WT/DS316/ARB/Add.1  
 
2 October  2019 
(19-6151) Page: 1/49 
  Original: English  
 
  
EUROPEAN COMMUNITIES  AND CERTAIN MEMBER STATES – MEASURES 
AFFECTIN G TRADE IN LARGE CIV IL AIRCRAFT  
DECISION  OF THE ARBITRATOR  
Addendum  
BCI deleted, as indicated [[***]]  
 
This addendum  contains Annexes A to C to the Decision  of the Arbitrator  to be found in document  
WT/DS316/ ARB. 
 
 
_______________  
 WT/DS316/ARB/Add.1  
 
- 2 - 
 
   
LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES O F THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures for the Protection of Business Confidential 
Information and Highly Sensitive Business Information  9 
Annex  A-3 Additional working Procedures for the Substantive  Meeting with the Arbitrator  21 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the United States  23 
Annex  B-2 Executive summary of the arguments of the European Union  32 
ANNEX  C 
DECISION OF THE ARBI TRATOR CONCERNING TH E EUROPEAN UNION'S  
PRELIMINARY RULING R EQUEST  
Contents  Page 
Annex  C-1 Communication from the Arbitrator Preliminary Ruling (Conclusion)  49 
 
 
 
 
 WT/DS316/ARB/Add.1  
 
- 3 - 
 
  ANNEX  A 
WORKING PROCEDURES O F THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures for the Protection of Business Confidential 
Information and Highly Sensitive Business Information  9 
Annex  A-3 Additional working Procedures for the Substantive  Meeting with the Arbitrator  21 
 
 WT/DS316/ARB/Add.1  
 
- 4 - 
 
  ANNEX  A-1 
WORKING PROCEDURES O F THE ARBITRATOR  
 
Adopted 17 August 2018  
 
General  
 
1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").  In 
addition, the following Working Procedures apply.   
(2) The Arbitrator reserves the right t o modify these procedures as necessary, after 
consultation with the parties.  
Confidentiality  
2. (1) The deliberations of the Arbitrator  and the documents submitted to it  shall be kept 
confidential. Members shall treat as confidential information that is submitted to the Arbitrator 
by another Member which the submitting Member has designated as confidential.  
(2) Nothing in the DSU or in these Working Procedures shall preclude a party from disclosing 
statements of its own positions to the public.   
(3) If a party submits a confidential version of its written submissions to the Arbitrator , it 
shall also, upon request of a Member, provide a non -confidential summary of the information 
contained in its subm issions that could be disclosed to the public.  
(4) Upon request, the Arbitrator may adopt appropriate additional procedures for the 
treatment and handling of confidential information after consultation with the parties.  
Submissions  
 
3. (1) Before the sub stantive meeting of the Arbitrator with the parties, the United States shall 
transmit to the Arbitrator and to the European Union a communication explaining the basis 
for its request, including the methodology and data supporting it, in accordance with the  
timetable adopted by the Arbitrator.   
(2) Each party to the dispute shall also transmit to the Arbitrator a written submission in 
which it presents the facts of the case and its arguments, in accordance with the timetable 
adopted by the Arbitrator.  
a. To facilitate the efficient conduct of this proceeding, the written submissions referenced in 
the Arbitrator's timetable (United States' written communication explaining the basis for 
its request (Methodology Paper), the European Union's written submission, an d the United 
States' written submission) shall not exceed 125 pages (single -spaced, font size 10) each. 
This limit excludes exhibits accompanying written submissions.  
b. The Arbitrator may grant an extension of this page limit upon a request from a party. A 
party shall submit any such request in accordance with the procedures concerning service 
of documents set out in paragraph 21 below and no later than seven days (one calendar 
week) before the deadline to file the submission at issue. The request shall incl ude the 
number of additional pages requested by the party for the submission at issue and explain 
the circumstances that in its view warrant exceeding the page limit by the specified 
number of pages. The Arbitrator shall rule on such requests promptly.   
(3) The Arbitrator may invite the parties t o make  additional submissions in the course of 
the proceeding, including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.   WT/DS316/ARB/Add.1  
 
- 5 - 
 
  Preliminary rulings  
4. (1) If either party  considers that the Arbitrator  should make a ruling prior to the issuance 
of the Decision  that certain issues are not properly before the Arbitrator , the following 
procedure applies . Exceptions to this procedure shall be granted upon a showing of good 
cause.  
a. A party  shall submit any such request for a preliminary ruling at the earliest possible 
opportunity. The other party shall submit its response to the request at a time to be 
determined by the Arbitrator in light of the request.  
b. The Arbitrator  may issue  a preliminary ruling on the issues raised in such a preliminary 
ruling request before, during or after the substantive meeting , or the Arbitrator  may defer 
a ruling on the issues raised by a preliminary ruling until it issues its Decision  to the parties.  
c. In the event that the Arbitrator  finds it appropriate to issue a preliminary ruling prior to 
the issuance of its Decision , the Arbitrator  may provide  reasons for the ruling at the time 
that the ruling is made, or subsequently in its Decision .   
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary or procedural rulings in the course of the proceeding, and to the procedures that 
the Arbitrator  may follow with respect to such requests.  
Evidence  
5. (1) Each party shall submit all evidence to the Arbitrator  no later than the substantive 
meeting , except evidence necessary for purposes of rebuttal, or evidence necessary for 
answers to questions or comments on answers provided by the other party. Additional 
excep tions may be granted upon a showing of good cause.  
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator  
shall accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) Where the  original language of an exhibit  or portion thereof is not a WTO working 
language, the submitting party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the submission . The Arbitrator may grant 
reasonable extensions of time for the translation of exhibits upon a showing of good cause.  
(2) Any objection as to the accuracy of a translation should be raised promptly in writing, 
preferably no later than the next filing or the meeting (whichever occurs earlier) following the 
submission which contains the translation in question. Any objection shall be accompanied by 
a detailed explanation of the grounds for the  objection and an alternative translation.  
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party shall sequentially number its exhibits throughout the course of the 
dispute, indicating the submit ting Member and the number of each exhibit on its cover page. 
Exhibits submitted by the United States should be numbered USA -1, USA -2, etc. Exhibits 
submitted by the European Union should be numbered EU -1, EU -2, etc. If the last exhibit in  
connection with a submission was numbered XXX-5, the first exhibit in connection with the 
next submission thus would be numbered XXX-6.  
 
(2) Each party shall provide a n updated  list of exhibits  (in Word or Excel format) together 
with each of its submissions, oral stateme nts, 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 cons iders that the Arbitrator should tak e into account a document 
already submitte d as an exhibit in the prior panel proceeding s, it should resubmit that 
document as an exhibit for the purpose of this proceeding. In its list of exhibits, it should refer WT/DS316/ARB/Add.1  
 
- 6 - 
 
  to the number of the original exhibit in t he original panel proceeding (OP) and Article 21.5 
panel proceedings (CP) , if applicable  (for example: XXX-1 (XXX-21-OP), XXX-2 (XXX-11-CP)).  
Editorial Guide  
8. In order to facilitate the work of the Arbitrator , each party is invited to make its submissions 
in accordance with the WTO Editorial Guide for Submissio ns (electronic copy provided).  
 
Questions  
 
9. The Arbitrator may pose questions to the parties at any time  during the proceedings , including  
by: 
a. sending a list of  written  questions  prior to the meeting,  or a list of topics it intends to 
pursue in questioning orally in the course of the meeting. The Arbitrator may ask different 
or additional questions at the meeting; and   
b. putting questions to the parties orally in the c ourse of the meeting, and in writing following 
the meeting, as provided for in paragraph 16 below.  
Substantive meeting  
 
10. The Arbitrator shall conduct its internal deliberations in closed session. The Arbitrator may, 
upon request by either party, open i ts substantive meeting with the parties to the public subject to 
appropriate procedures to be adopted by the Arbitrator after consulting with the parties.  
11. The parties shall be present at the meetings only when invited by the Arbitrator  to appear 
before  it.  
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Arbitrator .  
(2) Each party shall  have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties.  
13. Each party shall provide to the Arbitrator and the other party the list of members of i ts 
delegation no later than 5:00  p.m. (Geneva time ) three working days pr ior to  the first day of the 
meeting with the Arbitrator .  
14. A request for interpretation by any party should be made to the Arbitrator as early as possible, 
preferably at the organi zational stage, to allow sufficient time to ensure availability of interpreters.  
15. There shall be one substantive meeting with the parties.  
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:  
a. The Arbitrator s hall invite the European Union to make an opening statement to present 
its case first. Subsequently, the Arbitrator shall invite the United States to present its point 
of view. Before each party takes the floor, it shall provide the Arbitrator and the othe r 
party with a provisional written version of its statement. In the event that interpretation 
is needed, each party shall provide additional copies for the interpreters.  
b. After the conclusion of the opening statements, the Arbitrator shall give each party the 
opportunity to make comments or ask the other party questions.  
c. The Arbitrator may subsequently pose questions to the parties.  
d. Once the questioning has concluded, the Arbitrator shall afford each party an opportunity 
to present a brief closing statement, with the European Union presenting its statement WT/DS316/ARB/Add.1  
 
- 7 - 
 
  first. Before each party takes the floor, it shall provide the Arbitrator  and the other party  
at the meeting with a provisional written version of its closing statement , if available .  
e. Following the meeting:  
i. Each party shall submit a final written version of its opening statement no later than 
5:00 p.m. (Geneva time) on the first wor king day following the meeting.  At the same 
time, each party should also submit a final written version of any prepared closing 
statement that it delivered at the meeting.   
ii. Each party shall send in writing, within the timeframe established by the Arbitrato r 
prior to the end of the meeting, any questions to the other party to which it wishes to 
receive a response in writing.  
iii. The Arbitrator shall send in writing, within the timeframe established by the Arbitrator  
prior to the end of the meeting , any question s to the parties to which it wishes to 
receive a response in writing.  
iv. Each party shall respond in writing to the questions from the Arbitrator, and to any 
questions posed by the other party, within the timeframe established by the Arbitrator  
prior to the end of the meeting . 
Descriptive part and executive summaries  
 
17. The d escription of the arguments of the parties in the Decision  of the Arbitrator shall consist  
of executive summaries provided by the parties, which shall be annexed  as addenda to the Decision. 
These executive summaries shall not in any way serve as a substitu te for the submissions of the 
parties in the Arbitrator's examination of the case.  
18. Each party shall submit one integrated executive summary , which shall summarize the facts 
and arguments as presented to the Arbitrator  in the party's  submissions and st atements , and where 
possible, its responses to questions and comments thereon  following the substantive  meeting.  
19. Each integrated executive summary shall be limited to no more than 15 pages.   
20. The Arbitrator  may request the partie s to provide executive summaries of facts and arguments 
presented in any other submissions to the Arbitrator  for which a deadline may not be specified in 
the timetable.  
Service of documents  
 
21. The following procedures regarding ser vice of documents apply  to all documents submitted by 
parties in the course of the proceeding (including exhibits):  
a. Each party shall submit all documents to the Arbitrator  by submitting  them with the 
DS Registry (office No. 2047) .  
b. Each party shall s ubmit one (1)  paper copy  of all documents it submits to the Arbitrator 
by 5:00 p.m. (Geneva time) on the due dates established by the Arbitrator. The 
DS Registrar shall stamp the documents with the date and time of submission. The paper 
version submitted t o the DS Registry shall constitute the official version for the purposes 
of submission deadlines and the record of the dispute.  
c. Each party shall also submit two CD -ROMs or two DVDs to the DS Registry, at the same 
time that it submits the paper versions,  each containing an electronic copy of all 
documents that it submits to the Arbitrator , preferably in both Microsoft Word and PDF 
format.  
d. In addit ion, each 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  have any questions or technical difficulties relating to WT/DS316/ARB/Add.1  
 
- 8 - 
 
  the DDSR, they are invited to consult the DDSR User Guide (electronic copy provided) or 
contact the DS Registry at DSRegistry@wto.org.  
e. Each party shall serve any document submitted to the Arbitrator  directly on the other 
party. A party may submit  its documents to another party on a CD -ROM or DVD only,  
unless  the recipient party has previously requested a  paper copy. Each party shall confirm, 
in writing, that copies have been served on the parties, as appropriate, at the time it 
provides each document to the Arbitrator.  
f. Each party shall submit  its documents with the DS Registry and serve  copies on the o ther 
party by 5:00  p.m. (Geneva time) on the due dates established by the Arbitrator.   
g.  All communications from the Arbitrator  to the parties will be via email . 
Correction of clerical errors in submissions  
22. The Arbitrator  may grant leave to a party to correct clerical errors in any of its submissions 
(including paragraph numbering and 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/ARB/Add.1  
 
- 9 - 
 
  ANNEX  A-2 
ADDITIONAL WORKING P ROCEDURES  FOR THE PROTECTION O F BUSINESS CONFIDENT IAL 
INFORMATION  AND HIGHLY SENSITIVE  BUSINESS INFORMATIO N  
 
 
 
Adopted 2 7 Septemb er 201 9 
I. GENERAL  
The following Procedures apply to all business confidential information ("BCI") and highly sensitive 
business information ("HSBI") on the Arbitration record.  These Procedures do not diminish the rights 
and obligations of the Parties to request, disclose, or maintain th e confidentiality of any information 
within the scope of the SCM  Agreement1 or the DSU.2  
 
II. DEFINITIONS  
For the purposes of these Procedures:  
 
1. "Approved Persons"  means Representatives or Outside Advisors of a Party, when 
designated in accordance with these procedures.  
2. "Arbitrator" means the DS316 Arbitrator under Article 22.6 of the DSU.  
3. "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 has 
"Designated as BCI" because it is not otherwise available in the public domain and its disclosure 
could, in the Party's view, cause harm to the originators o f the information.  Each Party shall act in 
good faith and exercise restraint in designating information as BCI, and will endeavour to designate 
information as BCI only if its disclosure would cause harm to the originators of the information.  
4. "Conclusion o f the Arbitration Process"  means the earliest to occur of the following 
events:  
(a) the date of circulation of the decision of the Arbitrator ; or 
(b) pursuant to Article 3.6 of the DSU, a mutually satisfactory solution is notified to 
the DSB. 
5. "Designated as BCI " means:   
(a) for printed information, text that is set off with bolded square brackets in a 
document clearly marked with the notation "BUSINESS CONFIDENTIAL 
INFORMATION" and with the name of the Party that submitted the information;  
(b) for electronic information, characters that are set off with bolded square 
brackets (or with a heading with bolded square brackets on each page) in an 
electronic file that contains the notation "BUSINESS CONFIDENTIAL 
INFORMATION", has a file name that contains the letters "BCI", and is stored 
on a storage medium with a label marked "BUSINESS CONFIDENTIAL 
INFORMATION" and indicating the name of the Party that submitted the 
information; and  
 
1 Agreement on Subsidies and Countervailing Measures  ("SCM Agreement").  
2 Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").  WT/DS316/ARB/Add.1  
 
- 10 - 
 
  (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  5(a)-(c), the dispute shall be resolved by the Arbitrator.  If the 
Arbitrator disagr ees with designation of information as BCI, the submitting Party 
may either designate it as non -BCI or withdraw the information.  In the case of 
withdrawal, the Arbitrator shall either destroy such information or return it to 
the submitting Party.  Each Pa rty may at any time designate as non -BCI 
information previously designated by that Party as BCI.  
This paragraph shall apply to all submissions, including exhibits, by a Party.  
 
6. "Designated as HSBI " means:  
(a) for printed information, text that is set off with double bolded square brackets 
in a document clearly marked with the notation "HIGHLY SENSITIVE BUSINESS 
INFORMATION" and with the name of the Party that submitted the information;  
(b) for electronic informatio n, 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 that submitted 
the information; and  
(c) for uttered information, declared by the speaker to be "Highly Sensitive  
Business Information" prior to utterance.4  
This paragraph shall apply to all submissions, including exhibits, by a Party.  
 
7. "Electronic information"  means any information stored in an electronic form (including 
but not limited to binary -encoded informatio n). 
8. "Highly Sensitive Business Information"  or "HSBI" means any business information 
regardless of whether contained in a document provided by a public or private body that a Party has 
"Designated as HSBI" because it is not otherwise available in the publi c domain and its disclosure 
could, in the Party's view, cause exceptional harm to its originators.  Each Party shall act in good 
faith and exercise the utmost restraint in designating information as HSBI.  Each Party may at any 
time designate as non -BCI/HS BI or as BCI information previously designated by that Party as HSBI.  
(a) The following categories of information may be Designated as HSBI:  
(i) information indicating the actual selling or offered price of any large civil 
aircraft (LCA) manufacturer's products o r services5, and, except as provided 
in subparagraph 8 (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;   
 
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 shall not affect the designation of 
the HSBI in question.  
5 This category includes (but is not limited to) information on individual LCA prices, prices per seat, or 
information allowing the operating cost per seat of an LCA to be determined, calculated or reflected; the 
negotiated or offered prices for the airframe ; all concessions offered or agreed to by an LCA manufacturer 
including financing, spare parts, maintenance, pilot training, asset value and other guarantees, buy back 
options, remarketing arrangements or other forms of credit support.  This category shall  also include the actual 
pricing information relating to any number of individual LCA offers and prices (including concessions) 
aggregated by model or other category.  WT/DS316/ARB/Add.1  
 
- 11 - 
 
  (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 may  also Designate as HSBI other categories of business information 
that are not otherwise available in the public domain and the disclosure of which 
could, in the Party's view, cause exceptional harm to its originators.    
(c) Each Party shall Designate as HSBI any information described in subparagraph 
8(a) that pertains to LCA produced by an LCA manufacturer headquartered 
within the territorial jurisdictio n 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 conclusions shall be 
treated as neither BCI nor HSBI;  
(iii) contracts on the granting of launch aid or reimbursable launch investment 
and project appraisal documents relating thereto, other than information 
described in subparagraph 8 (a); 
(iv) the terms and conditions of loans, other than information described in 
subparagraph 8 (a); and  
(v) intergovernmental agreements and government decisions, other than 
information described in subparagraph 8 (a). 
(e) Information may not be Designated as HSBI simply because it is subject to bank 
secrecy or banker -client confidentiality.  
(f) In case either Party objects to the designation of information as HSBI under 
paragraphs 8(a) -(e), the dispute shall be resolved by the Arbitrator.  I f the 
Arbitrator disagrees with designation of information as HSBI, the submitting 
Party may either designate it as BCI, as non -BCI/HSBI or withdraw the 
information.  In the case of withdrawal, the Arbitrator shall either destroy such 
information or return  it to the submitting Party. Each Party may at any time 
designate as non -BCI/HSBI or as BCI information previously designated by that 
Party as HSBI.  
9. "HSBI Approved Persons"  means Approved Persons specifically designated by the Parties  
as having the right to access HSBI (according to the procedures laid down in Section IV). 
10. "HSBI location"  means a room to be kept locked when not occupied and the access to 
which shall be possible only for HSBI Approved Persons, located:   
(a) for HSBI submitted by the United States, on the premises of (i) the United 
States Mission to the Europ ean Union in Brussels and (ii) the Office of the United 
States Trade Representative in Washington, DC;  WT/DS316/ARB/Add.1  
 
- 12 - 
 
  (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.  
11. "Locked CD"  means a CD -ROM that is not rewritable.  
12. "Outside Advisor"  means a legal counsel or other advisor of a Party, who:  
(a) advises a Party in the course of the dispute;  
(b) is not an employe e, officer or agent of an entity or an affiliate of an entity 
engaged in the manufacture of LCA, the provision of supplies to an entity 
engaged in the manufacture of LCA, or the supply o f air transportation services; 
and 
(c) is subject to an enforceable code o f professional conduct that includes an 
obligation to protect confidential information, 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 producer 
headquartered in the territory of one of the Parties in connection with these proceedings or 
outside consultants who have been retained by such counsel to provide advice wit h regard 
to these proceedings are not considered agents of an entity listed in subparagraph  (b). 
 
