WT/DS316/RW2/Add.1  
 
2 December 2019  
(19-8220) Page: 1/77 
    
 
  
EUROPEAN COMMUNITIES  AND CERTAIN MEMBER STATES – MEASURES  
AFFECTING TRADE IN L ARGE CIVIL AIRCRAFT  
 
RECOURSE TO ARTICLE 21.5 OF THE DSU BY T HE EUROPEAN UNION  
AND CERTAIN MEMBER S TATES  
REPORT OF THE PANEL  
Addendum  
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This addendum  contains Annexes A to D to the Report of the Panel to be found in document  
WT/DS316/RW2 . 
 
 
_______________  
 WT/DS316/RW2/Add.1  
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LIST OF ANNEXES  
ANNEX  A 
PANEL DOCUMENTS  
 
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex  A-2 Additional Working Procedures on open panel meetings  11 
Annex  A-3 Additional Working Procedures for the protection of business confidential 
information and highly sensitive business information  13 
Annex  A-4 Interim Review  27 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the European Union  30 
Annex  B-2 Integrated executive summary of the arguments of the United States  46 
ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of  Brazil  55 
Annex  C-2 Integrated executive summary of the arguments of Canada  59 
Annex  C-3 Integrated executive summary of the arguments o f Japan  62 
ANNEX  D 
RULING OF THE PANEL ON THE EUROPEAN UNION'S  REQUEST OF 12 JULY 2019 
Contents  Page  
Annex  D-1 Ruling of the Panel on the European Union's Request of 12 July 2019 
concerning:  (i) the alleged untimely filing of certain new arguments and 
evidence; and  (ii) allegations of additional due process concerns  65 
 
 WT/DS316/RW2/Add.1  
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  ANNEX A  
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex  A-2 Additional Working Procedures on open panel meetings  11 
Annex  A-3 Additional Working Procedures for the protection of business confidential 
information and highly sensitive business information  13 
Annex  A-4 Interim Review  27 
  WT/DS316/RW2/Add.1  
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ANNEX A -1 
WORKING PROCEDURES O F THE PANEL  
General  
1. (1) In this proceeding, the Panel 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 Panel reserves the right to modify these proc edures as necessary, after consultation 
with the parties.  
Confidentiality  
2. (1) The deliberations of the Panel and the documents submitted to it shall be kept 
confidential. Members shall treat as confidential information that is submitted to the Panel 
which the submitting Member has designated as confidential.  
(2) Nothing in the DSU or in these Working Procedures shall preclude a party or third party 
from disclosing statements of its own positions to the public.  
(3) If a party submits a confidential versio n of its written submissions to the Panel, it shall 
also, upon request of a Member, provide a non -confidential summary of the information 
contained in its submissions 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 Panel For the Protection of  Business Confidential Information and Highly -Sensitive 
Business Information.  
Submissio ns 
3. (1) Before the substantive meeting of the Panel with the parties, each party shall transmit 
to the Panel a first written submission, and subsequently a written rebuttal, in which it 
presents the facts of the case and its arguments, and counter -argume nts, respectively, in 
accordance with the timetable adopted by the Panel.  
a. To facilitate the efficient conduct of this proceeding, the written submissions referenced 
in the Panel's timetable (the parties' first written submissions and written rebuttals) 
shall not exceed 250 pages (single -spaced, font size 10) each. This limit excludes 
exhibits accompanying written submissions.  
b. The Panel may grant an extension of this page limit upon a request from a party. A 
party shall submit any such request in accor dance with the procedures concerning 
service of documents set out in paragraph 30 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 Panel shall rule on such requests promptly.  
(2) Each third party that chooses to make a written submission before the substantive 
meeting of the Panel with the parties shall do so in accordance with the timetable adopted by 
the Panel.  
(3) The Panel may invite the parties or third parties to make  additional submissions during 
the proceeding, inclu ding with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.   WT/DS316/RW2/Add.1  
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  Preliminary rulings  
4. (1) If the United States considers that the Panel should make a ruling before the issuance 
of the Report that certain measures or claims in t he panel request or the complainant's first 
written submission are not properly before the Panel, the following procedure applies. 
Exceptions to this procedure shall be granted upon a showing of good cause.  
a. The United States shall submit any such reques t for a preliminary ruling at the earliest 
possible opportunity and in any event no later than in its first written submission to the 
Panel. The European Union shall submit its response to the request before the 
substantive meeting of the Panel, at a time to be determined by the Panel in light of the 
request.  
b. The Panel may issue a preliminary ruling on the issues raised in such a preliminary 
ruling request before, during or after the substantive meeting, or the Panel may defer 
a ruling on the issues raised by a preliminary ruling request until it issues its Report to 
the parties.  
c. If the Panel finds it appropriate to issue a preliminary ruling before the issuance of its 
Report, the Panel may provide reasons for the ruling at the time that the  ruling is made, 
or subsequently in its Report.  
d. Any request for such a preliminary ruling by the respondent before the meeting, and 
any subsequent submissions of the parties in relation thereto before the meeting, shall 
be served on all third parties. T he Panel may provide all third parties with an opportunity 
to provide comments on any such request, either in their submissions as provided for 
in the timetable or separately. Any preliminary ruling issued by the Panel before the 
substantive meeting on whe ther certain measures or claims are properly before the 
Panel shall be communicated to all third parties.  
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary or procedural rulings during the proceeding, and t o the procedures that the Panel 
may follow with respect to such requests.  
Evidence  
5. (1) Each party shall submit all evidence to the Panel no later than during the substantive 
meeting, except evidence necessary for purposes of rebuttal, or evidence necess ary 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 Panel shall 
accord the other par ty an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) If the original language of an exhibit or portion thereof is not a WTO working language, 
the submitting party or third party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the submission. The Panel may grant 
reasonable extensions of time for the translation of exhibits upon a showing of good cause.  
(2) Any objection as to the accuracy of a translation should be rai sed promptly in writing, 
preferably no later than the next submission 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 maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the 
course of the dis pute, 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 WT/DS316/RW2/Add.1  
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  last exhibit in connection with the first 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 an updated list of exhibits (in Word or Excel format) together 
with eac h 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  
(4) Insofar as a party conside rs that the compliance panel should take into account a 
document already submitted as an exhibit in the original panel proceeding or the first 
compliance proceeding, it should resubmit 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 proceedings (OP) (example: [XXX] -1 ([XXX] -21-OP)) or first compliance 
proceeding (FCP) (example: [XXX] -1 ([XXX] -21-FCP)).  
(5) If a party includes a hyperlink to t he content of a website in a submission, and intends 
that the cited content form part of the official record, the cited content of the website shall be 
provided in the form of an exhibit.  
Editorial Guide  
8. In order to facilitate the work of the Panel, eac h party and third party is invited to make its 
submissions in accordance with the WTO Editorial Guide for Panel Submissions (electronic copy 
provided).  
Questions  
9. The Panel may pose questions to the parties and third parties at any time, including:  
a. Before the meeting, the Panel may send written questions, or a list of topics it intends 
to pursue in questioning orally during the meeting. The Panel may ask different or 
additional questions at the meeting.  
b. The Panel may put questions to the parties and  third parties orally during the meeting, 
and in writing following the meeting, as provided for in paragraphs 16 and 21 below.  
Substantive meeting  
10. The Panel may open its meeting with the parties to the public, subject to appropriate 
procedures to be adopted by the Panel after consulting with the parties.  
11. The parties shall be present at the meetings only when invited by the Panel to appear before 
it. 
12. (1) Each party has the right to determine the composition of its own delegatio n when 
meeting with the Panel.  
(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 and third parties.  
13. Each party shall provide to the Panel the list of members of its delegation no later than 
5.00 p.m. (Geneva time) three working days before the first day of each me eting with the Panel.  
14. A request for interpretation by any party should be made to the Panel as early as possible, 
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.  
15. There shall be one substantiv e meeting with the parties.  WT/DS316/RW2/Add.1  
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  16. The substantive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall invite the European Union to make an opening statement to present its 
case first. Subsequently, the Panel shall invite t he United States to present its point of 
view. Before each party takes the floor, it shall provide the Panel and other participants 
at the meeting with a provisional written version of its statement. If interpretation is 
needed, each party shall provide ad ditional copies for the interpreters.  
b. Each party should avoid lengthy repetition of the arguments in its submissions. Each 
party is invited to limit the duration of its opening statement to not more than 
75 minutes. If either party considers that it req uires more time for its opening 
statement, it should inform the Panel and the other party at least 10 days before the 
meeting, together with an estimate of the expected duration of its statement. The Panel 
will accord equal time to the other party.  
c. After the conclusion of the opening statements, the Panel shall give each party the 
opportunity to make comments or ask the other party questions.  
d. The Panel may subsequently pose questions to the parties.  
e. Once the questioning has concluded, the Panel sha ll afford each party an opportunity to 
present a brief closing statement, with the European Union presenting its statement 
first. Before each party takes the floor, it shall provide the Panel and other participants 
at the meeting with a provisional written  version of its closing statement, if available.  
f. Following the meeting:  
i. Each party shall submit a final written version 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, e ach 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 Panel 
before the end of the meeting, any questions to the  other party to which it wishes 
to receive a response in writing.  
iii. The Panel shall send in writing, within the timeframe established by the Panel 
before the end of the meeting, any questions to the parties to which it wishes to 
receive a response in wr iting. 
iv. Each party shall respond in writing to the questions from the Panel, and to any 
questions posed by the other party, within the time -frame established by the 
Panel before the end of the meeting.  
THIRD PARTY SESSION  
17. The third parties shall be present at the meetings only when invited by the Panel to appear 
before it.  
18. (1) Each third party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each third 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 and third parties.  
19. A request for interpretation by any third party should be made to the Panel as early as 
possible, preferably upon receiving the working procedures and timetable for the proceeding, to 
allow sufficient time to ensure availabil ity of interpreters.  WT/DS316/RW2/Add.1  
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  20. (1) Each third party may present its views orally during a session of the substantive meeting 
with the parties set aside for that purpose.  
(2) Each third party shall indicate to the Panel whether it intends to make an oral statemen t 
during the third party session, along with the list of members of its delegation, in advance of 
this session and no later than 5.00  p.m. (Geneva time) three working days before the third 
party session of the meeting with the Panel.  
21. The third -party se ssion shall be conducted as follows:  
a. All parties and third parties may be present during the entirety of this session.  
b. The Panel shall first hear the oral statements of the third parties, who shall speak in 
alphabetical order. Each third party making  an oral statement at the third -party session 
shall provide the Panel and other participants with a provisional written version of its 
statement before it takes the floor. If interpretation of a third party's oral statement is 
needed, that third party shal l provide additional copies for the interpreters.  
c. Each third party should limit the duration of its statement to 15 minutes, and avoid 
repetition of the arguments already in its submission. If a third party considers that it 
requires more time for its o pening statement, it should inform the Panel and the parties 
at least 10 days before the meeting, together with an estimate of the expected duration 
of its statement. The Panel will accord equal time to all third parties for their statements.  
d. After the third parties have made their statements, the parties shall be given the 
opportunity to pose questions to any third party for clarification on any matter raised in 
that third party's submission or statement.  
e. The Panel may subsequently pose questions to any third party.  
f. Following the third -party session:  
i. Each third party shall submit the final written version of its oral statement, no 
later than 5.00  p.m. (Geneva time) on the first working day following the 
meeting.  
ii. Each party may send in writin g, within the timeframe to be established by the 
Panel before the end of the meeting, any questions to a third party or parties to 
which it wishes to receive a response in writing.  
iii. The Panel may send in writing, within the timeframe to be established by the 
Panel before the end of the meeting, any questions to a third party or parties to 
which it wishes to receive a response in writing.  
iv. Each third party choosing to do so shall respond in writing to written questions 
from the Panel or a party, withi n a timeframe established by the Panel before the 
end of the meeting.  
Descriptive part and executive summaries  
22. The description of the arguments of the parties and third parties in the descriptive part of the 
Panel report shall consist of executive summ aries provided by the parties and third parties, which 
shall be annexed as addenda to the report. These executive summaries shall not in any way serve 
as a substitute for the submissions of the parties and third parties in the Panel's examination of the 
case. 
23. Each party shall submit one integrated executive summary, which shall summarize the facts 
and arguments as presented to the Panel in the party's first written submission, second written 
submission, oral statement, and if possible, its responses to questions and comments thereon  
following the substantive meeting.  WT/DS316/RW2/Add.1  
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  24. Each integrated executive summary shall be limited to no more than 15 pages.  
25. The Panel may request the parties and third parties to provide executive summaries of facts 
and arguments  presented in any other submissions to the Panel for which a deadline may not be 
specified in the timetable.  
26. Each third party shall submit an integrated executive summary of its arguments as presented 
in its written submission and statement in accordance with the timetable adopted by the Panel. This 
integrated executive summary may also include a summary of responses to questions, if relevant. 
The executive summary to be provided by each third party shall not exceed six  pages. If a third -party 
submission and/or oral statement does not exceed six pages in total, this may serve as the executive 
summary of that third party's arguments.  
Interim review  
27. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the Panel, in accordance 
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no 
later than at the time the written request for review is submi tted. 
28. If no further meeting with the Panel is requested, each party may submit written comments 
on the other party's written request for review, in accordance with the timetable adopted by the 
Panel. Such comments shall be limited to commenting on the other party's written request for 
review.  
Interim and Final Report  
29. The interim report, as well as the final report before its official circulation, shall be kept strictly 
confidential and shall not be disclosed.  
Service of documents  
30. The following p rocedures regarding service of documents apply to all documents submitted by 
parties and third parties during the proceeding:  
a. Each party and third party shall submit all documents to the Panel by submitting them 
with the DS  Registry (office No. 2047).  
b. Each party and third party shall submit 3 paper copies of its submissions and 3 paper 
copies of its Exhibits to the Panel by 5.00 p.m. (Geneva time) on the due dates 
established by the Panel. The DS  Registrar shall stamp the documents with the date 
and time of submission. The paper version submitted to the DS Registry shall constitute 
the official version for the purposes of submission deadlines and the record of the 
dispute. If any documents are in a format that is impractical to submit as a paper copy, 
then the party may submit such documents to the DS Registrar by email or on a CD -
ROM, DVD or USB key only.  
c. Each party and third party shall also send an email to the DS Registry, at the same time 
that it submits the paper versions, attaching an electron ic copy of all documents that it 
submits to the Panel, preferably in both Microsoft Word and PDF format. All such emails 
to the Panel shall be addressed to DSRegistry@wto.org, and copied to other WTO 
Secretariat staff whose email addresses have been provid ed to the parties during the 
proceeding. If it is not possible to attach all the Exhibits to one email, the submitting 
party or third party shall provide the DS Registry with four copies of the Exhibits on USB 
keys, CD -ROMs or DVDs.  
d. In addition, each pa rty and third party is invited to submit all documents through the 
Digital Dispute Settlement Registry (DDSR) within 24 hours following the deadline for 
the submission of the paper versions. If the parties or third parties have any questions 
or technical d ifficulties 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.  WT/DS316/RW2/Add.1  
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  e. Each party shall serve any document submitted to the Panel directly on the other party. 
Each p arty shall, in addition, serve any submissions in advance of the first substantive 
meeting with the Panel directly on the third parties. Each third party shall serve any 
document submitted to the Panel directly on the parties and on all other third parties . 
A party or third party may serve its documents on another party or third party by email 
or on a CD -ROM or DVD only, unless the recipient party or third party has previously 
requested a paper copy. Each party and third party shall confirm, in writing, tha t copies 
have been served on the parties and third parties, as appropriate, at the time it provides 
each document to the Panel.  
f. Each party and third party shall submit its documents with the DS Registry and serve 
copies on the other party (and third par ties if appropriate) by 5.00  p.m. (Geneva time) 
on the due dates established by the Panel.  
g. As a general rule, all communications from the Panel to the parties and third parties will 
be via email. In addition to transmitting them to the parties by email,  the Panel shall 
provide the parties with a paper copy of the Interim Report and the Final Report.  
Correction of clerical errors in submissions  
31. The Panel may grant leave to a party or third party to correct clerical errors in any of its 
submissions (including paragraph numbering and typographical 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/DS316/RW2/Add.1  
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  ANNEX A -2 
ADDITIONAL WORKING PROCEDURES ON OPEN  PANEL  MEETINGS  
Adopted 4 April 2019  
1. During the meeting with the parties, only Approved Persons (as defined in paragraph 1 of the 
Additional Working Procedures for the Protection of Business Confidential Information and Highly 
Sensitive Business Information ("BCI/HSBI Procedures") and WTO Approved Persons (as defined in 
paragraph 23 of the BCI/HSBI Procedures) will be admitte d into the meeting room. The Panel will 
invite the European Union to first present its full opening oral statement before the floor is given to 
the United States to present its full opening oral statement. The opening oral statements 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 Panel 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. If a party inclu des HSBI in its opening oral statement , 
it shall provide, prior to delivery of the opening oral statement, only one paper copy to each member 
of the Panel and one paper copy to the othe r 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. All other paper copies to be handed in the room shall not contain 
HSBI.  
3. Paragraphs 44 and 55 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 dis continued 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, then ask for the videotaping to be discontinued  when that 
part is over. It will then start the delivering of the second part of its opening oral statement 
containing BCI or HSBI, which will not be videotaped.  
4. After both parties have delivered their opening oral statement s, the Panel  will ask the parties 
whether they can confirm that no BCI or HSBI was pronounced during the videotaped portio ns of 
the opening oral statement s. If both parties so confirm, the showing of the videotape will proceed 
according to schedule. If either party , within a deadline to be established by the Panel , 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 
premises of the WTO at an appropriate time after the meeting. The parties should be prepar ed 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 the 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. Regarding the third party session, t hird parties shall indicate to the Panel, not later than close 
of business on 3 May 2019, whether  they con sent to the videotaping of their oral statements for 
later viewing. The Panel will start the third party session with the statements of those third parties 
so consenting. After such third parties have made their statements, any questions or comments 
from t he parties, other third parties or the Panel concerning these statements shall be made. The 
Panel shall then proceed to a third party closed session during which the rest of the third parties 
shall make their statements. Such statements will not be videota ped. The Panel or any party or third 
party may pose questions to any third party or make comments concerning these statements. Such 
comments, questions and answers thereto will not be videotaped. Should any third party intend to 
include BCI in its oral sta tement or otherwise to refer to BCI during the third party session, it is 
requested to inform the Panel by close of business on -- April 201 9 so that appropriate arrangements 
can be made to protect the confidentiality of that information.  WT/DS316/RW2/Add.1  
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  6. The showing of  the videotape of the opening oral statements of the parties and any third party 
wishing to make its statement publicly available shall take place on a date to be established by the 
Panel after consulting the parties . It will be open to officials of WTO Me mbers and Observers, and, 
upon registration with the Secretariat, to accredited journalists, accredited representatives of 
non-governmental organizations, and other interested persons, including members of the public.  
The WTO Secretariat will place a notic e on the WTO website no later than four weeks before the date 
of the public viewing  to inform the public of the showing. The notice shall include a link through 
which persons  can register with the WTO  Secretariat to attend the showing . 
 WT/DS316/RW2/Add.1  
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  ANNEX A -3 
ADDITIONAL WORKING PRO CEDURES FOR THE PROT ECTION OF BUSINESS  CONFIDENTIAL 
INFORMATION AND HIGH LY SENSITIVE BUSINES S INFORMATION  
("BCI/HSBI PROCEDURE S") 
Adopted on 23 October 2018  
Revised on 15 November 2018  
I. GENERAL  
The following Procedures apply to all business confidential information ("BCI") and highly sensitive 
business information ("HSBI") on the Panel record. These Procedures do not diminish the rights and 
obligations of the P arties to request, disclose, or maintain 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. "Business Confidential Information"  or "BCI" means any business information regardless 
of whether contained in a document provided by a public or private body that a Party or Third Party 
has "Designate d as BCI" because it is not otherwise available in the public domain and its disclosure 
could, in the Party 's or Third Party 's view, cause harm to the originators of the information. Each 
Party and Third 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.  
3. "Conclusion of the Panel Process"  means the earliest to occur of the following events:  
(a) pursuant to Article 16.4 of the DSU, the Panel report is adopted by the DSB, or 
the DSB decides by consensus not to adopt the Panel report;  
(b) a Party formally notifies the DSB of its decision to appeal pursuant to 
Article  16.4 of the DSU;  
(c) pursuant to Article 12 .12 of the DSU, the authority for establishment of the 
Panel lapses; or  
(d) pursuant to Article 3.6 of the DSU, a mutually agreed  solution is notified to 
the DSB. 
4. "Designated as BCI " means:  
(a) for printed information, text that is set off with bold square brackets in a 
document clearly marked with the notation 'BUSINESS CONFIDENTIAL 
INFORMATION ' and with the name of the Party or Third Party that submitted 
the information;  
(b) for electronic informat ion, 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 
 
1 Agreement on Subsidies and Countervailing Measures  ("SCM Agreement "). 
2 Understanding on Rules and Procedures Governing the Settlement of Disputes  ("DSU"). WT/DS316/RW2/Add.1  
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  INFORMATION ', has a file name that contains the letters "BCI",  and is stored on 
a storage medium with a label marked 'BUSINESS CONFIDENTIAL 
INFORMATION ' and indicating the name of the Party or Third Party that 
submitted the information; and  
(c) for uttered information, declared by the speaker to be "Business Confidential  
Information" prior to utterance.3 
(d) In case either Party objects to the designation of information as BCI under 
paragraphs  4(a)-(c), the dispute shall be resolved by the Panel. If the Pan el 
disagrees with designation of information as BCI, the submitting Party or Third 
Party may either designate it as non -BCI or withdraw the information. In case 
of withdrawal, the Panel shall either destroy such information or return it to the 
submitting P arty or Third Party. Each Party or Third Party may at any time 
designate as non -BCI information previously designated by that Party or 
Third Party as BCI.  
This paragraph shall apply to all submissions, including exhibits, by a Party or Third Party.  
 
5. "Desig nated 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 or Third Party that submitted 
the information.  
(b) for electronic information, in characters that are set off with double bolded 
square brackets (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 marked 'HIGHLY SENSITIVE 
BUSINESS INFORMATION ' and indicating the name of the Party or Third Party 
that submitted the information; and  
(c) for uttered informati on, declared by the speaker to be "Highly Sensitive 
Business Information" prior to utterance.4  
This paragraph shall apply to all submissions, including exhibits, by a Party or Third Party.  
 
6. "Electronic information"  means any information stored in an electronic form (including but 
not limited to binary -encoded information).  
7. "Highly Sensitive Business Information"  or "HSBI" means any business information 
regardless of whether contained in a document provided by a publ ic or private body that a Party or 
Third Party has "Designated as HSBI" because it is not otherwise available in the public domain and 
its disclosure could, in the Party 's or Third Party 's view, cause exceptional harm to its originators. 
Each Party and Thi rd Party shall act in good faith and exercise the utmost restraint in designating 
information as HSBI. Each Party and Third Party may at any time designate as non -BCI/HSBI or as 
BCI information designated by that Party or Third 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 
 
3 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of 
the BCI in question.  
4 The erroneous failure by a speaker to make such a prior declaration sh all 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 re flected; the 
negotiated or offered prices for the airframe; all concessions offered or agreed to by an LCA manufacturer WT/DS316/RW2/Add.1  
BCI deleted, as indicated  [***]  
- 15 - 
 
  in subparagraph 7(d)(i) below, any graphs or other 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, business plans and 
share/business valuations generated by LCA producers, consultants, or 
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 limited to data regarding pricing by suppliers.  
(b) Each Party and Third Party may also Designate as HSBI other categories of 
business information that are not otherwise available in the public doma in and 
the disclosure of which could, in the Party 's view, cause exceptional harm to its 
originators.  
(c) Each Party and Third Party shall Designate as HSBI any information described 
in subparagraph 7(a) that pertains to LCA produced by an LCA manufacturer 
headquartered within the t erritorial 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 that 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 con clusions 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 subparagraph 7(a); 
(iv) the terms and conditions of loans, other than information descri bed in 
subparagraph 7(a); and  
(v) intergov ernmental agreements and government decisions, other than 
information described in subparagraph 7(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 7(a) -(e), the dispute shall be resolved by the Panel. If the Panel 
disagrees with designation of information as HSBI, the submitting Party or Third 
Party may either designate it as BCI, as non -BCI/HSBI or withdraw the 
information. In case of withdrawal, the Panel  or party  shall either destroy such 
information or return it to the submitting Party or Third Party. Each Party or 
Third Party may at any time designate as non -BCI/HSBI or as BCI information 
previously designated  by that Party or Third  Party as HSBI.  
 
including financing, spare parts, maintenance, pilot training, asset value and other guarantees, buy back 
options, remarketing arrangeme nts 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 or other category.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 16 - 
 
  8. "HSBI Approved Person"  means Approved Persons specifically designated by the Parties as 
having the right to access HSBI (according to the procedures laid down in Section IV). 
9. "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.  
(c) for HSBI submitted by a Third Party, on the premises of its Geneva Mission to 
the WTO.  
10. "Locked CD"  means a CD -ROM that is not re writable.  
11. "Outside Advisor"  means a legal counsel or other advisor of a Party or Third Party, who:  
(a) advises a Party or Third 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 ma nufacture 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 info rmation, or has been retained by another 
outside advisor who assumes responsibility for compliance with these 
procedures and is subject to such a code of professional conduct.  
For purposes of this paragraph, outside legal counsel representing an LCA produc er 
headquartered in the territory of one of the Parties or Third Parties in  connection with these 
proceedings or outside consultants who have been retained by such counsel to provide 
advice with regard to these proceedings are not considered agents of an e ntity listed in 
subparagraph  (b). 
 
