assures the parties that the members of the Arbitrator and the 
Secretariat staff assisting the Arbitrator have at all times acted with the dedication, integrity and 
objectivity that befit their roles in these proceedings. In spite of the multiple challenges arising from 
the C OVID -19 pandemic that have impaired their modalities for work and greatly affected their 
workplaces, families, communities, and countries, the Arbitrator and the Secretariat staff assisting 
it continue to work diligently towards fulfilling the Arbitrator's  mandate in these proceedings. The 
Arbitrator is keenly aware of the importance to the European Union that these proceedings be 
completed as expeditiously as possible.  
 
 WT/DS353/ARB/Add.1  
 
- 62 - 
 
  ANNEX C-9 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REQUESTING AUTH ORIZATION  
TO DISCUSS SPECIFIC EU HSBI, DATED 5 AUGUST 2020  
As the parties are aware, the Covid -19 pandemic continues to present serious challenges for 
international travel. In the light of such challenges, and moving forward into the last stages of this 
proceeding, the Arbitrator is considering options to conduct final internal meetings remotely. With a 
view to facilitating that mode of meeting, the Arbitrator hereby inquires as to whether the European 
Union would grant, on a temporary basis, permission to  the Arbitrator and other WTO approved 
persons who are additionally authorized to access HSBI to verbally  discuss certain HSBI, strictly  for 
the purpose of the internal meetings of the Arbitrator to be held on Skype for Business to occur 
during the time -frame of 24 August until 30 September 2020. At present, the Arbitrator's inquiry 
concerns the following HSBI materials only:  
• European Union's response to Arbitrator question No. 75, paras. 392 -393 and 405 -406 
(including footnote 425); and Declaration by [[***]] , 25 February 2020 ("Airbus' use of 
discount rates"), (Exhibit EU -78-HSBI)).  
• Proposed delivery schedules in Airbus fin al offer in the 2008 Fly Dubai sales campaign 
(Fly Dubai 2008 final offer,  [[HSBI]], (Exhibit EU -5-HSBI, p. 7 (information contained in 
columns "Aircraft Rank" and "Delivery Period"))) and in the 2011 Delta Airlines sales 
campaign ( Delta Airlines final off er, [[HSBI]], (Exhibit EU -4-HSBI, p. 26 )).  
The Arbitrator notes that the Additional Working Procedures for the Protection of Business 
Confidential Information and Highly Sensitive Business Information (BCI/HSBI Procedures) allow a 
party to "treat{} … its own BCI and HSBI"1 as it sees fit (unless otherwise provided for in the 
procedures) and, as a result, allow the parties to authorize the Arbitrator and designated Secretariat 
staff to discuss such materials in the manner described above in respect of its own HSBI. The 
Arbitrator thus considers that, if the European Union were to respond favourably to the Arbitrator's 
inquiry, allowing the Arbitrator to discuss such materials in the above -described manner leaves the 
BCI/HSBI Procedures, and the protections afforded to BCI and HSBI therein, unchanged.  
The Arbitrator requests that the European Union advise whether it agrees to grant the 
above -referenced temporary permission by close of business on Friday, 14 August 2020.  
 
 
 
1 Paragraph 24 of the BCI/HSBI Procedures.  WT/DS353/ARB/Add.1  
 
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  ANNEX C-10 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REQUESTING AUTHORIZATION  
TO DISCUSS ADDITIONAL SPECIFIC EU HSBI, DATED 19 AUGUST 2020  
1.1.  The Arbitrator acknowledges receipt of the European Union's letter of 10 August 2020 which 
refers to the Arbitrator's communica tion of 5 August 2020. The Arbitrator notes also its 
communication of 17 June 2020, the European Union's letter of 22 June 2020 and the Arbitrator's 
response to that letter of 26 June 2020.  
1.2.  In its communication of 17 June 2020, the Arbitrator indicated tha t the earliest possible time 
that it expected to provide the Decision to the parties (for purposes of ensuring appropriate redaction 
of BCI/HSBI) was the end of September 2020. The Arbitrator advises that it now expects to provide 
the Decision to the parti es for that purpose by the end of September 2020 at the latest. The 
Arbitrator's request for authorization to discuss certain HSBI to cover the whole period up until the 
delivery of the Decision to the parties for BCI/HSBI review was to facilitate any unfo reseen need to 
discuss HSBI which might otherwise delay its work.  
1.3.  In that respect, the Arbitrator additionally requests the European Union for authorization to 
discuss (in the same manner as, and over the same time -period, referenced in the Arbitrator's 
communication of 5 August 2020) the following EU HSBI:  
1. Proposed number of firm orders (and associated Airbus LCA models) in:  
 
a. 2008 Fly Dubai sales campaign (Fly Dubai 2008 final offer, [[HSBI]] , (Exhibit EU -5 
(HSBI), p. 7, clause 3.1.1));  
b. 2013 Air Canada sales campaign (Air Canada final offer, [[HSBI]] , (Exhibit EU -3 
(HSBI), p. 37 clause 2.1));  
c. 2013 Icelandair sales campaign (Icelandair final offer, [[HSBI]] , (Exhibit EU -8 
(HSBI)), p. 7 clause 3.1)); and  
d. 2014 Fly Dubai sales campaign  (Fly Dubai 2014 final offer, [[HSBI]] , (Exhibit EU -6 
(HSBI), p. 5 clause 1.1, and pp. 9 -10 clause 3.1.1)).  
 