13. "Party"  means the European Union or the United St ates. 
14. "Party -BCI" means BCI originally submitted by a Party.  
15. "Representative"  means an employee of a Party.  
16. "Sealed laptop computer"  means a laptop computer having (software and hardware) 
characteristics considered necessary by the submitting Party for pr otection of that HSBI, provided 
that it has software installed that permits such HSBI to be searched and printed in accordance with 
the provisions of Section VI.  However, HSBI may not be edited on the sealed laptop computer.  
17. "Secure site"  means a facility to be kept locked when not occupied and the access to which 
shall be possible only for Approved Persons, located:  
(a) in the case of the European Union, the offices of WTO Team of the Legal Service 
of the European Commission (Rue de la Loi 2 00, 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, 1202 
Geneva, Switzerland), and three additional sites specified in accordance with 
subparagraph  (c); 
(b) in the case of the United States, the offices of the Office of the United States 
Trade Representative (600 17th Street, NW,  and 1724 F Street NW,  
Washington, DC, USA), the Mission of the United  States to the World Trade 
Organization (11, route de Pregny, 1292 Chambésy, Switzerland), and three 
additional sites specified in ac cordance 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 Arbitrator, and the other Party has 
not objected to the designation of that site within ten days of s uch submission.  
(d) Any objections raised under subparagraph (c) may be resolved by the 
Arbitrator.  WT/DS316/ARB/Add.1  
 
- 13 - 
 
  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. "Submissi on" means any written, electronic, or uttered information transmitted to the 
Arbitrator, including but not limited to, correspondence, written submissions, exhibits, oral 
statements, and answers to questions.  
21. "WTO Approved Persons"  means the members of the  Arbitrator and persons employed 
or appointed by the Secretariat who have been authorized by the Secretariat to work on the dispute 
(and includes translators and interpreters as well as any transcribers present at Arbitrator meetings 
involving BCI and/or H SBI). 
22. "WTO Rules of Conduct"  means the Rules of Conduct for the Understanding on Rules and 
Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996 
(WT/DSB/RC/1).  
III. SCOPE  
23. These procedures apply to all BCI and HSBI received by an Approved Person and by W TO 
Approved Persons as a result of the Arbitration.   
24. Unless specifically otherwise provided herein, these procedures do not apply to a Party's 
treatment of its own BCI and HSBI.  
25. The Arbitrator is aware that the European Union may need to submit informatio n that it 
internally classifies as "EU Top Secret", "EU Secret" or "EU Confidential".  The Arbitrator will to the 
extent possible implement procedures for the protection of such classified information in the event 
that either Party informs the Secretariat that it will be submitting such classified information and 
has not already designated it as BCI or HSBI.  In such cases, the submitting Party shall propose 
appropriate procedures for the protection of such classified information.  
IV. DESIGNATION OF APPRO VED PE RSONS  
26. At the latest by 12:00 p.m. (noon) on 3  September 2018, each Party shall submit to the 
other Party, and to the Arbitrator, a list of the names and titles of any Representatives and Outside 
Advisors who need access to BCI submitted by the other Party and whom it wishes to have 
designated as Approved Persons, along with any clerical or support staff that would have access to 
the BCI.  On that list, each Party shall indicate which Approved Persons need access to HSBI 
submitted by the other Party and whom  it wishes to have designated as HSBI Approved Persons. 
Each Party may designate new Approved Persons, remove, or replace Approved Persons by 
submitting amendments to its list of Approved Persons to the other Party and to the Arbitrator.  
27. Each Party shall keep the number of Approved Persons as limited as possible.  Each Party 
may designate no more than a total of 30 Representatives and 20 Outside Advisors as "HSBI 
Approved Persons".  
28. WTO Approved Persons  shall have access to BCI.  The Director -General of the  WTO, or his 
or her designee, shall submit to the Parties, and to the Arbitrator, a list of the WTO Approved Persons 
and shall identify which of those WTO Approved Persons shall additionally have access to HSBI.  
29. Unless a Party objects to the designation of  an Outside Advisor of the other Party, the 
Arbitrator shall designate those persons as Approved Persons.  A Party also may object within ten 
days of becoming aware of information that was not available to the Party at the time of the filing 
of a list unde r paragraph 26 that would suggest that designation of an individual is not appropriate.  
If a Party objects, the Arbitrator shall decide on the objection within ten  working days.  
30. An objection may be based on the failure to satisfy the definition of "Outsi de Advisor" or on 
any other compelling basis, including conflicts of interest.   WT/DS316/ARB/Add.1  
 
- 14 - 
 
  31. 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 paragraph 27  and to 
objections for the addition of new Approved Persons in accordance with paragraphs 29 and 30. Any 
such amendments or objections by a Party shall be submitted to the Arbitrator and communicated 
to the other Party on the same day. Any amendments to th e list of WTO Approved Persons shall be 
promptly communicated to the Parties.   
V. BCI 
32. Only Approved Persons and WTO Approved Persons may have access to BCI submitted in 
this proceeding.  Approved Persons and WTO Approved Persons shall use BCI only for the pu rposes 
of this dispute.  No Approved Person or WTO Approved Person shall disclose BCI, or allow it to be 
disclosed, to any person except another Approved Person or WTO Approved Person.  These 
obligations apply indefinitely.  
33. A Party shall make no more than one copy of any BCI submitted by the other Party for each 
Secure site provided for that Party in paragraph  17. 
34. Parties may incorporate BCI in inter nal memoranda for the exclusive use of Approved 
Persons.  Any memorandum and the BCI it contains shall be marked in accordance with paragraph  5. 
35. BCI submitted pursuant to these procedures shall not be copied, distributed, or removed 
from the Secure site, except as necessary for submission to the Arbitrator .  
36. The treatment in a Party's submissions to the Arbitrator of any BCI shall be governed by the 
provisions of this paragraph, which shall prevail to the extent of any conflict with the other provisions 
of the Working Procedures (including these Procedures) relating to BCI.  
(a) Parties may incorporate BCI in submissions to the Arbitrator, marked as 
indicated in paragraph 5. In exceptional cases, parties may include BCI in an 
appendix to a submission.  
(b) A Party submitting a submission or appendix containing BCI shall also submit, 
within a time period to be set by the Arbitrator, a version redacting any BCI.  
This shall be ref erred to as the "Non -BCI Version".  However, a Party is not 
required to submit a "Non -BCI Version" of any exhibit containing BCI, unless 
specifically directed to do so by the Arbitrator;  
(c) A Non -BCI Version shall be sufficient to permit a reasonable underst anding of 
its substance.  In order to prepare such a Non -BCI Version:  
(i) A Party may request the Party that originally submitted the BCI, as soon as 
possible, to indicate with precision portions of documents containing BCI 
that may be included in the non -BCI Version and, if necessary to permit a 
reasonable understanding of the substance of the information, produce a 
Non-BCI summary in sufficient detail to achieve this aim.  
(ii) Upon receipt of such a request, the Party that originally submitted the BCI 
shall, as so on as possible, indicate with precision portions of documents 
containing BCI that may be included in the Non -BCI Version and, if necessary 
to permit a reasonable understanding of the substance of the information, 
produce a Non -BCI summary in sufficient det ail to achieve this aim.  
(iii) The Arbitrator shall resolve any disagreement as to whether the Party that 
originally submitted the BCI failed to indicate with sufficient precision 
portions of documents containing BCI that may be included in the Non -BCI 
Version a nd to produce, if necessary, a Non -BCI summary in sufficient detail 
to permit a reasonable understanding of the substance of the information, 
and may take appropriate action to ensure that the provisions of this 
paragraph are satisfied.  WT/DS316/ARB/Add.1  
 
- 15 - 
 
  (d) The European Union  may designate the personal offices of up to four of its 
Approved Persons as additional Secure sites for the sole purpose of storing and 
permitting review of the BCI versions of the Parties' submissions to the 
Arbitrator.  All of the protections applicable to BCI under these procedures, 
including the storage rules in paragraph  39, shall apply to such submissions.  
BCI exhibits to submissions may not be stored or reviewed at these additional 
Secure sites.  The EU shall submit the address (including room numbe r) of each 
of the additional Secure sites to the Arbitrator and the complaining Party.  
37. Any document containing BCI shall not be copied in excess of the number of copies required 
by the Approved Persons.  The making of electronic copies shall be avoided whe never possible.  Such 
documents may be transmitted electronically only by using secure e -mail, or by means of encrypted  
electronic communication.  If a Party submits to the Arbitrator an original document that cannot be 
transmitted electronically, it shall  on the day of submission deliver a copy of that document to one 
of the Secure sites listed in paragraph 17.  The Parties shall designate one of th e Secure sites listed 
in paragraph 17 for this purpose.  
38. A Party that wishes to submit or refer to BCI at an Arbitration meeting shall so inform the 
Arbitrator and the other Party.  The Arbitrator shall exclude persons who are not Approved Persons 
or WTO Approved Persons from the meeting for the duration of the submission and discussion of 
BCI. 
39. Approved Persons and WTO Approved Persons shall  store BCI only in locked security 
containers or in computers or computer systems that prevent access to such documents by non -
approved persons.  In the case of BCI submitted to the Arbitrator, such locked security containers 
shall be kept on the WTO Secre tariat's premises, except that members of the Arbitrator may 
maintain a copy of all relevant documents and materials containing BCI at their places of residence.  
Such documents and materials shall be stored in locked security containers when not in use.  BCI 
shall be appropriately protected against improper inspection and eavesdropping when being 
consulted and will be transmitted in sealed heavy duty double envelopes only.  All work papers ( e.g., 
draft submissions, worksheets, etc.) containing BCI shall, w hen no longer needed, be shredded or 
burned consistent with normal government practice for destroying sensitive documents.  
40. The Arbitrator shall not disclose BCI in its decision, but may make statements or draw 
conclusions that are based on the information  drawn from the BCI.  Before the Arbitrator makes its 
decision publicly available, the Arbitrator shall give each party an opportunity to ensure that the 
decision does not contain any information that it has designated as BCI.  
VI. HSBI  
41. Unless otherwise provide d below, HSBI shall be subject to all the restrictions in Section  V 
applicable to BCI.  
42. HSBI shall be submitted to the Arbitrator  in electronic form, using L ocked CDs or two Sealed 
laptop computers connectable to 19" - 21" monitors, or in hard copy form, f or access by WTO 
Approved Persons designated pursuant to paragraph 28 as being additionally authorized to access 
HSBI.  All such HSBI shall be stor ed 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 may 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 6.  Such hard copies shall 
either be stored in a combination safe at the designated secure location referred to above, or 
destroyed at the end of the relevant working session. HSBI shal l 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 Approved Persons designated pursuant to paragraph 28 
as being additionally authorized to access HSBI and which shall be destroyed once no longer in use.   
Also, documents containing HSBI may be removed if stored on a Sealed laptop computer provided 
by the Party that submitted the information , if stored on  Locked CDs provided by the Party that 
submitted the information , or if stored on a Stand -alone computer  on which HSBI has been saved  
pursuant to paragraph 47,  to the extent necessary for working sessions of the Arbitrator and WTO 
Approved Persons designated pursuant to paragraph 28 as being additionally authorized to access 
HSBI, subject to the following conditions:  WT/DS316/ARB/Add.1  
 
- 16 - 
 
  (a) the Sealed laptop computer , Locked CDs , or Stand -alone computer  on which 
HSBI has been saved  pursuant to paragraph 47  shall remain on th e premises of 
the WTO  at all times ;  
(b) the Sealed laptop computer , Locked CDs , or Stand -alone computer  on which 
HSBI has been saved  pursuant to paragraph 47  shall at all times be in the 
exclusive and direct custody of a WTO Approved Person designated pursuan t to 
paragraph 28 as being additionally authorized to access HSBI;  
(c) the WTO Approved Person  in exclusive and direct custody of  the Sealed laptop 
computer, L ocked CDs , or Stand -alone computer  on which HSBI has been saved  
pursuant to paragraph 47  shall ensure that no reproductions of any kind of 
information stored on the Sealed laptop , the L ocked CDs , or Stand -alone 
computer  on which HSBI has been saved  pursuant to paragraph 47  are created  
in any way ;  
(d) information contained on the Locked CDs shall only be viewed or processed 
using  a Stand -alone computer  that is neither connected to a network nor 
capable of being connected to a network. When not in u se, such Stand -alone 
computers shall be kept in locked security containers on the premises of the 
WTO Secretariat;  and 
(e) at the conclusion of the relevant working session, the Sealed laptop computer, 
Locked CDs , or Stand -alone computer on which HSBI has been  saved  pursuant 
to paragraph 47  shall be immediately returned to the combination safe in the 
designated secure location referenced above.  
Any working sessions  involving HSBI that occur outside of the d esignated secure location referred 
to above  shall only occur in the personal work spaces (on the premises of the WTO Secretariat) of 
WTO Approved Persons designated pursuant to paragraph 28 as being addi tionally authorized to 
access HSBI , or, for internal meetings of the Arbitrator and/or of WTO Approved Persons  designated 
pursuant to paragraph 28 as being additionally authorized to access HSBI , only in 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 sessions occur, special care shall always be taken to ensure the 
security of HSBI.  
43. Each Party shall maintain an additional copy (electronic or hard) of the HSBI it submits to 
the WTO, for access by HSBI Approved Persons acting on behalf of the other Party, in the HSBI 
locations listed in paragraph 10.  A Stand -alone printer may be used 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.  
44. Except as otherwise provided in these procedures, HSBI shall not be stored, transmitted or 
copied either in written or electron ic form.  
45. HSBI Approved Persons may view HSBI on the Sealed laptop computer maintained by the 
other Party or, in  the case of HSBI submitted on L ocked CDs on a Stand -alone computer, only in a 
designated room at one of the HSBI locations indicated in paragrap h 10 or at the designated secure 
location on the premises of the WTO Secretariat referred to in paragraph  42, unless otherwise 
mutually agreed by th e Parties. The designated rooms shall be available to HSBI Approved Persons 
from 9:00 a.m. to 5:00  p.m. (local time) during official working days at the respective HSBI location.  
The designated secure location referred to in paragraph 42 shall be availabl e to HSBI Approved 
Persons by prior arrangement with the WTO Secretariat.  HSBI Approved Persons may not bring into 
such room any electronic recording or transmitting devices.  HSBI Approved Persons may not remove 
HSBI from such room, except in the form of  handwritten notes or aggregated information generated 
on a Stand -alone computer.  In either case, such notes or information shall be used exclusively for 
this dispute in connection with which the HSBI has been submitted.  Each person viewing the HSBI 
in the HSBI location or designated secure location referred to in paragraph 42 shall complete and 
sign a log identifying the HSBI that the person reviewed or, alternatively, such a log can be generated 
automatically.  Each Party shall, for the HSBI location wi thin its territory referenced in paragraph WT/DS316/ARB/Add.1  
 
- 17 - 
 
  10, maintain such log until one year after the Conclusion of the Arbitration Process .  The WTO 
Secretari at shall, for the designated secure location referred to in paragraph 42, maintain such log 
until one year after the Conclusion of the Arbitration Process.  Before entering and when leaving 
such room, Outside Advisors who are HSBI Approved Persons may be s ubject to appropriate controls.  
46. No HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 28 
as being additionally authorized to access HSBI shall disclose HSBI to any person except another 
HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 28 as being 
additionally authorized to access HSBI, and then only for the purpose of this dispute.  This obligation 
applies indefinitely.  
47. HSBI may be processed only on Stand -alone computers.  WTO Approved Persons designated 
pursuant to paragraph 28 as being additionally authorized to access HSBI  may create electronic files 
containing HSBI and may save such files on a Stand -alone computer that is neither con nected to a 
network nor capable of being connected to a network . Any electronic file  containing HSBI shall not 
be transmitted electronically, whether by e -mail, facsimile, or otherwise.   
48. A Party that wishes to submit or refer to HSBI at an Arbitration meeting shall so inform the 
Arbitrator and the other Party.  The Arbitrator shall exclu de persons who are not HSBI Approved 
Persons or WTO Approved Persons designated pursuant to paragraph 28 as being additionally 
authorized to access HSBI from the meeting for the duration of the submission and discussion of 
HSBI.  
49. All HSBI shall be stored in a safe at the relevant HSBI location or in accordance with 
paragraph  42. 
50. The treatment in a Party's submissions to the Arbitrator of any HSBI shall  be governed by 
the provisions of this paragraph, which shall prevail to the extent of any conflict with the other 
provisions of the Working Procedures (including these Procedures) relating to HSBI.  
(a) HSBI may be incorporated into a separate appendix to, bu t not the body of, a 
Party's submission, which appendix shall be comprehensible in itself.  The 
document containing the HSBI shall be referred to as the "Full HSBI Version 
Appendix";  
(b) A Party submitting an appendix containing HSBI shall also submit, within a time 
period to be set by the Arbitrator, a version redacting any HSBI.  This shall be 
referred to as the "Redacted Version Appendix";  
(c) At the request of a Party, information contained in the Redacted Version 
Appendix may be treated as BCI, in accordance with the provisions of Section  V;   
(d) A Redacted Version Appendix shall be sufficient to permit a reasonable 
understanding of its substance.  In order  to prepare such a Redacted Version 
Appendix:  
(i) A Party may request that the Party that originally submitted the HSBI, as 
soon as possible, indicate with precision portions of documents containing 
HSBI that may be included in the Redacted Version Appendix an d, if 
necessary to permit a reasonable understanding of the substance of the 
information, produce a non -HSBI summary in sufficient detail to achieve 
this aim. 
(ii) Upon receipt of such a request, the Party that originally submitted the HSBI 
shall, as soon as possible, indicate with precision portions of documents 
containing HSBI that may be included in the Redacted Version Appendix and, 
if necessary to permit a reasonable understanding of the substance of the 
information, produce a non -HSBI summary in sufficie nt detail to achieve 
this aim. WT/DS316/ARB/Add.1  
 