12. "Panel " means the DS316 compliance panel composed on 28 September 2018.  
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 or Third 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 a ccordance 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 ke pt 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, Belgium), 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, WT/DS316/RW2/Add.1  
BCI deleted, as indicated  [***]  
- 17 - 
 
  1202 Geneva, Switzerl and), 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 Miss ion 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 designated 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 Panel, and the other Party has not 
objected to the designation of that site within ten days of such submission.  
(d) Any objections r aised under subparagraph (c) may be resolved by the Panel.  
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.  
20. "Submission"  means any written, electronic, or uttered information transmitted to the Panel, 
including but not limited to, correspondence, written submissions, exhibits, oral statements, and 
answers to questions.  
21. "Third party" means a Member having notified its interest in the dispute to the DSB 
pursua nt to DSU Article 10.  
22. "Third Party BCI Approved Person"  means a representative or Outside Advisor of a 
third party granted access to BCI pursuant to paragraphs 30, 37, 38 and 43. 
23. "WTO Approved Persons"  means the Panel members, PGE members or experts appointed 
by the Panel who in the opinion of the Panel require access to BCI, 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 Panel meetings 
involving BCI and/or HSBI).  
24. "WTO R eading Room"  means a room, located on the premises of the WTO, which a Third 
Party BCI Approved Person may use to access a Party 's submission that contains Party BCI.  
25. "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  
26. These procedures apply to all BCI and HSBI received by an Approved Person and by WTO 
Approved Persons as a result of the Panel process, and to all BC I reviewed, in accordance with these 
procedures, by a Third Party BCI Approved Person.  
27. Unless specifically otherwise provided herein, these procedures do not apply to a Party 's or 
Third Party 's treatment of its own BCI and HSBI.  
28. The Panel 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 Panel will to the extent possible 
implement procedures for the protection of such classified information in the event tha t 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 for the protection of such classified i nformation.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 18 - 
 
  IV. DESIGNATION OF APPRO VED PERSONS  
29. At the latest by 12:00 p.m. (noon) on 25 October 2018, each Party shall submit to the other 
Party and Third Parties, and to the Panel, a list of the names and titles of any Representatives and 
Outside Advisors who need access to BCI submitted by the other Party and/or Third Parties and 
whom it w ishes 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 indicate which Approved Persons 
need access to HSBI submitted by the other Party and/or Third Parties a nd whom it wishes to have 
designated as HSBI Approved Persons. Each Party may designate new Approved Persons, remove 
Approved Persons , or replace Approved Persons by submitting amendments to its list of Approved 
Persons to the other Party and Third Parties , and to the Panel.  
30. There shall be no Third Party HSBI Approved Persons. The designation of Third Party BCI 
Approved Persons shall be governed by paragraphs 37 and 38. 
31. Each Party shall keep the number of Approved Persons as limited as possible. Each Party 
may designate a maximum number of 30 R epresentatives and 2 2 Outside Advisors as "HSBI 
Approved Persons"  over the duration of the proceeding. These limits shall apply in respect of all 
Representative s and Outside Advisor s designated as HSBI Approved Person s, irrespective of whether 
that designation is withdrawn at any stage of the proceeding.  
32. WTO Approved Persons  shall have access to BCI. The Director -General of the WTO, or his 
designee, shall submit to the Parties and Third Parties, and to the Panel, a list of the WTO Approved 
Persons and shall identify which of those WTO Approved Persons shall additionally have access to 
HSBI.  
33. Unless a Party objects to the designation of an Outside Advisor of the other Party, the Panel 
shall designate those persons as Approv ed 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 29 that would suggest that designation of an individual is not appropriate. If a 
Party objects, the Panel shall decide on the objection within ten  working days.  
34. 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.  
35. The Parties or the Director -General of the WTO, or his or her designee, may submit 
amendments to their lists at any time, subject to the overall limits set out in paragra ph 31 and to 
objections for the addition of new Approved Persons in accordance with paragraphs 33 and 34. Any 
such amendments or objections by a Party shall be submitted to the Panel  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.  
V. BCI 
36. Only Approved Persons, WTO Approved Persons and Third Party BCI Approved Persons may 
have access to BCI submitted in this proceeding. Third Party BCI Approved Persons may not have 
access to Party -BCI other than that included in the submissions. Approved Persons, WTO Approved 
Persons and Third Party BCI 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, WTO Approved Person or Third Party BCI Approved Person. 
No Third Party BCI Approved Person shall disclose  BCI, or allow it to be disclosed, to any person 
except another Approved Person, WTO Approved Person or Third Party BCI Approved Person. These 
obligations apply indefinitely.  
37. Each Third Party that wants to access Party -BCI contained in the first or rebutta l submission 
of a Party shall submit to the Part ies and Third Parties, and to the Panel, a list of the names and 
titles of any Representatives and Outside Advisors (including clerical or support staff) who need 
access to such BCI and whom it wishes to have designated as Third Party BCI Approved Persons. 
Each Third Party shall keep the number of Third Party BCI Approved Persons as limited as possible. 
Each Third Party may designate no more than a total of 5 Representatives and Outside Advisors as 
Third Party BCI Approved Persons.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated  [***]  
- 19 - 
 
  38. Unless a Party objects to th e designation of an Outside Advisor of a Third Party, the Panel 
shall designate those persons as Third Party BCI 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 t he 
filing of a list under paragraph 37 above that would suggest that designation of an individual is not 
appropriate. If a Party objects, the Panel shall decide on the objection within ten working days. 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.  
39. A Party shall make no more than one copy of a ny BCI submitted by the other Party or a 
Third Party for each Secure site provided for that Party in paragraph  17. 
40. Parties may incorporate BCI in i nternal memoranda for the exclusive use of Approved Persons. 
Any memorandum and the BCI it contains shall be marked in accordance with paragraph 4. 
41. BCI submitted pursuant to these procedures shall not be copied, distributed, or removed from 
the Secure site, except as necessary for submission to the Panel.  
42. The treatment in a Party 's submissions to the Panel of any BCI shall be governed by the 
provision s 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 Panel, marked as indicated 
in paragra ph 4. 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 Panel, a version redacting any BCI. This 
shall be referred 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 Panel;  
(c) A Non -BCI Version shall be sufficient to permit a reasonable understanding 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 perm it a reasonable understanding of the substance of the information, 
produce a Non -BCI summary in sufficient detail to achieve this aim.  
(iii) The Panel shall resolve any disagreement as to whether the Party that 
originally submitted the BCI failed to indicate wit h 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 t ake appropriate action to ensure that the provisions of this 
paragraph are satisfied.  
(d) The EU 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 BC I versions of the Parties ' submissions to the Panel. All of the protections 
applicable to BCI under these procedures, including the storage rules in 
Paragraph 45, shall apply to such submissions. BCI exhibits to submissions may 
not be stored or reviewed at these additional Secure sites. The EU shall submit WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 20 - 
 
  the address (including room number) of each of the additional Secure sites to 
the Panel and the complaining P arty. 
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 sec ure e-mail, or by means of encrypted 
electronic communication. If a Party or Third Party submits to the Panel an original document that 
cannot be transmitted electronically, it shall on the day of submission deliver a copy of that document 
to one of the Se cure sites listed in paragraph 17. The Parties shall designate one of the Secure sites 
listed in paragraph 17 for this purpose.  
 
43. Notwithstanding paragraph 20 of the Working Procedures, the following procedures apply to 
the access by Third Parties to a Party 's submission that contains Party -BCI. 
(a) A Party 's Submission containing Party -BCI shall not be serviced to Third Parties 
unless both Parties agree otherwise.  
(b) Third Party BCI Approved Persons may view Party -BCI contained in a Party 's 
first written submission only in a Secure site or in the WTO R eading Room. Third 
Party BCI Approved Persons may not bring into such room any electronic 
recording or transmitting devices. Third Party BCI Approved Persons may not 
remove a Party 's Submission containing Party -BCI from such room, but may 
take handwritten notes of the Party -BCI contained therein. Such notes shall be 
used exclusively for this dispute (that is, DS316). Each person viewing a Party 's 
Submission containing Party -BCI shall complete and sign a log identifying the 
submission the person reviewed. Th e Party responsible for maintaining the 
particular Secure site, and the WTO Secretariat in the case of the WTO Reading 
Room, shall maintain such log until one year after the Conclusion of the Panel 
Process . Before entering and when leaving the room, Outsid e Advisors who are 
Third Party BCI Approved Persons may be subject to appropriate controls.  
(c) If a Third Party BCI Approved Person removes from the Secure site or the WTO 
Reading Room a handwritten memo in accordance with subparagraph 43(b) 
above, that Third Party BCI Approved Person shall store the memo only in a 
locked security container. Such memo shall be appropriately protected against 
improper inspection and eavesdropping when being consulted and will be 
transmitted in sealed heavy dut y double envelopes only. The content of such 
memo shall not be incorporated, electronically or in handwritten form, into the 
Non-BCI Version, as defined in paragraph 42(b). 
(d) All Third Parties that have designated Third Party BCI Approved Persons must 
inform the Parties of the identity of the spe cific room (including the address and 
the room number) in which the locked security container, as referred to in 
subparagraph (c) above, is located . 
(e) If a Third Party BCI Approved Person removes from the Secure site or the WTO 
Reading Room a handwritten memo in accordance with subparagraph 43(b) 
above, such memo shall not be copied in excess of the number of copies 
required by the Third Party BCI Approved Persons. All copies of such docum ents 
shall be consecutively numbered. The making of electronic copies of such memo 
shall be prohibited.  
(f) A Third Party may not incorporate into the body of its submission any Party -BCI. 
If a Third Party wishes to refer to any Party -BCI, the relevant argumen ts 
including such BCI should be incorporated into a separate Appendix. Such 
Appendix shall not be serviced to other Third Parties.  
(g) On the date determined by the Panel as the deadline to make the Third Party 
submission, a Third Party shall service its submi ssion only to the Parties and to 
the Panel. The submission shall be serviced to the other Third Parties only after 
the Parties have confirmed that the submission does not contain or disclose WT/DS316/RW2/Add.1  
BCI deleted, as indicated  [***]  
- 21 - 
 
  Party-BCI. A  Party shall make this confirmation or otherwise advi se of any 
necessary change to the relevant Third Party within 2 working days of receiving 
the submissions of Third  Parties.  
44. A Party or Third Party that wishes to submit or refer to BCI at a Panel meeting shall so inform 
the Panel and the other Party, and T hird Parties as appropriate. The Panel shall exclude persons who 
are not Approved Persons, WTO Approved Persons or, as appropriate, Third Party BCI Approved 
Persons from the meeting for the duration of the submission and discussion of BCI.  
45. 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 Panel, such locked security containers 
shall be kept on the WTO Secretariat 's premises, except that Panel members may maintain a copy 
of all relevant documents and materials containing BCI at their places of residence. Such documents 
and materials shall be stored in locked security containers when n ot 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 submissions, 
worksheets, etc.) containing BC I shall, when no longer needed, be shredded or burned consistent 
with normal government practice for destroying sensitive documents.  
46. The Panel shall not disclose BCI in its report, but may make statements or draw conclusions 
that are based on the informati on drawn from the BCI.  
VI. HSBI  
47. Unless otherwise provided below, HSBI shall be subject to all the restrictions in Section  V 
applicable to BCI.  
48. HSBI shall be submitted to the Panel in electronic form, using locked 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 32 as being additionally authorized to access HSBI. All 
such HSBI shall be stored in a combination 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 m ay be used to make hard copies of any HSBI. Such hard copies shall be made on 
distinctively colored paper and marked in accordance with paragraph 5. 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 removed 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 App roved Persons designated pursuant to paragraph 32 as 
being additionally authorized to access HSBI and which shall be destroyed once no longer in us e. 
Also, documents containing HSBI may be removed if stored on a Sealed laptop computer provided 
by the Party or Third Party that submitted the information or if stored on Locked CDs provided by 
the Party or Third Party that submitted the information to th e extent necessary for working sessions 
of the Panel and WTO Approved Persons designated pursuant to paragraph 32 as being additionally 
authorized to access HSBI, subject to the following conditions:  
(a) the Sealed laptop computer or Locked CDs shall remain on the premises of the 
WTO at all times;  
(b) the Sealed laptop computer or Locked CDs shall at all times be in the exclusive 
and direct custody of a WTO Approved Person designated pursuant to paragraph 
32 as being additionally authorized to access HSBI;  
(c) the WTO Approved Person  in exclusive and direc t custody of the Sealed laptop 
computer or Locked CDs shall ensure that no reproductions of any kind of 
information stored on the Sealed laptop or the Locked CDs are created  in any 
way; 
(d) information contained on the Locked CDs shall only be viewed or proces sed 
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 WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 22 - 
 
  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 
or Locked CDs shall be immediately returned to the combination safe in the 
designated secure location referenced above.  
Any working sessions involving HSBI that occur outside of the des ignated secure location referred 
to above shall only occur in the personal work spaces (on the premises of the WTO Secretariat) of 
WTO Approved Persons designated pursuant to paragraph 32 as being additionally authorized to 
access HSBI, or, for internal meetings of the Panel and/or of WTO Approved Persons designated 
pursuant to paragraph 32 as being additionally authorized to access HSBI, only in closed meeting 
rooms on the premises of the WTO Secretariat. During all such working sessions, and with respect 
to all spaces in which such working se ssions occur, special care shall always be taken to ensure the 
security of HSBI.  
 
49. 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 9. A Stand -alone printer may be used to 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.  
50. If a Third Party submits HSBI, it shall notify the Parties of the fact that such submissi on has 
been made. Each Third Party submitting HSBI 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 
Parties, in the HSBI location listed in paragraph 9. A Stand -alone printer may be used to 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.  
51. Except as otherwise provided in these procedures, HSBI shall not be stored, transmitted or 
copied either in written or electronic form.  
52. HSBI Approved Persons may view HSBI on the Sealed laptop computer maintained by the 
other Party or a Third Party or, in the case of HSBI submitted on Locked CDs on a Stand -alone 
computer, only in a designated room at one of the HSBI locations indicated in pa ragraph 9, or at the 
designated secure location on the premises of the WTO Secretariat referred to in paragraph 47, 
unless otherwise mutually agreed by the Parties. The designated room shall be available to HSBI 
Approved Persons from 9:00 a.m. to 5:00  p.m. during official working days at the r espective HSBI 
location. The designated secure location referred to in paragraph 48 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 tr ansmitting 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 thi s dispute in connection with which the HSBI has been submitted. Each person 
viewing the HSBI in the HSBI location or designated secure location referred to in paragraph 47 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 9, maintain such log until one year after the Conclusion of the Panel Process . The 
WTO Secretariat shall, for the designated secure location referred to in  paragraph  48, maintain such 
log until one year after the Conclusion of the Panel Process. Before entering and when leaving such 
room, Outside Advisors who are HSBI Approved Persons may be subject to appropriate controls.  
53. No HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 32 as 
being additionally authorized to access HSBI shall disclose HS BI to any person except another HSBI 
Approved Person or WTO Approved Person designated pursuant to paragraph 32 as being 
additionally authorized to  access HSBI, and then only for the purpose of this dispute. This obligation 
applies indefinitely.  
54. HSBI may be processed only on Stand -alone computers. Any memorandum containing HSBI 
shall not be transmitted electronically, whether by e -mail, facsimile, or  otherwise.  WT/DS316/RW2/Add.1  
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  55. A Party or Third Party that wishes to submit or refer to HSBI at a Panel meeting shall so inform 
the Panel and the other Party, and Third Parties as appropriate. The Panel shall exclude persons who 
are not HSBI Approved Persons or WTO Approved Persons designated pursuant to paragraph 32 as 
being additionally authorized to access HSBI from the meeting for the duration of the submission 
and discussion of HSBI.  
56. All HSBI shall be stored in a safe at the relevant HSBI location or in accordance with 
paragraph  48. 
57. The treatment in a Party 's submissions to the Panel of any HSBI shall be governed by the 
provisions of this paragraph, which shall pre vail 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 c omprehensible 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 Panel, 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 substance. In order to prepare such a Redacted Versi on 
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 Version Appendix and, if 
necessary to permit a reaso nable 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 p ortions 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 Panel 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 the Redacted 
Version Appendix and to produce, if nece ssary, 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.  
(e) The Full HSBI Version Appendix shall be kept in an HSBI location and in the 
designated secure location referred to in paragraph 48, as appropriate, in the 
form of a locked 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 sec urity container in a 
Secure site in the form of a locked CD.  
(f) The locked CD containing the Full HSBI Version Appendix shall bear the label 
marked 'FULL VERSION OF HSBI APPENDIX TO SUBMISSION ' and indicate the 
name of the Party that submitted the HSBI. In ad dition, the HSBI Appendix 
itself shall be marked with a heading with double bolded square brackets on WT/DS316/RW2/Add.1  
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  each page in an electronic file that contains the notation 'FULL VERSION OF 
HSBI APPENDIX TO SUBMISSION '. 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 Panel 
(through an individual identified by the Panel ) and two copies to the other Party 
in the form of two locked CDs . The Full HSBI Version Appendix shall not be 
transmitted via e -mail. Parties shall agree between themselves beforehand on 
the name of the Approved Person that is to receive the locked CD.  
(h) The Party shall commence transfer of the locked CDs containing the Full HSBI 
Version Appendix no later than the deadline for the submission concerned, and, 
at the same time, provide the Panel and the other Party with proof that this has 
been done.  
(i) No more than one working day in advance of a Panel meeting with the parties , 
a Party may, exclusively at that Party 's Permanent Mission in Geneva, use the 
locked CD to produce no more than one hard copy of the Full HSBI Version 
Appendix for each HSBI Approved Person planning to attend that Panel meeting. 
All paper versions produc ed pursuant to this subparagraph shall be collected by 
the Party concerned and destroyed immediately after the conclusion of the 
meeting.  
(j) WTO Approved Persons designated pursuant to paragraph 32 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 Panel 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 48. All 
paper versions produced pursuant to this subparagraph shall be destroyed  after 
the Conclusion of the Panel Process as defined in paragraph 3. 
(k) Parties are encouraged to submit versions of exhibits 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 Party 
to the Panel, and serve them on t he 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 th e 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 (identified 
by double brackets) from such ex hibit 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 
by the Party that submitted the exhibit(s) in question. The res ulting 
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 maximum extent possible to make 
available necess ary 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 WT/DS316/RW2/Add.1  
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  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 Panel shall resolve any disagreement arising f rom the operation of this 
sub-paragraph, and may take appropriate action to ensure that the 
provisions of this paragraph are satisfied.  
(l) The Panel reserves the right, after consulting the parties, to amend the 
provisions of this paragraph at any time in ord er to accommodate situations 
arising during Panel meetings, and the preparation of the interim report and the 
final report.  
58. The Panel shall not disclose HSBI in its report, but may make statements or draw conclusions 
that are based on the information drawn  from the HSBI.  
VII.  RESPONSIBILITY FOR C OMPLIANCE  
59. Each Party and Third Party is responsible for ensuring that its Approved Persons and 
Third Party BCI Approved Persons comply with these procedures to protect BCI and HSBI submitted 
by each Party and Third 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 or Third  Party. WTO Approv ed 
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 designee, as appropriate, for a ppropriate action pursuant 
to Section  VIII of the WTO Rules of Conduct.  
VIII.  ADDITIONAL PROCEDURE S 
60. After consulting with the Parties, the Panel may apply any other additional procedures that it 
considers necessary to provide additional protections to the confidentiality of BCI or HSBI or other 
types of information not explicitly covered by these Procedures but which the Panel considers may 
be of assistance in adjudicating the claims before it.  
61. The Panel 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 DESTRUCTI ON 
62. Except as provided for in paragraph 63, after the Conclusion of the Panel Process as defined 
in paragraphs 3(a), 3(c) or 3(d), or as contemplated in paragraph 64, within a period to be fixed by 
the Panel, WTO Approved Persons, the Parties and Third Parties (along with all Approved Persons) 
shall destroy or return all documents (including electronic material) or other recordings co ntaining 
BCI to the Party or Third Party that submitted such documents or other recordings. At the same 
time, WTO Approved Persons and the Parties shall destroy and/or return any electronic material 
submitted by a Party or Third Party that contains HSBI.  
63. The WTO Secretariat shall retain one hard copy and one electronic version of any final report 
of the Panel containing BCI, and one electronic version of all documents containing BCI submitted 
to the Panel, recorded on locked CD(s), to be kept in sealed cont ainers in a locked cabinet on the 
premises of the WTO Secretariat.  
64. After the Conclusion of the Panel Process as defined in paragraph 3(b), the Secretariat will 
inform the Appellate Body of these procedures and will transmit to the Appellate Body any BCI/HSBI 
governed by these Procedures. Such t ransmission shall occur separately from the rest of the Panel 
record, to the extent possible. Following the adoption by the DSB of the Appellate Body report 
pursuant to Article 17.14 of the DSU, or a decision by the DSB by consensus not to adopt the 
Appell ate Body Report pursuant to Article 17.14 of the DSU, the provisions of paragraphs 62 and 63 
shall apply.  WT/DS316/RW2/Add.1  
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  65. The hard drive of each Stand -alone computer and all media used  to back up such computers 
shall be destroyed within the period fixed by the Panel pursuant to paragraph 62. WT/DS316/RW2/Add.1  
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  ANNEX  A-4 
INTERIM REVIEW  
1  INTRODUCTION  
1.1.  The Panel issued its Interim Report to the parties on 17 October  2019. Both parties submitted 
written requests for review of precise aspects of the Interim Report on  31 October 2019, and written 
comments on each other's written requests  on 14 November 2019 . The European Union also 
provided written comments on the treatment of certain information as BCI in the Interim Report on 
31 October 2019. Neither party requested the Panel to hold an interim review meeting.   
In accordance with Articl e 15.3 of the DSU, this Annex  responds  to the issues raised by the 
parties in the context of the interim review.  Apart from the specific changes described in the following 
section, w e have also corrected a number of typographical errors and other non-substantive errors 
throughout the report, including those identified by the parties, which are not referred to specifically 
below.  
2  SPECIFIC REQUESTS FO R REVIEW SUBMITTED B Y THE PARTIES  
2.1  The European Union's 1 7 May 2018  compliance communication to the DS B 
2.1.1   Paragraph 7.34  
The United States requests the Panel to revise this paragraph to reflect the United States' 
specific argument that the European Union did not demonstrate that the less than full drawdown 
reduces the ex ante benefit of the subsidy. The European Union does  not object to the United States' 
request.  
The relevant text has been amended to more accurately reflect the United States'  argument.  
2.1.2   Paragraph 7.39  
The European Union requests the Panel to explain the significance of the Panel's statement in 
paragraph 7.39 that "the European Union has not provided evidence indicating that the notified 
measures and steps were taken by the relevant member States for the specific purpose of achieving 
compliance with Article 7.8 of the SCM Agreement". The European Union asks the  Panel to clarify 
the significance of this statement to the Panel's assessment whether the notified measures and steps 
achieved compliance with the recommendations and rulings of the Dispute Settlement Body. The 
United States responds that paragraph 7.39 r equires no further modification because the Panel's 
relevant statement therein "is an observation that speaks for itself".  
The statement cited in the European Union's request is a factual observation made by 
the Panel  about  the character of the  18 steps or  measures  the European Union  maintains "bring its 
measures fully into conformity with its WTO obligations" and "ensure full implementation of the 
DSB's recommendations and rulings".1  By noting the absence of the submission of evidence on the 
part of the E uropean Union indicating that the 18 steps or measures were taken for the specific 
purpose of achieving compliance, the relevant statement clarifies the nature of the actions the 
European Union asks the Panel to find achieve compliance.  The Panel considers  this observation 
relevant to  its factual characterization  of the  steps and  measures under consideration . 
2.2  The [ ***] amendment to the German A350XWB LA/MSF agreement  
2.2.1   Paragraph  7.134  
The United States requests the Panel to modify this paragraph to reflect th e United States' 
argument that conclusions contained in the NERA German A350XWB LA/MSF report demonstrate 
 
1 Communication from the Europea n Union dated 17 May 2018, WT/DS316/34, para s. 2 and 14.  WT/DS316/RW2/Add.1  
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  that the German A3 50XWB LA/MSF amendment increased the subsidy provided to Airbus. The 
European Union does  not object to the United States' request.  
The relevant text has been amended to more accurately reflect the United States'  argument.  
2.2.2   Paragraph 7.135  
The United States requests the Panel to revise the first and second sentences of this paragraph 
to clarify the United States' argument that, even if the Panel were to accept the European Union's 
analytical framework, a comparison of the IRR of the [***] amendment to the market benchmark 
used by TradeRx demonstrates that no reasonable commercial lender would have agreed to the 
amendment's terms. The European Union does  not object to the United States' request.  
The relevant text has been amended to more accur ately reflect the United States'  argument.  
2.2.3   The [ ***] amendments to the French, German, Spanish and UK A380 LA/MSF loan 
agreements  
2.2.3.1   Paragraph 7.211  
The United States requests the Panel to revise the text o f this paragraph to reflect the 
United  States' argume nt that the PwC analysis incorrectly ignored the risk that forecast customer 
demand for the A380 would not materialize [***]. The European Union does  not object to the 
United  States' request.  
The relevant text has been amended to more accurately reflect th e United States'  argument.  
2.2.4   Market presence  of the A380, A350XWB and A330neo after 2013  in the absence of 
the A380 and A350XWB LA/MSF subsidies  
2.2.4.1   Paragraph 7.337  
The United States requests the Panel to revise this paragraph to reflect the United States' 
specific argument that the Launch Statement contradicts the DSB's adopted findings. The 
European  Union does  not object to the United States' request.  
The relevant text has been amended to more accurately reflect the United States'  argument.  
2.2.5   Factors allegedly attenuating the causal link between A380 and A350XWB LA/MSF 
subsidies and any present adverse effects  
2.2.5.1   Paragraph 7.383 , footnote 684  
The United States requests the Panel to revise this footnote to more precisely reflect the 
United States' specific  argument being cited. The European Union does  not object to the 
United  States' request.  
The relevant text has been amended to more accurately reflect the United States'  argument.  
2.2.5.2   Paragraph 7.389  
The United States requests the Panel to revise this paragraph to reflect the United States' 
specific argument that the causal pathway through which LA/MSF subsidies operate makes the 
present "magnitude" of any particular LA/MSF measure irrelevant. The Euro pean Union does  not 
object to the United States' request.  
2.16.   The relevant text has been amended to more accurately reflect the United States'  argument.  
_______________  WT/DS316/RW2/Add.1  
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  ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the European Union  30 
Annex  B-2 Integrated executive summary of the arguments of the United States  46 
  WT/DS316/RW2/Add.1  
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ANNEX B -1 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGU MENTS OF  THE EUROPEAN UNION  
I. INTRODUCTION  
 
1. This Integrated Executive Summary contains the arguments presented by the European Union 
in its Written Submissions, Oral Statements, Responses to Questions and Comments on Responses 
to Questions.  
 
2. In these reverse compliance proceedings, the European Union has demonstrated, with 
argument and evidence, that it has achieved compliance with the recommendations and rulings of 
the DSB in this dispute. After the first compliance proceedings, the remaining recommendations 
related to adverse effects from A380 and A3 50XWB MSF subsides, which were found to have 
accelerated the launch of the A350XWB some 13 years ago, in 2006, and A380 MSF subsidies, which 
were found to have accelerated the launch of the A380 some 19 years ago, in 2000.  
 
3. Specifically, under Article 7 .8 of the SCM Agreement , the European Union has demonstrated 
in these proceedings that the vast majority of the subsidies that remained after the first compliance 
proceedings have been withdrawn; and, for any subsidies that have not been withdrawn, the 
European Union has demonstrated that appropriate steps have been taken to remove their adverse 
effects. Accordingly, full compliance has been achieved with the DSB 's recommendations and rulings.  
 
4. As regards the withdrawal of the vast majority of the subsid ies at issue, the European Union 
has demonstrated that, of the subsidies pertaining to the eight MSF loans at issue, six have been 
withdrawn, within the meaning of Article 7.8 of the SCM Agreement. Specifically, the UK A350XWB 
MSF subsidy has been withdraw n through the full repayment of the UK A350XWB MSF loan. 
Moreover, five of the MSF loan agreements, i.e., the French, German, Spanish and UK A380 MSF 
loans, as well as the German A350XWB MSF loan, have been amended such that those loans are 
now consistent with a contemporaneous market benchmark, resulting in the withdrawal of those 
subsidies. The European Union has further demonstrated that the full amortisation of the benefit 
from the Spanish A380 MSF subsidy provides an additional basis to find  that that subsidy has been 
withdrawn. Finally, to the extent any of the A380 MSF subsidies remained non -withdrawn as of 
14 February 2019, the wind -down of the A380 programme acted as an intervening event 
withdrawing those subsidies. Hence, the European Un ion has withdrawn all of the A380 MSF 
subsidies, as well as the German and UK A350XWB MSF subsidies, such that full compliance has 
been achieved in respect of those subsidies.  
 