2. Numerical values of the adverse effects specifically contained in:  
a. 2RPQ valuation of single -aisle lost sales – Airbus delivery schedules, (E xhibit EU -85 
(HSBI), Worksheet "Total Adverse Effects");  
b. Updated valuation of single -aisle threat of impedance, (Exhibit EU -60 (HSBI), 
Worksheet "Total Adverse Effects"); and  
c. 2RPQ valuation of single -aisle threat of impedance – Airbus delivery sche dules, 
(Exhibit EU -77 (HSBI), Worksheet "Total Adverse effects").  
 
3. Narrative discussion (excluding footnotes) in Appendix 2 (HSBI) of the compliance panel 
report (Exhibit EU -65 (HSBI), paras. 160 -166 (excluding the first sentence of para. 163 and 
the la st sentence of para. 164) and 266 -271 (excluding the second sentence of para. 270)).  
1.4.  In the event that the Arbitrator makes a subsequent request in relation to any other EU HSBI, 
it will do so by close of business on Monday, 31 August 202 0.WT/DS353/ARB/Add.1  
 
- 64 - 
 
  ANNEX C-11 
ARBITRATOR'S COMMUNICATION TO THE PARTIES REGARDING MEDIA REPORTS CONTAINING 
THE ARBITRATOR'S CALCULATED LEVEL OF COUNTERMEASURES, DATED 9 OCTOBER 2020  
You will recall  that on 28 September 2020, the Arbitrator provided the parties with advanc e copies 
of the non -BCI and BCI versions of the Decision in US – Large Civil Aircraft (2nd complaint) 
(Article  22.6 – US), as well as a CD -ROM with the Arbitrator 's HSBI calculations.  
 
The parties were informed that the documents may at that point contain BCI and/or HSBI and the 
documents were provided prior to the circulation of the Decision for the express purpose of enabling 
the parties to check the contents of the Decision to ensure that no BCI or HSBI would be 
inadvertently disclosed in the pub lic version of the Decision. This was a procedure provided for by 
the Arbitrator's BCI/HSBI Procedures specifically to protect the parties' confidential information for 
purposes of this dispute.   
 
Accordingly, and as  explained in the cover letter transmitt ing these materials, the  Arbitrator 
expressly indicated that the  entirety of the text of the Arbitrator 's Decision, including figures and 
information not designated as BCI, must remain strictly confidential  until the public version of the 
Decision is circu lated.  
 
The Arbitrator became aware of media reports of the amount of the countermeasure s in publication s 
in the early hours of 30  September 2020, followed by reports in other media outlets on 
30 September  2020 and subsequently. The list of media reports o f which the Arbitrator is  currently 
aware is attached to this letter.  
 
In its communication of 2 October 2020, t he United States referred to a Bloomberg press article of 
30 September 2020, and stated that none of its approved persons "leaked the contents of the 
confidential report ". It also asked the Arbitrator to investigate the source of this leak and take any 
appropriate action.   
 
In its communication of 6 October 2020, t he European Union also expressed similar concern 
regarding the leak and assert ed that the leak originally appeared in a Reuters article  of 
30 September  2020. The European Union state d that none of  its approved persons, nor any member 
of its delegation (whether or not BCI/HSBI approved) "was the source of the leak ". 
 
The members of the Arbitrator fully affirmed that at all relevant times they have (i) handled the 
Decision, including the BCI/HSBI the rein, in accordance with the BCI/HSBI Procedures, and (ii) in 
all other respects, treated the Arbitrator 's Decision as strictly confidential .  
 
The Arbitrator has  also requested  the Director of the WTO Legal Affairs Division  to make inquiries of 
all WTO Secretariat staff who had access to the draft Decision (all such persons comprising the WTO 
Approved Persons appearing on the attached letter). All such persons have fully affirme d that at all 
relevant times they have (i) handled the Decision, including the BCI/HSBI therein, in accordance 
with the BCI/HSBI Procedures, and (ii) in all other respects, treated the Arbitrator 's Decision as 
strictly confidential . 
 
The Arbitrator conside rs that if all persons who had access to the Decision had in fact treated the 
Decision in all respects as strictly confidential, it is simply not possible that the amount of the 
countermeasures would have been communicated to any person who was authorized to 
communicate it to a journalist for publication in a media report.  
  
The Arbitrator condemns the failure to uphold the strict confidentiality of the contents of the 
Arbitrator's Decision. The Arbitrator considers that such actions ultimately  undermine t he integrity 
of the dispute settlement process, and the necessary respect for the principle of good faith, a 
fundamental and necessary tenet for engagement in a proceeding of this nature.  
 
__________