- 18 - 
 
  (iii) The Arbitrator shall resolve any disagreement as to whether the Party that 
originally submitted the HSBI failed to indicate with sufficient precision 
portions of documents containing HSBI that may be included in the Redacted 
Version Appendix and to produce, if necessary, a non -HSBI summary in 
sufficient detail to permit a reasonable understanding of the substance of 
the information, and may take appropriate action to ensure that the 
provisions of this paragraph are satisfied.  
(e) The Full HSBI Version Appendix shall be kept in an HSBI location and in the 
designated secure location referred to in paragraph 42, as  appropriate, in the 
form of a L ocked CD.  If it is not practical to keep the Full HSBI Version Appendix 
in an HSBI locati on, the Party may keep it in a locked security container in a 
Secure site in the form of a L ocked CD.  
(f) The L ocked CD containing the Full HSBI Version Appendix shall bear the label 
marked "FULL VERSION OF HSBI APPENDIX TO SUBMISSION" and indicate the 
name o f the Party that submitted the HSBI.  In addition, the HSBI Appendix 
itself shall be marked with a heading with double bolded square brackets on 
each page in an electronic file that contains the notation "FULL VERSION OF 
HSBI APPENDIX TO 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 
Arbitrator (through a WTO Approved Person identified by the Arbitrator ) and 
two c opies to the other Party in the form of two L ocked 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 L ocked CD s.   
(h) The Part y shall commence transfer of the L ocked CDs containing the Full HSBI 
Version Appendix no later than the deadline for the submission concerned, and, 
at the same time, provide the Arbitrator and the other Party with proof that this 
has been done.   
(i) No more t han one working day in advance of a n Arbitration meeting with the 
parties, a Party may, exclusively at that Party's Perman ent Mission in Geneva, 
use the L ocked CD to produce no more than one hard copy of the Full HSBI 
Version Appendix for each HSBI Approve d Person planning to attend that 
Arbitrat ion meeting. All paper versions produced 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 pursuan t to paragraph 28 as being 
additionally authorized to access HSBI may, exclusively on the WTO premises, 
produce paper versions of the Full HSBI Ver sion Appendix for the purpose of, 
and immediately prior to, a n Arbitration meeting with the parties and/or an 
internal meeting.  When not in use, these paper  versions shall be stored in a 
locked container in the designated secure location referred to in paragraph 42.  
All paper versions produced pursuant to this subparagraph shall be destroyed 
after the Conclusion of the Arbitration Process as defined in paragraph 4. 
(k) Parties are encouraged to submit versions of exhibits containing HSBI from 
which all HSBI has been deleted.  Such exhibits shall be referred to as "HSBI -
Redacted Version Ex hibits".  HSBI -Redacted Version Exhibits may contain BCI.   
(i) A Party may submit HSBI -Redacted Version Exhibits prepared by that Party 
to the Arbitrator, and serve them on the other Party in accordance with the 
applicable procedures, at the time it serves th e submission to which the 
exhibit relates.  WT/DS316/ARB/Add.1  
 
- 19 - 
 
  (ii) If a HSBI -Redacted Version Exhibit is not submitted by the Party submitting 
the exhibit, an HSBI -Approved Person representing the other Party may 
prepare an HSBI -Redacted Version Exhibit of any such exhibit.  
(iii) HSBI-Redacted Version Exhibits may be prepared by an HSBI -Approved 
person, at an HSBI location, by deleting the HSBI in the exhibit (identified 
by double brackets) from such exhibit and either printing or photo -copying 
the resulting document containing no HSBI.   The deletion of HSBI from the 
resulting document shall be verified by a person authorized for this purpose 
by the Party that submitted the exhibit(s) in question.  The resulting 
document containing no HSBI (but which may contain BCI) will constitute 
the HSBI-Redacted Version Exhibit of such exhibit, and may be removed 
from the HSBI location.    
(iv) The Parties shall cooperate to the maximum extent possible to make 
available necessary facilities, including printers, photo -copiers, and physical 
means for the de letion of text from a document, to enable the preparation 
of HSBI -Redacted Version Exhibits, including making available an 
HSBI-Approved Person for purposes of the verification provided for in 
paragraph (iii) above.  HSBI -Redacted Version Exhibits may be p repared by 
HSBI-Approved Persons upon request during the times the designated room 
at the relevant HSBI location is available.     
(v) The Arbitrator shall resolve any disagreement arising from the operation of 
this sub -paragraph, and may take appropriate acti on to ensure that the 
provisions of this paragraph are satisfied.  
(l) The Arbitrator reserves the right, after consulting the parties, to amend the 
provisions of this paragraph at any time in order to accommodate situations 
arising during Arbitrat ion meetings,  and the preparation of the decision .  
51. The Arbitrator shall not disclose HSBI in its decision, but may make statements or draw 
conclusions that are based on the information drawn from the HSBI. Before the Arbitrator makes its 
decision publicly available, t he Arbitrator shall give each party an opportunity to ensure that the 
decision does not contain any information that it has designated as HSBI.  
VII.  RESPONSIBILITY FOR C OMPLIANCE  
52. Each Party is responsible for ensuring that its Approved Persons comply with thes e 
procedures to protect BCI and HSBI submitted by each Party, as well as with enforceable codes of 
professional conduct to which its Approved Persons or other Outside Advisors are subject.  WTO 
Approved Persons shall comply with these procedures to protect  BCI and HSBI submitted by a Party.  
WTO Approved Persons are covered by the WTO Rules of Conduct.  As provided for in the WTO Rules 
of Conduct, evidence of breach of these Rules may be submitted to the Chair of the DSB or to the 
Director -General of the WT O, or his or her designee, as appropriate, for appropriate action pursuant 
to Section VIII of the WTO Rules of Conduct.  
VIII.  ADDITIONAL PROCEDURE S 
53. After consulting with the Parties, the Arbitrator may apply any other additional procedures 
that it considers nece ssary to provide additional protections to the confidentiality of BCI or HSBI or 
other types of information not explicitly covered by these Procedures.  
54. The Arbitrator may, with the consent of both Parties, waive any part of these procedures.  
Such "waiver"  shall be specifically set forth in writing and signed by a representative of both Parties.  
IX. RETURN AND DESTRUCTI ON 
55. Except as provided for in paragraph 56 immediately below, after the Conclusion of the 
Arbitration Process as defined in paragraph 4, within a  period to be fixed by the Arbitrator, WTO 
Approved Persons and the Parties (along with all Approved Persons) shall destroy or return all WT/DS316/ARB/Add.1  
 
- 20 - 
 
  documents (including electronic material) or other recordings containing BCI to the Party that 
submitted such document s or other recordings.   At the same time, WTO Approved Persons and the 
Parties shall destroy or return any electronic material containing  HSBI, together with any typed or 
manuscript record thereof.    
56. The WTO Secretariat shall retain one hard copy and one electronic version of the  Decision 
of the Arbitrator containing BCI, and one electronic version of all documents containing BCI (except 
documents destroyed or returned pursuant to paragraph 55 immediately above because such 
documents contained HSBI) that w ere submitted to the Arbitrator. The Decision and the documents 
containing BCI referred to in the preceding sentence shall be recorded on locked CD(s), to be kept 
in sealed containers in a locked cabinet on the premises of the WTO Secretariat.   
57. The hard dr ive of each Stand -alone computer that has been used to store HSBI at any time 
and all media used to back up such computers shall be destroyed within the period fixed by the 
Arbitrator pursuant to paragraph 55.  
 
 WT/DS316/ARB/Add.1  
 
- 21 - 
 
  ANNEX  A-3 
ADDITIONAL WORKING PROCEDURES FOR THE SUBSTANTIVE MEETING WITH  THE ARBITRATOR  
Adopted 6 December 2018  
1.  During the meeting with the parties, the following persons will be ad mitted into the meeting 
room: (a ) the Arbitrator ; and (b ) all Approved Persons, HSBI  Approved Persons, and WTO Approved 
Persons. The Arbitrator will invite the 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 statemen ts will be videotaped and be made available for later viewing, as set out in paragraph 
5 below.  
2. BCI or HSBI in the texts of the opening oral statements provided to the Arbitrator  and the 
other party during the meeting and prior to the delivery of the opening oral statements shall be 
bracketed in accordance with the BCI/HSBI Procedures. In addition, a party including HSBI in its 
opening oral statement shall provide, prior to delive ry of the opening oral statement, one paper copy 
to each member of the Arbitrator  and one paper copy to the other party, on coloured paper, with 
the HSBI included in double brackets. This document shall be subject to the same confidentiality 
rules as an HS BI Appendix to a written submission.   
3. Paragraphs 38 and 48 of the BCI/ HSBI Procedures  shall be observed at  all times during the 
meeting.  Further i n that context , if at any point during its opening oral statement a party intends to 
utter BCI or HSBI, it  shall request that the videotaping be discontinued for the relevant portion of 
the opening oral statement, after which videotaping will be resumed.  The party that requests the 
discontinuation of the videotaping shall also indicate when the BCI or HSBI por tion has ended so 
that the videotaping can be resumed.  A party is invited to  first deliver a part of its opening oral 
statement that contains no BCI or HSBI, and then ask for the videotaping to be discontinued, before 
delivering a second part of its openin g oral statement containing BCI or HSBI.  
4. After both opening oral statement s have been delivered, the Arbitrator  will ask the parties 
whether they can confirm that no BCI or HSBI was pronounced during the videotaped portion s of 
the opening oral statement s. If each party so confirm s, the showing of the videotape will proceed 
according to schedule. If either party , within a deadline to be established by the Arbitrator,  requests  
to review the videotape  after the meeting , both parties will be invited to atten d 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 prepared to 
advise the WTO Secretariat representative(s) which portion of the opening oral statement presents 
a concern, and limit review to those portions of the videotape to 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 w ill be deleted.  
5. The showing of the videotape of the opening oral statements of the parties shall take place on 
a date to be established by the Arbitrator after consulting the parties . It will be open to officials of 
WTO Members and Observers, and, upon  registration with the Secretariat, to accredited journalists, 
accredited representatives of non -governmental organizations, and other interested persons, 
including members of the public.  The WTO Secretariat will place a notice on the WTO website no 
later than four weeks before the date of the public viewing  to inform the public of the showing. The 
notice shall include a link through which persons  can register with the WTO  Secretariat to attend the 
showing . 
 
_______________  
 
 
 WT/DS316/ARB/Add.1  
 
- 22 - 
 
  ANNEX  B 
ARGUMENTS OF THE PARTI ES 
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the United States  23 
Annex  B-2 Executive summary of the arguments of the European Union  32 
 WT/DS316/ARB/Add.1  
 
- 23 - 
 
  ANNEX  B-1 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUMENTS OF THE  UNITED STATES  
INTRODUCTION  
I. THE FRAMEWORK FOR ASSESSING THE U.S.  PROPOSED COUNTERMEASURES  
1. Pursuant to Article 7.10 of the Agreement on Subsidies and Countervailing Measures ("SCM 
Agreement"), the Arbitrator 's task is to "determine whether countermeasures {proposed by the 
United States} are commensurate with the degree and nature of the adverse effects determined to 
exist."  The dictionary definition of degree is "the amount, level, or extent to which something 
happens or is present" and of nature is "the basic or inherent features of something, especially when 
seen as characteristic of it."1  In the only arbitration to date regarding actionable subsidies, US – 
Upland Cotton (22.6 II) , the arbitrator considered that the ord inary meaning of these terms in Article 
7.10 was consistent with these definitions.2  Determining the degree and nature of adverse effects 
invites a case -specific inquiry that seeks to understand the causal findings and rationale in the 
underlying proceedi ngs.3 
2. The arbitrator in US – Upland Cotton (22.6 II)  further found that " 'commensurate ' essentially 
connotes 'correspondence ' between two elements,"4 but that " 'commensurate ' does not suggest that 
exact or precise equality is required between the two el ements to be compared, i.e., in this case, 
the proposed countermeasures and the 'degree and nature of the adverse effects determined to 
exist'."5  Thus, the arbitrator continued, " 'commensurate ' connotes a less precise degree of 
equivalence than exact nume rical correspondence '."6  In addition, "the expression 'adverse effects ' 
determined to exist ' refers us to the specific 'adverse effects ' within the meaning of Articles 5 and 6 
of the SCM Agreement  that form the basis of the underlying findings in the case  at hand."7   
3. The arbitrator in US – Upland Cotton (22.6 II) also observed that "it is normally not the task 
of arbitrators under Article 22.6 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes ("DSU") to review whether co mpliance has been achieved or not, as arbitral 
proceedings under this provision assume that there has been no compliance, and this will normally 
have been determined through compliance proceedings under Article 21.5 of the DSU."8  Of course, 
in this disput e, the EU 's failure to comply has in fact been determined through a compliance 
proceeding in which the findings were adopted by the DSB.9  Indeed, the parties agreed to a 
sequencing agreement in which the arbitration would be suspended while the EU 's initi al claims of 
compliance would be adjudicated first, and then the arbitration regarding the extent of the 
countermeasures would continue if the EU was found to have failed to comply, as it was.10 
4. The arbitrator in US – COOL  (22.6) discussed the objecting  party's burden in an arbitration.  
Specifically, the arbitrator stated:  
In the absence of a demonstration that the proposing party 's methodology is 
incorrect, the mere submission of an alternative methodology would not meet the 
objecting party 's burden of proof. This is because the alternative methodology does 
not, in itself, assist the Arbitrator in determining whether the result from the first 
methodology is (or is not) equivalent to the level of nullification or impairment. In 
 
1 Oxford English Dictionary online (US version), https://en.oxforddictionaries.com/defini tion/us/degree 
(accessed November 8, 2018); Oxford English Dictionary online (US version), 
https://en.oxforddictionaries.com/definition/us/nature (accessed November 8, 2018).  
2 See United States – Subsidies on Upland Cotton – Recourse to Arbitration by the  United States under 
Article 22.6 of the DSU and Article 7.10 of the SCM Agreement,  WT/DS267/ARB/2 and Corr.1, paras. 4.20, 
4.40-4.48 ( 31 August 2009) (" US – Upland Cotton (22.6 II) "). 
3 See US – Upland Cotton (22.6 II) , paras. 4.88 -4.89.  See also ibid. , para. 4.43.  
4 US – Upland Cotton (22.6 II) , para. 4.37.  
5 US – Upland Cotton (22.6 II) , para. 4.39.  
6 US – Upland Cotton (22.6 II) , para. 4.39.  
7 US – Upland Cotton (22.6 II) , para. 4.50.  
8 US – Upland Cotton (22.6 II) , para. 3.17.  
9 See Compliance Appellate Report, paras. 6.43 -6.44. 
10 Sequencing Agreement, para. 6  WT/DS316/ARB/Add.1  
 
- 24 - 
 
  such a situatio n, it would follow from the rules on burden of proof that the objecting 
party has not proved that the act at issue is WTO -inconsistent.11 
II. THE LEVEL OF COUNTERMEASURES REFLECTED IN THE U.S.  METHODOLOGY PAPER COMPORTS WITH 
THE REQUEST FOR COUNTERMEASURES  UNDER ARTICLE 22.2  OF THE DSU.  
5. In accordance with its request for authorization, the United States requested countermeasures 
"commensurate on an annual basis with the degree and nature of the adverse effects determined to 
exist."12  At the time the Arbitrator resumed its work on July 17, 2018,13 the "adverse effects 
determined to exist" were those found in the compliance panel and appellate reports adopted by the 
DSB on May 28, 2018.  In its methodology paper, the United States used  a series of calculations to 
determine the value of the adverse effects during the period covered by the adopted findings, and 
expressed that as $11.2 billion per year as of 2018.  The process and output follow exactly the 
approach outlined in the request for countermeasures.  
6. The EU argues that the U.S. "estimate{}"14 in its 2011 request for authorization of $7 -10 
billion "{b}ased on currently available data in a recent period,"15 acts as a ceiling on the amount of 
any countermeasures the United States m ay properly request now that the Arbitrator has resumed 
its work in 2018.  The EU goes on to argue that the Article 22.2 request has a "jurisdictional nature."  
It then contends, quoting the EC – Bananas (22.6 – Ecuador) arbitrator, that this means that th e 
$7-10 billion figure (or the formula used to derive that figure) " defines the amount of requested 
suspension for purposes of this arbitration proceeding '."16  The EU notes that the Bananas arbitrator 
rejected Ecuador 's effort to add "additional amounts" to the figure set out in its request for 
countermeasures as not " 'compatible with the minimum specificity requirements for such a 
request '."17  The EU 's argument is meritless.  
7. The U.S. request identified the level of countermeasures in functional terms,  as the annual 
level of adverse effects "determined to exist," caused to the interests of the United States by the 
EU's failure to comply with the DSB 's recommendations and rulings.  Therefore, under the EU 's 
reasoning, it is this functional description th at "defines  the amount of requested suspension for 
purposes of this arbitration proceeding."  While the U.S. request values "this figure" as $7 -10 billion, 
the result is explicitly stated as illustrative and temporary, framed as an "estimate{}" based on 
"currently available data in a recent period."18  This point is further underscored by the indication 
that the United States would update the figure annually using the most recent publicly available 
data. 
8. Moreover, the parties requested suspension of this  proceeding pending adoption by the DSB 
of a finding that the EU failed to comply with the recommendations and rulings of the DSB.19  In 
doing so, they evinced the clear intention that the results of that report would inform the work of 
the Arbitrator.20  This includes updating the countermeasures amount in 2018 following the nearly 
seven -year compliance period, which does not pose concerns regarding the EU 's due process.21 
 