5. In addition to its demonstration that the vast majority of MSF subsidies at issue have been 
withdrawn, the European Union has further demonstrated that, within the meaning of Article 7.8 of 
the SCM Agreement , appropriate steps have been taken to remove the adverse effects. Those 
appropriate steps have removed any adverse effects f rom the French and Spanish A350XWB MSF 
subsidies, which have not been withdrawn. The steps taken by the European Union have also 
removed any adverse effects from the other six MSF subsidies,1 should the Panel find, despite the 
argument and evidence put for ward by the European Union, that those subsidies have not been 
withdrawn. The appropriate steps to remove the adverse effects include, but are not limited to, the 
wind-down of the A380 programme. This constitutes the most extreme step that could ever have 
been taken to remove any alleged present adverse effects related to the market presence of the 
A380. The wind -down of the A380 programme ensures that Boeing will never again lose a sale or 
market share to the A380 (due to any subsidies or otherwise), and e ffectively hands Boeing a 
monopoly in the product market for very large aircraft ( "VLA"). If this does not constitute an 
appropriate step to remove adverse effects, nothing will.  
 
6. Moreover, the European Union has shown that the acceleration effects of A 380 MSF and 
A350XWB MSF subsidies have timed out, in light of the counterfactual launch dates for those aircraft, 
in the absence of those subsidies, that the European Union established. T hus, the MSF subsidies at 
issue are no longer a genuine and substanti al cause of any presently occurring market phenomena 
 
1 French, German, Spanish and UK A380 MSF subsidies, and German and UK A350XWB MSF subsidies.  WT/DS316/RW2/Add.1  
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  alleged by the United States to constitute present adverse effects, taking into account these 
counterfactual launch dates; the passage of time more generally, which results in diminishing effects 
of any subsidies; the reduced magnitude of any non -withdrawn MSF (through both amortisation and 
the reduced draw -down of certain loans); and, the impact of Airbus ' post-launch investments on the 
continued market presence and attractiveness of the aircraft at issu e. 
 
7. Throughout these proceedings, the United States has failed to rebut the European Union 's 
demonstration that it has fully complied with the DSB 's recommendations and rulings. The 
United  States ' arguments are replete with factual and legal errors, and  must be rejected. Further, 
the United States has also sought, inappropriately, to expand the scope of these proceedings by 
challenging a suite of R&TD measures that are outside the scope of these proceedings for a number 
of reasons, including that the mea sures are not within the Panel 's terms of reference, and that claims 
against those measures have already been finally resolved, such that the United States is precluded 
from challenging them once again in these second compliance proceedings, and all of the  measures 
do not properly constitute measures taken to comply. In any event, the United States has also failed 
to demonstrate, with argument and evidence, that these measures supplement and complement 
any present adverse effects caused by any remaining A38 0 MSF and A350XWB MSF subsidies.  
 
8. Based on the totality of the evidence and argument presented by the European Union in these 
proceedings, the Panel should find that: (i) the European Union has withdrawn all of the A380 MSF 
subsidies at issue, as well a s the German and UK A350XWB MSF subsidies at issue, such that full 
compliance has been achieved in respect of those subsidies; (ii) the European Union has taken 
appropriate steps to remove the adverse effects of any subsidies that the Panel finds have not been 
withdrawn, such that full compliance has been achieved in respect of those subsidies; and, (iii) all 
of the R&TD measures challenged by the United States are outside the scope of these proceedings, 
and in any event, do not complement and supplement an y present adverse effects caused by any 
remaining A380 MSF and A350XWB MSF subsidies.  
I. THE EUROPEAN UNION HAS WITHDRAWN THE A380 MSF SUBSIDIES AND THE 
GERMAN AND UK A350XWB MSF SUBSIDIES  
9. In its submissions, the European Union has discussed the various  means through which a 
subsidy can be withdrawn for the purposes of Article 7.8 of the SCM Agreement . When the proper 
legal standard under Article 7.8 is applied to the facts of this case, the only conclusion that can be 
drawn is that the European Union ha s withdrawn all of the A380 MSF subsidies, as well as the 
German and UK A350XWB MSF subsidies. Accordingly, full compliance has been achieved in respect 
of those subsidies.  
A. The full repayment of the UK A350XWB MSF loan achieves withdrawal  
10. First, the European Union has demonstrated that the full repayment of the UK A350XWB MSF 
loan has resulted in the withdrawal of that subsidy, under Article 7.8 of the SCM Agreement . 
 
11. As a matter of law, the full repayment of the financial contribution removes one of the two 
constituent elements of the subsidy that was deemed to exist under Article 1.1 of the 
SCM Agreement . The conclusion that the repayment of a financial contribution w ithdraws the subsidy 
is consistent with, and flows from, the very definition of a subsidy. Specifically, Article 1.1 of the 
SCM Agreement , which applies "{f}or the purpose of this Agreement ", identifies the constituent 
elements of a subsidy as "a financial  contribution " and "a benefit " that is thereby conferred on the 
recipient. The existence of a subsidy requires that these two constituent elements co-exist. The 
conclusion that the full repayment of a subsidised loan results in the withdrawal of the subsid y is 
also supported by, and is fully consistent with, the Appellate Body 's finding, in the original 
proceedings, that the "removal of the financial contribution ", as one of the constituent elements of 
a subsidy, results in the "life" of a subsidy coming "to an end ".2 
 
12. The United States ' argument to the contrary is based on a selective reading of findings by the 
first compliance panel. In any event, the findings of that panel constitute obiter dicta ; and they were 
tainted by the first compliance panel 's erroneous interpretation of the requirements to achieve 
withdrawal of the subsidy, which the Appellate Body reversed as erroneous, under Article 7.8 of the 
SCM Agreement . Accordingly, the United States failed to rebut the European Union 's argument that, 
 
2 Appellate Body Report, EC – Large Civil Aircraft , para. 709.  WT/DS316/RW2/Add.1  
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  consistent with the Appellate Body 's finding in the original proceedings, the "removal of the financial 
contribution " results in the "life" of a subsidy coming "to an end ".3 
 
13. As factual matter, the European Union has further demonstrated that Airbus has repaid the 
UK A350XWB MSF loan in full. In response, the United States has offered flawed readings of the EU 
evidence, and baseless assertions. The United States has, thus, failed to rebut the European Union 's 
demonstration that the UK A350XWB M SF loan has been repaid in full.  
 
14. Accordingly, the UK A350XWB MSF subsidy has been withdrawn, because one of the 
constituent elements of the subsidy, i.e., the financial contribution, is no longer extant. The 
European  Union has thus achieved full compl iance in respect of the UK A350XWB MSF subsidy.  
B. All of the A380 MSF subsidies, and the German A350XWB MSF subsidy, have 
been withdrawn  
15. Second,  the withdrawal of a subsidy can be achieved through the replacement of a financial 
contribution conferred on below -market terms with a financial contribution conferred on terms 
consistent with a contemporaneous market benchmark. Specifically, where a subs idising Member 
modifies  the financial terms under which a subsidised financial contribution had been provided, this 
amounts to the replacement  of the original financial contribution  by a new financial contribution .4 
This approach is consistent with the App ellate Body 's endorsement of the panel finding in Japan – 
DRAMS (Korea) , identifying the following as examples of modifications to an existing financial 
contribution which would result in a new financial contribution: (i) debt forgiveness, (ii) extension o f 
a loan maturity, and (iii) interest rate reduction.5 
 
16. If the new financial contribution is provided on terms consistent with a contemporaneous 
market benchmark, it means that the subsidised financial contribution has been replaced by a new 
and non-subsidised  financial contribution. As such, a benefit is no longer conferred. In other words, 
the replacement of a subsidised financial contribution with a non -subsidised financial contribution 
constitutes the replacement of a subsidy by a measure that does not amount to a subsidy. Such 
replacement brings about the prospective withdrawal of the subsidy, within the meaning of 
Article  7.8 of the SCM Agreement . This conclusion is further supported by the Appellate Body 's 
finding, in the first compliance proceedi ngs, that: "{i}n order to withdraw a subsidy, an 
implementing Member may be able to take action to align the terms of the subsidy with a market 
benchmark , or to otherwise modify the terms of the subsidy  such that it no longer qualifies as a 
subsidy ".6 
 
17. The United States ' arguments to the contrary have rejected the relevance of immediately 
applicable context from the definition of a subsidy in Article 1.1 of the SCM Agreement , in favour of 
distant context from Article 6.2 of the DSU. That provision gover ns the specificity requirements of a 
panel request, and speaks to the jurisdiction of a panel, under its terms of reference. That provision 
does not govern the substantive assessment of whether a measure is consistent with the covered 
agreements, including  Article 7.8 of the SCM Agreement . Moreover, throughout its submissions, the 
United States has failed to identify any measure that a Member could adopt to withdraw a subsidy 
prospectively.  
 
18. As a factual matter, the European Union has demonstrated, thro ughout its submissions, that 
the subsidies conferred by all four A380 MSF loans, as well as the German A350XWB MSF loan, have 
been withdrawn through amendments to each of the original loan agreements. Specifically, each of 
the amendments resulted in the su bsidised financial contribution being replaced by a new financial 
contribution that is consistent with a contemporaneous market benchmark, such that there no longer 
exists a benefit. Thus, as the European Union recalls below, the subsidies no longer exist,  and are 
hence withdrawn.  
 
 
3 Appellate Body Report, EC – Large Civil Aircraft , para. 709.  
4 EU First Written Submission, paras. 70 -80 (citing Panel Report, Japan – DRAMs (Korea) , para. 7.442; 
Appellate Body Report, Japan – DRAMs (Korea) , para. 251).  
5 Appellate Body Report, Japan – DRAMs (Korea) , para. 251; Panel Report, Japan – DRAMs (Korea) , 
para. 7.442.  
6 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.366.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 33 - 
 
  1. The European Union has demonstrated that all of the A380 MSF subsidies have been 
withdrawn through the amendment of each of the original A380 MSF loan agreements  
19. As regards the four A380 MSF subsidies, in each instance, the subsidised financial contribution 
has been replaced by a new financial contribution, as a result of 2018 amendments to the loan 
agreements. This new financial contribution is now consistent with a contemporaneous market 
benchmark, such that t here no longer exists a benefit and, consequently, the subsidy has been 
withdrawn.  
 
20. These amendments arose against the background of the commercial situation of the A380 
programme. In 2017, Airbus had not recorded any new orders for a period of approxi mately four 
years. The company decided that the only commercially acceptable option would be to  terminate the 
programme, unless it could secure, in the near term, an additional order under negotiation with 
Emirates at commercially acceptable conditions tha t would also ensure production at least until  
additional future demand was expected to materialise in the mid -2020s. However, the commercial 
constraints facing Emirates and Airbus made such an order economically unachievable, without a 
restructuring of the  A380 MSF agreements.  
 
21. The A380 MSF loan agreements required payment of levies, and royalties, where applicable, 
on delivery of A380 aircraft. It was this feature of the MSF loans, which made them risk -sharing, 
that led the original panel to require a project -specific risk premium when benchmarking the A380 
MSF loans. That same feature led the first compliance panel to rule that a shortfall in repayments 
due to a lack of sales does not constitute a new subsidy, but was anticipated by the parties when 
the loan agreements were signed, and reflected in the benchmark.  
 
22. Given this risk -sharing nature of the A380 MSF loan agreements, terminating the A380 
programme in 2017 or 2018 would have resulted in the MSF lenders suffering substantial losses on 
their investments. Faced with this certainty of loss, the lenders acted as any rational commercial 
actor would have acted, and agreed to the restructuring of the MSF loan agreements. Hence, each 
of the 2018 amendments ultimately concluded represents an attempt, by each of the lenders, to 
exchange the certainty of large losses in the case of programme termination, for the prospect of 
additional gains, by unlocking, through the restructuring of the A380 MSF loans, future upside 
potential when forecast demand was ex pected to return in the mid -2020s.  
 
23. As explained above, "the modification of an existing loan may properly be treated as the 
transfer of new rights to the recipient of the modified loan ", and thus as a new financial contribution.7 
The European Union ha s demonstrated that each of the amendments to the A380 MSF loan 
agreements modifies the original loan agreements in a manner that brings about a new financial 
contribution under each of the agreements. This means that the original financial contribution wa s 
removed, and replaced by a new financial contribution.  
 
24. The new financial contributions under the amended A380 MSF loan agreements are each 
consistent with contemporaneous market benchmarks, as demonstrated in analyses undertaken by 
PwC. Specifically , PwC compared the losses that each of the MSF lenders would have faced in the 
programme termination scenario, to the net returns that the MSF lenders stand to receive under 
each of the amendments in a restructuring scenario. PwC concluded that each amendm ent placed 
the MSF lenders in a more favourable position, relative to programme termination. Moreover, PwC 
concluded that, as a standalone proposition ( i.e., even when not compared to the losses from 
programme termination), each amendment has a positive im pact on expected repayments, or entails 
no net change to the future repayments for each Member State. PwC 's analysis thus establishes 
that, even if the lenders were to receive only a small part of any projected net returns from the 
restructuring, they woul d still be better off than they would have been in the programme termination 
scenario.  
 
25. As such, each of the EU Member State lenders acted consistently with market. T he 2018 
amendments to the A380 loan agreements resulted in subsidised financial contributions being 
replaced by new financial contributions that are consistent with a contemporaneous market 
benchmark, such that there no longer exists a benefit. Thus, the A380 MSF subsidies no longer exist, 
and are hence withdrawn.  Accordingl y, the European Union has achieved compliance, under 
Article  7.8, in relation to the A380 MSF subsidies.  
 
7 Panel Report, Japan – DRAMs (Korea) , para. 7.442.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 34 - 
 
  26. The United States has failed to rebut the European Union 's showing that each of the A380 
MSF subsidies have been withdrawn.  
 
27. First, the United States ' insistence that the amendments to the original A380 agreements do 
not bring about the withdrawal of each of the A380 MSF subsidies flows from its erroneous 
understanding of the legal standard for withdrawal under Article 7.8 of the SCM Agreement . The 
United States attempts to refute the fact that the amendments result in new financial contributions 
by pointing to the fact that the parties to the A380 MSF loan agreements did not formally terminate 
the original agreements and effect "immediate disgorg ement " of the original financial contribution.8 
However, this argument reflects an erroneous understanding of the applicable legal standard. To 
recall, the correct legal standard, as reflected in Japan – DRAMs (Korea) , is that a modification of 
the financi al terms of an existing financial contribution gives rise to  a new financial contribution .9 
Moreover, the economic effect of either (i) a modifying amendment or (ii) the return of a financial 
contribution and its redrawing on amended terms , is identical. Hence, the US argument is 
inconsistent with the applicable legal standard pertaining to the withdrawal of subsidies for the 
purposes of Article 7.8 of the SCM Agreement . The United States also places form over substance.  
 
28. Second , in atte mpting to rebut the European Union 's demonstration that the amendments to 
the A380 MSF agreements result in the withdrawal of the A380 MSF subsidies, the United States 
also erroneously relies on a comparison of the IRRs under the original A380 MSF loan agr eements, 
and those under the amended MSF agreements. However, the European Union has demonstrated 
that this comparison is erroneous, and the United States has failed to explain why a comparison of 
those two IRRs is relevant for the particular financial con tributions at issue. Indeed, such comparison 
evokes a "cost to government " standard for the assessment of "benefit " under Article 1.1(b) of the 
SCM Agreement that has been explicitly rejected by the Appellate Body. As the Appellate Body has 
confirmed, the relevant comparison assesses whether the new financial contributions brought about 
by the amendments is consistent with a contemporaneous market benchmark.  
 
29. Third, in its futile attempt to rebut the European Union 's demonstration that the amendments 
to the A380 loan agreements withdraw each of the A380 MSF subsidies, the United States further 
disputes the fact that each of the EU Member State lenders, in agreeing to the amendments, acted 
consistently with the manner in which rational commercial lenders would have acted in similar 
circumstances. In this regard, the United States erroneously asserts that a rational private creditor 
would not have believed that, absent the restructuring, Airbus would have terminated the A380 
programme. However, this asserti on is entirely undermined by the evidence of record. That evidence 
conclusively demonstrates that Airbus would not have continued the A380 programme absent the 
restructuring. Conversely, nothing in the PwC Report, the United States ' submissions or NERA 's 
analysis supports that US assertion. For example, the United States grossly understates the shortage 
of orders for the A380 programme immediately preceding the 2018 amendments, and the 
consequent risk of programme termination. Moreover, the United States er rs when arguing that the 
mere fact that a company has sufficient financial resources to afford continuation of a programme, 
without risking its own liquidation, means that the company will spend those financial resources in 
an economically irrational manne r. In short, the United States has failed to demonstrate, with 
evidence and argument, its erroneous assertion that programme continuation was a "real option ".10 
 
30. In its submissions to the Panel, the United States also placed much reliance on a statement  
by the CEO of Emirates, which expressed general support for the A380 programme. The 
United  States used this statement in an attempt to establish its erroneous assertion that a rational 
private creditor would not have agreed to the amendments to the A380 M SF loan agreements. 
Specifically, the United States argued that a rational private creditor, relying on the statement by 
the CEO of Emirates, would have expected Emirates to take delivery on all of the airline 's outstanding 
A380 orders, and to support the A380 programme by placing additional orders, regardless of the 
specific terms offered by Airbus . In its submissions, the European Union has demonstrated, however, 
that the United States errs in interpreting the statement made by the CEO of Emirates as an 
assurance that Emirates would accept deliveries on all outstanding orders for the A380, and place 
additional orders, in a manner and at a time that would have secured programme continuation, 
regardless of the specific terms on offer. Indeed, the very fact t hat the A380 wind -down was caused 
by Emirates ' cancellation of a large number of its existing orders should make it plainly obvious that 
 
8 US First Written Submission, para. 51.  
9 Panel Report, Japan – DRAMs (Korea) , para. 7.442; Appellate Body Report, Japan – DRAMs (Korea) , 
para. 251.  
10 US First Written Submission, para. 65.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 35 - 
 
  Emirates was not committed to incorporating additional A380s in its fleet without regard to its own 
interests and const raints. Moreover, the evidence of record demonstrates that even assurances from 
Emirates that it would want to receive all outstanding orders would not have alleviated Airbus ' 
concerns, and thus would not have avoided programme termination. Accordingly,  the United States 
errs in suggesting that a commercial lender would have viewed the statement by the CEO of Emirates 
as an indication, much less an assurance, that programme termination could be avoided even absent 
MSF loan restructuring.  
 
31. In a further a ttempt to establish that the EU Member State lenders acted inconsistently with 
market in agreeing to the amendments, the United States accuses the European Union and PwC of 
assuming that all of the projected future deliveries would occur. The United States  asserts that a 
rational private creditor would not have believed that the future prospects for the A380 programme 
were attractive enough for the creditor to accept the restructuring. The United States errs. The 
European Union has demonstrated that the pro spects of the A380 programme were attractive 
enough for a private creditor to accept the restructuring. Indeed, PwC analysis demonstrates that 
the restructuring solution was advantageous to the MSF lenders, in comparison with the programme 
termination scen ario. Moreover, PwC analysis demonstrates that even in the programme wind -down 
scenario that occurred in 2019, each amendment has a positive impact on the MSF lenders ' returns, 
or entails no meaningful change. Accordingly, PwC 's conclusions regarding the m arket consistency 
of the amendments do not rest on an assumption that all of the projected future deliveries would 
occur.  
 
32. Finally, the United States asserts that the EU Member State lenders failed to act as rational 
commercial creditors. The United St ates erroneously alleges that the MSF lenders failed to perform 
due diligence prior to the 2018 amendments, and also failed to demand better terms. As an initial 
matter, the presence or absence of due diligence cannot be determinative, because the 
market -consistency of a financial contribution is to be determined through a comparison of the terms 
on which the financial contribution is provided, with the terms of a contemporaneous market 
benchmark. No amount of due diligence on a below -market loan leads to the conclusion that no 
subsidy exists; in the interests of symmetry and even -handedness, nor can the alleged failure to 
undertake due diligence on a loan demonstrated to have been provided on market terms turn that 
loan into a subsidy. In any event, contra ry to the US assertions, the European Union has 
demonstrated that each MSF lender agreed to the terms of the 2018 amendment to its MSF loan 
after careful consideration of the situation, and in pursuit of their interests in multiple rounds of 
negotiations, in order to secure the best possible terms for themselves in a manner consistent with 
the market. Moreover, simply asserting that a lender could have sought better terms is of no 
moment; the circumstances demonstrate that the MSF lenders were in no positio n to secure  better 
terms. In this connection, the MSF lenders ' negotiating position was shaped by the risk -sharing 
terms of the original loan agreements, which led, in 2018, to a choice between the certainty of loss 
through programme termination, and the p rospect of avoiding that loss through restructuring of the 
A380 MSF loans.  
 
33. Moreover, and contrary to the US arguments, the MSF lenders ' negotiating positions simply 
did not permit them to choose between the terms of the 2018 amendments, and terms that  would 
have guaranteed them repayment of the entirety of their risk -sharing investment. As noted above, 
under the risk -sharing terms of the A380 MSF loan agreements, the MSF lenders had no contractual 
right to receive full repayment. While the MSF lenders could have sought anything they desired in 
renegotiating the A380 MSF agreements, there is a difference between "seeking " and "receiving ". 
The lack of a legal entitlement or negotiating power meant that the terms of the 2018 amendments 
to the A380 MSF loan s are consistent with what a rational market actor could have secured, as PwC 
confirms.  
 
34. In sum, the European Union has demonstrated that, by agreeing to the amendments of the 
original A380 MSF loan agreements, the EU Member State lenders acted consist ently with market. 
The European Union has further demonstrated that those amendments resulted in new financial 
contributions, and that those new financial contributions are consistent with contemporaneous 
market benchmarks. Accordingly, the amendments to t he original A380 MSF loan agreements 
withdraw the A380 MSF subsidies at issue. Consequently, the European Union has achieved full 
compliance with the DSB 's recommendations and rulings in respect of those subsidies.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 36 - 
 
  2. The European Union has demonstrated th at the German A350XWB MSF subsidy has 
been withdrawn through alignment with a contemporaneous market benchmark  
 
35. As the European Union has demonstrated in these proceedings, in 2018, Germany (through 
KfW) and Airbus concluded an amendment to the German A350XWB MSF loan agreement that 
modified the financial terms of the original financial contribution and hence replaced it with a new 
financial contribution. When assessed against a contemporary market benchmark, the 
European  Union demonstrated that the new financial contribution arising under the 2018 
amendment is consistent with that contemporaneous market benchmark, such that there no longer 
exists a benefit. Thus, the subsidy no longer exists, and has been withdrawn.  
 
36. To recall,  in assessing w hether the original A350XWB MSF loan agreements conferred 
"benefits " and constituted subsidies, the first compliance panel used a market benchmark consisting 
of (i) a corporate borrowing rate, (ii) a project -specific risk premium, (iii) and certain market fees.11 
Following the same approach, and adjusting the values of each of these components to reflect market 
conditions contemporaneous with the conclusion of the 2018 amendment, Professor Andreas Klasen 
compared the IRR under the amended German A350XWB MSF loan with a contemporaneous market 
benchmark. Professor Klasen concluded that the anticipated IRR under the amended loan is 
consistent with the market benchmark. Consequently, the amendment achieves the withdrawal of 
the German A350XWB MSF subsidy, and hen ce full compliance in respect of that subsidy.  
37. The United States has failed to rebut the European Union 's demonstration in this regard. In 
its failed attempt to rebut the European Union 's showing, the United States asserts, first, that the 
financial co ntribution under the original loan was not replaced by a new financial contribution. The 
United States rests this erroneous assertion on the fact that the parties did not formally terminate 
the original agreement and effect "immediate disgorgement " of the original financial contribution.12 
The US argument is flawed, because it proceeds from an erroneous understanding of the applicable 
legal standard. To recall, the applicable legal standard was articulated in Japan – DRAMs (Korea) , 
where the panel and the Ap pellate Body confirmed that a modification of the financial terms of an 
existing financial contribution gives rise to  a new financial contribution .13 Moreover, the economic 
effect of either (i) a modifying amendment or (ii) the return of a financial contribution and redrawing 
the contribution on amended terms , is identical. Thus, contrary to the United States ' assertions, and 
consistent with the proper legal standard, the amendment of the German A350XWB MSF loan 
replaces the financial contri bution under the original loan agreement with a new financial 
contribution.  
 
38. Second , the United States asserts that the comparison undertaken by Professor Klasen 
between the IRR under the amended German A350XWB MSF loan and the applicable 
contemporaneo us market benchmark is inappropriate. The United States argues, on the basis of a 
report prepared by NERA, that the appropriate comparison is between the IRR under the original 
German A350XWB loan agreement, and the IRR under the amended terms. The US argu ment is 
flawed, both as a factual and legal matter.  
 
39. As a legal matter, the United States errs in its assertion that a comparison of the IRR under 
the original German A350XWB MSF agreement and the IRR under the amended agreement 
determines whether the subsidy has been withdrawn. With its assertion, the United States adopts a 
"cost to government " standard for the assessment of "benefit " that has been rejected by the 
Appellate Body. The United States ignores the crucial role a contemporaneous market bench mark 
plays in the assessment of whether a financial contribution confers a benefit (and consequently 
constitutes a subsidy). Contrary to the US assertions, the new financial contribution must be 
assessed against a contemporaneous market benchmark.  
 
40. As a factual matter, the US argument is flawed. In this regard, the United States asserts that 
it is appropriate to draw conclusions about subsidisation from a comparison of the two IRRs alone, 
because KfW enjoyed the right to retain the IRR foreseen by the o riginal German A350XWB 
agreement. This argument is premised on a fundamental factual error – the terms of the original 
agreement entitled Airbus to seek early repayment (enabling Airbus to refinance the loan at current 
market conditions), and did not affor d KfW the option to refuse that request. Thus, i n the 
 
11 Panel Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 6.632, Table 10.  
12 US First Written Submission, para. 95.  
13 Panel R eport, Japan – DRAMs (Korea) , para. 7.442; Appellate Body Report, Japan – DRAMs (Korea) , 
para. 251.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 37 - 
 
  negotiations leading up to the amendment, both Airbus and KfW understood that Airbus ' Best 
Alternative to a Negotiated Agreement, or "BATNA ", was to effect prepayment. As in any negotiation 
between two rational actors, the knowledge of this BATNA influences the parties ' positions in the 
negotiations.  
41. As such, comparing the IRR under the amended terms to an IRR that KfW was not entitled to 
receive, is meaningless. The relevant and determinative compar ison is between the IRR under the 
amended terms and a contemporaneous market benchmark. As the European Union has 
demonstrated, the IRR under the amended agreement is consistent with the benchmark.  
 
42. The United States then argued that "a commercial lend er would have the option to leave the 
loan unamended ".14 Again, the United States errs. The evidence demonstrates that the option to 
prepay a loan, subject to appropriate compensation is a standard term in comparable loan 
agreements, including, for example,  those governed by German law and English law. That option 
was similarly included as a term of the German A350XWB MSF loan agreement.  
 
43. Finally, the United States argues that, still, KfW would have been better off refusing the 2018 
amendment, and receiv e early repayment instead. The United States errs once more. As part of its 
role as Airbus Operations GmbH 's auditors, KPMG reviewed whether appropriate compensation was 
included in the 2018 amendment for the changes to the terms of the German A350XWB MSF loan 
agreement, confirming that these terms were consistent with market. This means that, from an 
economic perspective focusing on the existence of an appropriate compensation for agreeing to the 
amendment, KfW was indifferent between continuing the unamen ded loan, or agreeing to the 2018 
amendment.  
 
44. In sum, the European Union has demonstrated, based on the analyses by Professor Klasen 
and KPMG, that the amendment to the German A350XWB MSF loan achieves withdrawal of the 
subsidy, by replacing a subsidis ed financial contribution with a financial contribution that is 
consistent with a contemporaneous market benchmark.  
 
3. The European Union has demonstrated that the Spanish A380 MSF subsidy has been 
withdrawn as a result of the full amortisation of benefit  
 
45. The European Union has also demonstrated that the benefit from the Spanish A380 MSF 
subsidy has fully amortised, and has thus expired. In the first compliance proceedings, the 
Appellate  Body found, on that basis, that the European Union had achieved full compliance under 
Article 7.8 in respect of the MSF loans for the development of the A300, A310, A320, A330/A340, 
A330-200 and A340 -500/600.15 Accordingly, the full amortisation of the benefit of the Spanish A380 
MSF loan results in full compliance in r espect of that subsidy.  
 
46. In determining whether the benefit of the Spanish MSF loan for the A380 has amortised, 
Professor Klasen uses the "Loan Life " approach to amortisation. In the first compliance proceedings, 
the compliance panel and the Appellate Body accepted the use of a "Loan Life " approach to assess 
whether the benefit from a subsidised MSF loan had fully amortised.16 Under that approach, the 
benefit of an MSF loan amortises over the period during which the parties anticipated, from an ex 
ante perspective at the time of conclusion of the loan agreement, full repayment of principal and 
interest, along with any royalties anticipated under the delivery forecast of the business case.17 
Specifically, the first compliance panel considered the point in t ime at which the parties expected, 
ex ante  at the time of conclusion of the loan agreement, full repayment of principal and interest, 
and any anticipated royalties, to occur, on the basis of (i) the specific repayment terms included in 
the MSF loan agreeme nt, and (ii) the Airbus business case delivery forecast from the time of 
conclusion of the MSF loan agreement. On the basis of the "Loan Life " approach, Professor Klasen 
concludes that the benefit from the Spanish A380 MSF subsidy has fully amortised in 2018.  
 
47. The United States raises several erroneous criticisms of the European Union 's demonstration, 
and of Professor Klasen 's analysis. First, the United States asserts that "the very fact that the 
Spanish government negotiated to amend the terms and conditions of A380 LA/MSF " confirms that 
 
14 US First Written Submission, para. 97.  
15 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.383.  
16 Panel Report, EC – Large Ci vil Aircraft (Article 21.5 – US), paras. 6.879, 6.1507 (footnote 2597).  
17 Panel Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 6.872, footnote 1534.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 38 - 
 
  the A380 LA/MSF subsidy had not yet come to an end.18 However, the US assertion ignores the fact 
that the  "Loan Life " approach is based on the period over which the parties to the loan expected , 
ex ante, the full repayment of the loan. The fact that the loan agreement may continue to be legally 
valid beyond the ex ante expected life of the subsidy is entirely  irrelevant to the determination of 
the ex ante  expected life of the subsidy. The United States merely attempts to confuse the period 
of legal validity of the loan agreement, with the ex ante determined life of a subsidy conferred by a 
loan. 
 
48. Second , the United States criticises the European Union and Professor Klasen for employing 
the "Loan Life " approach to the exclusion of the "Marketing Life " approach. While the first compliance 
panel also identified the so -called Marketing Life Approach as  an alternative means of approaching 
amortisation of the pre-A380 MSF subsidies, that approach applied in circumstances where the 
subsidy resulted in the very existence of the aircraft at issue. In contrast, the first compliance panel 
found that the direct  effects from the A380 MSF subsidies are not "critical to {the} very existence " 
of the A380, and clarified that the effects of the subsidies do not endure for the entire marketing life 
of the programme. Instead, the first compliance panel and the Appellate  Body found that the A380 
MSF loans accelerated the launch of the A380. As a result, amortising the benefit of Spanish A380 
MSF over the anticipated marketing life of the funded aircraft does not correspond to the nature and 
effect of the subsidy. To apply  the logic behind the "Marketing Life " Approach to amortisation of the 
A380 MSF loans, it would be necessary to make adjustments to amortise the benefit over the period 
during which the acceleration effect is anticipated on an ex ante  basis to endure , rath er than the 
entire expected marketing life of these aircraft. That would result in the benefit from the A380 MSF 
loans being amortised over the two (or fewer) years following conclusion of the loan agreements. 
While the European Union does not object to ap plying that approach, it considers it more appropriate 
to adopt the "Loan Life " approach, which amortises benefit over a much longer period.  
 
49. In sum, the European Union has demonstrated that the benefit of the Spanish A380 MSF loan 
has fully expired, s uch that the European Union has achieved full compliance in respect of that 
subsidy.  
 
4. The European Union has demonstrated that the wind -down of the A380 programme 
acts as an intervening event that brings the life of any non -withdrawn A380 MSF 
subsidies to an end  
 
50. Finally, and in the alternative, the European Union has also established the announcement of 
the wind -down of the A380 programme on 14 February 2019 brings an end to the life of the A380 
MSF subsidies, under either the "Loan Life " or "Market ing Life " approaches.  
 
51. First, under the "Loan Life " approach, the A380 wind -down constitutes an intervening event 
that brings the life of the A380 MSF subsidies to an earlier end than was expected ex ante . To recall, 
under the "Loan Life " approach, the focus is on the "benefit " of MSF subsidies amortising as it is 
expected to materialise with each repayment that is made. Once Airbus has discharged all of its 
repayment obligations, the MSF agreements no longer confer a "benefit ". Accordingly, once Airbus 
has discharged all of its repayment obligations, no be nefit continues to accrue, and therefore no 
subsidy continues to exist, within the meaning of Article 1.1 of the SCM Agreement . 
 
52. By winding down the A380 programme, Airbus will deliver less than the number of A380 
aircraft foreseen under the terms of t he A380 MSF agreements. Therefore, since the foreseen 
number of aircraft under the funded programme will not be delivered, Airbus need not effect full 
repayment of principal and interest. This discharge of repayment obligations earlier than anticipated 
is a dramatic departure from the ex ante  expectations as to when the final payment would occur, 
and constitutes an intervening event that brings the life of the MSF subsidies to an earlier end than 
was expected ex ante . 
 
53. Second , the announcement of the wi nd-down of the A380 programme means that, even if the 
Panel were to choose the "Marketing Life " approach, the lives of all the A380 MSF subsidies came to 
an end on 14 February 2019. From that date, Airbus stopped marketing the A380, and the aircraft 
will n o longer be sold. In fact, in announcing to the market that the A380 programme is being 
wound -down, Airbus did the exact opposite of "marketing " the A380.  
 
 
18 US First Written Submission, para. 82.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 39 - 
 
  54. Accordingly, the announcement of the programme wind -down acts as an intervening event 
that bring s about the end of the marketing life of the A380, and the A380 MSF subsidies would have 
to be considered withdrawn under the "Marketing Life " approach.  
 
II. THE EUROPEAN UNION HAS TAKEN APPROPRIATE STEPS TO REMOVE ADVERSE 
EFFECTS OF ANY SUBSIDIES THAT HAV E NOT BEEN WITHDRAWN  
 
55. As noted above, the European Union has demonstrated that the vast majority of the MSF 
subsidies at issue have been withdrawn – i.e., all of the A380 MSF subsidies and the German and 
UK A350XWB MSF subsidies. Full compliance has th us been achieved in respect of these subsidies, 
under Article 7.8 of the SCM Agreement . In addition, the European Union has demonstrated that it 
has taken appropriate steps to remove the adverse effects of all of the withdrawn and any 
non-withdrawn subsidi es, under Article 7.8 of the SCM Agreement . Specifically, steps taken by the 
European Union have removed any adverse effects from the French and Spanish A350XWB MSF 
subsidies, which the European Union does not assert have been withdrawn. The steps taken by  the 
European Union have also removed any adverse effects from the other six MSF subsidies,19 should 
the Panel find, despite the argument and evidence put forward by the European Union, that those 
subsidies have not been withdrawn.  
 
56. To determine whether the European Union has achieved compliance under Article 7.8 of the 
SCM Agreement  through appropriate steps to remove the adverse effects, the Panel must examine 
whether any subsidies it considers not to be withdrawn are, at present, a  genuine and substantial 
cause of alleged present adverse effects. In making that determination, it is important to recall, first, 
the causal pathway through which the first compliance panel determined that the subsidies at issue 
were a genuine and substan tial cause of adverse effects.  
 
57. To recall, the remaining compliance obligations on the European Union under Article 7.8 of 
the SCM Agreement stem from certain findings, in the first compliance proceedings, regarding 
certain sales and deliveries of A380  and A350XWB aircraft that were found to amount to adverse 
effects. These adverse effects were held to be caused by the A350XWB and A380 MSF subsidies. 
Specifically, in the first compliance proceedings, A380 and A350XWB MSF subsidies were held to 
have accelerated  the launch of the A380 and the A350XWB.20 That is, although the A380 and the 
A350XWB could have been launched absent the A380 and A350XWB MSF loans, those loans enabled 
Airbus to launch these aircraft as and when it did.  
 
58. Yet, the United States consistently misrepresents the findings of the first compliance panel 
and the Appellate Body. Specifically, the United States erroneously characterises the first compliance 
panel and the Appellate Body as having found that A380 and A 350XWB MSF are responsible for the 
very existence of the aircraft. As the European Union has demonstrated, at no stage of the 
proceedings in this dispute did a WTO adjudicator find that the A380 and the A350XWB would never 
have existed in the absence of A3 80 and A350XWB MSF.  
A. The acceleration effects of A380 and A350XWB MSF have timed out and can no 
longer serve as a basis for present adverse effects in 2019  
 
59. The European Union has demonstrated that the acceleration effects of the A380 and A350XWB 
MSF subsidies have timed out. As a result of those acceleration effects having come to an end, the 
A380 and A350XWB MSF subsidies can no longer serve as the basis for findings of present  adverse 
effects in 2019. Accordingly, the European Union has taken appro priate steps to remove the adverse 
effects of the subsidies at issue.  
 
60. Specifically, the European Union demonstrated, based on an approach adopted by Professor 
David Wessels, a US expert in the first compliance proceedings, that, under a counterfactual  in which 
the subsidies at issue had not been provided, Airbus would have launched the A380 in 2003, and 
the A350XWB in 2007 or 2008. In any event, the European Union has demonstrated that Airbus 
would have launched the A380 and the A350XWB by today, which  is notable, since this Panel is 
charged with assessing whether there remain present  adverse effects from any non -withdrawn 
subsidies.  
 
 
19 French, German, Spanish and UK A380 MSF subsidies , and German and UK A350XWB MSF subsidies.  
20 Panel Report, EC – Large Civil Aircraft (Article 21.5 – US), paras. 6.1507 (footnote 2597), 6.1747, 
6.1771, 6.1773, 7.1(d)(xiii); Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.632.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  61. To recall, in the first compliance proceedings, the United States had engaged Professor 
David  Wessels to develop and  apply an approach to determining the counterfactual launch date for 
the A380. In the current compliance proceedings, the European Union applied the Wessels model in 
light of changed circumstances dictated by findings in the first compliance proceedings. S pecifically, 
the counterfactual applied by the European Union to determine the counterfactual launch dates of 
the A380 and A350XWB does not assume the absence of the  pre-A380 MSF subsidies , but does 
assume the absence of the A380 and A350XWB MSF subsidies.  The counterfactual applied by the 
European Union does not eliminate the pre-A380 MSF subsidies  because, as the Appellate Body 
confirmed in the first compliance proceedings, those subsides have been withdrawn and the 
European Union has, accordingly, no fur ther compliance obligations in respect of those subsidies.  
 
62. Under that counterfactual, the European Union demonstrated that Airbus would have 
substantially surpassed a Standard & Poor 's ("S&P") credit rating of BBB -, which was Professor 
Wessels ' thresh old criterion for determining Airbus ' ability to launch a new aircraft programme 
without subsidised MSF. In so doing, the European Union demonstrated that Airbus would have had 
the necessary financial capability to launch the A380 and the A350XWB significa ntly before the 
present period, i.e., 2019. To recall, the European Union demonstrated that Airbus would have 
launched the A380 in 2003, and the A350XWB in 2007 or 2008.  
 
63. While much of the adverse effect dissipates with the counterfactual launch date, the 
European  Union recognised that a two -year delay in the launch date of the A380 and the A350XWB 
may still have resulted in some delay in the counterfactually available  delivery positions  that Airbus 
would have been able to offer in subsequent sale s campaigns after 2003 (for the A380) and 
2007/2008 (for the A350XWB), respectively. This would result in adverse effects continuing to exist 
for a period after the counterfactual launch dates, including during the 2011 -2013 reference period 
considered in the first compliance proceedings.  
 
64. However, as Airbus loses sales to Boeing in light of later available delivery positions for Airbus 
aircraft in the counterfactual, the available delivery positions in the actual world and in the 
counterfactual start t o align. Once Airbus has lost sales campaigns to Boeing involving a number of 
deliveries equivalent to the number of aircraft that would have been produced during the duration 
of the delayed launch (one or two years) the counterfactually available delivery  positions would be 
the same as in the real world. At that point, the outcome of subsequent sales campaigns would be 
the same as in the real world, and the adverse effects will have fully dissipated.  
 
65. As the European Union has demonstrated in its submi ssions, the United States has failed to 
rebut its showing that the acceleration effects of A380 and A350XWB MSF have come to an end. The 
United States primary response is that the first compliance panel and the Appellate Body found A380 
and A350XWB MSF sub sidies to have "product creation " effects, rather than the effect of accelerating 
the launch of the aircraft at issue. As explained above, the US argument is unsupported by the 
findings from the first compliance proceedings.  
 
66. The United States also arg ues that the EU approach failed to consider aspects other than 
Airbus ' counterfactual financial position that are relevant to the launch of an aircraft. Specifically, 
the United States refers to evidence of the viability of a business case for a delayed la unch of the 
A380 and A350XWB, and Airbus ' technological capabilities to develop these aircraft. In this respect, 
the United States asserts that the European Union 's evidence is insufficient, relative to the types of 
evidence considered in earlier proceedin gs. 
 
67. Once again, the United States errs. As the European Union explained, its argument and 
evidence in these second compliance proceedings necessarily and appropriately build on the adopted 
findings from the original and first compliance proceedings, a nd the evidence underlying those 
findings. The European Union does not seek a re -assessment of that evidence. This constitutes a 
strength , not a weakness, of the European Union 's demonstration in these proceedings. It was, thus, 
not necessary for the Europ ean Union to resubmit pieces of evidence that previous adjudicators have 
already reviewed and on the basis of which they made relevant factual findings. Those findings 
indicate that Airbus could have launched the A380 and the A350XWB absent the subsidies a t issue, 
with a delay . 
 
68. With respect to the viability of the counterfactual business cases for the A380 and A350XWB, 
the European Union explained the importance to Airbus of competing in the VLA market, as well as 
the first compliance panel 's findings regarding the viability of a somewhat delayed launch of the WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  A350XWB, each supporting the EU 's arguments on the counterfactual launch dates.  
 
69. With respect to Airbus ' counterfactual technological capabilities, Airbus would have had the 
same technological  capacity in 2000 as it actually had, given that the counterfactual does not assume 
the absence of the pre -A380 MSF subsidies. With a conservatively assumed counterfactual launch 
date of the A380 in 2003, this means that Airbus would counterfactually have had additional 
technological capabilities  in 2003 than it actually did in 2000, when it launched the A380. Turning 
to the A350XWB, the time gap between the launch of the A380 and the launch of the A350XWB is 
approximately the same as it was in the actual w orld. This means that five/six years from the 
counterfactual launch date of the A380, Airbus ' technological capabilities would have been superior 
to its technological capabilities five/six years after the actual launch of the A380.  
 
70. Accordingly, the European Union has demonstrated that the acceleration effects of the A380 
and A350XWB MSF subsidies on the launch of those aircraft have come to an end. Because those 
effects have now timed out, they can no longer serve as the basis for fi ndings of present  adverse 
effects in 2019.  
 
B. The passage of time, intervening events and non -attribution factors attenuate 
the causal link such that it can no longer be characterised as a genuine and 
substantial causal link  
 
71. In addition to demonstrat ing that the acceleration effects of A380 and A350XWB MSF have 
come to an end, the European Union has further demonstrated that the passage of time, intervening 
events and non -attribution factors have attenuated any causal link between the MSF subsidies at  
issue and alleged present adverse effects, such that the MSF subsidies can no longer be characterised 
as having a genuine and substantial causal link with those adverse effects. As such, for any subsidies 
that have not been withdrawn, the European Union h as achieved compliance under Article 7.8 of the 
SCM Agreement  through appropriate steps to remove the adverse effects.  
 
72. In demonstrating that the requisite causal link no longer exists today, the European Union 
takes, as its starting point, the Appella te Body 's finding that "as with a subsidy that has a finite life 
and materializes over time, so too do the effects of a subsidy accrue and diminish over time ".21 
Taking the diminishing degree to which the non -withdrawn subsidies can, with the passage of tim e, 
affect the market as the starting point of the analysis, the European Union has further demonstrated 
that the amortisation of A380 and A350XWB MSF loans, and the less than full drawdown of certain 
of those loans, reduces the magnitude of A380 and A350XW B MSF and, therefore, further diminishes 
the ability of these subsidies to remain a genuine and substantial cause of alleged adverse effects.  
 
73. That is, the MSF subsidies that were held to have accelerated the initial launch of the A380 
and the A350XWB, as and when they were launched, have since diminished in magnitude, and 
consequently their ability to remain a genuine and substantial cause of present adverse effects has 
also diminished. By contrast, since the launch of the A380 and the A350XWB,  Airbus ' post-launch 
investments have grown over time and have supplanted the initial impact of any non -withdrawn 
MSF subsidies, by renewing and sustaining the competitiveness and attractiveness of the aircraft at 
issue, in a manner that accounts for the a bility of the aircraft to cause any of the market phenomena 
that the United States alleges to constitute present adverse effects.  
 
74. Accordingly, taking into account the passage of time, the reduced magnitude of any non -
withdrawn MSF (through both amorti sation and the reduced draw -down of those loans), and the 
impact of Airbus ' post-launch investments on the continued market presence and attractiveness of 
the aircraft at issue, the MSF subsidies are no longer a genuine and substantial cause of any 
present ly occurring market phenomena alleged by the United States to constitute present adverse 
effects.  
 
75. The United States has failed to rebut the European Union 's demonstration in this regard. The 
United States ' standard – and inaccurate – response to the E U evidence and argument concerning 
the various factors that attenuate the causal link is that the A380 and A350XWB would never have 
existed  absent the MSF subsidies at issue. However, the European Union has demonstrated that this 
is an inaccurate descripti on of the causal pathway – i.e. the so -called "product effects " – of A380 
 
21 Appellate Body Report, EC – Large Civil Aircraft  (Article 21.5 – US), footnote 932 to para. 5.371 
(quoting  Appellate Body Report, EC – Large Civil Aircraft , para. 713).  WT/DS316/RW2/Add.1  
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  and A350XWB MSF, as established in earlier proceedings in this dispute. Accordingly, the standard 
and inaccurate response of the United States must be rejected.  
 
76. Moreover, the Un ited States also attempts to ignore the impact of Airbus ' post-launch 
investments on the continued marke t presence of the aircraft at issue by arguing that those 
investments arise by virtue of subsidies. Specifically, the United States alleges, but has ent irely 
failed to substantiate, that certain R&TD measures are responsible for Airbus ' post-launch 
investments, which resulted in the matured technologies and production processes applied on the 
aircraft today.  
 
77. As an initial matter, and as the European Union recalls in section IV, below, the R&TD 
measures are not properly within the scope of these proceedings. In any event, even if the R&TD 
measures were properly within the scope of these proceedings ( quod non ), the United States has 
failed to put forwar d evidence and argument sufficient to establish that it is the R&TD measures, 
rather than specific investments made by Airbus in the A380 and the A350XWB, that are responsible 
for the matured technologies and production processes that are currently used on  the aircraft, and 
that account for the continued market presence and attractiveness of the aircraft.  Instead, the 
United  States merely points to vague associations between (i) basic early stage research conducted 
under the R&TD measures and (ii) specific matured technologies applied several years later on the 
aircraft after launch, without demonstrating any link between those two factors. This is insufficient 
to establish the United States ' assertion that "EU R&TD subsidies were responsible for  many Airbus  
technological advancements "22 that the European Union argues were funded by Airbus ' post-launch 
non-subsidised investments.  
 
78. In sum, while the MSF subsidies were held to have accelerated the initial launch of the A380 
and the A350XWB, as and when they were launched, the magnitude of those subsidies, and 
consequently their ability to remain a genuine and substantial cause of present adverse effects, has 
since diminished – a fact that the European Union has proven throughout these proceedings. By 
contrast , since the launch of the aircraft, Airbus ' post-launch investments have grown over time, 
and have supplanted the initial impact of any non -withdrawn MSF subsidies, by renewing and 
sustaining the competitiveness and attractiveness of the aircraft at issue,  in a manner that accounts 
for the ability of the aircraft to cause any of the market phenomena that the United States alleges 
to constitute present adverse effects.  
 
C. The wind -down of the A380 programme constitutes an appropriate step that 
removes any A 380-related adverse effects  
 
79. Finally, the European Union notes that the most extreme measure to remove adverse effects 
related to the A380 has occurred, in the form of the wind -down of the A380 programme. As a result 
of the programme wind-down, Boeing will never again lose a single sale to the A380, due to 
subsidies, or otherwise. Boeing 's market share will not be obstructed or hindered by the A380, and 
Boeing will enjoy a monopoly in the market for VLA. Consequently, the wind -down of the A380 
programme constitutes an appropriate step to remove any present adverse effects related to the 
market presence of the A380.  
 
80. Moreover, the wind -down of the A380 programme also ensures that A380 MSF subsidies will 
not have any additional "indirect effects " – i.e., "learning, scope and financial effects " – on the 
market presence of the A350XWB.  
 
III. THE R&TD MEASURES REFERRED TO BY THE UNITED STATES ARE OUTSIDE THE 
SCOPE OF THESE PROCEEDINGS  
 
81. Finally, apart from failing to rebut the European Union 's demonstration that appropriate steps 
have been taken to remove the adverse effects of any non -withdrawn subsidies, the United Sta tes 
also attempts to bring within the scope of these compliance proceedings R&TD measures that: (i)  fall 
outside the scope of these proceedings; and (ii), in any event, cannot supplement and complement 
any alleged "product effects " from A380 or A350XWB MSF  subsidies.  
82. The United States ' attempt to bring the R&TD measures within the scope of these proceedings 
raises serious systemic issues concerning the finality of DSB recommendations and rulings, and the 
 
22 US First Written Submission, para. 203 (underlining added).  WT/DS316/RW2/Add.1  
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  proper scope of compliance proceedings under Arti cle 21.5 of the DSU. The Panel must reject the 
United States ' attempt to undo a consistent and well -established approach to the proper scope of 
compliance proceedings under WTO law.  
83. The European Union has demonstrated that the R&TD measures are outside  the scope of these 
proceedings. First, and most importantly, the European Union has demonstrated that the R&TD 
measures, which were first cited in the US First Written Submission, are not covered by the EU Panel 
Request. Nor has the United States filed it s own panel request. As a consequence, under Article 6.2 
of the DSU, the Panel lacks jurisdiction to make findings regarding the WTO -consistency of the R&TD 
measures, including findings regarding the extent to which they "complement and supplement " any 
alleged effects of any remaining A380 and A350XWB MSF subsidies.  
84. Contrary to the US assertion, the term "non-subsidised investments " in the EU Panel Request 
is not broad enough to cover the R&TD measures. As the European Union has explained, that term 
addresses investments made by Airbus  in the A380 and the A350XWB. It does not include R&TD 
measures taken by the European Union and its Member States . 
85. Hence, the R&TD measures are neither expressly nor implicitly covered by the term 
"non-subsidised invest ments " in the EU Panel Request. Those measures thus fall outside the Panel 's 
terms of reference, and are not, thus, properly within the scope of these proceedings.  
86. Second , the European Union has demonstrated that the United States is precluded from raising 
claims against the Second through Sixth EU Framework Programmes, and the EU member State 
R&TD measures, because these measures were found not to be WTO -inconsistent in t he original 
proceedings.23 Permitting the United States to raise claims against these measures in these 
compliance proceedings would disturb the finality of adopted recommendations and rulings of the 
DSB. The Appellate Body has explicitly stated that "a com plainant should not be allowed to raise 
claims in compliance proceedings that were already raised and dismissed in the original proceedings 
in respect of a component of the implementation measure that is the same as in the original 
measure ".24 
 
87. Third, the European Union has demonstrated that, even if the Appellate Body had not 
definitively settled the matter in the original proceedings, the United States would still be precluded 
from raising claims against the Second through Seventh EU Framework Programm es, and the EU 
member State R&TD measures, in these second compliance proceedings. To recall, the United States 
could have, but did not, raise any claims regarding these R&TD measures in the first compliance 
proceedings. If the Appellate Body 's ruling in t he original proceedings was not a final ruling – which 
it was – then the United States could have, but elected not to, challenge these R&TD measures again 
in the first compliance proceedings. Having elected not to raise any such claims in the first 
complia nce proceedings, the United States is precluded from doing so now. As the Appellate Body 
has stated, "{a} complaining Member ordinarily would not be allowed to raise claims in an 
Article  21.5 proceeding that it could have pursued in an original proceeding ".25 
 
88. Contrary to the US assertions, the Appellate Body 's guidance that a party may not pursue 
claims in a first compliance proceeding that it could have pursued in an original proceeding, applies 
mutatis mutandis to successive compliance proceedings. Th e United States ' attempt to circumvent 
the Appellate Body 's guidance is unavailing. The United States draws a false distinction between, on 
the one hand, the relationship between original and first compliance proceedings, and, on the other 
hand, the relati onship between first and second compliance proceedings. For the purposes of the 
preclusion doctrine, this is a distinction without a difference. A Member is precluded from challenging 
in compliance proceedings – whether first or second – measures that it c ould have, but chose not 
to, challenge in earlier proceedings in the same dispute. The preclusion doctrine arises from final 
resolution  of matters in previous phases of a dispute; the United States offers no reasons whatsoever 
to support its assertion that  final resolution stemming from original proceedings is more 
consequential for first compliance proceedings, than is final resolution stemming from first 
compliance proceedings for subsequent compliance proceedings.  
 