11 United States – Certain Country of Origin Labelling (COOL) Requirements – Recourse to Article 22.6 of 
the DSU the United States , WT/DS384/ARB  and Add.1 / WT/DS386/ARB  and Add.1, para. 4.12  (7 December 
2015) (" US – COOL (22.6) "). 
12 WT/DS316/18, p. 2 (12 Dec. 2011).  
13 WT/DS316/38 (19 July 2018).  
14 WT/DS316/18, p. 2 (12 Dec. 2011).  
15 WT/DS316/18, p. 2 (12 Dec. 2011).  
16 EU Written Submission, para. 86 ( quoting EC – Bananas  (22.6 – Ecuador) , para. 24 (emphasis added 
by EU)).  
17 EU Written Submission, para. 86 ( quoting EC – Bananas (22.6 – Ecuador) , para. 24).  
18 WT/DS316/18, p. 1 (12 Dec. 2011) (footnote omitted).  
19 Sequencing Agreement, para. 6.  
20 It is w orth noting that in the EC – Bananas (22.6 – Ecuador)  arbitration, Ecuador proposed to add to 
the amount of nullification and impairment based on previously existing findings and information.  EC – 
Bananas (22.6 – Ecuador) , para. 23.  Unlike this proceeding, there had been no compliance proceeding, and no 
finding that in addition to maintaining existing WTO -inconsistent measures, the responding party had adopted 
new WTO -inconsistent measures.  
21 Cf. EU Written Submission, para. 85.  WT/DS316/ARB/Add.1  
 
- 25 - 
 
  III. THE UNITED STATES FOLLOWED THE CORRECT APPROACH IN DEVELOPING COUNTERMEASURES T HAT 
ARE COMMENSURATE WITH THE  ADVERSE EFFECTS DETERMINED TO EXIST. 
9. The U.S. countermeasures, as outlined in the U.S. methodology paper and subsequent 
submissions, are faithful to the requirements of DSU Articles 22.6 and 22.7 and SCM Articles 7.9 
and 7. 10, as well as the guidance provided by the decisions of past arbitrators.  
10. The United States based the methodology on the text of those provisions and the DSB -adopted 
findings from the compliance proceeding in this dispute.  The United States valued th e LCA in the 
specific orders underlying the significant lost sales findings and the LCA in the specific deliveries 
underlying the impedance findings, which reflect the instances of adverse effects caused by the A380 
LA/MSF and A350 XWB LA/MSF in the Decemb er 2011 – 2013 period reviewed by the compliance 
panel.  The U.S. calculation relies on the actual transactions underlying the findings for two reasons.  
First, this approach is consonant with the text of the agreement, which states SCM Agreement Article 
7.9 that countermeasures must be commensurate with "the degree and nature of the adverse effects 
determined to exist."  And second, because these are adopted findings, they do not require 
speculation as to their nature and extent.  
11. The SCM Agreement disc iplines actionable subsidies when they cause adverse effects to the 
interests of another Member.  When significant sales are lost, or imports and exports (into the EU 
and third country markets, respectively) are impeded, the United States suffers adverse e ffects in 
the form of serious prejudice.  It is the determination that particular subsidies cause adverse effects 
that provides the basis for countermeasures.22  Therefore, the United States methodology values 
the instances of adverse effects as of the tim e they occur.  By valuing a lost sale at the time the sale 
was lost, and valuing impedance at the time the imports and exports (through deliveries) were 
impeded, the U.S. calculation appropriately reflects the adverse effects determined to exist.  
12. The U nited States methodology then re -states in 2013 dollars the value of instances of adverse 
effects in 2011 and 2012 to ensure comparability, and derives an annual average value.  Finally, to 
make sure that the countermeasures remain commensurate with the ad verse effects determined to 
exist, the United States proposes a formula that accounts for inflation between 2013 and a given 
year in which countermeasures are applied.  
13. The U.S. methodology reflects the proper understanding of the degree and nature of t he 
adverse effects determined to exist.  During the original reference period, the United States 
established that "the effect of the subsidy is" certain forms of serious prejudice contained in SCM 
Article 6.3(a) -(c).  The United States proved as much by re lying on specific instances of these 
phenomena.  During the first compliance proceeding, the United States again proved, based on other 
specific instances after the end of the implementation period, that LA/MSF continues to cause 
adverse effects.  As a res ult, the DSB adopted findings that the effects of non -withdrawn LA/MSF is 
significant lost sales of U.S. twin -aisle LCA and significant lost sales and impedance of U.S. very 
large aircraft (VLA).23 
14. As the DSB found, LA/MSF causes "product effects;" tha t is, it enables Airbus to launch and 
bring to market new LCA models.24  When Airbus makes a sale through an order, or gains market 
share through a delivery, of an LCA model that, absent the subsidies, would not be available for sale 
or delivery, a causal link is established between the LA/MSF responsible for the market presence of 
that Airbus model, and the lost sale or impedance suffered by the U.S. LCA industry.25  Thus, the 
market presence of an LCA model attributable to the subsidies leads to sales and  deliveries year 
after year, to a variety of customers that would not otherwise occur, making these subsidies 
"profound and long -lasting."26  LA/MSF subsidies to one aircraft program also have been found to 
enable Airbus to build on the competitive advanta ges from LA/MSF subsidies,27 and further, to 
provide Airbus with technologies, experience, and financial benefits that make it easier to bring to 
 
22 See SCM Agree ment, Art. 7.9.  
23 WT/DS316/35 (29 May 2018).  
24 Compliance Appellate Report, para. 5.587.  
25 See, e.g., Compliance Appellate Report, paras. 5.725 -5.726, 5,740.  
26 Compliance Panel Report, para. 6.1528.  
27 See Compliance Appellate Report, para. 5.644.  WT/DS316/ARB/Add.1  
 
- 26 - 
 
  market subsequent new LCA models, which the compliance appellate report recognized as "indirect 
effects."28 
15. In both the original and the compliance proceedings, the adverse effects findings relied on the 
counterfactual proposition that the Airbus LCA model that won a particular sale or accounted for 
market share would not have even been available in the market , and neither would any other non -
U.S. competing model.29  Given these adopted findings, the existing LA/MSF subsidies ' effects of 
causing significant lost sales and impedance is not limited to the specific transactions that panels 
and the Appellate Body h ave cited as evidence.  That effect is ongoing.  It is manifest in repeated 
instances of lost sales and impedance, which will continue to arise as long as LA/MSF subsidies 
continue to have "product effects."  
16. Therefore, to ensure that countermeasures ar e commensurate with the degree and nature of 
the adverse effects determined to exist, the United States proposes annual countermeasures that 
reflect the adopted findings in that regard, including the findings that LA/MSF subsidies continue – 
in the present  tense – to cause adverse effects after the end of the implementation period.30  Thus, 
just as Boeing LCA compete with A380 and A350 XWB aircraft that are in the market when and as 
they are because of the LA/MSF subsidies, the United States proposes to app ly countermeasures 
annually until the DSB finds that the EU has come into compliance or the parties reach a positive 
solution to the dispute.31  This is also consistent with the prospective nature of WTO dispute 
settlement.  
17. By ignoring the nature of th e adverse effects determined to exist, especially the causal link 
between the A380 LA/MSF and A350 LA/MSF subsidies and the adverse effects they were found to 
continue to cause, the EU erroneously treats as the full extent of the adverse effects the five 
transactions during the December 2011 – 2013 period identified in the compliance proceeding, and 
deliveries during that same period to the six country markets that served as the basis for impedance 
findings.   
IV. ONGOING COUNTERMEASURES , AS ALMOST ALL PAST ARBITRATORS HAVE AWARDED , ARE 
APPROPRIATE IN THIS PROCEEDING .  
18. The continuing adverse effects of LA/MSF subsidies were the explicit focus of the successful 
U.S. claim in the first compliance proceeding that "the challenged subsidies continue to cause  the 
same types of 'adverse effects ' today."32  At the heart of both the U.S. claim and the compliance 
findings of continued, or ongoing, adverse effects are the "product effects" of LA/MSF and their 
operation in the LCA industry where the subsidy -enabled m arket presence of Airbus LCA has an 
obvious and direct adverse impact on Boeing LCA.   
19. Consistent with the original findings of adverse effects, the compliance findings of adverse 
effects are based on the "direct" and "indirect" product effects that ex isting LA/MSF has in enabling 
Airbus to offer and deliver LCA where it would otherwise be unable to do so.  LA/MSF thus allows 
Airbus to take sales, deliveries, and market share that it would not otherwise obtain, resulting in 
continued adverse effects to the United States for as long as those product effects operate.   
20. Relying in large part on the compliance panel 's findings, the appellate report concluded that 
existing subsidies did indeed continue to cause adverse effects into the post-implementation period, 
and it did so in terms that leave no doubt as to the ongoing nature of LA/MSF 's adverse effects:   
• "{O}ur discussion of the Panel 's findings reveals that the LA/MSF subsidies existing in the 
post-implementation period – i.e. the A380 and A350XWB LA/MSF subsidies – enabled Airbus 
to proceed with the timely launch and development of the A350XWB, and to bring to market 
 
28 See Compliance Appellate Report, paras. 5.637 -5.639.  
29 See Original Appellate Report, para. 1264; Compliance Appellate Report, paras. 5.725 -5.726, 5,740.  
30 See Compliance Appellate Report, paras. 5.413, 5.605, 5.609, 5.640, 5.646 -5.647, 5.694, 5.768, 
6.37(a), 6.43(a).  
31 See DSU, Art. 22.8.  The United States notes that the EU attacks a straw man by quoting a phrase in 
the U.S. methodology paper out of context.  The United States never suggested, as the EU implies, that its 
basis for applying countermeasur es going forward is that doing so is common and administrable.  See EU 
Written Submission, para. 92.  Rather, the U.S. point was that it was using a one -year period, rather than, for 
example, a 25 -month period, because considering imports on an annual basi s is both common and easily 
administrable.  The United States could have sought a 25 -month countermeasure figure that would apply in 
each 25 -month period.  But that would be unusual and more difficult to administer.  
32 Compliance Panel Report, para. 6.1112  (emphasis original).  WT/DS316/ARB/Add.1  
 
- 27 - 
 
  and to continue d eveloping the A380. Both these events, as the above analysis shows, were 
crucial to  renew and sustain Airbus ' competitiveness in the post -implementation period ."33 
• "{T}he Panel's findings support the conclusion that the sales of the A350XWB identified in  
Table 19 of the Panel Report represent 'significant lost sales ' to the US LCA industry within 
the meaning of Article 6.3(c) of the SCM Agreement, and that such lost sales were the effect 
of the LA/MSF subsidies existing in the post -implementation period. This conclusion also 
finds support in the analytical framework adopted by the panel and the Appellate Body in 
the original proceedings, as well as in a number of the Panel 's findings, including its finding 
concerning the 'product effects ' of the LA/MSF sub sidies existing in the post -implementation 
period on Airbus ' timely launch of the A350XWB , and the existence of sufficient 
substitutability between Boeing's and Airbus ' twin-aisle product offerings."34 
• "{T}he orders identified in Table 19 of the Panel Re port in the twin -aisle LCA market 
represent 'significant lost sales ' to the US LCA industry and, therefore, that the LA/MSF 
subsidies existing in the post -implementation period are a genuine and substantial cause of 
serious prejudice to the United States w ithin the meaning of Article 6.3(c) of the SCM 
Agreement."35 
• "{T}the Panel 's findings support the conclusion that the sales of the A380 identified in Table 
19 of the Panel Report represent 'significant lost sales ' to the US LCA industry within the 
meanin g of Article 6.3(c) of the SCM Agreement, and that such lost sales were the effect of 
the LA/MSF subsidies existing in the post -implementation period. This conclusion also finds 
support in the analytical framework adopted by the panel and the Appellate Bod y in the 
original proceedings, as well as in a number of the Panel 's findings, including its finding 
concerning the 'product effects ' of the LA/MSF subsidies existing in the post -
implementation period on Airbus' continued offering of the A380 , and the exis tence 
of sufficient substitutability between Boeing's and Airbus ' VLA product offerings."36 
• "{T}he orders identified in Table 19 of the Panel Report in the VLA market represent 
'significant lost sales ' to the US LCA industry and, therefore, that the LA/M SF subsidies 
existing in the post -implementation period continue to be  a genuine and substantial cause 
of serious prejudice to the United States within the meaning of Article 6.3(c) of the SCM 
Agreement."37 
21. In sum, the DSB adopted findings both that ex isting LA/MSF subsidies have adverse effects 
of an ongoing, or continuing, nature, and that the subsidies were continuing to cause – in the present 
tense – such adverse effects throughout the post -implementation period.  Thus, there is no merit to 
the EU 's objections to annual countermeasures, or its attempts to again limit the adverse effects 
caused by LA/MSF to the specific instances identified in the reference period.  The DSU provides for 
countermeasures until the EU is found to have complied in an appr opriate forum and the DSB adopts 
the findings, or a positive solution is reached.  
V. EU OBJECTIONS TO THE U.S.  METHODOLOGY ARE ERRONEOUS  
A. The Proper Counterfactual  
22. However, the EU has alleged no anomaly with the compliance reference period – December 
2011 – 2013 – in terms of LCA prices or other inputs into the U.S. methodology that were not 
germane to the adopted compliance findings.  Thus, the EU has failed to prove than any such data 
utilized by the U.S. methodology are "unrepresentative."  The EU 's arguments in this respect 
therefore fail.  
23. The fact is that the adverse effects flow from the product effects caused by the LA/MSF 
subsidies.  Those product effects continue to result in significant lost sales and impedance.  The 
subsidies are  in no way specific to certain sales or deliveries.  Thus, because the DSB adopted 
findings that, following the end of the RPT, the causal chain remained intact, there is no basis to 
treat the instances of adverse effects that manifested in the December 20 11 – 2013 period as the 
 
33 Compliance Appellate Report, para. 5.647 (emphasis added).  
34 Compliance Appellate Report, para. 6.31 (emphasis added).  
35 Compliance Appellate Report, para. 6.31(a) (emphasis added).  
36 Compliance Appellate Report, para. 6.37 (emphasis added).  
37 Compliance Appellate Report, para. 6.37(a) (emphasis added).  WT/DS316/ARB/Add.1  
 
- 28 - 
 
  full extent of the adverse effects.  Rather, as the compliance panel observed, the adverse effects of 
LA/MSF are "profound and long -lasting."38  
24. The EU alleges that the United States mischaracterizes the causal pathway "to turn adverse 
effects findings based on a temporally -limited acceleration effect into findings of adverse effects that 
apply in perpetuity."39   According to the EU, "the first compliance panel found, and the Appellate 
Body upheld, that the subsidised element of  A380 MSF loans and A350XWB MSF loans accelerated 
the launch of the A380 and the A350XWB."40 
25. But the EU is flatly wrong.  As we already discussed, the compliance panel in US – Large Civil 
Aircraft specifically contrasted the acceleration effects in tha t dispute with the product creation 
effects found by the original and compliance panels in this dispute.41  Indeed, the EU itself has stated 
in this proceeding:  
Where the market presence of a model of aircraft, at the time of a sales campaign, 
was attribut able to the direct effects and indirect effects from subsidies, this served 
as the basis for findings of significant lost sales, on the notion that, absent the 
subsidies, the Airbus product would not have competed in the sales 
campaign , and Boeing would in stead have won the sale.  Similarly, these findings 
relating to the market presence of Airbus ' models also served as the 
eventual basis for findings of other forms of volume effects  (and specifically, 
impedance).42 
Thus, although it repeatedly fights the c onclusion, at least once in this proceeding the EU has 
specifically and concisely acknowledged that both the significant lost sales findings and the 
impedance findings were based on the unavailability of the Airbus LCA in the absence of LA/MSF.  
This adopt ed multilateral finding – including the causal pathway by which the presence of Airbus 
LCA continually causes Boeing to lose sales and deliveries it would otherwise obtain – remains in 
effect and cannot be disturbed.  Accordingly, contrary to the EU 's asse rtions, the U.S. methodology 
results in annual countermeasures commensurate with the degree and nature of the adverse effects 
determined to exist.   
B. Counterfactual Airplane Prices  
26. The EU has also faulted the United States for the prices it used for calculating significant lost 
sales and impedance values.  With respect to lost sales, the EU objects to the United States ' use of 
somewhat contemporaneous orders (for all but one of the customers) by the same customer of the 
relevant Boeing model.  The  EU's allegations fail to prove that the U.S. approach would render the 
countermeasures not commensurate.  
27. The EU 's criticisms typically take the form of pointing out some way in which these comparator 
orders are not identical to the counterfactual orde r.  For example, in some instances, the number of 
aircraft ordered is not exactly the same.  But the EU 's burden requires more than demonstrating 
that the proxies the United States chose are imperfect.  Of course, they are.  They are proxies.  
There is no actual information available; it 's a counterfactual  order.  The proxies the United States 
chose are eminently reasonable, and therefore, do not result in countermeasures that are not 
commensurate.  
28. It would be erroneous to value the instances of lost sa les from the first compliance proceeding 
as if they involved orders for Airbus models other than those identified in the first compliance 
appellate report.43  To do so would amount to a collateral attack on the findings in the reports 
adopted by the DSB.  
29. In addition, such an approach would presume erroneously that, if a customer actually 
converted an original order for a given Airbus model ( e.g., the A350 XWB -1000) to another Airbus 
model ( e.g., the A350 XWB -900), then the same customer in the counterfa ctual situation would 
 
38 Compliance Panel Report, para. 6.1528.  
39 EU RAQ 56, para. 48.  
40 EU RAQ 56, para. 48. 
41 See United States – Large Civil Aircraft (21.5) (Panel) , para. 9.127, note 2849.  
42 Exhibit A to EU Preliminary Ruling Request, para. 41 (citing Compliance Panel Report, paras. 6.1785 -
6.1789, 6.1806 -6.1817) (emphasis added).  
43 See U.S. RAQ 58, paras. 14 -16.  See also  Compliance Appellate Report, para. 5.705, Table 10 and 
para. 5.723, Table 12; Compliance Panel Report, para. 6.1781, Table 19.  WT/DS316/ARB/Add.1  
 