23 Appellate Body Report, EC – Large Civil Aircraft , para. 1407.  
24 Appellate Body Report, EC – Fasteners (Article 21.5 – China) , para. 5.15 ( citing  Appellate Body 
Report, EC – Bed Linen (Article 21.5  – India) , paras. 96 and 98).  
25 Appellate Body Report, US – Upland Cotton (Article 21.5 - Brazil) , para. 211.  WT/DS316/RW2/Add.1  
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  89. Fourth , the European Union has demon strated that, in any event, none of the R&TD measures 
constitute measures taken to comply ( "MTTCs ") under Article 21.5 of the DSU. As a result, those 
measures cannot fall within the proper scope of these proceedings. To establish that the R&TD 
measures con stitute MTTCs, the United States was required to demonstrate that those measures 
have a "close nexus ", i.e., a "particularly close relationship ", to the European Union 's declared 
measures taken to comply, and to the DSB 's recommendations and rulings. A det ermination of 
whether such a "close nexus " exists may, "depending on the particular facts, call for an examination 
of the timing, nature and effects of the various measures ".26 Specifically, the Appellate Body has 
held that the "close nexus test is not satisfied by merely identifying any links at all between the 
'undeclared ' measure and the declared measures taken to comply or the DSB recommendations and 
rulings ".27 
90. The Unite d States has failed to demonstrate that a "close nexus " exists between the 
R&TD  measures, the EU 's declared measures taken to comply, and the DSB 's recommendations and 
rulings. Indeed, in its attempt to establish the relevant "close nexus ", the United Stat es has, at 
most,  pointed to loose subject -matter associations between basic early stage research conducted 
under the R&TD measures, and specific matured technologies applied on the aircraft. The 
United  States then leaps to unsubstantiated assertions regard ing the degree  to which that early 
stage research contributed to the specific matured technologies applied on the A380 and the 
A350XWB in the post -launch period. The European Union emphasises that, in determining whether 
a "close nexus " exists, the Panel i s bound by a duty to make an objective  assessment of the matter, 
based on evidence. In these proceedings, the United States has offered nothing more than 
speculation, baseless assumptions, conjecture and innuendo.  
91. Finally, even if the R&TD measures wer e within the scope of these proceedings ( quod non) , 
the United States would have failed to demonstrate that they complement and supplement alleged 
product effects of MSF. As an initial matter, the United States has failed to demonstrate that the 
R&TD measu res still exist. Indeed, the European Union has demonstrated that, except for the Eighth 
EU Framework Programme, all of the R&TD measures challenged by the United States have expired. 
In accordance with the Appellate Body 's guidance, the European Union can not, as a matter of law, 
incur compliance obligations in respect of expired subsidies. That means that there is only one 
R&TD  measure that is still ongoing – i.e., the Eighth EU Framework Programme. With respect to that 
measure, the United States has faile d to explain how a project that aims, by 2021, to mature 
technology to TRL 6 ( i.e., far from being mature enough for application on an aircraft) could be 
relevant to: (i) Airbus ' ability to launch the A380 and the A350XWB, as and when it did in 2000  and 
2006, respectively; and, (ii) Airbus ' pre-2019 completed  post-launch investments in the A380 and 
the A350XWB.  
92. As noted above, the United States, at most, points to loose subject -matter associations 
between (i) basic early stage research conducted under t he R&TD measures, and (ii) specific 
matured technologies applied on the aircraft, without demonstrating any contribution from one to 
the other, and without even considering whether, in light of the timing of the measures, such 
contribution is even logicall y possible. This is insufficient to meet the applicable legal standard. In 
this regard, the European Union recalls that, in the original proceedings, the Appellate Body reversed 
the original panel 's finding that the R&TD measures at issue complemented and supplemented the 
product effects of MSF. Specifically, the Appellate Body agreed with the European Union "that a 
general finding that {the R&TD subsidies} enabled Airbus to develop 'features and as pects ' of its 
LCA on a schedule that otherwise it would have been unable to accomplish does not provide a 
sufficient basis to determine that R&TD subsidies 'complemented and supplemented ' the 'product 
effect ' of LA/MSF in enabling Airbus to launch particul ar models of LCA ".28 The Appellate Body further 
held that, without a showing, based on evidence, that "technology or production processes funded 
by R&TD subsidies contributed to Airbus ' ability to launch and bring to the market particular models 
of LCA ",29 the panel could not properly have concluded that the R&TD subsidies at issue 
complemented and supplement the effects of MSF.  
 
26 Panel Report, Colombia – Textiles (Article 21.5 – Colombia) , para.  7.56 (referring to Appellate Body 
Report, US – Softwood Lumber IV (Article 21.5 – Canada) , para. 77).  
27 Panel Report, US – Large Civil Aircraft  (Second Complaint)  (Article 21.5 – EU), para. 7.67.  
28 Appellate Body Report, EC – Large Civil Aircraft , para. 1 407. 
29 Appellate Body Report, EC – Large Civil Aircraft , para. 1407.  WT/DS316/RW2/Add.1  
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  93. As in the original proceedings, the United States has failed, in these second compliance 
proceedings, to put forward any evidenc e sufficient to meet the applicable legal standard.  
IV. CONCLUSION AND REQUEST FOR RELIEF  
 
94. In sum, the European Union asks the Panel to find that the European Union has achieved full 
compliance with the recommendations and rulings of the DSB, within the meaning of Article 7.8 of 
the SCM Agreement . 
 
95. The European Union also asks the Panel to f ind that the US claims against the R&TD measures 
are outside the Panel 's terms of reference; that the United States is otherwise precluded from raising 
claims or arguments implicating these measures; that the measures are not MTTCs; and, that, in 
any event , the United States has failed to establish a causal link between those measures, and any 
present adverse effects.  
 WT/DS316/RW2/Add.1  
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  ANNEX B -2 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGU MENTS OF THE UNITED STATES  
I. INTRODUCTION  
 
1. Over the course of this proceeding, the European Union ( "EU") has not demonstrated that it 
has taken any meaningful steps to come into compliance with the Dispute Settlement Body 's ("DSB") 
recommendations and rulings, adopted in 2011, or after the first compliance proceeding. Rather, 
the EU cobbled together compliance arguments from a series of events (and non -events) that had 
nothing to do with WTO compliance. In addition – and perhaps because these steps seem 
insubstantial in comparison to the $9 billion magnitude of the subsidized Launch Aid/Member State 
Financing ( "LA/MSF ") – the EU also asked the Panel to dilute the legal requirements  for compliance 
under Article 7.8 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement "). 
All of these efforts are in the service of the same objective that the EU pursued unsuccessfully in the 
first compliance proceeding: to avoid mea ningful compliance steps, but assert compliance to 
interfere with the U.S. exercise of its right to restore the balance of concessions and other obligations 
disrupted by the EU 's WTO -inconsistent measures.  
2. The U.S. submissions have explained how the so-called compliance measures identified in the 
EU panel request have not only failed to remedy, but have exacerbated, the EU 's noncompliance. 
The 2018 Amendments to the four A380 LA/MSF agreements, and the 2018 Amendment to German 
A350 XWB LA/MSF, increas ed the pre -existing A380 LA/MSF subsidies to Airbus. The 2018 
repayment of UK A350 XWB LA/MSF reflects Airbus 's fulfilment  of the terms of an agreement that 
the first compliance panel already found to provide Airbus with a WTO -inconsistent subsidy – not a 
modification of the agreement that could somehow bring the EU closer to compliance. As for the 
EU's purported measures to remove adverse effects, the EU cites a variety of extraneous events 
(and non -events) – "non-subsidized investments " in the A380 progra m by Airbus, "cancellation or 
completion of A380 deliveries, " "the passage of time, " and so on – that cannot even be attributed 
to the EU or its member States, and do not remove adverse effects.  
3. Indeed, with respect to adverse effects, the EU 's case app ears to boil down to one erroneous 
assertion: that the adverse effects of the A380 and A350 XWB LA/MSF had already vanished by 
2008. That was before the first compliance panel and appellate reports found that these subsidies 
were causing present adverse ef fects. In other words, the EU 's adverse effects argument is an 
implicit rejection of the adopted findings in the first compliance proceeding. In reality, the EU 
mischaracterizes the DSB -adopted adverse effects findings, which indicate that, due to the 
unavailability in the counterfactual of the A380 and A350 XWB for offer or delivery, sales and 
deliveries of A380 and A350 XWB aircraft represent the adverse effects of the EU 's subsidies to 
Airbus.  
II. THE EU DID NOT WITHDRAW THE SUBSIDIES  
A. The EU 's Interpr etation of its Compliance Obligation with Respect to Subsidy 
Withdrawal is Flawed  
4. The EU argued that an amendment results in withdrawal if as of the time of the amendment, 
a de novo application of Articles 1 and 2 of the SCM Agreement based on a new ben chmark ( i.e., one 
contemporaneous with the amendment rather than the grant of the pre -existing subsidy) establishes 
that there is no benefit. As demonstrated by the U.S. submissions, this interpretation is flawed. It is 
flawed because the option to withdra w a subsidy under Article 7.8 of the SCM Agreement entails 
removal of the subsidy that was the basis for DSB -adopted recommendations and rulings of 
inconsistency with Articles 5 and 6. Thus, the mere amendment of a subsidy – without reducing the 
amount of the subsidy – cannot result in withdrawal pursuant to Article 7.8.  
5. The EU attempted to support its flawed interpretation of Article 7.8 by referring to the panel 
and appellate reports in Japan – DRAMs (Korea) . However, Japan – DRAMs (Korea) does not eve n 
address Article 7.8, and certainly provides no support to the view that amending the terms of a 
pre-existing subsidy necessarily withdraws it. The EU also cited the Appellate Body 's statement in WT/DS316/RW2/Add.1  
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  the first compliance proceeding that, "{i}n order to withdr aw a subsidy, an implementing Member 
may be able to take action to align the terms of the subsidy with a market benchmark, or to 
otherwise modify the terms of the subsidy such that it no longer qualifies as a subsidy. " However, 
this statement does not indi cate that merely amending the terms of a subsidy necessarily results in 
its withdrawal. Rather, the Appellate Body simply acknowledged that modifying the terms of a 
subsidy can remove the pre -existing subsidy. Thus, the Appellate Body 's statement also does  not 
support the EU 's interpretation of Article 7.8.  
6. The EU also erroneously argued that a subsidy can be withdrawn merely by removing the 
financial contribution, even if this does not also remove (or even lessen) the benefit. It asserted that 
mere subt raction of the nominal amount of the financial contribution, without regard to the terms 
under which it was conferred or the terms that were available to the recipient in the market at the 
time of its provision, is sufficient to remove the subsidy. However , Article 7.8 of the SCM Agreement 
permits Members to comply by "withdraw{ing} the subsidy. " By its ordinary meaning, this text refers 
to withdrawal of the subsidy itself – not an element or component of the subsidy. Just as the 
governments ' payment of principal to Airbus under the LA/MSF contracts was not enough for past 
panel and appellate repo rts to conclude that it conferred a subsidy, the alleged disgorgement of the 
principal by Airbus is not enough by itself to conclude that the subsidy no longer exists.  
7. The only support that the EU identified for its current theory is the following state ment in the 
appellate report about the views of the parties in the original proceeding: "We understand the 
participants to agree with the basic proposition that a subsidy has a life, which may come to an end, 
either through the removal of the financial con tribution and/or the expiration of the benefit. " 
However, the statement was the starting point for an analysis under Articles 5 and 6 of the SCM 
Agreement. As the appellate report in the first compliance proceeding stressed, Article 5 is different 
from Art icle 7.8 in that it concerns the use of subsidies in a way that causes adverse effects – not 
the continued existence of such subsidies. Moreover, the use of "and/or " in the statement cited by 
the EU signals an understanding that the parties agreed that the  two options are not necessarily 
disjunctive. It is also significant that the SCM Agreement uses "remove " only with respect to removal 
of adverse effects, material injury, and countervailing duties, and never with respect to a financial 
contribution.  
B. None of the Amendments to the LA/MSF Subsidies Achieved Withdrawal  
8. German LA/MSF for the A350 XWB. The U.S. submissions demonstrated that the 
amendment in 2018 for the German LA/MSF for the A350 XWB is an intervening event that increased 
the subsidy to Ai rbus. The EU did not numerically rebut this assertion. Instead, the EU relied on its 
flawed interpretation of Article 7.8 that the amendment withdrew the subsidy because it aligned the 
terms of the subsidy with a contemporaneous market benchmark. However, even assuming 
arguendo  that comparison with a contemporaneous benchmark were valid, the United States 
demonstrated that the terms provided to Airbus in the 2018 amendment are still more favorable 
than that of a contemporaneous benchmark.  
9. Furthermore, th e EU's argument relied on the presumption that Kreditanstalt für Wiederaufbau 
("KfW") (the government financier) did not have the option to leave the agreement unamended 
because Airbus would repay the principal and accrued interest early. However, the EU h as not 
provided enough information to properly assess whether KfW would have agreed to early repayment. 
Moreover, the United States demonstrated that KfW would have been in a better financial position 
if it had rejected the terms of the 2018 amendment and instead accepted early repayment of 
principal and interest.  
10. French, German, Spanish, and UK LA/MSF for the A380. Similar to German LA/MSF for 
the A350 XWB, the United States demonstrated that the amendments made in 2018 to these LA/MSF 
subsidies increa sed the benefit conferred by the pre -existing subsidies and prolonged their lives. The 
EU also did not numerically rebut this assertion and also relied on its flawed interpretation of 
Article  7.8. In addition, the EU argument fails because it is riddled wi th factual errors and admissions 
that undermine its own mistaken approach.  
11. Evidence submitted by the EU shows that the Airbus Governments entered into the 2018 
amendments on the basis of non -commercial considerations, which conform to a decades -long 
pattern of the EU and its member States propping up Airbus in the pursuit of European industrial WT/DS316/RW2/Add.1  
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  policy – not a newfound inclination to adopt the practices of reasonable commercial creditors, or a 
desire to achieve WTO compliance, as the EU would have it. Th e EU also failed to rebut the U.S. 
demonstration that a reasonable private creditor would have doubted that the 2018 Amendments 
were necessary to ensure the continuation of the A380 program. Additionally, the EU failed to rebut 
the U.S. demonstration that the EU and its member States did not perform adequate due diligence 
prior to entering into the 2018 Amendments. Moreover, the United States demonstrated that the 
First PwC Report – which contains a financial analysis purporting to establish the market -consistency 
of the 2018 Amendments – uses a flawed methodology that vitiates the entire analysis.  
C. Spanish LA/MSF for the A380 Was Not Withdrawn Through Amortization  
12. The first compliance panel and appellate reports accepted the "marketing life " methodolo gy 
as an appropriate way to measure the ex ante  life of LA/MSF subsidies. Under the marketing life 
methodology, the ex ante  life of Spanish A380 LA/MSF did not end prior to the negotiation and 
finalization of the Spanish 2018 Amendment. Furthermore, there are at least two intervening events 
that prolonged the ex ante  life of the Spanish A380 LA/MSF subsidy, and there is no evidence that 
either of these events were anticipated at the time that the original Spanish A380 LA/MSF agreement 
was concluded.  
13. The EU argued that the "marketing life " methodology only applies to subsidies that are "critical 
to the very existence " of a particular product, and they assert that this is not true of A380 LA/MSF. 
However, this contention is wrong.  
14. The first compliance panel report states that the "marketing life " methodology is "at least 
equally appropriate " as the "loan life " methodology for measuring the ex ante  lives of LA/MSF 
subsidies in general, because "it was expected that the nature, amounts and projected use o f the 
LA/MSF subsidies would enable Airbus to develop and bring to market one or more of its LCA 
products. " The language of the Spanish A380 LA/MSF contract fits this pattern.  
15. Whether such LA/MSF was also "critical to the very existence " of the A380 is irrelevant. 
Indeed, the EU 's focus on whether A380 LA/MSF is a product -creation subsidy improperly mixes the 
ex ante  analysis of a life of the subsidy, with the ex post  adverse effects analysis – something that 
the compliance appellate repo rt specifically warned against.  
16. Even assuming arguendo  that the loan life approach were the correct way to measure the 
ex ante life of the Spanish A380 LA/MSF subsidy, the EU 's compliance argument regarding Spanish 
A380 LA/MSF still fails. This is beca use, according to the EU, even under the loan life approach, the 
ex ante  life of Spanish A380 LA/MSF ends after the Spanish 2018 Amendment was negotiated and 
finalized. Furthermore, the two intervening events noted above also worked to extend the ex ante  
life of the subsidy under the loan life approach. Accordingly, under either the loan life or the 
marketing life methodology, the EU fails to establish that Spanish A380 LA/MSF has expired.  
D. UK LA/MSF for the A350 XWB Was Not Withdrawn Through Repayment  
17. The EU argues that Airbus has repaid all outstanding principal and interest accrued under the 
UK A350 XWB LA/MSF contract. However, as demonstrated by the United States, repayment by a 
subsidy recipient of an amount that is nominally equivalent to the or iginal financial contribution does 
not ipso facto withdraw the subsidy. Accordingly, the EU fails to establish that it has withdrawn the 
UK A350 XWB LA/MSF subsidy, even assuming arguendo that it has accurately portrayed the 
relevant facts.  
III. THE EU FAI LED TO MEET ITS BURDEN OF DEMONSTRATING IT HAS TAKEN 
APPROPRIATE STEPS TO REMOVE THE ADVERSE EFFECTS  
 
18. The EU has not taken any genuine compliance action nor has it presented any change in 
market conditions that removed the adverse effects. The first compliance proceeding resulted in 
findings that, absent existing LA/MSF, Airbus could not have offered the A380 or A350 XWB from 
the end of the reasonable period of time to comply ( "RPT") through at least the end of 2013. Thus, 
the central question p osed by the EU 's claims of compliance is – what has changed that would mean 
Airbus would be able to both offer and deliver those models in the present period in the absence of 
LA/MSF? Absent such a change, sales and market share lost to those models would continue to be WT/DS316/RW2/Add.1  
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  the result of EU subsidies, and continue to be serious prejudice for purposes of Articles 5 and 6.3. 
The EU has nowhere presented even a semblance of argumentation or evidence on this central 
question, and therefore it has failed as the Memb er that initiated these compliance panel proceedings 
to make out a prima facie case that it has taken appropriate steps to remove the adverse effects 
under Article 7.8 of the SCM Agreement.  
A. LA/MSF Product Effects Have Never Been Found to Be Mere Acceler ation Effects.  
19. An essential premise of the EU 's compliance theory is that the compliance panel and appellate 
reports found the sole effect of LA/MSF to be the acceleration of the launch and first delivery of the 
A380 and A350 XWB by a few years. The EU  relies on the use of the phrase "as and when " in these 
reports to suggest that the findings were limited to the exact point in time when Airbus launched 
each of the various LCA families and nothing more. This is clearly inaccurate.  
20. U.S. submissions an d the adopted findings throughout this dispute – from the original panel 
proceedings onward – have used the phrase "as and when " to mean that, absent the subsidies, the 
relevant Airbus LCA would not exist  as of the time of the relevant proceedings.  
21. Moreover, the causal pathway from the product effects of LA/MSF to the adverse effects 
previously found to exist makes clear that the EU 's interpretation of the phrase "as and when " is 
incorrect. To recall, the causal pathway previously found to exist was tha t, because in the 
counterfactual the relevant Airbus aircraft would not be available for offer or delivery, i.e., would not 
exist at that time, the U.S. LCA industry would have captured all of the relevant sales and deliveries 
identified by the United States.  
22. In its second written submission, the EU presented a novel interpretation of the adopted 
findings, which in its view make s those findings compatible with its counterfactual launch timing 
arguments. Specifically, the EU argues that, absent LA/MSF, launch of the A380 and A350 XWB 
would merely have been delayed , resulting in a corresponding delay in the delivery positions that 
Airbus would have been able to offer in sales campaigns in the 2011 -2013 period, thereby making 
Airbus 's offers less attractive to customers. Although neither the compliance panel nor appellate 
reports said any of this, the EU asserts that this line of rea soning was the basis for the findings of 
lost sales or impedance in the first compliance proceeding.  
23. However, this was not the conclusion of the four panel and appellate reports in this dispute. 
Rather, the findings throughout this dispute were that LA /MSF subsidies cause significant lost sales 
and displacement or impedance because, absent the subsidies, the relevant Airbus LCA would not 
exist. Neither compliance report states or even suggests that Airbus would have been able to offer 
the A380 or the A3 50 XWB in the December 2011 -2013 sales campaigns at issue, but with less 
attractive delivery positions.  
B. The EU 's Compliance Theory and Alleged Attenuation Factors Are Fundamentally 
Inconsistent with DSB -Adopted Findings  
24. The EU focuses on four factor s that it asserts attenuate or dilute the "genuine and substantial " 
causal link between existing LA/MSF and post -implementation -period adverse effects, namely: 
(1) the "timing out " of LA/MSF effects; (2) the less -than-full drawdown of French A380 and Frenc h 
and UK A350 XWB LA/MSF; (3)  the so -called "amortization " of LA/MSF; and (4) non -subsidized 
investments in the A380 and A350 XWB. None of these factors attenuates the genuine and 
substantial causal link between existing LA/MSF and the product effects prev iously found to exist in 
this dispute. Only one – the "timing out " argument – is even notionally related to the causal 
mechanism by which LA/MSF subsidies result in adverse effects, but it fails because it is 
fundamentally inconsistent with the adopted fin dings.  
25. The EU 's "timing out " arguments are based on the proposition that, absent LA/MSF, Airbus 
would have launched the A380 soon after its actual launch in 2000 and the A350XWB soon after its 
actual launch in 2006. Therefore, according to the EU, Airb us would have been able to offer both the 
A380 and A350 XWB no later than 2008, well before the expiry of the RPT in December 2011. Yet, 
the first compliance proceeding has already determined that Airbus would not have been able to 
offer either model from the end of the RPT at least through the end of 2013. Accordingly, the EU 's 
theory that it achieved full compliance no later than 2008 is simply irreconcilable with the WT/DS316/RW2/Add.1  
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  DSB-adopted reports finding the EU to not be in compliance in the post -implementation pe riod. As 
long as the EU continues to rely on a theory that "proves " compliance prior to 2008, its adverse 
effects case necessarily fails in its entirety.  
26. Additionally, the EU 's calculation of counterfactual launch dates is based not on objective 
eviden ce but on a flawed reading of an expert report by Professor Wessels that was submitted in 
the first compliance proceeding. It remains that the EU has yet to establish Airbus 's counterfactual 
financial capacity to launch the A380 and A350 XWB at any time, i ncluding the legally relevant 
timeframe after 2013. Even if the EU could do so, that would still be insufficient because the launch 
of a new LCA program requires much more than just financial capacity. Other prerequisites include 
a viable business case and  sufficient technological and industrial know -how at the relevant 
counterfactual time.  
27. Even if the EU 's counterfactual launch dates were correct – which they are not – the EU is also 
wrong to argue that adverse effects "time out " as of the moment of co unterfactual launch. Indeed, 
the EU has subsequently confirmed as much. Displacement and impedance are a function of LCA 
deliveries , which typically begin several years after launch. Indirect effects of LA/MSF may also 
persist beyond launch and impact the development, design, sales, and deliveries of other aircraft. 
Under the EU 's new alternative causation theory, the less attractive delivery positions that Airbus 
would have been able to offer absent LA/MSF also mean that the subsidies would continue to be a 
genuine and substantial cause of adverse effects post -launch.  
28. The three other attenuation factors the EU cites are no more persuasive. In fact, they are 
completely unrelated to the causal mechanism previously found to exist, and thus even further 
removed from any plausible compliance theory.  
C. The EU 's Failure to Make a Prima Facie  Case is Confirmed by Evidence of Continued 
Adverse Effects  
29. The EU 's arguments concerning removal of the adverse effects focus almost exclusively on 
the first link in the causal chain – whether the subsidies cause product effects. With one arguable 
exception, the EU does not contest the second link in the causal chain by arguing that, even though 
product effects on Airbus continue, those product effects nevertheless do not result in adverse effects 
to the interests of the United States in the form of the market phenomena in Article 6.3 of the 
SCM Agreement.  
30. Therefore, if the EU fails to show that existing LA/MSF subsidies no longer cause product 
effects, it has faile d to meet its burden of showing that it has taken appropriate steps to remove the 
adverse effects for purposes of Article 7.8. It is not the U.S. burden to prove adverse effects anew.  
31. Nevertheless, the United States has provided evidence of continued a dverse effects in its 
second submission. This evidence clearly demonstrates that the A380 and A350 XWB continue to 
capture market share and sales at the expense of U.S. LCA.  
32. The United States has also presented evidence of adverse effects regarding oth er Airbus 
models and other Airbus subsidies. The United States has shown that existing LA/MSF has indirect 
product effects enabling the market presence of the A330neo, Airbus 's other current twin -aisle 
offering. All the EU can offer in response is a mispla ced assertion that indirect effects of a given 
tranche of LA/MSF can only be felt by subsequent Airbus LCA programs, which is beside the point 
anyway because it ignores that the A330neo was launched after the A380 and A350 XWB. The 
United  States has also s hown the important role of R&TD subsidies in enabling the technologies used 
in the A380 and A350 XWB programs. The EU has not even disputed these facts, confining itself to 
meritless jurisdictional arguments that the United States has refuted.  
33. In sum, once the EU 's false launch timing arguments are disposed of, there can be no question 
that the U.S. LCA industry continues to suffer serious prejudice as a result of LA/MSF and R&TD 
subsidies to the A380, A350 XWB, and A330neo. In addition, deliveries asso ciated with campaigns 
already found to represent significant lost sales remain outstanding, meaning the EU has failed to 
achieve full compliance according to the EU 's own approach.  WT/DS316/RW2/Add.1  
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  D. The Recent Cancellation of A380 Orders by Emirates Did Not Remove the Ad verse 
Effects of Existing LA/MSF  
34. The EU argued Airbus 's announcement of its intent to "wind down " the A380 program as if it 
were a measure taken to comply, but avoided actually referring to it as a measure.  
35. The United States explained in submission s that the EU provides no evidence or rationale to 
support its conclusory statements that the direct effects of A380 LA/MSF or the marketing life of the 
A380 have come to an end. To the contrary, the EU 's projections show A380 deliveries continuing 
through  the present period until 2022. Yet the EU chose to bring this reverse compliance proceeding 
asserting full, substantive compliance in 2018.  
36. Moreover, it is entirely speculative for the EU to assert that Boeing will lose no more sales to 
the A380 due to the "wind-down " of the program. This is a prediction of the future, not a fact, as 
the EU incorrectly suggests.  
37. The EU is also incorrect th at "any indirect effects from the A380 MSF loans on the A350XWB 
have now ceased to exist, by virtue of the wind -down of the A380 programme. " First, the termination 
of an LCA program does not mean that other existing or future Airbus LCA no longer benefit f rom 
the learning, scope or financial effects generated in the past. Indeed, as the EU itself highlights, "the 
first compliance panel found {that} the A380 was a very significant intermediate step, in terms of 
its learning effects, for Airbus future work wi th composites, " such as on the A350 XWB and A330neo.  
38. Second, the EU is incorrect that A380 LA/MSF contributed only to the launch  of the A350 XWB, 
and nothing more. As the United States explained in its second written submission, the first 
compliance pa nel made a number of specific findings on how the indirect effects of A380 LA/MSF – 
including learning effects from post -launch development – contributed to the adverse effects 
vis-à-vis the A350 XWB. Thus, the EU is incorrect that the indirect effects of A380 LA/MSF can no 
longer be aggregated with the direct effects of A350 XWB LA/MSF in analyzing whether the subsidies 
cause adverse effects in the twin -aisle market.  
IV. THE EU CONTINUES TO SUBSIDIZE AIRBUS THROUGH R&TD SUBSIDIES, WHICH 
FALL WITHIN THE PAN EL'S TERM OF REFERENCE  
39. Following issuance of the panel and appellate reports in the first compliance proceeding, the 
EU commenced this compliance proceeding on July 31, 2018, asserting that it had "(i) withdrawn 
the remaining subsidies, and/or (ii) tak en appropriate steps to remove their adverse effects " so as 
to "bring the European Union into full compliance with its WTO obligations. " In particular, the EU 
asserted that Airbus had "undertaken significant non -subsidised investments " in "continuous support 
and development " of its A380 and A350 aircraft families that, in its view, brought it into compliance 
with the recommendations and rulings of the DS B. 
40. The U.S. first written submission accordingly challenged the EU research and techn ological 
development ( "R&TD ") measures as undeclared measures taken to comply with the 
recommendations and rulings of the DS B. The United States also observed that the existence of 
these subsidies rebutted the EU 's assertion that Airbus 's "continuous suppo rt and development " of 
the A380 and A350 was "unsubsidized. " On December 21, 2018, the EU requested a preliminary 
ruling from the Panel that the U.S. arguments regarding the R&TD measures are outside the Panel 's 
terms of reference. The Panel denied the EU 's request on January 11, 2019.  
A. The U.S. Arguments Regarding the R&TD Measures would not Disturb the Finality of 
the Original Appellate Findings  
41. The U.S. first written submission recalled that the original appellate report reversed the 
original panel 's findings against the R&TD measures because that panel had not made "specific 
findings that technology or production processes funded by R&TD subsidies contributed to Airbus ' 
ability to launch and bring to market particular models of LCA. " The Appellate Body did not evaluate 
whether the evidence before the original panel would support specific findings that the R&TD 
subsidies contributed to Airbus 's ability to launch and bring to market any large civil aircraft model.  WT/DS316/RW2/Add.1  
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  42. The EU nonetheless argued in its  second written submission that the argument that the R&TD 
subsidies complement and supplement the effects of LA/MSF "is identical to the claim asserted by 
the United States in the original proceedings – a claim ultimately rejected by the Appellate Body as  
insufficiently proven. " But the Appellate Body did not "reject " the U.S. argument. It rejected the 
original panel 's analytical approach, and found further that the panel had failed to provide an 
objective assessment of the facts for purposes of DSU Articl e 11. Therefore, the EU errs in charging 
the United States with seeking "an unfair second chance 'to make a case that it failed to make out 
in the original proceeding. '" The United States is in actuality seeking a first chance to show that the 
facts satisf y the test the original panel should have applied, but did not.  
43. The EU also objects to the U.S. statement that "the Appellate Body 's findings were confined 
to the original panel 's failure to make 'specific findings. '" As a legal matter, the Appellate B ody may 
complete a panel 's analysis "only if the factual findings of the panel and the undisputed facts in the 
panel record provide{} it with a sufficient basis for conducting its own analysis. " Silence with respect 
to completion of the analysis may, therefore, indicate that the panel failed to make necessary 
findings or that relevant facts existed, but were disputed. Thus, the fact that the appellate report 
did not complete the "complement and s upplement " analysis does not mean that there was no 
evidence to support a finding that the subsidies meet the proper cumulation standard.  
44. The procedural history of that particular appellate finding further demonstrates the invalidity 
of the EU 's conten tions. The Appellate Body understood the EU 's appeal as being grounded in the 
assertion that "the Panel erroneously presumed that all non -LA/MSF measures had the same effect 
as LA/MSF. " With respect to the R&TD measures, "the European Union emphasizes that  the Panel 
found that such measures enabled Airbus to develop 'features and aspects ' of its LCA, but failed to 
link any such features and aspects to any of Airbus ' actual launch decisions. '" Thus, the focus of the 
appeal was on alleged errors in the analyt ical approach taken by the original panel. Neither party 
requested completion of the analysis in the event that the appellate report found the panel 's 
approach to be inconsistent with Articles 5 and 6.3 of the SCM Agreement or that the panel failed to 
provide an objective assessment of the facts for purposes of DSU Article 11. Nothing in the appellate 
report reasoning justifies the EU 's assertion that the appellate report decided an issue that neither 
party raised.  
B. The Absence of the R&TD Measures from t he First Compliance Proceeding does not 
Preclude this Panel 's Evaluation of Them in a Subsequent Compliance Proceeding 
Brought by the EU  
45. The EU argued that, as a matter of law, a complaining party is precluded from raising claims 
in a second compliance  proceeding that it could have raised in the first compliance proceeding, but 
did not. The EU provides no valid support for this assertion. In fact, successive compliance 
proceedings will likely involve different sets of declared (or undeclared) measures t aken to comply, 
different conditions of competition, and may even switch the procedural postures of the complaining 
and responding parties. Thus, a measure not raised in a first compliance proceeding may take on a 
greater significance in a second complianc e proceeding. To preclude consideration of that measure 
in the second proceeding would prevent the second panel from appreciating the full extent of 
compliance or noncompliance.  
46. It is important to note that the EU 's argument has major systemic conseque nces. In particular, 
it would incentivize parties to pursue unnecessarily expansive litigation that they do not deem at the 
time to be critical to resolving the dispute, solely to preserve their rights should that assessment 
change in a later proceeding. F or many, if not most disputes, a second or third compliance 
proceeding will never come to pass. But Members, panels, and the Appellate Body would all be left 
with the burden of sprawling claims necessitated by the desire to preserve options in future 
proce edings that may never arrive. This would be inefficient and would be contrary to the objective 
of the prompt settlement of disputes.  
47. In addition, it would impose a burden on the original complainant to identify all measures that 
are inconsistent with t he original respondent 's compliance obligations, no later than the original 
complainant 's first request for the establishment of a compliance panel. Otherwise, according to the 
EU, the original complainant 's right to challenge such measures would be foreve r waived (except in 
a wholly new dispute). Such a requirement has no basis in the covered agreements and would run 
contrary to the due process interests of original complainants – as well as the objective to promote 
"prompt compliance with recommendations or rulings of the DSB. " WT/DS316/RW2/Add.1  
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  48. The EU failed to recognize that a complaining party 's perception of what would resolve a 
dispute at each stage are informed by the evolving factual situation, findings in successive panel 
and appellate reports, and the declared and undeclared measures taken to comply then in existence. 
Constricting the measures challenged by an original complaining party in a second compliance 
proceeding would prevent it from addressing measures that have become more problematic because 
of the im plementing Member 's own actions or inaction or changing circumstances. That would 
prevent the second compliance panel from discharging its mandate to evaluate whether the 
challenged declared and undeclared measures taken to comply in effect at the time of its 
establishment  exist and are consistent with the covered agreements.  
V. CONCLUSION  
49. For these reasons, the EU has failed to establish that it has complied with its WTO obligations.  
 
_______________  
 
 WT/DS316/RW2/Add.1  
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  ANNEX C  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Brazil  55 
Annex  C-2 Integrated executive summary of the arguments of Canada  59 
Annex  C-3 Integrated executive summary of the arguments of Japan  62 WT/DS316/RW2/Add.1  
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  ANNEX C -1 
INTEGRATED EXECUTIVE SUMMARY OF  THE ARGUMENTS  OF BRAZIL  
I. Introduction  
1. Brazil provides the following executive summary of its participation during the panel 
proceedings in this dispute.  
II. How to assess whether a Member has withdrawn a subsidy by virtue of a 
modification of its terms  
2. Brazil acknowledges that, in theory, it is possible to withdraw a subsidy in order to achieve 
compliance with Article 7.8 by introducing modifications to a measure by means of removing their 
original inconsistencies with the covered agreements. Where a measure is modified, the question is 
whether the modification has resulted in the actual withdrawal of the subsidy.  
3. Brazil does not take a position as to whether the modifications introduced by the EU to the 
original A380 and A350 LA/MSF Agreements managed to withdraw the subsidy and, therefore, 
achieve compliance as claimed by the European Union. That would require Brazil to examine in det ail 
the terms of the amended agreements, which include a considerable amount of BCI and HSBI 
information, which Brazil has not accessed.  
4. However, Brazil notes that the European Union 's reasoning regarding the amendments made 
to the four A380 LA/MSF agre ements gives particular cause for concern. More specifically, Brazil 
considers the European Union 's focus on the "choice " faced by EU Member -State governments 
between "certain loss " in the case A380 program termination and "potential gains " that could aris e 
if they were to consent to modifications to the terms of the original agreements to be misleading 
and deeply troubling.  
5. The European Union 's focus on the alleged choice faced by member State governments, 
therefore, suffer from at least two flaws. Firs t, it is questionable whether the position of a 
government already involved in a subsidized investment with no exit strategy or downturn protection 
should be considered the proper standpoint on which to base a market benchmark. It is clear to 
Brazil that a  market investor would not have provided success -dependent financing that would leave 
it without any recourse in the event of an insufficient number of sales or of program termination. 
This lack of recourse in case of default or protection against adversit y is precisely one of the key 
features that characterizes LA/MSF instruments as subsidies in the first place.  
6. Second, even if it is true that without the restructuring, the A380 program would have been 
terminated, the European Union 's argument says noth ing as to whether the specific terms of the 
restructuring are consistent with what a market investor would have required. It is one thing to 
accept a restructuring of a deal, and quite another to accept it under the terms that have been 
agreed between Airb us and the member State governments.  
7. Therefore, in Brazil 's view, whether it was rational for member State governments to accept 
the restructuring of the A380 LA/MSF under the terms that they did in order to avoid program 
termination is the wrong questi on to ask. It provides little guidance when assessing whether the 
amendments made to those agreements managed to withdraw the subsidies and achieve 
compliance. Rather, the question the Panel must answer is whether market investors would have 
agreed to prov ide a financial contribution to a project as risky as the A380 was in 2017 under the 
same terms that were agreed between Airbus and the four member State governments. If the Panel 
understands that the terms of the restructuring have not been made under mar ket conditions, then 
the Panel should decide that the EU has not yet complied with Art. 7.8 of the SCM Agreement.  
III. The adjusted Airbus A380 LA/MSF Agreements may be the cause of additional 
serious prejudice  
8. In Brazil 's view, the adjusted Airbus A380  LA/MSF Agreements may be the cause of additional 
serious prejudice to the interests of the United States. The European Union itself admits that, without WT/DS316/RW2/Add.1  
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  the restructuring, the A380 program would have been terminated. Therefore, if the Panel finds that 
the modifications introduced to the A380 failed to withdraw the subsidy, the consequence would be 
that after the compliance period, the European Union continues to cause adverse effects to the 
interests of the United States by artificially maintaining, throug h the granting of subsidies, an aircraft 
program that, left to itself, would have been terminated.  
9. Brazil recalls that the original LA/MSF subsidies for the A380 enabled Airbus to launch the 
program "as and when it did ", as found by the original Panel. Now, it seems the 2018 restructuring, 
by the European Union 's own admission, enabled Airbus to continue the A380 program, thus avoiding 
"imminent programme termination ". The renewed subsidies, therefore, are key to "explain the 
current market presence and competitiveness of the A380 ", since, without the subsidies, the 
program would have been terminated.  
IV. Can exogenous commercial conditions be the determining factor in analysing 
whether a subsidy has been withdrawn?  
10. In response to a question by the Pa nel, Brazil clarified that it  does not believe that any one 
factor, including a change in exogenous commercial conditions, considered in isolation, can be the 
determining factor in analyzing whether a subsidy has been withdrawn. In Brazil 's view, assessing  
withdrawal of a subsidy entails analyzing whether a subsidy remains in existence. As such, it entails 
an assessment of whether there is a financial contribution, by a government or public body, which 
confers a benefit. In order to assess whether a particu lar financial contribution confers a benefit, as 
stated by the Appellate Body in Canada – Aircraft1, some sort of comparison is necessary.  
11. Such a comparison, in Brazil 's view, cannot be limited to any one single factor and, as such, 
a hypothetical lowering of commercial interest rates between the time of the original provision of a 
subsidized loan and the time of an amendment to that subsidized loan in and of itself, is not enough 
for a determination of withdrawal. This is because inter est rates are not the only way in which a 
financial contribution may differ from what could be available to the recipient in the market, and 
therefore, are not the only relevant factor in assessing benefit. Instead, panels and the 
Appellate  Body must, in B razil's view, analyze the full terms of the financial contribution and compare 
those to what would be available in the market.  
V. When does the life of a subsidy come to an end and how to withdraw it  
12. In response to a question by the Panel, Brazil clari fied that the life of a subsidy, even if 
provided in the form of a one -off cash grant to a recipient, does not come to an end immediately 
after it has been provided. In support of its position, Brazil cited prior guidance by the Appellate  Body 
in the Origi nal Appellate Report in this dispute. In particular, Brazil showed that the Appellate Body 
recognized that "the fact that a subsidy is "deemed to exist" under Article 1.1 once there is a financial 
contribution that confers a benefit does not mean that a su bsidy does not continue to exist after the 
act of granting the financial contribution. "2, and that "{t}he nature, amount, and projected use of 
the challenged subsidy may be relevant factors to consider in an assessment of the period over 
which the benefit from a financial contribution might be expected to flow. "3 
13. Brazil also noted that the Appellate Body made no caveats or distinctions regarding each of 
the "types " of financial contributions listed in Article 1.1(a)(1) (i) through (iv) of the SCM Agreem ent. 
As such, its statements apply equally to "grants " (including, in Brazil 's view, one -off cash grants) as 
one of the examples of a "direct transfer of funds " under Article 1.1(a)(1)(i) of the SCM Agreement.  
14. Brazil also pointed out the problems that would arise if the Panel were to accept the notion 
that the life of a subsidy that takes the form of a one -off cash grant ends immediately after granting. 
That would mean that such subsidies would always be exempt from any implementation obligation, 
even i f found to have caused adverse effects to the interests of a Member, because they would 
always be considered to be withdrawn as soon as they were granted. Obviously, this would not be 
an acceptable reading of the disciplines regarding withdrawal of a subsi dy under Article 7.8 of the 
SCM Agreement.  
 
1 Canada – Aircraft (AB) , para. 157.  
2 Original Appellate Report, para. 708. 
3 Original Appellate Report, para. 706 -707 WT/DS316/RW2/Add.1  
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  15. Finally, Brazil notes that the statements quoted above also appear to support the view that 
the assessment of the life of a subsidy is, in essence, an assessment of how and for how long the 
benefits provided b y the subsidy would materialize.  
16. Once it has been established that a subsidy 's life, even if it takes the form of a one -off cash 
grant, does not end immediately after its granting, the remaining question is how can a Member 
withdraw such a subsidy with in the terms of Article 7.8 of the SCM Agreement. Regarding this issue, 
Brazil 's view is that withdrawing a subsidy entails bringing its life to an end, which necessarily 
requires that a Member withdraw the benefit provided by a subsidy.  
17. As indicated a bove, the life of a subsidy is a function of how the benefits it provides are 
expected to materialize over time. Because withdrawing a subsidy means that its life must come to 
an end, and because the life of a subsidy is, in essence, dependent on the benef it, it is Brazil 's view 
that the benefit should be the focus of Members ' efforts to withdraw a subsidy within the meaning 
of Article 7.8 of the SCM Agreement, not the financial contribution.  The financial contribution is, after 
all, merely the instrument through which a government confers a benefit upon a recipient. Once 
granted, the determination of the life of the subsidy will necessarily depend on an assessment of the 
benefit it provided, that is, an assessment of how the benefit materializes  over time and of how its 
value accrues and diminishes. There could potentially be several different ways through which a 
Member could withdraw such a benefit, depending on the specific characteristics of the financial 
contribution and of the specific ways  in which the benefit it provided materialized.  
VI. The proper counterfactual for assessing compliance with Article 7.8 of the 
SCM Agreement through the removal of adverse effects  
18. The proper counterfactual for assessing compliance with Article 7.8 of t he SCM Agreement 
through the removal of adverse effects involves, in Brazil 's view, a comparison between the current 
situation, at the end of the implementation period and the situation that would have existed if the 
subsidies at issue had never been provi ded. 
19. Article 7.8 of the SCM Agreement offers two paths for implementation when subsidies are 
found to be a cause of adverse effects: a Member may either withdraw the subsidy, or remove its 
adverse effects. If a Member chooses to withdraw the subsidy, i t should do so before the end of the 
implementation period. However, if it chooses to maintain the subsidy and rather remove its adverse 
effects, it must ensure that no adverse effects are being caused after the end of the implementation 
period by the stil l existing subsidy. Under this second pathway, the end of the implementation period 
is neither a deadline nor a starting point when it comes to the existence of the subsidy. It is relevant 
only for the assessment of whether adverse effects caused by the su bsidy have ceased or not.  
20. In a situation where subsidies have not been withdrawn, the relevant question is whether 
there remain any adverse effects during the post -implementation period attributable to the 
subsidies.  To answer this question, the only e lement of timing pertains to the adverse effects, not 
to the subsidies.  As the Appellate Body has stated, "a subsidy and its effects need not be 
contemporaneous "4. Thus, as a factual matter, adverse effects in the post -implementation period 
may result from  subsidies existing before or after the end of the implementation period.  
21. The European Union 's proposed counterfactual is only capable of showing whether a subsidy 
granted after the implementation period is causing adverse effects, since it disregards any effects 
of subsidization up to and until the end of the implementation period. However, nothing in the text 
of Article 7.8 of the SCM Agreement supports the interpretation that only adverse effects caused by 
subsidization given after the end of the imp lementation period must be removed.  
22. In addition, in response to a question by the Panel, Brazil clarified that it considers that the 
counterfactuals proposed by the EU and by Canada are predicated on an implicit assumption that 
has been directly refute d by the Appellate Body in this dispute - that withdrawal of a subsidy 
necessarily and immediately results in removal of the adverse effects.  
 
4 See Appellate Body Report, EC and certain member States — Large Civil Aircraft (Article 21.5) (AB) , 
paragraph 5.371  WT/DS316/RW2/Add.1  
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  23. Without this assumption, the explanatory power of the counterfactuals proposed by the 
European Union and by Ca nada disappears. It becomes impossible to draw a definitive conclusion 
regarding the presence or absence of adverse effects from a finding that the present market situation 
and a hypothetical market situation in which the subsidies existed but were removed  either at the 
end of the implementation period or when a Member asserts full compliance are identical. This 
impossibility stems from the fact that there is another likely explanation for why the market situation 
in a scenario in which subsidies are still being granted could be equivalent to a counterfactual 
scenario in which those subsidies were withdrawn either at the end of the implementation period, 
as suggested by the EU, or, as suggested by Canada, at the date a Member asserts full compliance. 
It is p ossible that both market situations are the same not because subsidies are not causing adverse 
effects, but because their withdrawal at the points in time suggested by the European Union and by 
Canada would not have had the effect of removing the adverse e ffects they were previously causing.  
24. As such, the counterfactuals proposed by the European Union and by Canada are incapable of 
answering the question before the Panel, which is whether unremoved subsidies are presently 
causing adverse effects to the i nterests of the United States. Brazil notes that Article 7.8 of the 
SCM Agreement mandates the removal of present adverse effects, not only of present adverse 
effects caused by subsidies granted after a certain date.  
 WT/DS316/RW2/Add.1  
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  ANNEX  C-2 
INTEGRATED EXECUTIVE SUMMARY OF  THE ARGUMENTS  OF CANADA  
I. INTRODUCTION  
 
1. Canada is participating in these second compliance proceedings because of its systemic 
interest in the legal interpretation of certain provisions of the Agreement on Subsidies and 
Countervailing Measures (SCM Agreement) that are being raised.  
2. Canada's third -party submission and respons es to the Panel 's questions address two 
fundamental aspects of the legal framework that applies to the European Union's claims of 
compliance under Article 7.8 of the SCM Agreement: the circumstances under which a subsidy can 
be considered withdrawn and the  counterfactual analysis that should be conducted in second 
compliance proceedings for assessing whether an implementing Member has withdrawn the adverse 
effects of actionable subsidies.  
II. CIRCUMSTANCES THAT RESULT IN THE WITHDRAWAL OF A SUBSIDY  
 
3. To recall, Article 5 of the SCM Agreement provides that no Member should cause, through the 
use of specific subsidies, adverse effects to the interests of other Members.  Article 6.3 describes 
serious prejudice, one of the forms of adverse effects enumerated in  Article 5.  Article 7.8, in turn, 
sets out the following compliance obligation for violations of Article 5: the Member granting or 
maintaining the subsidy that caused adverse effects "shall take appropriate steps to remove the 
adverse effects or shall with draw the subsidy".  
4. As a general rule, Canada considers that the withdrawal of a subsidy necessarily occurs when 
the constituent elements of the subsidy are no longer present.  That is, when a subsidy no longer 
meets the definitional requirements under Article 1.1 of the SCM Agreement, it no longer exists.  
When this is the case, the subsidy has been withdrawn within the meaning of Article 7.8.  
5. Article 1.1 defines a subsidy as a financial contribution that confers a benefit on the re cipient.  
As such, actions or events affecting the financial contribution or the benefit elements of a subsidy 
can result in withdrawal.  
6. Canada considers that the following scenarios are examples of where the withdrawal of a 
subsidy would take place.  
7. First, repayment of the financial contribution would result in withdrawal of the subsidy.  
Repayment of the financial contribution necessarily brings the life of the subsidy to an end because 
the financial contribution element of the subsidy ceases to be pr esent.  After repayment, the recipient 
is no longer able to benefit from the financial contribution on a going forward basis; hence, the 
subsidy has been withdrawn.  
8. For subsidized loans specifically, it follows that repayment of the principal amount of t he loan 
would result in withdrawal.  As the recipient of a subsidized loan benefits from having access to the 
principal amount of the loan on better -than-market terms, once the principal is repaid it no longer 
enjoys such benefit.  As such, removal of the fi nancial contribution through repayment of the loan 
principal constitutes withdrawal of the subsidy.  
9. Second , a subsidy may also be withdrawn as a result of amending the terms of the financial 
contribution to reflect market conditions.  Under this scenario , the financial contribution remains but 
no longer confers a benefit because the original terms have been replaced by those that reflect 
market conditions.  Once this occurs, the subsidy has been withdrawn.  
10. If an implementing Member amends the terms and  conditions of a subsidized loan to make 
them consistent with market terms and conditions, the withdrawal of the subsidy would depend on WT/DS316/RW2/Add.1  
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  whether the amended terms and conditions are consistent with those available on the market when 
the compliance obligati on is triggered . 
11. In original compliance proceedings, the implementing Member is required to bring its 
measures into compliance by the end of the implementation period. Accordingly, whether a 
subsidized loan has been withdrawn in original compliance pro ceedings depends on whether the 
amended terms and conditions are consistent with terms and conditions available on the market at 
the end of the implementation period.  
12. In respondent -initiated second compliance proceedings, the implementing Member assert s 
that it has brought its measures into compliance at a later point in time. As such, whether a 
subsidized loan has been withdrawn depends on whether the amended terms and conditions of the 
loan are consistent with terms and conditions available on the mar ket at the time when full 
compliance is asserted.  
13. Third, expiry of the benefit also amounts to withdrawal of the subsidy.  When the period in 
which the benefit from a financial contribution is expected to flow comes to an end, the subsidy no 
longer exis ts. Therefore, it has been withdrawn.  
14. For a non -recurring subsidy in the form of a one -off cash grant, repayment of the grant 
(i.e. the entire financial contribution) would result in the subsidy being withdrawn, as no benefit 
would remain with the subs idy recipient. However, doing so would be more than what is necessary 
to withdraw the subsidy, as a certain portion of the benefit associated with the grant will have 
expired in the period following its provision. As such, it is only the non -expired portio n of the benefit 
that must be repaid in order to withdraw the subsidy, as that is the portion of the subsidy that will 
benefit the recipient on a prospective basis.  
15. The benefit of the subsidy will exist for the period of time over which it is appropria tely 
allocated. Previous disputes indicate that, depending on the factual circumstances surrounding the 
contribution, an appropriate period of allocation may be the average useful life of assets in the 
relevant industry or the marketing life of the product . This period of allocation, as well as the timing 
of the compliance obligation, will determine the non -expired portion of the benefit that the 
implementing Member would have to remedy.  
III. THE APPROPRIATE COUNTERFACTUAL ANALYSIS IN SECOND COMPLIANCE 
PROC EEDINGS  FOR ASSESSING ADVERSE EFFECTS  
16. For subsidies that have not expired or been withdrawn, an implementing Member may comply 
with the requirements of Article 7.8 by taking appropriate steps to remove the relevant adverse 
effects of the subsidies deem ed inconsistent with Article 5.  In this respect, Canada recalls that, in 
the initial compliance proceedings, the Appellate Body confirmed that the compliance obligation 
under Article 7.8 is conditional on the continued presence of subsidies during the impl ementation 
period.  Relatedly, the Appellate Body confirmed that Article 7.8 provides for two distinct compliance 
options: withdrawing the subsidy or removing their adverse effects.  As such, in initial compliance 
proceedings, an implementing Member may comp ly with Article 7.8 by either withdrawing the 
relevant subsidies or, if it has not, ensuring that those subsidies no longer cause adverse effects by 
the end of the implementation period.  
17. As Canada indicated in the initial compliance proceedings, these features of Article 7.8 have 
direct implications on the counterfactual analysis that should be conducted in initial compliance 
proceedings to determine whether subsidies cause adverse effects in the post -implementation 
period.  In particular, the counterfac tual analysis should:  
• Focus  exclusively on subsidies that continue to exist in the implementation period; and  
 
• Be based on a counterfactual scenario under which those subsidies are withdrawn at the end 
of the  implementation period , rather than a scenario under which those subsidies were never 
provided.  
18. In initial compliance proceedings, this approach to the counterfactual analysis is appropriate 
as it ensures there is consistency between the two compliance options available under Article 7.8. WT/DS316/RW2/Add.1  
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  In particular, since compliance may be achieved through the withdrawal of the subsidies by the end 
of the implementation period, the analysis of whether a Member has removed the adverse effects 
caused by the remaining subsidies must be based on a counterfa ctual scenario under which those 
subsidies have been withdrawn at the end of the implementation period . It is only by comparing this 
counterfactual situation with the actual market situation that the nature and extent of any present  
causal relationship bet ween the remaining subsidies and any adverse market phenomena can be 
properly assessed.1 
19. However, in second compliance proceedings, Canada considers that the counterfactual 
analysis should be adjusted to reflect any additional compliance steps undertak en by the responding 
Member and the fact that the assessment of adverse effects necessarily takes place significantly 
after the end of the implementation period.  As such, in order to assess whether the remaining 
subsidies presently cause adverse effects to  the interests of the complaining Member, the 
counterfactual analysis in second compliance proceedings should:  
• Focus exclusively on the remaining subsidies, i.e. the subsidies that have not expired or been 
withdrawn; and  
• Be based on a counterfactual scenario under which those subsidies are withdrawn by the date 
on which the responding Member asserts full compliance  (in the case of respondent -initiated 
second compliance proceedings).  
20. In this respect, Canada recalls that  a panel's role in assessing adverse effects is always 
present -oriented.  That is, a panel is tasked with determining whether the relevant subsidies are 
presently  causing adverse effects.  To do so, a panel is required to select a reference period from the 
past that provides an appropriate approximation of the present effects of the subsidies on the 
market.  
21. These principles are well -established and continue to apply in the context of second 
compliance proceedings.  Accordingly, when determining whether the  remaining subsidies are a 
present cause of adverse effects, it would be logical for the panel to assess a counterfactual scenario 
in which the subsidies are withdrawn at a recent point in time.  If the implementing Member may 
bring itself into compliance t hrough withdrawing the relevant subsidies at a later stage in the dispute 
(such as by the date of a second compliance communication), it must also be able to bring itself into 
compliance by taking appropriate steps to ensure that any subsidies it has not w ithdrawn by that 
point no longer cause adverse effects.  A counterfactual under which those subsidies are withdrawn 
by that point therefore provides an appropriate basis upon which to assess whether those subsidies 
are a present cause of adverse effects.  
 