- 29 - 
 
  necessarily have converted the originally ordered Boeing model ( e.g., the 777 -300ER) to another 
Boeing model ( e.g., the 787 -10).  Conversion activity can result from various factors, including 
factors specific to Airbus models and Air bus's customer relationships, such that it cannot be assumed 
that actual Airbus conversions would translate to counterfactual Boeing conversions.   
30. The specifications of the aircraft that each customer actually ordered from Boeing provide the 
best prox y for the specifications of aircraft they likely would have ordered in the counterfactual.  The 
price that they paid accordingly provides the best measure of the value of the aircraft that would 
have been ordered in the counterfactual.  In addition, there are not reliable methods to adjust LCA 
pricing for differences in the countless physical characteristics and other specifications between 
Airbus and Boeing aircraft.   
31. The United States also notes that these prices are just proxies for counterfactual s ales.  Even 
if the requisite information was available and there was a reliable methodology to make price 
adjustments, there is no indication that any differences in physical characteristics or other 
specifications between the Airbus aircraft ordered and t he counterfactual Boeing model would 
necessitate price adjustments so large as to affect the conclusion whether proposed 
countermeasures are "commensurate."  Accordingly, there is no basis to undertake an immensely 
complicated, unreliable, and improper exe rcise of adjusting the submitted prices, if that indeed is 
what the EU is advocating.   
32. The EU argues that the Arbitrator should attempt to exclude non -U.S. inputs from the 
valuation of Boeing aircraft in the calculation of countermeasures.  The EU goe s so far as to ask that 
all "engine costs" should be excluded from the calculations because one Boeing model, the 787, 
offers customers a choice between Rolls Royce engines and General Electric engines.44  As 
demonstrated previously, the EU 's argument is u ntenable, and would inherently result in 
countermeasures that are not "commensurate" because the goods experiencing serious prejudice 
are U.S. LCA, not the U.S. parts thereof.45  The EU 's argument is also incoherent:  for LCA 
incorporating millions of part s from several tiers of suppliers, it would exclude complex assemblies, 
such as engines, based on the country in which they were assembled, without regard to any U.S. -
origin parts in such assemblies.46 
33. In sum, the EU 's criticisms of the U.S. lost sales evidence are meritless.  They include a 
mixture of inaccurate guesswork, legal error, and demands for documentation that is now on the 
record.  These arguments are emblematic of the EU 's failure to demonstrate that the U.S. 
calculations are not "comm ensurate with the degree and nature of the adverse effects determined 
to exist."   
C. Alleged Dissipation of Adverse Effects  
34. The counterfactual launch of the A380 and A350 XWB is a necessary, but not necessarily 
sufficient, condition for the dissipatio n of adverse effects based on sales and deliveries of the A380 
and A350 XWB.  That is, as long as the A380 and A350 XWB would not be available for offer in the 
counterfactual situation absent existing LA/MSF – and therefore not available for delivery – the sales 
and deliveries they take during that period from competing Boeing LCA continue to represent adverse 
effects caused by the subsidies.  
35. However, the point at which the A380 and A350XWB would launch in the counterfactual is not 
necessarily the point  at which adverse effects would cease.  There are several reasons why adverse 
effects would not cease at the moment of a counterfactual launch in this dispute, including those 
discussed below.   
36.  First, A380 LA/MSF would still contribute to the adverse  effects caused in the twin -aisle 
market.  Both A380 LA/MSF and A350 XWB LA/MSF – assessed through aggregation as a single 
subsidy – were found to cause significant lost sales in the twin -aisle market.  Therefore, both A380 
LA/MSF and A350 XWB LA/MSF would  remain out of compliance unless the EU somehow could have 
 
44 See EU RAQ 52, para. 3 (seventh bullet).  
45 See U.S. Written Submission, paras. 266-269. 
46 See U.S. Written Submission, para. 269.  WT/DS316/ARB/Add.1  
 
- 30 - 
 
  demonstrated, in addition to a counterfactual A380 launch, that Airbus also would have been able 
to offer and deliver the A350 XWB in the absence of the aggregated LA/MSF subsidies.  
37. Second, the re would still be adverse effects in the form of impedance in the VLA market.  The 
findings of impedance in the VLA market were based on deliveries .  Delivery of an aircraft 
necessarily lags by several years behind the launch of an aircraft.  The real -world A380 was launched 
in 2000, but first delivery did not occur until 2007.47  Therefore, even if the counterfactual launch of 
the A380 marked the moment at which a customer could order  A380s, at least another seven years 
would have to pass before Airbus cou ld make deliveries of the A380.  Accordingly, counterfactual 
launch will not coincide with an end to impedance resulting from LA/MSF -enabled A380 deliveries.  
38. Third, there may even still be significant lost sales involving the A380 in the global VLA pr oduct 
market after the counterfactual A380 launch.  A later launch can have several important effects on 
a sales campaign.  For example, market perceptions regarding the value proposition an LCA model 
offers can be strengthened by a model 's demonstrated su ccess in service.  A manufacturer cannot 
benefit in early sales campaigns from such demonstrated success.  In addition, the timing of a launch 
may affect the delivery slots a manufacturer is able to offer in a particular campaign.  Whether or 
not the subsi dies would continue to cause significant lost sales in the global VLA market after the 
counterfactual A380 launch would be a fact -specific inquiry assessed on the basis of the relevant 
campaign -specific evidence.  If these or other factors made it so that Airbus 's offer in a particular 
campaign would have been less attractive in the counterfactual, and as a result Boeing would have 
won the sale, then the subsidies would still be the cause of a lost sale even though in the 
counterfactual the A380 would have launched.  
39. As the United States has demonstrated, these are not proper considerations in the context of 
this arbitration.  However, even in the context of a compliance proceeding, compliance would require 
that any existing subsidies no longer cause adve rse effects.  In particular, with respect to the VLA 
market, the EU would have failed to achieve compliance if, absent existing LA/MSF, Boeing would 
have made additional significant sales.  To be sure, establishing compliance by severing the causal 
link wo uld have meant showing that the A380 would have been launched in the absence of LA/MSF.  
But demonstrating a counterfactual launch alone would be insufficient if it were still the case that, 
for any of the reasons listed above or based on any other conside rations, Boeing still would have 
made sales after the end of the RPT to customers that instead ordered the A380.  
40. For these reasons, even if a counterfactual launch date had been established, it is not certain 
that any of the forms of adverse effects in  any of the relevant product markets would have ceased 
at the time of that launch.  Of course, the EU established no such thing.  The compliance proceeding 
found that the subsidies cause significant lost sales and impedance in the VLA product market, and 
significant lost sales in the twin -aisle product market.  
41. There are other ways in which the adverse effects caused by A380 LA/MSF and A350 XWB 
LA/MSF could dissipate.  In particular, if generations of LCA passed and the technological knowledge, 
experienc e, and financial gains from the subsidies no longer bore a significant relationship with the 
LCA models being sold at that time, the effects could be found to have dissipated.  Specifically, the 
compliance panel explained:  
Nevertheless, it is possible to e nvisage a number of different scenarios pursuant to 
which the "product -creating" effects of the pre -A350XWB LA/MSF subsidies might 
well come to an end.  One such possibility could be through the launch of new 
unsubsidized models of Airbus LCA.  The introdu ction of a new unsubsidized  model 
of Airbus LCA would ensure that its market presence could not be attributable to the 
direct effects  of LA/MSF.  Yet because of the particular features of LCA production, 
it is highly unlikely that a new unsubsidized model of Airbus LCA could be launched 
today in the absence of the "learning", scope and financial effects associated with 
the LA/MSF subsidies provided for certain (but not necessarily all) previous models 
of LCA.  Indeed, as already noted, it is undisputed that  "learning" effects are 
fundamental to the very existence of any competitive LCA producer.  However, were 
a second  unsubsidized LCA model to be developed, it is possible that the indirect 
effects  of the LA/MSF subsidies provided for the purpose of developi ng previous 
 
47 See Compliance Panel Report, paras. 6.1220, 6.1383 (citing to a 2011 Airbus presentation entitled 
"A380 Update: Four Years in Service").  WT/DS316/ARB/Add.1  
 
- 31 - 
 
  models of LCA would play a relatively minor role in its launch and bringing to market 
compared with the first unsubsidized new model of Airbus LCA.  The impact of the 
same indirect effects  on a third unsubsidized new model of Airbus LCA would b e 
even smaller as its development would most likely be based on mainly the "learning", 
scope and financial effects generated from the first and second unsubsidized  models 
of Airbus LCA.48 
42. Finally, the United States recalls that these findings were adop ted by the DSB and cannot be 
re-evaluated in this arbitration.  Article 7.10 of the SCM Agreement requires the Arbitrator to 
determine whether the proposed countermeasures are commensurate with the degree and nature 
of the adverse effects determined to exi st.  It would therefore be improper to replace the degree 
and nature of the adverse effects determined to exist with new adverse effects findings.  The EU is 
welcome to argue (again) that the adverse effects have dissipated.  The United States is confident  
any such effort will fail (again).  However, this is not the forum for those arguments.  
CONCLUSION  
43. Effective countermeasures are the last remaining hope to force the EU to reckon with the 
pernicious effects its LA/MSF subsidies cause, and hopefully achieve a solution to this longstanding 
failure to comply with its WTO obligations.  For the United States, as with the DSU, these 
countermeasures are not the preferred option.  But after 14 years of litigation, and ten years since 
the original p anel findings against the EU, without a single, meaningful step by the EU to reform 
LA/MSF – and, in fact, a period in which the EU reinforced its WTO -inconsistent behavior by providing 
the latest and largest tranche of subsidized LA/MSF to date (and with no guarantee that it will not 
once again do the same) – this option is all that remains.  
44. The EU 's efforts to greatly expand the limited scope of this proceeding to evade the 
consequences of its WTO -inconsistent behavior for longer still, represent an a ttack on the very utility 
of dispute settlement at the WTO.  Despite that the EU has provided these WTO -inconsistent LA/MSF 
subsidies to every single Airbus LCA program, and that the EU has taken zero meaningful steps to 
address these subsidies or the effe cts they cause, the EU seeks to avoid countermeasures 
commensurate with the degree and nature of the adverse effects determined by the WTO to exist.  
The EU tries to guarantee itself the right to continue its course of unabated, WTO -inconsistent 
subsidies with limited and ineffectual, if any, consequences.  The EU therefore, in effect, seeks to 
have the Arbitrator declare that the WTO rules and dispute settlement system simply cannot deal 
effectively with the EU 's massive subsidization of Airbus, or with su bsidies of this nature in general.  
45. But the EU is wrong.  The DSB adopted reports twice, making clear that the EU 's LA/MSF 
subsidies breach the EU 's WTO obligations by causing massive adverse effects to the United States.  
The SCM Agreement and the DSU explicitly provide for the United States now to obtain authorization 
to impose countermeasures commensurate with the degree and nature of those adverse effects.  To 
deny the United States that right would be to cement in perpetuity the imbalance imposed by  the 
EU's subsidies.  It is long past the appropriate time for the EU to argue about whether, or the extent 
to which, its subsidies cause adverse effects.   
46. We must distinguish between so -called technical errors with the U.S. methodology alleged by 
the EU, and the EU 's broader attempt to draw out and expand this proceeding far beyond its intended 
purpose.  The EU may not like the potential consequences of the requested countermeasures.  But 
they are unfortunately necessary to induce the EU to finally co nfront the economic pain its subsidies 
have caused for at least two decades – a burden the United States alone has shouldered for the 
duration of this long dispute.  It is our hope that, consistent with the DSU and the parties ' joint 
sequencing agreement, the "technical" disagreements can be adjudicated relatively quickly, so that 
the balance of concessions can be restored and the EU is given appropriate additional incentive to 
pursue in earnest a lasting solution.  
 
 
48 Compliance Panel Report, para. 6.1529 (emphasis original).  WT/DS316/ARB/Add.1  
 
- 32 - 
 
  ANNEX B -2 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF TH E EUROPEAN UNION  
 
I. INTRODUCTION  
1. The US methodology results in an amount of countermeasures that is not "commensurate " 
with the degree and nature of the adverse effects determined to exist, as required under Articles 
7.9 and 7.10 of the Agreement on Subsidies and Countervailing Measures  ("SCM Agreement "), and 
that is inconsistent with the US request for countermeasures under Article 22.2 of the DSU ( "Article 
22.2 request ").1 
2. The United States designed an approach purpor ting to value the "precise findings "2 of five 
specific lost sales, and impedance in six specific third -country markets for very large aircraft ( "VLA"), 
each during the December 2011 to 2013 period.3  The total value of those adverse effects, according 
to the United States and before correcting multiple errors it has made, is USD 22 billion.  USD 22 
billion is an exceptionally high amount.  Even a fraction of that amount is significantly larger than 
any countermeasures authorised in previous arbitrations.  However, the US request does not stop 
there.  The United States asks for an amount of countermeasures that is multiple  times the value of 
the "precise findings " of adverse effects.  The United States a sks to multiply  the precise findings of 
past adverse effects an indefinite number of times, and to authorise, on that basis, the full amount 
of countermeasures – USD 22 billion – on a recurring basis, again and again, without bound.  Such 
recurring counter measures are evidently not "commensurate " with the "precise findings " of the 
adverse effects determined to exist.4  Below, the European Union summarizes key flaws in the United 
States ' approach.  
II. THE ARTICLE 22.2 REQ UEST PROVIDES NO BAS IS FOR AUTHORIZING 
COUNTERMEASURES FOR FI NDINGS OF IMPEDANCE   
3. In its Article 22.2 request, the United States requests countermeasures that correspond to 
lost sales and displacement, but not impedance.5  Since the Article 22.2 request fails to meet the 
applicable "specificity " requirements with respect to adverse effects in the form of "impedance ", the 
Article 22.2 request provides no basis for requesting, let alone authorising, countermeasures for 
findings of impedance.   
4. An Article  22.2 request must "set out a specific level of suspension , i.e. a level equivalent to 
the nullification and impairment caused by the WTO -inconsistent measure ".6  The United States 
submits that its Article 22.2 request specifi es the level of countermeasures in "functional terms ", 
rather than in numerical terms, and that those "functional terms " cover impedance.7  The United 
States errs.  
5. First, the US reading of its Article 22.2 request is unsupported by the terms of that reques t.  
The amount requested  by the United States "corresponds  to the annual value of lost sales , of imports 
of US large civil aircraft displaced from the EU market, and of exports of US large civil aircraft 
displaced  from third country markets ".8  Thus, the purported "functional terms " in the Article 22.2 
request specifically identify lost sales and  displacement, but do not identify impedance, and hence 
fail to cover impedance.   
6. Second , the erroneous reading advanced by the United States would imply that its request 
fails to "set out a specific level of suspension ".9  The United States asserts that the level of 
countermeasures in  functional terms corresponds to "the annual level of adverse effects 'determined 
 
1 WT/DS316/18.  
2 US Methodology Paper, para. 25 ( citing Decision by the Arbitration Panel, US – Upland Cotton (Articles 
22.6 and 7.10 – US), para. 4.49).   
3 US Methodology Paper, paras. 26 -30. 
4 US Methodology Paper, para. 25.  
5 WT/DS316/18.  
6 Decision by t he Arbitration Panel, EC – Bananas III (Ecuador) (Article  22.6 – EC), paras. 21, 24 
(emphasis added); Decision by the Arbitration Panel, EC – Hormones (Canada) (Article 22.6 – EC), para. 16.  
7 US Written Submission, para. 74; US Response to Arbitration Pan el Question 133, paras. 145 -149. 
8 US Response to Arbitration Panel Question 133, para. 146 (emphasis and underlining added).  
9 Decision by the Arbitration Panel, EC – Bananas III (Ecuador) (Article  22.6 – EC), paras. 21, 24 
(emphasis added); Decision by t he Arbitration Panel, EC – Hormones (Canada) (Article 22.6 – EC), para. 16.  WT/DS316/ARB/Add.1  
 
- 33 - 
 
  to exist ,' caused to the interests of the United States by the EU 's failure to comply with the DSB 's 
recommend ations and rulings ".10  In the US view, the references in its Article 22.2 request to the 
specific types  of adverse effects ( i.e., lost sales and displacement), and to the amount  of adverse 
effects ( i.e., "between $7 and $10 billion per year"), are not part of this description, but merely 
"explained  how the United States valued those adverse effects at that time ".11 
7. If that is the proper construction of the Article 22.2 request, the request does not provide 
any specificity whatsoever as regards  the level of c ountermeasures, either in terms of the types  of 
adverse effects, or in terms of amount requested by the United States.  Instead, the purported 
"functional  description " advanced by the United States would merely paraphrase the language of 
Articles 7.9 and 7.10 of the SCM Agreement .  It follows that, if that is the proper construction of the 
Article 22.2 request, it does not support the authorisation of any countermeasure s whatsoever.   
III. THE UNITED STATES ER RS IN REQUESTING REC URRING COUNTERMEASUR ES 
8. Without any explanation in its Methodology Paper, the United States took the position that 
it must be granted authorisation to impose not only countermeasures commensurate with the 
specific adverse effects determined to exist in the first compliance proceedings, but, in addition, 
recurring countermeasures for an indefinite period and total amount.  For numerous reasons, the 
United States errs in requesting recur ring countermeasures.  
A. The US ' "static " approach provides no basis for recurring countermeasures  
9. The approach adopted by the United States does not permit authorisation of recurring  
countermeasures.12  The US approach is premised on a particular understandin g of the treaty terms 
"commensurate with the degree and nature of the adverse effects determined to exist ", in Articles 
7.9 and 7.10 of the SCM Agreement .   
10. The United States has adopted what one might refer to as a "static " approach, which is based 
on the following related legal premises.13  First, the US approach is premised on the understanding 
that the term "determined " (which is the past tense) refers to w hat has already been "determined " 
in the compliance panel report, as modified by the Appellate Body report in the first compliance 
proceedings.  Second , and relatedly, the US approach is premised on the understanding that the 
term "exist" refers to the exi stence or non -existence of a particular phenomenon between December 
2011 and 2013  (that is, within defined temporal parameters related to the past).  Third, and 
relatedly, the US approach is premised on the understanding that the term "exist" does not allo w 
the Parties and the Arbitration Panel – in determining the continued existence or non -existence of a 
particular phenomenon – to consider any argument or evidence related to the period  after December 
2013 (that is, after the defined parameters related to the past).  For the specific purposes of this 
argument, the European Union does not take issue with these legal premises.  They are, therefore, 
not in dispute between the Parties.  
11. However, in light of the US static approach, the Arbitration Panel cannot au thorise recurring 
countermeasures, which are premised on the proposition that the United States is experiencing the 
same degree of adverse effects over time, including up to the present.  This would amount to 
assuming , in an entirely speculative fashion, t hat new adverse effects, which have not been 
determined  to exist (and may not, under the very approach proposed by the United States, be 
assessed), will occur to the same degree over time.  Indeed, t he United States acknowledges that 
its "static " approach does not show, and is not designed  to show, that the "adverse effects 
determined to exist " consist of any sales other than the five lost sales identified, or impedance in 
any market other than the six markets identified during the December 2011 to 2013 period.14  Even 
if the US approach were to provide a basis for countermeasures calibrated accurately to the "precise 
findings " of adverse effects determined to exist, it provides no basis for recurring cou ntermeasures 
for an indefinite period and total amount.  
 