 
1 With respect to original proceedings, Canada recognizes that the Appellate Body has previously 
clarified that subsidization and adverse effects need not be contemporaneous, and that there may be s cenarios 
under which a subsidy has expired, but a Member still, through that subsidy, causes adverse effects within the 
meaning of Articles 5(c) and Article 6.3 of the SCM Agreement.  
However, these principles are no longer directly relevant with respect to  whether an implementing 
Member has complied with Article 7.8. As the Appellate Body clarified in the initial compliance proceedings of 
this dispute, the expiration of a subsidy means that an implementing Member no longer bears any compliance 
obligation wi th respect to that subsidy . This clarification was well -founded, as the text of Article 7.8 provides 
that the compliance obligation only attaches to subsidies that are being granted or maintained; it also makes 
clear that the compliance obligation is achie ved when the remaining subsidies are withdrawn. As such, unlike in 
original proceedings, the continued existence of the subsidy in compliance proceedings is legally significant – 
and potentially dispositive – with respect to whether an implementing Member is acting consistently with its 
obligations under Part III of the SCM Agreement.  
Therefore, in compliance proceedings, a counterfactual under which the remaining subsidies have been 
withdrawn provides an appropriate basis upon which to assess whether those  subsidies are a present cause of 
adverse effects.  
 WT/DS316/RW2/Add.1  
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  ANNEX  C-3 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I. Benefit assessment  
 
Japan submits that the determination of the benefit that is conferred by a given financial contribution 
is an ex ante  analysis that does not depend on how a particular financial contribution actually 
performed after it was granted.  Thus, Japan maintains that a "benefit" is basically identified by 
determining how the subsidizing government contemplated  that the "benefit " of the subsidy would 
flow at the time when the subsidy was granted.  That is to say, a benefit is essentially identified by 
determining how the subsidy has been structured to be consum ed in order to achieve the relevant 
policy objectives, which is to lower, to the extent of the amount of the "benefit", the sales price of 
the products manufactured by the beneficiary of the subsidy.  
 
II. Research & Development (R&D) subsidies  
 
Japan under stands that generally speaking, the function of  a subsid y to promote  research and 
development (R&D ) is to lower, to the extent of the "benefit" amount, the sales price of the product 
incorporating the results of the research activities thereby creating an incentive for R&D activities 
that may generate positive spillover effects.  Consequently, once the "benefit" has been consumed 
in full during a certain period, the recipient will no longer be able to lower the price levels of its 
subsidized products.  Since the determination of the benefit is an ex ante  analysis, Japan submits 
that the assessment of the life of the "benefit " in this context should focus on the projected period 
or sales amount properly anticipated by the granting Member when the subsidy is granted.  
 
III. Remedies under Article 7.8 of the SCM Agreement  
 
A. Removal of adverse effects under Article 7.8 of the SCM  Agreement  
Japan submits that under Article 7.8 of the SCM Agreement, the starting point of the examination 
of the existence and, by implication, of the removal of adverse effects should be the analysis of the 
benefit conferred by a subsidy.  This is because the recipient of subsidies may cause adverse effects 
on like products of other Members by lowering the price of the subsidized products through the 
utilization of the benefit.  Japan therefore believes that the adverse effects of such a subsidy ceas e 
to remain in existence after the benefit has been removed and the recipient is no longer able to 
lower the price of the products by using the benefit.  
 
B. Withdrawal of a subsidy under Article 7.8 of the SCM Agreement  
Japan is of the view that withdrawal  of a subsidy under Article 7.8 of the SCM Agreement would 
always require that the benefit no longer exist.  Therefore, while Japan does not wish to delve into 
the fact findings in this case, whether the benefit conferred has been removed must be the key 
factor to assess whether the subsidy has been withdrawn and therefore compliance with Article 7.8 
of the SCM Agreement achieved.  
 
C. Exogenous changes of commercial conditions and compliance with Article 7.8 of the 
SCM Agreement  
Japan is of the view that exo genous changes of commercial conditions are not always sufficient to 
show that a Member complied with its obligations contained in Article 7.8 of the SCM Agreement.  
Japan submits that when a subsidized loan's favourable terms are adjusted to the market ben chmark 
through exogenous changes of commercial conditions, no further  benefit will be conferred by the 
loan in question.  Nonetheless, Japan posits that such an adjustment will not remove the benefit 
already conferred  to the recipient and may therefore not be sufficient to comply with Article 7.8 of 
the SCM Agreement.  
 WT/DS316/RW2/Add.1  
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  D. One-off cash grants under Article 7.8 of the SCM Agreement  
Japan considers that an ex ante analysis of the benefit is also relevant for the analysis of the life of 
a one -off cash grant.  In this regard, Japan submits that the issue to be assessed under Article 7.8 
of the SCM Agreement for a one -off cash grant is whether its adverse effects have been removed – 
by ensuring that its benefit has been removed – rather than whether the subsidy has been 
withdrawn.  This is so because when a one -off cash grant is provided by a government, its granting 
process has finished although the benefit can still remain in existence up to a certain point until it is 
either consumed or removed.  Japan thus believes that, under Article 7.8 of the SCM Agreement, the 
question of how to "withdraw " such a subsidy is of no relevance in the case of a one -off cash grant.  
 
IV. Assessment of a proper counterfactual in compliance proceedings  
 
Japan submits t hat a proper counterfactual analysis needs to be conducted under Article 7.8 of the 
SCM Agreement in the context of compliance proceedings.  Japan maintains that in compliance 
proceedings the analysis of whether a Member has removed the adverse effects caus ed by the 
remaining subsidies (through the examination of the benefit) must be based on a counterfactual 
scenario under which the adverse effects of the remaining subsidies have been removed ( i.e. the 
remaining benefit has been removed or otherwise ceased to exist) at the end of the implementation 
period.  
 
However, the purpose of the proceedings before this compliance Panel is to assess the EU 's actions 
undertaken after the implementation period in order to satisfy its remaining obligation under 
Article  7.8 of the SCM Agreement.  Consequently, in the context of this case specifically, Japan 
broadly agrees with Canada 's view, and considers  that the Panel should, for the purpose of these 
second compliance proceedings, examine and compare the current situation w ith a situation under 
which the European Union would have withdrawn the subsidies, or with a situation under which the 
adverse effects of the subsidies would have been removed or otherwise would have ceased to exist, 
by the date on which it asserts full co mpliance.  
 
V. Wind -down of the A380 programme  
 
Finally, while Japan does not wish to take a categoric position as to the facts of the case, Japan 
disagrees with the arguments of the European Union according to which the wind -down of the A380 
programme will result in the withdrawal of the relevant subsidy and that in any event it will represent 
an appropriate step to remove its adverse effects.  Japan's position is that the mere fact that a 
product will be discontinued at a given point in time does not render a Member in conformity with 
its obligations under Article 7.8 because if the unused benefit, should any exist, remains with the 
recipient after the winding down of subsidized operations, it may be used for a different purpose, 
for exam ple, to lower the sales price of another product line of the recipient.  
 
_______________  
 WT/DS316/RW2/Add.1  
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  ANNEX D 
RULING OF THE PANEL ON THE EUROPEAN UNIO N'S REQUEST OF 12 JU LY 2019  
Contents  Page  
Annex  D-1 Ruling of the Panel on the European Union's Request of 12 July 2019 
concerning:  (i) the alleged untimely filing of certain new arguments and 
evidence; and  (ii) allegations of additional due process concerns  65 
 WT/DS316/RW2/Add.1  
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  ANNEX D-1 
RULING OF THE PANEL ON THE EUROPEAN UNIO N'S REQUEST OF 12 JULY 2019 CONCERNING : 
(I) THE ALLEGED UNTI MELY FILING OF CERTA IN NEW ARGUMENTS AND  EVIDENCE; AND  
(II) ALLEGATIONS OF ADDITIONAL DUE PROCE SS CONCERNS  
5 AUGUST 2019  
1 INTRODUCTION  
 
1. The Panel refers to the European Union's 12 July 2019 letter concerning certa in arguments 
and evidence contained in the United States' comments on the European Union's responses to the 
Panel's questions following the substantive meeting , which were received on 25 June 2019 . In its 
letter, the European Union requests the Panel to either: (i)  reject as "untimely filed " certain new 
arguments and evidence; or alternatively, (ii) afford the European Union an opportunity to comment 
on the alleged new arguments and evidence, if the Panel were to  decline to reject those arguments 
and eviden ce as untimely filed .1 The European Union additionally requests the Panel to deny any 
invitations by the United States to pose unnecessary additional questions to the European Union.2 
Finally, the European Union request s that the Panel deny what the Europe an Union considers to be 
an assertion that the European Union "did not engage in good faith in the first compliance 
proceedings".3 
2 THE EUROPEAN UNION'S REQUEST TO REJECT CERTAIN ARGUMENTS AND EVIDENCE 
AS "UNTIMELY" FILED  
 
2.1 The European Union's complaints  
 
2. The European Union argues that the United States has filed a substantial amount of new 
arguments and evidence with the submission of its comments on EU responses, including two new 
expert reports authored by NERA Economic Consulting, as well as  six further exhibits. The 
European  Union considers that certain of these arguments and evidence are filed belatedly because 
they address EU arguments and evidence filed as early as the European Union's first written 
submission . The European Union submits that the United States "could and should have filed those 
arguments many months ago, had it considered them pertinent to the issues arising in this dispute".4 
For the European Union, the failure to do so raises serious due process issues. The European Unio n 
emphasises that it does not request the Panel to reject all new arguments and evidence as untimely 
filed but submits that it "focuses on the most egregious examples of belatedly -filed new 
US arguments and evidence".5 
3. The European Union recognizes that a party may progressively refine arguments throughout 
the course of the proceedings,  including through the parties' responses to panel questions, and their 
comments on the other party's responses.6 However, the European Union argues that due process 
requires  that arguments and evidence be presented in a timely manner  – i.e. as early as possible in 
panel proceedings, to enable their progressive refinement over the course of the proceedings.7 In 
contrast, the European Union submits that acceptance of new argume nts and evidence in a final set 
of comments in panel proceedings is inconsistent with due process obligations where those 
arguments and evidence respond, for the first time, to arguments and evidence by the other party 
 
1 European Union's request for interim ruling  (12 July 2019) , para. 2. 
2 European Union's request for interim ruling  (12 July 2019) , paras.  5 and 40,  referring to United States' 
comments on the European U nion's response to  Panel  question Nos. 4 and 7, paras. 30, 42, 52, 56; Third 
NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (BCI /HSBI )), para. 7;  
3 European Union's request for interim ruling  (12 July 2019) , paras. 36-38, referring to United States' 
comments on the European Union's response to  Panel  question No. 9, para. 51 . 
4 European Union's request for interim ruling  (12 July 2019) , para. 2. 
5 European Union's request for interim ruling  (12 July 2019) , para. 3. 
6 European Union's request for interim ruling  (12 July 2019), para. 11, referring to Appellate Body 
Report, US – Tuna II (Mexico) (Article 21.5 – Mexico) , para. 7.177.  
7 European Union's request for interim ruling  (12 July 2019), paras. 11 and  14. WT/DS316/RW2/Add.1  
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  offered many submissions ago. In  those circumstances, a panel must safeguard other interests, such 
as the right to timely redress, and reject such arguments and evidence as untimely filed.8 
4. The European Union considers that the United States' decision to file its new arguments and 
evidence in  its final submissions " appear {s} designed to unnecessarily prolong these proceedings, 
threatening to violate further the European Union's due process rights."9 According to the 
European  Union, permitting further delay would be inconsistent with Article 3. 3 of the DSU, which 
requires the "prompt settlement" of disputes, but would also deprive the European Union of its right 
to timely findings on its compliance measures, and appellate review thereof, should the need arise.10 
In this latter respect, the Europe an Union submits that only circulation of the panel report prior to 
10 December 2019 will ensure that the Parties may, if required, file an appeal that will be heard in 
a timely manner due to the United States' blocking of the appointment of new Appellate Body 
members.11 The European Union submits that it also "relies on these second compliance proceedings 
to bring the upcoming US countermeasures to an end", pending any DSB authorisation for the 
United  States to impose countermeasures.12 
5. The European Union identifies three specific instances where it considers the United States' 
untimely filing of arguments and evidence has compromised the European Union's ability to respond 
to arguments and evidence and make its case.  
6. First, the European Union refers to paragraphs 44 -46 of the US comments, and Sections V 
and VI of the third NERA report on the German A350XWB LA/MSF loan, and in particular the 
United  States' argument that the delivery forecast Professor Klasen used "is implausible and 
inconsistent with contemporaneous evidence", and that, with NERA 's newly constructed delivery 
forecast, the 2018 amendment "has a lower IRR than the market benchmark identified by Professor 
Klasen".13 The European Union submits that the United States and NE RA Economic Consulting 
address the delivery forecast that Professor Klasen relied upon to determine the IRR under the 2018 
German A350XWB LA/MSF amendment , for the first time . The European Union submits that the 
United States had access to that delivery fo recast since October 2018 and that it offers no 
justification for its belated filing of arguments and evidence concerning that IRR calculation and the 
underlying delivery forecast.14 
7. Second, the E uropean Union  refers to paragraph 47 of the US comments, and Section VII of 
the third NERA report on the German A350XWB LA /MSF loan, and in particular the United States' 
argument that "the EU and Professor Klasen appear to have improperly ignored that, even under an 
early repayment scenario, KfW would have been enti tled to [***]", and that, taking these into 
account, "the IRR of early repayment is higher than the IRR  under the 2018 amendment".15 The 
European Union argues that United States provides no justification for its belated filing of arguments 
and evidence in t his respect because the United States had the terms of the original KfW loan 
agreement since the first compliance proceedings and the terms were also provided with the 
European's Union's first written submission in these second compliance proceedings.16  
8. Third, the European Union refers to paragraphs 243 -277 of the US comments, in which the 
European Union argues that the United States engages, for the first time,  with the detail of the 
EU argument and evidence  that was provided back in January 2019 concernin g counterfactual launch 
dates for the A380 and A350XWB, in the absence of A380 and A350XWB MSF subsidies. The 
European Union based this analysis on the  Wessels Report, which was provided as evidence by the 
 
8 European  Union's request for interim ruling  (12 July 2019) , para. 15. 
9 European Union's request for interim ruling  (12 July 2019) , para. 5. 
10 European Union's request for interim ruling  (12 July 2019) , para. 9. 
11 European Union's request for interim ruling  (12 July 2019) , para. 7. 
12 European Union's request for interim ruling  (12 July 2019) , para. 7. 
13 United States' comments on the European Union's response to  Panel  question No. 7(b), para. 44, 
citing  Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (BCI/HSBI)), Sections V, VI . 
14 European Union's request for interim ruling  (12 July 2019) , para. 18. 
15 United States' comments on the European Union's response to Panel question No. 7(b), para. 47, 
citing  Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (BCI/HSBI)), Section VII . 
16 European Union's request for interim ruling  (12 July 2019), para.  21, referring to European Union's 
first written submission, paras. 90, 92 -99, German Loan Agreement between KfW and Airbus Operations GmbH 
and Airbus S.A.S, Toulouse, [***] , (Exhibit EU -10 BCI/HSBI) ; German Loan Agreement between KfW and 
Airbus Operations GmbH and Airbus S.A.S, Toulouse, [***]  (English translation), (Exhibit EU -10 (BCI/HSBI -
ENG)). WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  United States in the first compliance proceeding, as well as the Airbus Counterfactual Launch 
Statement.17 The European Union submits that the United States offers no justification for its belated 
filing of arguments and evidence in this respect.18 
9. In each case, the European Union requests that  the Panel re ject as untimely filed the 
arguments and evidence specifically identified above because, in each instance, the United States 
has had numerous opportunities to present relevant arguments and evidence at earlier stages in 
these proceedings, but chose not to do so, prejudicing the European Union's right to timely redress. 
If the Panel declines the EU request to reject any of the evidence as untimely filed, the  
European  Union argues that the  Panel should afford the European Union an opportunity to comment 
on the aforementioned arguments and evidence.19 
2.2 The United States' response to the European Union  
 
10. The United States argues that it has submitted its comments fully in conformity with the 
Panel's Working Procedures and timetable, and the European Union has no valid argument that any 
argument in the US comments was untimely. The United States argues that there is no requirement 
in the Working Procedures or the DSU barring a party from raising responsive arguments in one 
submission that allegedly could hav e been made in an earlier submission. Rather, according to the 
United States, WTO proceedings typically operate in an iterative manner, with the parties 
successively refining, elaborating, and adding to their arguments in response to issues raised by the 
other party in its submissions or by the panel in its questions. To preclude a party revisiting past 
issues in these circumstances would preclude the party from defending its interests and would 
further prevent the Panel from making an objective assessment of the matter as required under 
Article 11 of the DSU.20 The United States argues that, just as either party is free to reference or 
elaborate on earlier arguments in responding to Panel questions, parties must be able to elaborate 
on earlier arguments in t heir comments on those answers to make those comments "meaningful".21 
11. The United States also submits that there is no basis to "speed its deliberations" to bring to 
an end theoretical US countermeasures that have not yet been imposed, or to enable the Panel  to 
circulate its final report before 10 December 2019 to ensure that the European Union may file an 
appeal. The United States argues that neither of these reasons provide a valid justification.22 To the 
contrary, the United States submits that DSU Article 12.2 provides that "Panel procedures should 
provide sufficient flexibility so as to ensure high -quality panel reports, while not unduly delaying the 
panel process. " Therefore, the United States submits that the DSU does not authorize a panel to 
reject evid ence and argumentation submitted within the time period provided by the panel and 
relevant to the matter before it so as to expedite its review.23  
12. Regarding the specific instances of alleged "belatedly -filed" evidence, the United States argues 
that its com ments on the EU response to Panel question 7 respond directly to arguments the 
European Union  made and evidence submitted in its responses . In particular, the United States 
submits that the EU responses provided new information regarding the terms of Germa n 
A350 XWB LA/MSF agreement and how the European Union calculated the [***] associated with a 
 
17 European Union's request for interim ruling  (12 July 2019) , para. 23, referring to European Union 's 
first written submission, paras. 335-353; European Union 's second written submission, paras. 415 -460; 
Wessels Report, (Exhibit EU -40); Airbus Counterfactual Launch Statement, (Exhibit EU -92-HSBI and BCI).  
18 European Union's request for interim ruling  (12 July 2019) , paras. 23 and 24.  
19 See European Union's request for interim ruling  (12 July 2019) , paras. 19, 22 and 25.  
20 United States' comments on the European Union's interim ruling request (19 July 2019), paras. 9 and 10.  
21 United States' comments on the Euro pean Union's interim ruling request (19 July 2019), para. 12. 
The United States recognizes that it would be "ideal" for either party to raise its arguments as early as possible 
in proceedings but argues that this cannot imply a prohibition on raising argum ents later in the proceeding. 
The United States argues that prior reports cited by the European Union provide no basis for rejecting such 
arguments. (United States' comments on the European Union's interim ruling request (19 July 2019), para. 13 
referring to Appellate Body Reports: US – Gambling , para. 276; Thailand – Cigarettes , paras. 156, 160; US – 
Tuna II (Mexico) (21.5) , para. 7.181; Australia – Salmon , para. 278 ). 
22 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 2.  
23 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 2.  The 
United States also argues that there is no basis for the European Union's accusation that the United States 
framed its comments so as to "delay" this proceeding.  To the contrary, the United States submits that it has 
sought at each stage to facilitate the Panel's deliberations by focusing on the key issues and addressing them 
in a concise fashion. (United States' comments on the European Un ion's interim ruling request (19 July 2019) , 
para. 3). WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  hypothetical early repayment. According to the United States, this in turn, highlighted the criticality 
of Professor Klasen's assumptions regarding the revenue st ream associated with future LA/MSF 
payments, and the importance of A350XWB delivery forecasts. The United States submits that this 
led it to address the delivery forecasts in its comments in assessing the calculation of the IRR for 
the amended A350XWB LA/M SF loan agreement.24 
13. Second, the United States notes that its comments on the role of [***] in calculating the IRR 
of German LA/MSF for the A350XWB  directly address the European Union's responses to Panel 
questions 7, 11, and 12. The United States argues th at these comments flowed from the same series 
of developments outlined above with respect to the delivery schedule. In particular, the United States 
submits that the EU's explanation of the [***] calculation clarified for the first time how the 
EU derived its benchmark for the behaviour of KfW, the importance of assumptions Professor Klasen 
made in his calculations, and the sensitivity of the results to those assumptions. The United States 
further argues that the European Union is incorrect that the United States and NERA could have 
made these same arguments at the time of its first written submission, since the European Union's 
own arguments and explanation evolved through its various submissions.25 
14. Third, the United States argues that its comments concernin g the counterfactual launch dates 
of the A380 and A350XWB and the Wessels Report respond directly to arguments made by the EU 
in response to questions 68 and 69. In particular, the United States notes that question 69 requested 
the European Union's views a s to the relevance of whether launch of the A380 would have been 
economically viable at a later date, to which the European Union responded with 21 paragraphs of 
argumentation, including a lengthy elaboration on its views on the Wessels' report.26 The 
Unite d States submits that its comments address the specific points raised by the European Union.27 
2.3 Evaluation by the Panel  
 
15. We note at the outset that the European Union made similar requests in the first compliance 
panel proceeding regarding arguments and evidence that the United States submitted in its 
responses to questions following the meeting held with the parties in that proceeding.28  
16. As was the case in that compliance proceeding, the European Union does not assert that the 
United States' submission o f arguments and evidence in its comments to the European Union's 
responses has been made contrary to the Panel's Working Procedures. Paragraph 5(1) of the 
Working Procedures provides that "{e} ach party shall submit all evidence to the Panel no later than 
during 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 ." We share 
the United States' view that the United States' arguments contained in its comments and the 
included exhibits conformed with the Panel's Working Procedures in form and substance. The 
European Union specifically alleges that the timing of the su bmission of certain arguments and 
evidence in the United States' last substantive submission  constitutes a serious violation of the 
European Union's due process rights.  
17. As the first compliance panel observed, in conducting an objective assessment of the ma tter, 
we are bound to ensure that due process is respected. D ue process is intrinsically connected to 
notions of fairness, impartiality and the rights of parties to be heard and 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 .29 
18. As part of our  objective assessment of the matter  that we are required to perform under 
Article  11 of the DSU , we a re required  to carefully and independently scrutinize the parties' 
 
24 United States' comments on the European Union's interim ruling request (19 July 2019), paras. 15 
and 17.  
25 United States' comments on the European Union's interim ruling request (19 July 2019), paras . 18-20. 
26 United States' comments on the European Union's interim ruling request (19 July 2019), para. 21, 
referring to European Union's responses to Panel questions 6 8 and 69, paras. 347 -367. 
27 United States' comments on the European Union's interim ruli ng request (19 July 2019) , para. 21. 
28 See WT/DS316/RW/Add.1., pp. F -13 – F-18 and F -23 – F-28. 
29 See Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 147.  The Appellate Body  also 
stated that the question of whether a panel has ensured due process in any particular instance may go beyond 
whether a party has complied with the panel's working procedures. ( Appellate Body Report, Thailand – 
Cigarettes (Philippines) , para. 14 8). WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 69 - 
 
  arguments and any evidence submitted in support of those arguments, with a view to clarifying their 
meaning and exploring their implications for the particular claims being made. There is n o particular 
temporal sequence of proof  in a WTO proceeding and  both parties will adduce evidence in support 
of their own arguments or to rebut the arguments made by the other at various stages of a dispute  
throughout the entirety of a proceeding.  Due proc ess requires that each party be afforded a 
meaningful opportunity to comment on the arguments and evidence adduced by the other party. 
However, t his due process interest must be balanced against other interests, including systemic 
interests such as those r eflected in Articles 3.3 and 12.2 of the DSU.30 We also take into account the 
complex nature of issues that have been raised and the fact that we must discharge this 
responsibility in a compliance proceeding in which it was envisaged that the parties would hold only 
one substantive meeting with the Panel . We address the European Union's specific requests with 
these considerations in mind.  
2.3.1  The United States' comments on the EU response to Panel question  7 
(paragraphs  44-46) and Sections V and VI of the third NERA report on the German 
A350XWB LA/MSF loan (Exhibit USA -173 (BCI/HSBI))  
 
19. Sections V and VI of the third NERA report on the German A350XWB LA/MSF loan  and the 
United States' related comments address the delivery schedule that was relied upon in the  Klasen 
Report (Exhibit EU -11) to calculate the IRR of the German A350XWB LA/MSF loan following the 2018 
amendment. In its report, NERA contests whether a commercial lender at the time of the 2018 
amendment would have had reason to question Airbus' forecas t deliveries based on publicly available 
information and the A350XWB business case.31 NERA constructs a delivery schedule for future 
A350XWB deliveries based on forecasts from the Ascend database and other information and uses 
this constructed schedule to c alculate a the IRR for the German A350XWB LA/MSF loan following the 
2018 amendment, determining a value that is lower than the market benchmark that was calculated 
in the Klasen Report.32 
20. Along with its first written submission, the European Union submitted  the Klasen Report 
seeking to demonstrate that the German A350XWB LA/MSF subsidy was withdrawn within the 
meaning of Article 7.8 of the SCM Agreement through the alignment of its terms with a 
contemporaneous benchmark. The Klasen Report calculates an expec ted IRR under the German 
A350XWB LA/MSF loan following the [***] amendment based on delivery forecasts and the terms 
of the amended loan agreement.33 The European Union submits that the Klasen Report verifies the 
reliability of the forecast through a review  of market forecasts for wide -body aircraft and specific 
A350XWB forecasts.34 The United States responded in its first written submission that the Klasen 
Report applied the wrong analytical framework by failing to assess the effect of the amendment on 
the pre -existing loan.35 The United States submitted a first NERA report comparing  the IRR of the 
original German A350XWB LA/MSF loan agreement unamended with the IRR of the amended 
agreement.36 NERA relied on the expected IRR under the amended German A350XWB LA/MSF that 
was calculated in the Klasen Report, although NERA submitted that t he Klasen Report did not provide 
sufficient information to enable it to verify this IRR calculation.37 In its second written submission, 
the European Union argued that NERA's approach comparing the IRR under the original agreement 
and the IRR under the amen ded terms was erroneous.38 The European Union also submitted a 
supplemental report authored by Professor Klasen.39 The United States' recalled the conclusions in 
the first NERA report in its second written submission based on the IRR comparison.40 The parties ' 
addressed each other's arguments at the meeting, but did not submit any further evidence. At the 
 