10 US Response to Arbitration Panel Question 133, para. 149 (emphasis added).  
11 US Response to Arbitration Panel Question 133, paras. 146, 149 (emphasis in original); US Written 
Submission, para. 74.  
12 See, e.g., EU Responses to Questions 8, 9, and 12; EU Oral Statement, paras. 21 -25. 
13 See, e.g., US Written Submission, paras. 5, 9, 21, 53, 70, 77, and Section IV.B.  
14 US Response to Arbitration Panel Question 19, para. 29. WT/DS316/ARB/Add.1  
 
- 34 - 
 
  B. The US errs in arguing that the precise adverse effects findings support the 
conclusion that the same adverse effects still exist to a similar degree six 
to eight years later, in 2019, and in future y ears  
12. Because its own methodology is not even designed to calibrate the level of countermeasures 
to any adverse effects over time, the United States attempts a different approach to establish the 
required correspondence.  The United States argues that the first compliance pane l, and the 
Appellate Body, made findings about what would be present adverse effects in 2019 and beyond .  
Thus, in the US view, the precise findings of adverse effects in the December 2011 to 2013 period 
support the conclusion that the same  degree of adver se effects is present today, six to eight years 
later, and will continue unchanged into the future.  The United States is wrong.15 
13. First, the United States asserts that, even today, the A380 and the A350XWB "would not 
have even been available in the market " in the absence of the subsidy measures.16  No such findings 
have ever been made.  The United States simply assumes  a counterfactual wor ld without the A380 
and the A350XWB.  This assumption is not based on the required "plausible or reasonable " 
counterfactual, in light of the findings in the first compliance proceedings and the EU argument and 
evidence.17   
14. In the original and the first com pliance proceedings, the United States chose, and succeeded 
with, an approach to establishing causation based on so -called "product effects " of the subsidies on 
the "as and when " launch of these aircraft at specific moments in time – that is, an accelerati on 
effect .  That causation theory served the United States well.  However, the original and first 
compliance panels did not make findings about the counterfactual launch dates for the A380 and the 
A350XWB.18  That is, they did not determine when  the aircraf t would have been launched absent 
subsidisation.  Neither the original panel nor the first compliance panel found that the A380 and the 
A350XWB would not have been launched by 2011 -2013; nor did they find that the aircraft would 
not have been launched as o f today; and they certainly did not find that the aircraft would never  be 
launched in the future.  
15. Moreover, in the present proceedings, employing an approach developed by the United 
States itself in the first compliance  proceedings, the European Union has demonstrated that the 
A380 and the A350XWB, in their current form, would, at a minimum, have been launched as of 
today, and indeed several years earlier .19  The United States has not even addressed, much less 
contested, that showing.   
16. Instead of engaging with the European Union 's evidence, the United States takes the position 
that this evidence and argument involve an improper "collateral attack " on the findings on the causal 
pathway in the first compliance proceedings.20  The United S tates errs.  The European Union 's 
demonstration of the counterfactual launch dates for the A380 and the A350XWB does not constitute 
a "collateral attack " on the findings adopted by the DSB.21  Unlike the United States, the European 
Union takes the findings of the first compliance proceedings at face value, and accepts them.  It is 
the United State s that mischaracterises the findings in the first compliance proceedings concerning 
the causal path way, as a means of justifying its request for recurring countermeasures for an 
indefinite period and total amount.  If anything, it is the US assertion – i.e., that the A380 and the 
A350XWB would not have come into existence by 2013, or even today –  that constitutes a "collateral 
attack " on adopted findings.  
 
15 See, EU Framework Response, paras. 24-31; EU Responses to Arbitration Panel Questions 4, 8, 10, 
11, 12, 14, 15, 56.  
16 US Written Submission, para. 82.  
17 Decision by the Arbitration Panel, US  – Washing Machines (Article 22.6 – US), paras. 3.10 -3.11. See 
also Decision by Arbitration Panel, US – Gambling (Article 22.6 – US), paras. 3.27, 3.30.  
18 See, e.g., EU Response to Arbitration Panel Questions 4, 56 (pa ras. 48 -68).  See also Panel Report, 
EC – Large Civil Aircraft , paras. 7.1944 -7.1949; Panel Report, EC – Large Civil Aircraft (Article 21.5 – US), 
paras.  6.1717.  
19 See, e.g., EU second written submission in EC – Large Civil Aircraft (Article 21.5 II – EU), 28 January 
2019, (Exhibit EU -97-HSBI and BCI) , Section III.C.4; EU First Written Submission in EC – Large Civil 
Aircraft (Article 21.5 II – EC), October 2018, (Exhibit EU -A-BCI), Sections V.B.4.d, V.B.5.e .  See also  EU 
Responses to Arbitration Panel Questions 4 (paras. 119 -123), 56 (paras. 62 -68), 101; EU Opening Statement, 
para. 28.  
20 US Response to Arbitration Panel Question 18, paras. 25, 27; Question 19(b), para. 32.  
21 US Response to Arbitration Panel Question 18, para. 25.  WT/DS316/ARB/Add.1  
 
- 35 - 
 
  17. Second , the United States submits that the adverse effects determined to exist would, ad 
infinitum , remain "present ", because the findings at issue were phrased in the present tense.22  This 
argument is  not only grammatically  and legally incorrect, it is also at odds with the US 
acknowledgement that the findings were made with respect to the December 2011 to 2013 period.23    
18. Third, the United States submits that the first compliance panel made findings n ot of specific 
instances of adverse effects in December 2011 to 2013, but rather of "various forms of serious 
prejudice that LA/MSF subsidies continue to cause  today through its {sic} product effects ".24  Yet, 
the first compliance panel made no findings abo ut adverse effects today, in 2019, or in future years.  
As the United States acknowledges, the adverse effects determined to exist "consist " of "precise 
findings " of particular lost sales and impedance in particular geographic markets, during the 
December 2011 to 2013 period.25    
C. The United States erroneously rejects the relevance of the non -recurring 
nature of the subsidy measures  
19. Holding all other factors constant, when a measure is continuous, or recurring, it may cause 
continuous, or recurring, trade effects over time.  Assuming a representative period is identified, an 
arbitration panel could then authorise an amount of recurrin g countermeasures that is calibrated to 
the recurring trade effects caused by the recurring measure.  In the only previous  arbitration under 
Article 7.10 of the SCM Agreement , this is precisely what happened.  The arbitration panel in US – 
Upland Cotton (A rticles 22.6 and 7.10 – US) authorised recurring countermeasures because  the 
subsidies were recurring and made under a continuous programme.  The United States agrees.26  
Based on proper econometric modelling and analysis proposed by the parties, that arbit ration panel 
authorised recurring countermeasures calibrated to adverse effects resulting from recurring  
subsidies under a programme.  
20. In the present case, the United States also tried to establish the existence of an MSF subsidy 
programme.  It failed.  How ever, the United  States requests countermeasures as if it had succeeded 
on that claim.  It asks to multiply an indefinite number of times the "precise findings "27 of adverse 
effects from the past into the present and the future, and to ignore the non -recurr ing nature of the 
subsidy measures, of which, as the Appellate Body recently confirmed again, the effects "ordinarily 
dissipate " over time.28 
21. The case law shows a perfect  parallelism between (i) the (non -) recurring nature of the 
measure  at issue and (ii) the (non -) recurring nature of the countermeasures  authorised by past 
arbitration panels.  Recurring countermeasures have been authorised only where the measure was 
recurring, whereas only non-recurring countermeasures have been authorised where the measure 
was non -recurring.29  The United States erroneously asks the Arbitration Panel to deviate from the 
consistent past case law, and to authorise recurring  countermeasures (for an indefinite period and 
total amount) in response to non-recurring  measures, despite the Appellate Body 's explicit 
confirmation that the adverse effects of non -recurring subsidies "ordinarily dissipate " over time.30  
E. Recurring countermeasures do not reflect a "reasonabl e estimation " of the 
"actual continued adverse effects of the {subsidies} over time " 
22. The Parties agree on one important point – i.e., as explained by the arbitration panel US – 
Upland Cotton (Articles 22.6 and 7.10 – US), to meet the test of "commensurateness " under Article 
 
22 See, e.g., US Written  Submission, paras. 83, 86, 116.  
23 EU Response to Arbitration Panel Question 11, paras. 241-252. 
24 US Response  to Arbitration  Panel  Question  17, para. 18 (emphasis  added).   See also ibid., para. 16. 
25 US Methodology Paper, para. 29.  See also  EU Response to Arbitration Panel Question 56, paras. 24 -
33. 
26 US Response to Arbitration Panel Question 59, para. 21 (emphasis added).  
27 US Methodology Paper, para. 25.  
28 Appellate Body Report, US  – Large Civil Air craft (Article 21.5 – EU), para. 5.336.  See also Appellate 
Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.371 (footnote 932); EC – Large Civil Aircraft, 
para. 713.  
29 See, e.g., EU Written Submission, paras. 108 -112; EU Response to Arb itration Panel Question 20, 
paras. 338 -342. 
30 See above footnote  28. WT/DS316/ARB/Add.1  
 
- 36 - 
 
  7.10 of the SCM Agreement , recurring countermeasures must reflect a "reasonable estimation " of 
"actual continued adverse effects of the {subsidies} over time ". 31,32   
23. In its belated and ex post attempt to justify its request for recurring countermeasures, the 
United States asserts that its approach achieves the required commensurateness, or 
correspondence, under Article 7.10 of the SCM Agreement , arguing as follows:  
the U.S. approach of valuing the instances of adverse effects underlying 
the adopted findings is, … representative of the adverse effects 
LA/MSF subsidies will continue to cause  in future years  (subject to 
inflation).  And, consistent with US – Upland Cotton (22.6 II) , the U.S. 
approach provides the most reasonable estimation of continued 
adverse effects over time .33 
24. The substantial time gap of, at least, six to eight years between the December 2011 to 2013 
period  and today, 2019, enables the Arbitration Panel to test the United States ' assertion based on 
the most recent available data and evidence.  This does away wit h the need to address any alleged 
"inherent uncertainty "34 about how present adverse effects of the non -recurring subsidy measures 
at issue, if any, may "dissipate "35 further in the future.   
25. Indeed, to test the United States ' assertion, there is no need for  the Arbitration Panel to 
speculate about the future.  Using the most recent available data and evidence, the European Union 
has demonstrated that the specific instances of adverse effects determined to exist in December 
2011 to 2013 do not provide a "reasonable estimation " of "the actual continued adverse effects of 
the {subsidies} over time ".36  Specifically, the European Union submitted the following evidence and 
argument:  
(a) First, using the methodology developed by the United States ' own expert in the  first 
compliance proceedings, the European Union established that, in the counterfactual 
world, the relevant aircraft (A380 and A350XWB), in their current form, would have been 
in the marketplace today, without the subsidies.37,38    
The United States has not contested that showing, despite the fact that it directly rebuts 
and disproves the basis for the United States ' assertion that the adverse effects 
determined to exist in December 2011 to 2013 provide a reasonable estimation of 
adverse effects today, and  in the future.  That is, the United States asserts 
correspondence based on the erroneous assertion that the relevant aircraft would not be 
available in the market today, and in future years.39  
(b) Second , the European  Union submitted its first and second written submissions from the 
second compliance proceedings, showing that the specific instances of adverse effects 
determined to exist in December 2011 to 2013 do not provide a reasonable estimation 
of adverse effects today.40 
The United States has  not contested that showing.  
 
31 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
32 See, e.g. US Response to Arbitration Panel Question 19(b), paras. 31, 35; US Response to Arbitration 
Panel Question 21, para. 44.  See, e.g., EU Response to Arbitration Panel Questions 10 and 21.  
33 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis and bold added).  See also 
ibid., para. 31.  
34 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
35 See above footnote  28. 
36 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
37 See above footnote  19.   
38 In response to a question by the Arbitration Panel, the European Union also explained that the 
presence of adverse effects, if any, after the counterfactual launch dates cannot be the basis to authorise 
recurring c ountermeasures in the same amount for an indefinite period.  Diminishing effects weaken  and 
dissipate  with the passage of time, and therefore contradict the premise of the US request for recurring 
countermeasures, which assumes that adverse effects remain constant  over time (and prohibits testing of that 
assumption).  The United States argued that the Arbitration Panel has no authority to consider mechanisms 
through which adverse effects dissipate over time.  EU Response to Arbitration Panel Question 101; U S 
Response to Arbitration Panel Question 101; EU Comment on US Response to Arbitration Panel Question 101.   
39 See e.g. , US Response to Arbitration Panel Questions 20, 101; EU Response to Arbitration Panel 
Question 101.  
40 See, e.g., EU Written Submission, paras. 113 -130; EU Responses to Arbitration Panel Questions 10, 
21, 56 (Section C), 57, 101, 104, and 147; EU Opening Statement, paras. 48 -57. WT/DS316/ARB/Add.1  
 
- 37 - 
 
  (c) Third, even when taking the most extreme (and unsupported) US assumption – that 
every  A380 order and, in addition, every A380 delivery, today amounts to an adverse 
effect to the US (and disregarding , for the moment, the wind -down of the A380 
programme) – the US assertion of correspondence fails.  According to the US approach, 
the annual level of A380 orders and deliveries allegedly  lost to Boeing between 2016 and 
2018 is 47 units.  Yet, in reality, t he annual total A380 orders and deliveries during that 
same time period was only 27 units.41  Thus, e ven before taking into account the wind -
down of the A380 programme, the United States claims vastly higher adverse effects 
than the total number of annual A irbus orders and deliveries.  
The United States  has not contested that showing.  
(d) Fourth , when taking into account the wind -down of the A380 programme, the lack of any 
correspondence becomes only starker.  With the wind -down of the A380 programme by 
2021, there remain a total of [[***]] A380 aircraft to be delivered in 2019 -2021, of which 
[[*** ]] are destined for Emirates under the 2013 lost sale.42  That is, during the 2019 -
2021 period, the annual number  of A380 orders and deliveries will be [[***]] aircraft 
(without correcting for double -counting), or [[***]] aircraft (when correcting for doubl e-
counting).43  From 2022 onwards, the annual number of A380 orders and deliveries will 
be zero. 
This evidence further demonstrates the extreme degree  to which the US approach, which, 
for an indefinite  period, results in countermeasures commensurate with an  annual 
number of 47 A380 orders and deliveries, does not achieve the required correspondence 
with "the actual continued adverse effects of the {subsidies} over time ".44 
Again, the United  States has  not contested that showing.  
26. In sum, while the Parties agree on the legal standard for authorising recurring 
countermeasures, the European Union has shown that the United States ' request for 
countermeasures does not meet that standard.  Specifically, the United States ' request does not 
reflect a "reaso nable estimation " of "the actual continued adverse effects of the {subsidies} over 
time".45   This lack of correspondence should not come as a surprise.  The US approach is simply not 
designed to ensure  correspondence.  Rather, the US approach seeks recurri ng countermeasures that 
are permanently fixed by reference to adverse effects determined to exist in the past ( i.e., the 
December 2011 to 2013 period), regardless  of what is actually happening today, in 2019, and 
regardless of what is known will change in the future.46 
27. Given that the United States has not contested that showing, there is no basis in law or in 
fact for this Arbitration Panel to authorise recurring co untermeasures.  Similarly, there is no basis 
for the European Union to accept such an award.  
28. Moreover, the European Union notes that the untenable US position becomes even more 
problematic in light of the recent Appellate Body report in US – Large Civil Ai rcraft (Article 21.5 – 
EU).  Recalling its jurisprudence that "effects of a subsidy will ordinarily dissipate over time ", the 
Appellate Body found that an adjudicator cannot assume that "the phenomena {of price suppression 
and lost sales} manifest themselv es to the same degree throughout the time period from order to 
delivery ".47  Thus, there is no basis for the adjudicator to assume that even later deliveries under 
the very same  lost sale, and much less under later sales alleged to be lost due to subsidies,  constitute 
present adverse effects, nor that they do so "to the same degree ".48 
29. In the present proceeding, the United States asks the Arbitration Panel to do the exact 
opposite  of what the Appellate Body requires of an adjudicator.  That is, the United States asks the 
Arbitration Panel to assume, without any further assessment, that adverse effects during the 
December 2011 to 2013 period manifest "to the same degree "49 (i.e., are constant) over time, and, 
 
41 This comparison is even before  controlling for double -counting or over -counting, as discussed in 
Section I.G, below.    
42 See EU Response to Arbitration Panel Question 147.  
43 EU Respo nse to Arbitration Panel Question 147.  
44 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
45 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
46 US Methodology Paper, paras. 90 -94. 
47 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.336 (emphasis added).  
48 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.336, 5.340.  
49 Appellate Body Report, US  – Large Civil Aircraft (Article 21.5 – EU), para. 5.336.  WT/DS316/ARB/Add.1  
 
- 38 - 
 
  therefore, provide "a reasonable estimation " of "the actual continued adverse effects of the 
{subsidies} over time ".50   The Appellate Body 's jurisprudence confirms that there is simply no basis 
in law or fact for the US position, which is that, as a matter  of default, the Arbitration Panel must 
assume that adverse effects do not dissipate with time, and are the same today as they were during 
the December 2011 to 2013 period.  
F. The United States errs in arguing that the Arbitration Panel has no authority 
to test whether recurring countermeasures reflect a "reasonable 
estimation " of the "actual continued adverse effects of the {subsidies} over 
time "51 
30. As explained above, in its attempt to justify  its request for recurring countermeasures, the 
United States asserts, without any evidence (and without  engaging with the EU 's rebuttal evidence), 
that the "instances of adverse effects underlying the adopted f indings " are "representative  of the 
adverse effects LA/MSF subsidies will continue to cause in future years ", and are "the most 
reasonable estimation  of continued adverse effects over time ".52  The United States thus assumes 
that the effects of A380 and A35 0XWB MSF subsidies do not "diminish ",53 or "dissipate ",54 over time, 
but instead remain constant , such that adverse effects during the December 2011 to 2013 time 
period are "representative " of effects over time.  
31. At the same time, the United States asserts that the Arbitration Panel has no authority to 
test this assertion.55  The United States cannot have its cake and eat it.  The European Union is not 
aware of any court of law that would accept an assertion that:  
(a) The party putting  forward the assertion ( i.e., the United States) leaves that assertion 
unproven;  
(b) The opposing  party ( i.e., the European Union) disproved that assertion, without any 
rebuttal by the other side ( i.e., the United States); and,  
(c) The adjudicat or (i.e., the Arbitration Panel) is not even allowed to test the assertion – 
i.e., to assess in an objective manner the assertion put forward.56   
32. The US position is untenable.   
33. First, and as the arbitration panel in US – Washing Machines  recently confirme d, the task 
before this Arbitration Panel is to assess the "reasonableness and plausibility " of the counterfactual 
at issue.57  In these proceedings, that involves testing the counterfactual underpinning the US 
assumption that non -recurring subsidy measures  cause constant adverse effects over time, based 
on the assertion that the A380 and A350XWB would not be available in the mar ket.  While the 
European Union explained that the Arbitration Panel should coordinate its work with the second 
compliance panel, the European Union did not ask the Arbitration Panel also to assess compliance.  
Instead, the Arbitration Panel must test the "reasonableness and plausibility " of the US 
counterfactual in these proceedings, and in so doing, should rely on recent "credible, factual and 
verifiable information ",58 including the EU evidence.  
34. Second , the fact that the second compliance panel is, to som e extent, looking at the same 
evidence  for a different purpose – that is, to assess compliance under Article 7.8 of the SCM 
Agreement  – does not mean that the Arbitration Panel may abdicate its separate and distinct duty, 
under Article 7.10 of the SCM Agre ement  and Article 11 of the DSU,  to make an objective assessment 
on a key question that, because  of the US request for recurring countermeasures, is before the 
 
50 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
51 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  
52 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis added).  
53 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.371 (footnote 932); EC – 
Large Civil Aircraft, para. 713; US  – Large Civil Aircraft (Article 21.5  – EU), footnote 758.  
54 See above footnote  28. 
55 US Written Submission, paras. 99, 100, 105 -107; US Response to Arbitration Panel Questions 18 
(paras. 24 -27), 22 (para. 49), 103 (paras. 28 -29), 101 (paras. 19, 22) .  See, e.g., EU Framework Response, 
paras.  39-50; EU Responses to Arbitration Panel Questions 9, 10, 14, 21, 56, 103; EU Opening Statement, 
paras. 53 -57. 
56 See also EU Response to Arbitration Panel Question 104, paras. 130 -131. 
57 Decision by the Arbitration Panel, US – Washing Machines (Article 22 .6 – US), paras. 1.16, 3.10, 
3.11, 3.29.   
58 Decisions by the Arbitration Panel, US – 1916 Act (EC) (Article 22.6 – US), para. 5.54; EC – 
Hormones (US) (Article 22.6 – EC), para. 41; US – Washing Machines (Article 22.6 – US), para. 1.16.  WT/DS316/ARB/Add.1  
 
- 39 - 
 
  Arbitration Panel.  To support its erroneous request for recurring countermeasures, the United S tates 
asks the Arbitration Panel to make a finding that adverse effects in the December 2011 to 2013 
period are a reasonable estimation of adverse effects over time, but denies the Arbitration Panel any 
opportunity to test the US assertion on the basis of the evidence.  Consistent with its duty to make 
an objective assessment of the matter, the Arbitration Panel must test the US assertion in light of 
the recent evidence and argument.  
35. Third, the European  Union recalls that, in prior phases of this dispute, the Appellate Body 
faulted the adjudicator  for accepting assertions by the United States without "making its own 
independent assessment " thereof.59  By simply deferring to the United States, and ignoring  EU 
evidence and argument, that adjudicator failed to make an objective assessment, under Article 11 
of the DSU.  Likewise, in the recent report in  US – Large Civil Aircraft (Article 21.5 – EU), the 
Appellate Body again faulted the adjudicator, in several instances, for its failure "to assess properly 
the European Union 's evidence " and to "provide a reasoned and adequate explanation for {rejecting 
the European Union 's argument} ".60  The Arbitration Panel cannot simply disregard the European 
Union 's evidence and argument, as the United States has consistently asked it to do, and deny its 
duty to test the reasonability and plausibility of the US assertions about the relevant 
counterfactual.61   
36. Fourth , even with recurring subsidies that caused "continued adverse effects " over time, the 
arbitration panel in US – Upland Cotton (Articles 22.6 and 7.10 – US) did not simply assume  that 
past adverse effects provided a "reasonable estimation " of "actual continued advers e effects of the 
measure over time " in that particular case.62  Rather, the arbitration panel tested  this assertion in 
light of the Parties ' evidence, including recent evidence.63  The arbitration panel recognised that the 
outcome of this inquiry may depend on "a number of economic or other factors  that would affect the 
evolution over time of the impact of the subsidies at issue ".64  Based on an assessment of the parties ' 
evidence and argument, including recent evidence, the arbitration panel in that case foun d that the 
reference period proposed by Brazil  was not "unrepresentative ".65  This confirms , all the more , that 
this Arbitration Panel cannot  authorise recurring countermeasures in response to non -recurring 
subsidy measures, much less without similarly testing the US assertion that the December 2011 to 
2013 period is representative.  
37. Fifth, and finally, the European  Union notes that, while the U nited States rejects the 
Arbitration Panel 's authority to engage with the recent evidence, the United States asserts that "any 
'representativeness ' inquiry must be with respect to an aspect  of the countermeasures calculation 
that was not part of, or incorp orated  in, the adverse effects determination in the compliance 
proceeding ".66  The United States offers, as an example, the price of a particular LCA model, which 
was "not part of or incorporated in the adverse effects determined to exist ".67  The United States 
errs.   
38. There is a substantial logical disconnect in the US position that the Arbitration Panel is 
allowed to test for representativeness for some limited issues ( e.g., "the price of a particular LCA 
model "68), but not for any other issu e (e.g., cause -and-effect pathway, sales of A380 aircraft); while 
still insisting that recurring countermeasures are appropriate.  As the United States agrees, recurring 
countermeasures are appropriate only if the adverse effects in the December 2011 to 20 13 period 
provide a "reasonable estimation " of "the actual continued adverse effects of the measure over 
time".69  Such representativeness cannot be established based on an all -too-convenient assessment 
 
59 Appellate Body Report, EC – Large Civil Aircraft , para. 1128.  
60 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.78, 5.104, 5.116.  
61 See, e.g., US Written Submission, paras. 99, 100, 105 -107; US Responses to Arbitration Quest ions 
18 (paras. 24 -27); 22 (para. 49);  101 (paras. 19, 22); 103 (paras. 28 -29).  See, e.g., EU Framework 
Response, paras. 39 -50; EU Responses to Arbitration Panel Questions 9, 10, 14, 21, 56, 103; EU Opening 
Statement, paras. 53-57. 
62 Decision  by the Arbit ration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.   
63 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras. 4.117 -
4.118.  
64 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117 
(emphasis added).  
65 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.118.  
66 US Response to Arbitration Panel Quest ion 103, para. 28 (emphasis added).  
67 US Response to Arbitration Panel Question 103, para. 29.  
68 US Response to Arbitration Panel Question 103, para. 29.  
69 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.  WT/DS316/ARB/Add.1  
 
- 40 - 
 
  of a narrow subset of issues ( e.g., "the price of a pa rticular LCA model "), while ignoring all other 
issues.70   
39. To give a concrete example, according to the United States, adverse effects in the VLA 
market determined to exist in December 2011 to 2013 are "representative of the adverse effects 
LA/MSF subsidies  will continue to cause in future years ".71  The United States seems to accept that, 
in testing this proposition, the Arbitration Panel is allowed to test if the price of the A380 in December 
2011 to 2013 is similar to the price today, but the Arbitration P anel is not allowed to test if the A380 
is still sold today, and to a similar degree.  According to the United States ' logic, the Arbitration 
Panel must accept representativeness in the VLA market if the price of the A380 has not changed, 
even though the a verage annual number of A380 orders and deliveries  is vastly lower today than in 
the December 2011 to 2013 period, and the A380 programme is winding -down .72  
40. Moreover, th e inquiry into "representativeness " set out by the arbitration panel in US – 
Upland Cot ton (Articles 22.6 and 7.10 – US) was considerably more comprehensive than what the 
United States inaccurately asserts.  If that arbitration panel had adopted the narrow inquiry into 
"representativeness " proposed by the United States, it simply could not have tested for 
representativeness in the way it actually did.  In testing representativeness, that arbitration panel 
did consider an "aspect " – i.e., the world price of cotton – "that was part of, or inc orporated  in, the 
adverse effects determination in the compliance proceeding ".73 
41. Thus, if the United States insists that recurring countermeasures are appropriate, it must 
logically accept that the inquiry into "representativeness " cannot be confined to a s elf-selected, 
limited and biased subset of issues designed to favour the United States ' position.   
G. The US request for recurring countermeasures results in improper double -
counting and over -counting  
42. The US request  for recurring countermeasures is unwarranted for at least two other reasons.  
First, the US request  to multiply past adverse effects into the present and the future will lead to 
improper double -counting .  The US approach counts a transaction once as a los t sale in the year an 
order  is made and, again , when the delivery  actually occurs several years after the order, as part of 
the exercise of quantifying impedance.   
43. The United States submits that, because its approach values "non-overlapping instances of 
adverse effects " during the December 2011 to 2013 period, "utilizi ng this figure for future years  in 
which countermeasures will be applied " does not risk double -counting.74  The US reasoning  is 
erroneous, and shows a misunderstanding of the concept of double -counting.  The US approach risks 
double -counting, because it assumes  an equal number  of instances of lost sales and impedance 
occurring for an indefinite period of time.  However, the lost sale of today is necessarily the 
impedance of tomorrow, and under the US approach, the same transaction will therefore be counted 
twice.     
44. The European Union illustrates this by reference to the unsupported US assumption that 
every  A380 order  today and, in addition , every  A380 delivery  today, amounts to adverse effects.75  
Under the US approach, "non-overlapping instances of adverse effects " during the period December 
2011 to 2013 related to the A380 result in double -counting when used as the basis for recurring 
countermeasures .  The European Union demonstrated that the United States is counting the very 
same  transactions twice:  once  as a lost sale during the December 2011 to 2013 period, and again  
when the delivery actually occurred.  As a result, improper double -counting distorts the alleged 
correspondence between the requested recurring countermeasures and the adverse effects 
deter mined to exist.   
45. Second , the United States ' mixing of an order -centric metric for lost sales and a delivery -
centric metric for impedance during the same reference period improperly inflates the alleged level 
of adverse effects and leads to over-counting .  Any method for quantifying adverse effects must be 
 
70 US Response to Arbitration Panel Question 103, para. 29.  
71 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis added).  See also  US Written 
Submission, paras. 82, 137, 139, 260; US Response to Arbitration Panel Question 19(a), para. 28; US  
Response to Arbitration Panel Question 19(b), para. 38; US Response to Arbitration Panel Question 20, para. 
37; US Opening Statement, para. 37.  
72 See, e.g., EU Response to Arbitration Panel Question 147.  
73 US Response to Arbitration Panel Question 103, pa ra. 28 (emphasis added).  
74 US Response to Arbitration Panel Question 69, para. 43 (emphasis added).  
75 EU Response to Arbitration Panel Question 57.  WT/DS316/ARB/Add.1  
 
- 41 - 
 
  consistent, and use a single  metric; a quantification for the same period cannot mix an order -centric 
metric and a delivery -centric metric.  Just as the United States would be wrong to calc ulate a 
company 's turnover by mixing both an order -centric valuation and a delivery -centric valuation for 
sales and deliveries occurring in the same year, the United States errs in quantifying both lost sales 
and deliveries during the reference period in q uestion.  Doing so misallocates economic harm from 
a temporal perspective, and necessarily  results in over -counting.   
H. To authorise recurring countermeasures, the Arbitration Panel is required 
to coordinate with the second compliance panel  
46. In the European Union 's preliminary ruling request,  the European Union explained that the 
Arbitration Panel should coordinate with the parallel second compliance proceeding, because, to the 
extent that the second compliance panel confirms that the European Union has achie ved compliance, 
the Arbitration Panel could not award any countermeasures to the United States.76   
47. Moreover, there is an additional and distinct need for coordination, which results from the 
United States ' unwarranted request for recurring countermeasures.   The potential  consequences of 
any failure to co -ordinate are exacerbated by the US request for recurring  countermeasures, which, 
one way or another, would require the Arbitration Panel to make findings about present  adverse 
effects, if any.  If, on the o ther hand, the Arbitration Panel authorises non -recurring countermeasures 
(based on the findings related to the December 2011 to 2013 period), as it must, it would avoid this 
risk altogether.    
48. The risk of conflicting findings  is a particular feature of p roceedings under Part III of the 
SCM Agreement .77  An arbitration panel in the context of Part III does not have exclusive jurisdiction 
with respect to the existence (or non -existence) of adverse effects.  These are also issues that will 
be considered by or iginal and compliance panels.  Therefore, when parallel  compliance proceedings 
take place, the compliance panel will likewise make findings about present adverse effects, if any.  
As a result, there is a unique interdependence between the present arbitration panel proceedings 
and the parallel second compliance  proceedings in the context of proceedings under Part III of the 
SCM Agreement  – a connection that was not present in other disputes, such as US – Tuna II (Mexico) 
(Article 22.6 – US).   
49. The United States disagrees that this interdependence  is unique to Pa rt III of the SCM 
Agreement .  With reference to Article III of the GATT 1994, the United States submits that 
demonstrating trade effects is also required outside of Part III of the SCM Agreement .78  The United 
States errs.  The Appellate Body in Brazil – Taxation  recently confirmed that the requirement to 
show adverse effects distinguishes the disciplines on actionable subsidies from other disciplines 
under the covered agreements.79  Because trade effects "pervade{} "80 the disciplines on actionable 
subsidies, they create a unique need for coordination between the Arbitration Panel and the second 
compliance panel.   
IV. THE UNITED STATES ER RS IN REJECTING THE RELEVANCE OF "TRADE EFFECTS " TO 
QUANTIFY THE VALUE O F ADVERSE EFFECTS  
A. The Arbitration Panel should focus on a "trade effects " metric to quantify 
the value of adverse effects determined to exist  
50. In addition to the fundamental errors in the US request for recurring countermeasures, there 
are numerous additional errors in the US approach.  In particular, the Unite d States erroneously 
objects to the proper metric for quantifying countermeasures, i.e., actual  trade effects as they arise 
when aircraft are actually delivered, and argues for the use of sales and resulting anticipated  
deliveries.   
51. Curiously, the Parties agree that, in the present dispute and as a factual matter, trade effects 
arise at the moment of actual delivery of an aircraft, and not at the moment the order is placed, 
several years earlier.81,82   However, the United States asserts that the Arbi tration Panel must ignore 
 
76 See the European Union's request for preliminary ruling, 15 October 2018.  
77 Decision by the Arbitration Pa nel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.   
78 US Written Submission, para. 52.  
79 Appellate Body, Brazil – Taxation , para. 5.136.  
80 Appellate Body, Brazil – Taxation , para. 5.136.  
81 See, e.g., US Response  to Panel  Question  53, paras.  3-5. 
82 See also Panel Report, US – Large Civil Aircraft , para. 7.1685.  WT/DS316/ARB/Add.1  
 
- 42 - 
 
  "trade effects ", as they actually arise, in determining whether the countermeasures requested by 
the United States are "commensurate " with the adverse effects determined to exit.83  
52. Specifically, the United States asks the Arbitrat ion Panel to ignore how the specific adverse 
effects in December 2011 to 2013 have resulted in actual trade effects over time.  That is, the United 
States asks the Arbitration Panel:  (i) to ignore the pace of deliveries over time; (ii)  to ignore that a 
number of deliveries pursuant to the "precise findings " of adverse effects have already occurred ; 
and, (iii)  to ignore even the fact that some deliveries will never occur  (such as the Transaero Airlines 
order).84 
53. The United States errs.  The US assertion that  the Arbitration Panel must look "simply " at 
adverse effects does not answer how the Arbitration  Panel is to calibrate and quantify those adverse 
effects.  Rather, the Arbitration Panel must choose a relevant and appropriate metric to quantify and 
calibrat e the value of adverse effects determined to exist – i.e., trade effects.  As the arbitration 
panel in US – Washing Machines  recently confirmed, past arbitration panels have typically used trade 
effects as the metric to perform their task and this Arbitrat ion Panel should do the same.85 
54. The United  States also entirely ignores that, in the only prior arbitration panel under Article 
7.10 of the SCM Agreement , the arbitration panel did precisely  what the United States considers 
"unnecessary and inappropriate ".86  That is, the arbitration panel in  US – Upland Cotton (Articles 
22.6 and 7.10 – US) used trade effects  as the metric to quantify the value of adverse effects 
determined to exist.87  The Arb itration Panel in these proceedings should similarly use a trade effects 
metric.   
B. The Arbitration Panel should quantify adverse effects determined to exist 
on a prospective basis, considering present and outstanding deliveries  
55. An arbitration  panel must ensure  that it authorises solely those countermeasures that are 
"prospective " in nature,88 and that countermeasures authorised are not "in excess of the benefits 
that are nullified or impaired ".89  In the circumstances of the United States ' static approach, the 
quantification and calibration of countermeasures must, therefore, focus on present and outstanding 
trade effects.   
56. However, the United States considers that deliveries that have occurred i n the past must be 
taken into account, even though the related trade effects have happened in the past.  To support its 
position, the United States essentially recycles the same flawed arguments it put forward to defend 
its request for recurring countermea sures.  The United States argues that, in quantifying adverse 
effects determined to exist in the December 2011 to 2013 period, the fact that some of those adverse 
effects have subsequently ceased to exist is irrelevant.90 
57. The European Union has explained at  length that the Dispute Settlement Body ( "DSB") made 
no findings with respect to the existence, let alone the degree, of "annual " adverse effects, including 
in 2019 or any other subsequent year.  The prior findings relate only to adverse effects in the 
December 2011 to 2013 period.91  The United States itself concedes that the adopted findings 
"consist " of specific instances of adverse effects, each during December 2011 to 2013.92  No findings 
exist that would support the view that similar adverse effects oc cur today, six to eight years later, 
 