30 Appellate Body Report, Thailand – Cigarettes (Philippines) , para. 150.  
31 Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (HSBI)), para. 12.  
32 Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (HSBI)), paras. 13 -23. 
33 European Union' s first written submission, paras. 105-107; Professor Klasen, "Market Consistency of 
the [***]  Amendment to German MSF Agreement", October 8, 2018, (Exhibit EU -11 (BCI/HSBI)), 
paras.  44-56. 
34 European Union's first written submission, para. 106.  
35 United S tates' first written submission, para. 96.  
36 Effects of the [***]  Amendment of German LA/MSF for the A350XWB on Pre -Existing LA/MSF, NERA 
(19 December 2018) (Exhibit USA -26 (BCI/HSBI)), paras. 3 -9. 
37 Effects of the [***]  Amendment of German LA/MSF for the  A350XWB on Pre -Existing LA/MSF, NERA 
(19 December 2018) (Exhibit USA -26 (BCI/HSBI)), para. 6.  
38 European Union's second written submission, paras. 102, 113.  
39 Professor Klasen, "Analysis addressing the US comments on Trade Rx's A350XWB Report, 
26 January  2019" (Exhibit EU-82 BCI/HSBI), paras. 3 -7. 
40 United States' second written submission, paras. 103 -105. WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 70 - 
 
  meeting and subsequently in writing, the Panel posed a number of questions to the parties 
concerning German A350XWB LA/MSF, including one question directed a t the European Union asking 
how the 2018 delivery forecast that factors into the IRR assessment compares to the delivery 
forecast  at the time of signing the original A350XWB LA/MSF loan agreement .41 The United States 
submitted the third NERA report on the G erman A350XWB LA/MSF loan  in connection with the 
European Union's responses to several Panel questions.42 
21. As the European Union has observed, the United States could have raised its concerns with 
reliability of the delivery forecast relied upon in the Klase n Report at an earlier stage. However, we 
do not consider the fact that the United States did not present its arguments and evidence at an 
earlier point, when it possibly could have done so, means that the United States should be prevented 
from doing so in  later submission, including in its comments to the European Union's responses to 
Panel questions.  There is no specific rule of procedure or principle of due process that requires a 
party to a WTO dispute proceeding to present its arguments and evidence at  the first possible 
opportunity such that a failure to do so requires a panel to reject such argument and evidence as 
untimely.  
22. We recognize that the United States initially relied on the expected IRR under the amended 
German A350XWB LA/MSF that was calculated in the Klasen Report in performing its own 
assessment of the effect of the amendment on the pre -existing LA/MSF loan. Never theless, the first 
NERA report expressed concern that there was insufficient sufficient information to enable it to verify 
this IRR calculation. While the United States or NERA may have presented its own arguments and 
evidence in assessing the reliability of the delivery forecast and calculation of the IRR at an earlier 
point in time, we consider that our evaluation of the merits of the issues in this dispute must take 
into account all of the parties' arguments and the evidence adduced in support of those a rguments 
throughout the course of this proceeding. We therefore decline the European Union's request to 
reject the United States' arguments and evidence  contained in its comments and the third NERA 
Report on the grounds that it was  untimely filed . 
23. The Euro pean Union has requested that it be permitted to comment on NERA's expertise in 
the developing its own delivery forecast, certain assumptions that NERA made, and the consistency 
of NERA's forecast with contemporaneous demand forecasts, if we decline the Eu ropean Union's 
request.43 The arguments set out in the third NERA report present a significant revision of the IRR  
under the amended German A350XWB LA/MSF and reflect a shift from the United States' own 
previous reliance upon the expected IRR as calculated in the Klasen Report.  Due to this, and the fact 
that the third NERA report was submitted along with the United States' comments, we have decided 
to provide the European Union until 16 August 2019  to comment on the specified US and NERA 
arguments, to the ex tent that the European Union considers it necessary to comment further 
regarding the delivery schedule that was relied upon in the Klasen Report and the constructed 
schedule used to calculate a revised IRR for the amended German A350XWB LA/MSF agreement.  
2.3.2 The United States' comments on the EU response to Panel question 7 
(paragraph  47) and Section VII of the third NERA report on the German A350XWB LA/MSF 
loan (Exhibit USA -173 (BCI/HSBI))  
 
24. The European Union  additionally requests that we reject  the Unit ed States' arguments and 
evidence  contained in Section VII of the third NERA Report and in paragraph 47 of the US comments, 
concerning NERA's observation that the Klasen Report improperly ignores that KfW would have been 
entitled to [***] provided for under the terms of the original German A350XWB LA/MSF agreement 
had Airbus made an early repayment of outstanding principal. According to NERA, the IRR of early 
repayment is higher than the IRR under the [***] amendment, if these [***] are tak en into 
account.44  
25. The European Union did not address the issue of whether Airbus may have repaid the 
outstanding principal and interest had KfW not agreed to amend the terms of the original German 
A350XWB LA/MSF agreement. In its first written submission,  the United States asserted that KfW 
 
41 See European Union's response to Panel question No. 8.  
42 See United States' comments on the European Union's response to Panel question Nos. 4, 5 and 7.  
43 European Union's request for interim ruling  (12 July 2019) , para . 19. 
44 United States' comments on the European Union's response to Panel question No. 7, para 47; 
Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (HSBI)), paras. 24 -27. WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 71 - 
 
  would have been in a better financial position if it had left the terms of the original German 
A350XWB  LA/MSF agreement unamended.45 The European Union raised the possibility of repayment 
in its second written submission  in response to the United States' argument, and the operation of 
the early repayment charge/credit in Clause 7.1 in the original German A350XWB LA/MSF 
agreement, arguing that KfW acted as a rational market actor in deciding to amend the original 
terms.46 In its second written submission, the United States responded to the European Union's 
arguments.47 The parties additionally addressed these issues at length in their oral statements at 
the meeting and in their responses to questions and comments on responses .48 
26. In our view, it is sufficiently clear from our review of the parties' submissions that the prospect 
of early repayment of outstanding German A350XWB LA/MSF and its relevance to the question of 
whether the German A350XWB LA/MSF subsidy has been withdrawn , were discussed as part of the 
process of engagement between the parties and with the Panel, including in response to questions 
from the Panel. It is reasonable and to be expected that parties will clarify their positions and further 
develop their argumen ts as the debate progresses. In addition, as the United States has pointed 
out, the European Union argued in its responses to questions that the rate that Airbus would have 
paid on a comparable commercial loan at the time of the amendment serves as a bench mark to 
indicate what KfW would have earned had it received prepayment and reinvested the money at 
market in a comparable instrument.49 The United States' argument that [***] must also be taken 
into account is a response to that argument. We therefore consi der relevant and also appropriate to 
take the United States' comments into account in conducting our objective assessment of the matter. 
We therefore decline the European Union's request to reject the United States' arguments and 
evidence  on this issue on the grounds that the arguments and evidence were  untimely filed . 
27. The European Union requested the opportunity to comment on the United States and 
NERA's  assertions, in the event that we deny its request, including inter alia  to address "the presence 
of the  [***] and its neutralising  effect on KfW's financial position in the event of a [***] that 
affects the [***] KfW earns."50 We note that, in light of its argument that KfW would have received 
[***] under the original A350XWB LA/MSF agreement had it accepted  early repayment, NERA 
calculates an IRR of investing the [***] at the market benchmark and also receiving  [***]. 
28. Given the centrality of this new calculation to the United States' position that the [***] 
amendment did not achieve withdrawal of the German A350XWB LA/MSF subsidy, we have decided 
to grant the European Union until 16 August 2019  to comment on the United States' and NERA's 
argument, to the extent that the European Union considers it necessary to comment further 
regarding whether KfW would have been entitled to [***] provided for under the terms of the 
original German A350XWB LA/MSF agreement had Airbus mad e an early repayment of outstanding 
principal in order to ensure the European Union's due process rights.  
2.3.3  The United States' comments on the EU response to Panel questions 68 and 69 
(paragraphs 243 -277)  
 
29. The European Union asserts that the United Sta tes, in its comments "engages for the first 
time, with the detail of the EU argument and evidence  that was provided back in January 2019 
concerning counterfactual launch dates for the A380 and A350XWB, in the absence of A380 and 
A350XWB MSF subsidies. "51 In its comments, the United States comments on the European Union's 
response regarding conservative assumptions made in the Wessels Report.52 
 
45 United States' first written submission, para. 93.  
46 European Union's second written submission, paras. 105, 108 -117. 
47 United States' second written submission , paras. 106 -111. 
48 See European Union's opening oral statement, paras. 63 -69; United States' opening oral statement, 
paras. 28 -29; See also European Union's response to Panel question Nos. 7, 12 and 16; United States' 
response to Panel question Nos. 7, 12  and 16;  European Union's comments on United States' response to Panel 
question Nos. 7, 12 and 16; and United States' comments on the European Union's response to Panel question 
Nos. 7, 12 and 16.  
49 European Union's response to Panel question No. 7, para. 62. 
50 European Union's request for interim ruling  (12 July 2019) , para . 22. 
51 European Union's request for interim ruling  (12 July 2019) , para . 24. 
52 See European Union's response to Panel question No. 68, paras. 347 -367. WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
- 72 - 
 
  30. The parties' discussion of the European Union's proposed counterfactual launch dates of the 
A380 and the A350XWB date s back to the parties' first written submissions.53 In its first written 
submission, the United States specifically responded to the European Union's reliance on the Wessels 
Report, including the fact that the Wessels Report made conservative assumptions, w as limited to 
assessing Airbus' financial capacity and did not consider whether a given project would have an 
attractive business case.54 
31. The European Union based this analysis on the  Wessels Report, which was provided as 
evidence by the United States in th e first compliance proceeding, as well as the Airbus Counterfactual 
Launch Statement.55 The European Union submits that the United States offers no justification for 
its belated filing of arguments and evidence in this respect.56 The United States resumed it s 
discussion of the European Union's reliance on the Wessels Report and its proposed counterfactual 
in its second written submission57, oral statement58 and in its responses to questions and comments 
on EU responses. Notably, in its comments to the European Union's response to question 68, the 
United States respond directly to arguments made by the European Union, including on the issue of 
whether the launch of the A380 would have been economically viable at a later date.59 
32. The European Union requests that we reject the United States' arguments in its comments on 
the EU response to questions 68 and 69, or alternatively, that we allow the European Union an 
additional opportunity to comment. Specifically, the European Union has requested the opportunity 
to furthe r explain:  
inter alia , that (i) Airbus would have met, at the relevant times, the Wessels criteria for 
the launch of a new aircraft; (ii) Airbus would have had the technological and industrial 
capability to support the counterfactual launch of the A380 and  A350XWB; and, (iii) 
that the United States errs in its speculation about the role of counterfactual orders of 
Boeing very large aircraft by Emirates, Singapore and Qantas in the determination of 
the viability of a counterfactual A380 business case in 2003 , two years after the A380 's 
actual launch. The European Union would also explain (iv) that the same viability -related 
considerations that the United States raises with respect to the counterfactual launch 
of the 787 in DS353 apply with equal force to the counterfactual launch of the A380 and 
A350XWB in these proceedings; in both proceedings, the relevant findings are grounded 
in findings that subsidies accelerated the launch of an aircraft.  Finally, the 
European  Union would (v) correct the mischaracterisat ion by the United States of EU 
arguments on appeal in the first compliance proceedings.60 
33. We see no basis for granting either request. In our view, the United States' comments at issue 
are grounded in issues that have been before the Panel from the outset o f this proceeding. These 
include the relevance of the findings in the Wessels Report to establish counterfactual launch dates 
for the A380 and A350XWB, and issues related to the technological and economic viability of 
proceeding with the launch of either a ircraft in the absence of the subsidies. These issues have been 
addressed by both parties in their written submissions and responses. In requesting a further 
opportunity to comment, the European Union has indicated that it seeks to readdress effectively al l 
of the major issues pertaining to the counterfactual launch timing of the A380 and A350XWB. At this 
stage, we consider that both parties have had sufficient opportunity to articulate their positions on 
these issues and react to the other party's argument s. 
34. For the foregoing reasons, we decline the European Union's request to reject the United States' 
arguments and evidence  contained in its comments to the European Union's responses to Panel 
questions 68 and 69 on the grounds that they were  untimely filed . We also reject the 
 
53 See e.g. European Union's first written submission, paras. 335 -353; United States' first written 
submission, paras. 207 -235. 
54 United States' first written submission, paras. 221 -222, 225.  
55 European Union's request for interim ruling  (12 July 2019) , para. 23, referring to European  Union 's 
first written submission, paras. 335-353; European Union 's second written submission, paras. 415 -460; 
Wessels Report, (Exhibit EU -40); Airbus Counterfactual Launch Statement, (Exhibit EU -92 (BCI/HSBI) ). 
56 European Union's request for interim rulin g (12 July 2019) , paras. 23 and 24.  
57 United States' second written submission, paras. 226 -255. 
58 United States'  opening statement at the meeting of the Panel, paras. 45 -50. 
59 United States' comments on the European Union's response to Panel question No. 6 8, 
paras.  264-265. 
60 European Union's request for interim ruling  (12 July 2019) , para. 25. WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  European  Union's request for an additional opportunity to comment on the issues addressed in those 
responses.  
3 THE EUROPEAN UNION'S ADDITIONAL DUE PROCESS CONCERNS  
 
35. Apart from its request to reject certain arguments and evidence as "untimely" filed, the 
European Union submits that the United States raises additional due process concerns by: 
(i) asserting  that the European Union has withheld certain evidence allegedly necessary for the 
adjudication of the claims at issue in these proceedings, requesting the Panel to pose further 
questions to the European Union61; and (ii) by "rais{ing} an argument that the European Union did 
not engage in good faith in the first compliance proceedings. "62 The European Union requests the 
Panel to deny the  various  US requests  to pose unnecessary additional questions to the 
European  Union, and further deny any assertion that the  European Union did not engage in good 
faith in the first compliance proceedings.  
3.1 The European Union's request to deny the US request for the Panel to pose allegedly 
unnecessary additional questions to the European Union  
 
36. The European Union argues that various of the United States' comments also raise due process 
concerns "through its unfounded assertions that the European Union has withheld evidence allegedly 
necessary for the adjudication of the claims at issue in these p roceedings, and its invitation that the 
Panel pose further unnecessary questions to the European Union".63 The European Union specifically 
refers to the United States' requests related an array of information concerning the German A350 
LA/MSF loan agreement , including information in an expert report from KPMG , the terms of a [***] 
amendment of German LA/MSF for the A350 XWB [***], and the original repayment schedule for 
A350XWB LA/MSF as contained in [***] to the A350XWB LA/MSF loan agreement .64 The 
European  Union also refers to the United States' request  for the Panel to " exercise its authority under 
Article  13 of the DSU to gather the relevant information from the EU " to the extent " it needs 
additional information to evaluate the relationship between the R&TD subsidies and the EU 's declared 
measures taken to comply in this dispute ".65 
37. Regarding questions concerning German A350 LA/MSF, th e European Union argues that the 
United States has not explained why it considers certain of the information necessary.66 The 
European Union further submits that the United States has known of the existence of the relevant 
terms of the  [***] amendment  since the European Union 's first written submission , and even 
performed calculations based on the original KfW loan agreement [***], without an indication that 
it required additional information on the terms of that amendment.67 The European Union further 
submit s that the original repayment schedule in [***] was provided to the first compliance panel 
and thus the United States has had access to the information.68 The European Union considers the 
United States' requests for this information to be nothing more than an attempt to delay these 
proceedings in a manner that undermines the European Union's  due process rights.69 
 
61 European Union's request for interim ruling  (12 July 2019) , paras . 4 and 27 -35, referring to 
United  States' comments on the European Union's responses to Panel question Nos. 4, 7, 9, 10, 31, 32 and 84, 
paras. 30, 34, 42, 52, 56, 115, 116, 361.  
62 European Union's request for interim ruling  (12 July 2019) , paras . 36-38. 
63 European Union's request for interim ruling  (12 July 2019) , para. 26. 
64 European Union's request for interim ruling  (12 July 2019) , paras. 29, 31, 32 and 33, referring  to 
United States' comments on the European Union's responses to Panel questions,  paras . 30, 42, 52, 56; and 
Third NERA Report on German A350 XWB LA/MSF (Exhibit USA -173 (HSBI/ BCI)), para. 7  
65 European Union's request for interim ruling  (12 July 2019) , para.  33, referring to United States' 
comments on the European Union's responses to Panel question No. 84, para. 361.  
66 European Union's request for interim ruling  (12 July 2019) , para. 30.  
67 European Union's request for interim ruling  (12 July 2019) , para. 31,  referring to European Union 's 
first written submission, para. 93; Professor Klasen, "Market Consistency of the [***]  Amendment to German 
MSF Agreement", 8 October 2018, (Exhibit EU -11 (HSBI/BCI)), para. 35. See also United States' comments on 
the European  Union's responses to Panel question No. 5, paras. 35 -37. 
68 In this respect, the European Union notes that  the United States relies on different Article 13 
document s from the first compliance proceedings . See European Union's request for interim ruling  
(12 July 2019), para. 32 and accompanying fns, referring to United States' comments on the European Union's 
responses to Panel question No. 7, paras. 45, 51. See also  European Union's comments on the United States' 
response to Panel question No. 4(a), paras. 23-25. 
69 European Union's request for interim ruling  (12 July 2019) , para. 30 . WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  38. The United States argues that the requested information is  "potentially critical to the Panel's 
evaluation of the matter before it."70 In addition, the United States submits that to date, the 
European Union has only provided its own " characterizations  of the terms " of the [***] amendment 
of German A350XWB LA/MSF  despite the United States' request for a copy of the legal documents 
implementing the amendment  dating back to the first written submission71 and such 
characterizations amounts to "second -hand sourcing" which "is n ot enough ."72 Finally, the 
United  States argu es that it is in fact the European Union —and not the United States —that is under 
a duty to provided copies of the original repayment schedule contained in [***], as Paragraph 7(4) 
of the Working Procedures  requires the party identifying a document already submitted as an exhibit 
in the first compliance proceeding  to resubmit that document .73 
39. Regarding information concerning the R&TD measures, the European Union considers that the 
United States' request should be denied primarily because the request amounts t o an invitation to 
the Panel "to abuse its discretion to make the case for the United States".74 In addition, the 
European  Union submits that the United States has had numerous opportunities to invite the Panel 
to pose questions on this matter but chose not  do so. For the European Union, final submissions are 
not the proper stage to invite a panel to pose questions.75 
40. The United States contends that it  has made a prima facie  case that the R&TD subsidies are 
contributing to the adverse effects caused by LA/MSF  for the A380 and A350 XWB, and considers it 
would be entirely appropriate for the Panel to gather additional information under these 
circumstances.76 To the extent the European Union considers this to be "relatively late" in the 
proceeding, the United Stat es submits that it is due to the European Union's refusal, even when 
requested by the Panel, to provide information exclusively in its possession regarding the terms and 
magnitude of the R&TD subsidies.77 
41. The European Union's request to deny the US request for the Panel to pose allegedly 
unnecessary additional questions to the European Union covers an array of information concerning 
the provision of German A350 LA/MSF, on the one hand, and information pertaining to the R&TD 
measures, on the other hand. The E uropean Union's request appears to centre on several distinct 
concerns: (i) the information is either not necessary to the matter before it or the United States has 
not demonstrated that it is necessary; (ii) that it is too late in the proceeding to seek t his information; 
and (iii) the Panel is not permitted to make the case for the United States (in the case of the R&TD 
measures) and therefore is not permitted to gather the relevant information  in the exercise of its 
authority under Article 13 of the DSU.  
42. In the first compliance proceeding in this dispute, the European Union made a similar request 
that the panel to reconsider its decision to ask additional questions concerning the "alleged 
subsidization of the A350XWB".78 As the first compliance panel explained, in connection with that 
request, the European Union referred to the need for "{that} debate to come to an end"79, and that 
the panel should avoid "use of its interrogative powers, including notably, to make good eit her 
 
70 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 24.  
71 United States' first written submission, para. 90.  
72 United States' comments on the European Union's interim ruling request (19 July 2019), para. 25.  
73 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 26.  
74 European Union's request for interim ruling  (12 July 2019) , para. 33. 
75 European Union's request for interim ruling  (12 July 2019) , para. 34. The European Union also 
reiterates its view that the R&TD measures are not within the Panel 's terms of reference. Had the United States 
wished to pursue its challenge to the R&TD measures, the European Union submits that the United States could 
have filed its own panel request which would have given the United States access to the information gathering 
process under Annex V of the SCM Agreement, and would have permitted  the United States to post questions 
to the European Union for relevant evidence. ( European Union's request for interim ruling  (12 July 2019) , 
para. 35). 
76 In this regard, the United States emphasizes that it explicitly conditioned its suggestion on "{i}f the 
Panel considers that it needs additional information to evaluate the relationship between the R&TD subsidies 
and the EU's declared measures taken to comply…." United States' comments on the European Union's interim 
ruling request (19 July 2019),  para. 27 referring to United States' comments on the European Union's response 
to Panel question No. 84, para. 361.  
77 United States' comments on the European Union's interim ruling request (19 July 2019)  para. 27  
referring to United States' comments on the Europ ean Union's response to Panel question No. 84, para. 361.  
78 See WT/DS316/RW/Add.1., pp. F -32 – F-34. 
79 See WT/DS316/RW/Add.1., para. 1.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  Party's failure to articulate and substantiate its case".80 The first compliance panel rejected the 
European Union's request, concluding that the decision not to ask further questions would "artificially 
and arbitrarily constrain the Panel's ability to discharge its duty", including the obligation to conduct 
an objective assessment of the matter under Article 11 of the DSU. In reaching its decision, the 
panel noted the 90 -day deadline for a compliance panel to circulate its report.81 Nevertheless, the 
Panel considered that the complex issues and arguments and evidence at issue created particular 
challenges, necessitating further consideration of the matters at issue.82 
43. The first compliance panel went on to explain that panels are vested with discretion to pose 
questions to the parties  and there are no explicit limitations on when a panel may exercise that 
discretion, although a  decision to exercise this discretion relatively late in a proceeding must also 
take account of the need to settle disputes in a time ly manner, particularly in the context of 
Article  21.5 proceedings . The panel was clear in its view, however, that the objective of achieving a 
prompt settlement of disputes cannot alone dictate when a panel is entitled to request the parties 
to provide in formation and/or explanations that are considered necessary to perform its function .83 
Finally, the panel noted that it had previously informed the parties of the possibility that it may need 
to pose further questions on both factual and legal issues as nec essary in considering the claims 
before it.84 
44. We consider the guidance of the first compliance panel relevant to the circumstances of this 
proceeding, in the event that the Panel were to address further questions to the parties, including 
as necessary, on t hose matters referred to by the United States in its comments on the 
European  Union's responses to Panel questions. Notably, we have also informed the parties at the 
conclusion of its meeting that it may need to pose further questions on factual or legal i ssues in 
addition to those sent following the meeting. In light of this, we see no basis to rule on the 
European  Union's request that we deny US requests  to pose additional questions to the 
European  Union.  
45. Finally, we recall the United States' observation that the European Union is under an obligation 
to provide copies of the original repayment schedule contained in [***] pursuant to paragraph 7(4) 
of the Working Procedures.85 Paragraph 7(4) of the Working Procedures provides:  
Insofar as a party considers th at the compliance panel should take into account a 
document already submitted as an exhibit in the original panel proceeding or the first 
compliance proceeding, it should resubmit 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 proceedings (OP) (example: [XXX] -1 ([XXX] -21-OP)) or 
first compliance proceeding (FCP) (example: [XXX] -1 ([XXX] -21-FCP)).  
46. Based on our reading of paragraph 7(4), the parties appear to have discretion to determine 
whether to submit information contained in a document that was already submitted as an exhibit at 
an earlier phase in the proceeding. This would depend on the extent to which a party considers a 
compliance pane l should directly consider the information ("insofar as a party considers that the 
compliance panel should take into account a document"). We therefore do not consider it necessary 
to request the European Union to provide a copy of [***]. Nevertheless, con sistent with our view 
expressed above, we may exercise our discretion to request this information if we consider it 
necessary to do so.  
 
80 European Union's communication  (24 March 2014 ), p. 3. 
81 Article 21.5, DSU.  
82 WT/DS316/RW/Add.1., para. 3.  
83 WT/DS316/R W/Add.1., paras. 3 -5, referring to Appellate Body Report s: Canada – Aircraft , para. 192 ; 
Thailand – H-Beams , para. 135 . 
84 WT/DS316/RW/Add.1., para. 4.  
85 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 26.  WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  3.2 The European Union's request to deny any assertion that the European Union did not 
engage in good faith in the first  compliance proceedings  
 
47. In its response to Panel questions 5(b) and 9 and as part of the KPMG report, the 
European  Union provided the [***] of the German A350XWB MSF loan.86 In its comments on the 
EU response to question 9, the United States noted that the [***] that Dr. Jordan and the 
European  Union's  consultant, Professor Whitelaw, both assumed in the first compliance 
proceeding.87 Based on this observation, the United States commented that "it is difficult to 
understand why the EU allowed its expert to base his analysis on an estimate that differed [***] 
from an actual figure known to the EU, and differed in a way that could have [***]."88 
48. In response to this comment, the European Union submits that the United Stat es "implies that 
the allegedly belated disclosure of the [***] reveals that the European Union did not engage in 
good faith in the first compliance proceedings."89 The European Union submits that the United States' 
observation is not relevant, as Professor Whitelaw's and Dr. Jordan's (i) calculation of the ex ante  
expected return and (ii) their determination of the corresponding market benchmark in the first 
compliance proceedings "were both properly performed on an ex ante  basis, as of the date of the 
MSF l oan agreement – i.e., [***]."90 Thus, according to the European Union, it is irrelevant what 
the [***].91 Thus, the European Union asks the Panel to deny any  assertion that the European  Union 
did not engage in good faith in the first compliance proceedings . 
49. The United States argues that the European Union cannot "explain away its silence on this 
issue by arguing that the actual rate was set in response to market developments after signature of 
the agreement", submitting that the "proper action" w ould have been to report the actual rate and 
allow the Panel to determine what, if any, relevance that figure had on the determination of the IRR 
of the German LA/MSF for the A350 XWB.92 Thus, the United States reiterates its view from its 
comments to quest ion 9 that the European Union's approach is "difficult to understand".93 
50. The Panel does not deem it  necessary to address this particular aspect of the European Union's 
request . Although the European Union considers that the United States has implied that th e 
European Union did not act in good faith, we do not reach the same conclusion. Moreover, t he 
European Union has provided an explanation for why [***], given the need to conduct an ex ante 
analysis, and the Panel sees no problem with that explanation.  The Panel therefore does not consider 
it necessary to address the matter further.  
4 CONCLUSION  
51. In summary, after carefully considering the European Union's request for an interim ruling 
and the United States' response, the Panel has dec ided the following:  
a. The Panel declines the European Union's request to reject the United States' arguments 
and evidence contained in paragraphs 44 -46, 47 and 243-277 of the US comments and 
Sections V, VI and VII of the Third NERA Report on German A350 XWB LA/MSF . 
Neverth eless, the Panel has decided to provide the European Union an opportunity to 
comment on: (i) the specific US and NERA arguments that address the delivery schedule 
that was relied upon in the Klasen Report and constructed schedule used to calculate a 
revised IRR for the amended German A350XWB LA/MSF; and (ii) the specific US and 
 
86 European Union's  responses to Panel question Nos.  5(b) and 9, paras. 87-90, 102; KPMG Report, 
Assessment of [***] , 28 May 2019, (Exhibit EU -105 (BCI/HSBI)), pp. 5, 10.  
87 United States' comments on the European Union's response to Panel quest ion No. 9, referring to First 
NERA A350 XWB Report, para. 5 (Exhibit USA -26 (HSBI)); James Jordan, Comparison of A350 XWB LA/MSF 
Interest Rates with Market Benchmarks (18 October 2012) ("Jordan Report"), p. 4, Table 1 (Exhibit USA -114 
(USA-475-FCP) (HSBI)) ; and Robert Whitelaw, Update on certain calculations of IRRs and Macaulay durations 
(14 April 2014), Table 1 (Exhibit USA -115 (EU -507-FCP) (HSBI)).  
88 United States' comments on the European Union's response to Panel question No. 9, fn 87.  
89 European Union 's request for interim ruling (12 July 2019), para. 37.  
90 European Union's request for interim ruling (12 July 2019), para. 38.  
91 The European Union submits that [***]  over the two weeks that passed between those 14 June and 
the end of that month explain t he difference. (European Union's request for interim ruling (12 July 2019), 
para. 38). 
92 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 28. 
93 United States' comments on the European Union's interim ruling request (19 July 2019) , para. 28, 
referring to United States ' comment s on European Union's  response to Panel q uestion  No. 9, para. 51 and 
fn 87. WT/DS316/RW2/Add.1  
BCI deleted, as indicated [***]  
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  NERA argument concerning whether KfW would have been entitled to [***] provided 
for under the terms of the original German A350XWB LA/MSF agreement has Airbus 
made an early repayment. The Panel requests the European Union to submit its 
comments by no later than 16 August 2019 . 
b. The Panel declines the European Union's request to deny  any US requests to pose 
additional questions to the European Union.  
c. The Panel does not consider it necessary to address the European Union's request to 
deny what the European Union considers to be an assertion that the European Union did 
not engage  in good faith in the first compliance proceedings.  
 
__________