83 See, e.g., US Written Submission, para. 135.  See also US Response to Arbitration Panel Question 54.  
84 See, e.g., US Response to Arbitration Panel Questions 54 (paras. 7 -10); 5 8 (para. 16).  
85 See, e.g., Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.7 
(footnote 40).   
86 US Response to Arbitration Panel Question 94, para. 4.  
87 See Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras. 
4.193, 4.194.  
88 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.374 (emphasis in 
original).   
89 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), paras. 3.11, 3.22.  See 
also Decision by Arbitration Panel, US – Gambling (Article 22.6 – US), paras. 3.27, 3.30.  
90 US Written Submission, para. 137.  
91 See, e.g., EU Framework Response, paras. 24-31; EU Responses to Arbitration Panel Questions 4, 8, 
10, 11, 12, 14, 5, 56.  
92 US Methodology Paper, para. 29.  WT/DS316/ARB/Add.1  
 
- 43 - 
 
  or will occur in the future.  Moreover, the European Union has affirmatively shown that adverse 
effects are not present today.93  The United States has refused to engage with this evidence.  
58. Therefore, to determine "comme nsurate " countermeasures that are prospective in nature, 
the Arbitration Panel must calibrate the level of countermeasures to present and outstanding 
deliveries that result from the precise findings of adverse effects made.    
V. COUNTERMEASURES SHOU LD BE COM MENSURATE WITH THE A DVERSE EFFECTS 
DETERMINED TO EXIST IN EACH PRODUCT MARK ET 
59. The Parties agree that the Arbitration Panel is permitted to determine, separately for each 
product market, a level of countermeasures corresponding to the degree of adverse effe cts 
determined to exist.94  As the United States observes, correctly, "the U.S. methodology makes it 
easy to discern what portion of the countermeasures corresponds to the adverse effects in each of 
the respective product markets ".95  The Unites States disagrees, however, that, in the circumstances 
of this dispute, the Arbitration Panel should exercise its discretion and award separate amounts for 
each product market.  The United States errs.  
60. First, under Article 7.10 of the SCM Agree ment, an arbitration panel must determine a level 
of countermeasures that bears "a relationship of correspondence " with the precisely defined second 
element, namely, "the degree and nature of the adverse effects determined to exist ".96  As the 
United States  agrees, the "precise findings "97 in the first compliance proceedings concern separate 
product markets, resulting in separate findings of inconsistency for each product market .98  Those 
separate findings also concern different types of adverse effects for th e two product markets. 99  It 
follows that the need to make a separate determination for each product market is not, as the United 
States asserts, an "additional  requirement " for which there  is no textual support in Article 7.10 of 
the SCM Agreement.100  Rather, in the circumstances of the present case, the Arbitration Panel 
should do so as part and parcel  of its obligation to ensure "a relationship of correspondence " with 
the "precise findings "101 of adverse effects determined to exist in the first compliance proceedings.102    
61. Second , the United States ignores that arbitration panels have determined countermeasures 
separately for different product markets and types of inconsistency,103 or even depen ding on 
uniquely identifiable instances  of WTO -inconsistency.104  In US – Washing Machines , the arbitration 
panel accepted the United States ' request that it determine separately the amounts of suspension 
for the anti -dumping and countervailing duty measures.  The arbitration panel did so, and found 
that, in the circumstances of that case, a "single awarded amount … would risk a result contrary  to 
the DSU ".105  Awarding separate amounts, instead, was considered:  (i) to be consistent with Article 
22.8 of the DSU, which requires suspension to be "temporary "; (ii) to "maintain equivalence "; (iii) 
to "provide guidance to the parties on the authority to suspend and the obligation to comply "; and, 
(iv) "may limit the need for future recourse to dispute settlement proceedings ".106   
62. These same considerations apply in the present dispute, and mean that the Arbitration Panel 
should exercise its discretion an d award separate amounts for each of the respective product 
markets .  The "adverse effects determined to exist " in the first compliance proceedings consist of 
two separate sets of inconsistencies, one in the VLA market, which includes the A380, and another  
in the twin -aisle market, which includes the A350XWB.  The European Union has taken distinct steps 
 
93 See EU Response to Arbitration Panel Question 4, paras. 119 -123.  See also EU First Written 
Submission in EC – Large Civil Aircraft (Article 21.5 II – EC), October  2018, (Exhibit EU -A-BCI), Sections 
V.B.4.d, V.B.5.e, especially para. 343.  
94 US Response to Arbitration Panel Question 102, para. 25.  
95 US Response to Arbitration Panel Question 102, para. 25.  
96 Decision by the Arbitration Panel, US – Upland Cotton (Artic les 22.6 and 7.10 – US), para. 4.39 
(emphasis in original).  
97 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.  
98 US Response to Arbitration Panel Question 102, para. 25.  
99 US Response to Arbitration Panel Question 102, para. 25.  
100 US Response to Arbitration Panel Question 102, para. 23.  
101 US Methodology Paper, para. 25.  See also  US Written Submission, para. 41.  
102 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras. 4.39, 
4.49. 
103 See, e.g., Decision by the Arbitration Panel, US – COOL (Article 22.6 – US), paras. 6.78 -6.79; 
Decision by the Arbitration Panel, US – Byrd Amendment ( EC) (Article 22.6 – US), para. 3.121; Decision by the 
Arbitration Panel, EU – Hormones (US) (Article 22.6 – EC), paras. 65, 78.  
104 Decision by the Arbitration Panel, US – 1916 Act (Article 22.6 – US), paras. 6.14, 6.17.   
105 Decision by the Arbitration Panel , US – Washing Machines (Article 22.6 – US), para. 3.5.  
106 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.  WT/DS316/ARB/Add.1  
 
- 44 - 
 
  to ensure compliance in each product market.107  The European Union fully expects that, in the 
parallel second compliance proceedings, the second compliance p anel will find that the European 
Union has fully complied with its obligations under Article 7.8 of the SCM Agreement .  However, to 
the extent the second compliance panel were to find that the European Union has complied with only 
one or the other inconsis tency in one or the other product market, the level of countermeasures 
must be reduced accordingly to "maintain {correspondence} " and ensure that countermeasures are 
"temporary ".108  Therefore, to paraphrase the arbitration panel in US – Washing Machines , 
"separating the amounts of suspension would resolve potential ambiguities on the level of 
suspension, following an Article 21.5 determination, and diminish the need for future 
proceedings ".109 Such an approach is readily available, and allows the Arbitration Panel to greatly 
improve the clarity of its findings, while complying with the requirement to "maintain 
{correspondence} " and to ensure that countermeasures are "temporary ".110   
VI. THE US APPROAC H TO QUANTIFYING THE  DEGREE OF LOST SALE S DETERMINED 
TO EXIST IS FLAWED  
63. The US approach to valuing "lost sales " contains numerous further errors.  While the Parties 
agree on the identity of the specific lost sales determined to exist – that is,  five specif ic lost sales, 
and not others, each during the December 2011 to 2013 period – the Parties disagree on how to 
quantify these lost sales.   
64. The US approach to quantifying the level of adverse effects from the five lost sales at issue 
consists of determining the "present value " of orders counterfactually won by Boeing in the 
December 2011 to 2013 period.  The United States implements this "valuation of lost sales "111 
approach by combining (i)  Airbus delivery schedules – as (ii)  estimated  by Boeing employees 
pretending to assume a 2011 to 2013 perspective112 – with (iii)  Boeing  prices (taken from 
"comparator orders " that are allegedly similar to the lost sales at issue), and (iv) bringing back ( i.e., 
discounting) expected delivery revenues using a risk -free US-Government discount rate (the 10 -
year T -Bond yield rate).113  There is an obvious inconsistency in the US attempt to combine – in one 
calculation – estimates of Airbus  delivery schedules with actual Boeing prices and a risk -free US 
Government  discount rate.114   
65. In addition, the United States committed numerous, and consequential, technical errors in 
implementing  its approach.115  Here, the European Union focuses on one conceptual error that 
permeates  the US valuation of lost sales, namely the United States ' inconsistent and erroneous 
position concerning evidence post -dating the December 2011 to 2013 period.   
66. On the one hand, the United States submits that the Arbitration Panel is not allowed to 
consider any evidence speaking to the period after December 2013, and that the Arbitration Panel 
is precluded from considering:  (i) the cancellation of the Transaero A380 order in 2015;116 (ii) actual 
delivery schedules;117 and, (iii) certain escalation rates.118  The United States argues that the 
Arbitration Panel must base its work "on the same evidence that {was before the first compliance 
panel and} formed the basis of the significant lost sales determination ".119  The United States also 
asserts that there is a gen eral "preference for verifiable facts over unverifiable speculation ".120  
 
107 See, e.g., WT/DS316/34.  
108 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.  
109 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para 3.5 (footnote  
38). 
110 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.  
111 See, e.g., US Methodology Paper, para. 31.  
112 See US Response to Arbitration Panel Question 70.  
113 See EU Written Submission, paras. 33 -34, 207.  
114 See, e.g., EU Written Submission, paras. 223, 275;  EU Response to Arbitration Panel Question 80, 
paras. 284-285. 
115 See, e.g. , EU Written Submission, paras. 207-290, 353 -373; EU Opening Statement, paras. 83 -91, 
102-111; EU Responses to Arbitration Panel Questions 31, 40, 41, 42, 43, 48, 49, 52, 54, 60(c), 63, 64, 65, 
67, 68, 77, 78, 79, 80, 91, 95, 96, 97, 105, 106, 110, 112, 148, 161, 162, 164, 165, 166; EU Comments on 
US Responses to Arbitration Panel Questions 93, 94, 100, 110, 112, 115, 117, 118, 120, 121, 125, 126, 134, 
135, 136.  
116 US Response to Arbitration Panel Question 58, para. 16.  
117 US Response to Arbitration Panel Question 58, paras. 17 -19. 
118 US Wri tten Submission, paras. 186 -190; US Response to Panel Question 70.  
119 US Response to Arbitration Panel Question 58, para. 14.  
120 US Response to Arbitration Panel Question 58, para. 13 (underlining added).  WT/DS316/ARB/Add.1  
 
- 45 - 
 
  67. On the other hand, the United States submits that the Arbitration Panel  is allowed – and 
even required  – to consider evidence from the post -2013 period, including:  (i) the Producer Price 
Index ( "PPI");121 (ii) Boeing 's cancellation rate (if any is applied);122 (iii) certain "comparator orders " 
with which to compare the lost sales;123 and, (iv) the existence of the 747 -8I during the years 
countermeasures will be applied.124  The United States justifies these evidentiary requirements with 
the need to address inevitable "uncertainty " in the quantification exercise.125  It also asserts that 
the post -2013 evidence it int roduced is permissible because it "was introduced in this arbitration as 
relevant … and not related to the underlying adverse effects determination ".126 
68. The United States attempts to explain away the evident contradictions in its position by 
arguing that "uncertainty is not speculation ".127  Thus, it seems that, for the United States, 
uncertainty is just a normal and acceptable state of affairs that results from US assertions that are 
unsupported by any valid legal argument or prior finding, and that are unsupp orted by evidence.  At 
the same time, for the United States, "speculation " arises whenever the European Union  asks the 
Arbitration Panel to consider the actual facts and evidence pertaining to the real world; in that 
circumstance, the United States asserts  that the Arbitration Panel is precluded from looking at the 
evidence.  The distinction posited by the United States amounts to the denial of an objective, even -
handed assessment of the matter.  The United States ' attempt to discredit the use of the freshe st, 
most contemporary data as "speculation ", while at the same time promoting its own use of post -
2013 data as a mere attempt to reckon with "uncertainty ", must fail.  The only "principle " on which 
the US position rests is whether or not excluding post -2013 evidence serves its interests by 
artificially inflating the adverse effects determined to exist.   
69. As a matter of law, there is no temporal constraint on any evidence that the Arbitratio n Panel 
may consider in valuing the lost sales findings.128  In arbitration proceedings, a new factual record 
is built, based on new evidence and arguments by the parties regarding the quantification  of adverse 
effects determined to exist.  This new factual record enables an arbitration panel to fulfil its mandate 
to determine, on an objective basis, a commensurate level of countermeasures.  Moreover, the 
Arbitration Panel is duty -bound to make an objective assessment of the Parties ' evidence and 
argument.  A n arbitration panel must consider "all the evidence ",129 including recent evidence, in an 
even-handed manner.130   
VII.  THE US APPROACH TO Q UANTIFYING THE DEGRE E OF IMPEDANCE DETER MINED 
TO EXIST IS FLAWED  
70. With respect to quantifying the level of adverse effects fro m impedance, the United States 
simply assumes  – without evidence  or basis in the findings in the first compliance proceedings – that 
all A380 deliveries in the six markets at issue would have been replaced one -for-one by 747 -8Is.  
According to the United S tates, this would have afforded Boeing a 100 percent market share in all 
six VLA markets at issue, with each assumed to be equally large in the counterfactual as in reality.131  
These assumptions are baseless.   
71. The United States simply assumes that, absent  A380MSF and A350XWB MSF subsidies, the 
A380 and the A350XWB would not have been present in the market today, or in the undefined future 
over which the United States seeks countermeasures .  However, the original  and first compliance 
panels did not determine when  the aircraft would have been launched absent subsidisation.  Neither 
the original panel nor the first compliance panel found that the A380 and the A350XWB would not 
have been launched by 2011 -2013; nor did they find that the aircraft would not have been launched 
as of today; and they certainly did not find that the aircraft would never  be launched in the future.   
Instead, the European Union has demonstrated, employing the approach advocated by the United 
States in the first compliance proceedings, that both the A380 and the A350XWB would have 
 
121 US Methodology Paper, para. 94.  
122 US Response to Arbitration Panel Question 73, para. 87.  
123 US Methodology Paper, para. 73.  
124 US Written Submission, para. 239.  
125 US Response to Panel Arbitration Question 58, para. 13 (underlining added).  
126 US Response to Panel Arbitration Question 58, para. 1 7. 
127 US Response to Panel Arbitration Question 58, para. 13.  
128 See, e.g., EU Response to Arbitration Panel Question 40, para. 450.  
129 See, e.g., Appellate Body Reports, Brazil – Retreated Tyres , para. 185; EC – Hormones , para. 133; 
Korea – Dairy , para. 137; Philippines – Distilled Spirits , para. 140; US – Carbon Steel (India) , para. 4.448.  
130 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.118.  
131 See, e.g., US Written Submission, para. 173.  WT/DS316/ARB/Add.1  
 
- 46 - 
 
  counterfactually come in to existence, absent MSF subsidies, soon after their actual launch, and in 
any event, well in advance of any period relevant to the assessment of this Arbitration Panel.132  
72. The US assumption of a 747 -8I-only scenario further ignores important demand -side an d 
supply -side factors, and the interaction of those factors.  Specifically, faced with delayed deliveries 
of the A380, as well as with delayed deliveries and production bottlenecks of the 747 -8I, customers 
might have reacted in a number of different ways, including:  (i)  deferring purchase of A380s to a 
time as and when they become available; (ii)  substituting A380s for 747 -8Is (as and when the latter 
become available); (iii)  selecting alternative Airbus twin -aisle aircraft; (iv)  selecting alternative 
Boein g twin -aisle aircraft, such as the 777 -300ER; (v)  purchasing VLA or twin -aisle aircraft on the 
second -hand market; and, (vi)  leasing, rather than purchasing, aircraft.133  These options must be 
included – and examined – in any assessment of a counterfactual world in which the subsidised 
element of the MSF loans at issue is absent.  They cannot be assumed away.  The exact market 
outcome is dependent on consumer -specific behaviour and preferences, the availability of aircraft 
models, and the competitive dynamic s between Airbus and Boeing, including prices offered in the 
counterfactual world.134 
73. The United States has failed to support its assertions regarding the degree of impedance in 
the counterfactual with a proper, robust modelling exercise based on the freshes t, most recently 
available data and evidence.135 Such a quantification and calibration exercise would have replaced 
the US conjectures with a proper facts -based assessment, rooted in elementary economics.  
74. In this respect, the European Union notes that it has  established  that the 747 -8I was only 
available for delivery after April 2012, and that deliveries of 47 additional 747 -8Is during the 
December 2011 to 2013 period would have caused substantial production bottlenecks for Boeing, 
and ensuing delays.136  In response, the United States amended  its previous position, by simply 
assuming  that, in the absence of the 747 -8Is, LCA customers would then have substituted all A380s 
for 777 -300ERs or 747 -400s in all six geographic markets at issue.137  Unsurprisingly, this 
assumption is yet again unsupported by compliance findings or evidence, as even the United States 
acknowledges.138   
75. Moreover, the European Union also established139 – and the United States has 
acknowledged140 – that Boeing would not have been able to deliver 47 additional 747 -8Is during  the 
December 2011 to 2013 period.  That is, deliveries of 747 -8I would either never occur, because 
other alternatives would have been more attractive, or would occur in 2014, or thereafter.  In valuing 
the degree of impedance, the  Arbitration Panel should not include Boeing 's counterfactual delivery 
positions falling outside the December 2011 to 2013 reference period.  Those delivery positions 
were, by definition, not covered by the "precise "141 findings of impedance in the first compliance 
proceedings.  
76. For these reasons, the A rbitration Panel should reject the degree of impedance posited by 
the United States.  
VIII.  THE BELATED SUBMISSI ON OF PRIMARY EVIDEN CE BY THE UNITED STA TES 
PREJUDICES THE EUROP EAN UNION 'S DUE PROCESS RIGHTS  
77. Finally, the European Union recalls that, throughout  the proceedings, the European Union 
repeatedly observed that the United States had failed to provide verifiable primary -source evidence 
and documents for its factual assertions.  The European Union also demonstrated the importance of 
carefully assessing the v eracity and authenticity of the United Sates ' factual assertions .  The 
 
132 See above footnote  19. 
133 See EU Responses to Arbitration Panel Questions 5 (para. 126); 46 (para. 475); 64 (para. 211); 84 
(para. 302).  
134 EU Written Submission, para. 200; EU Response to Arbitration Panel Question 84.  
135 See EU Written Submission, paras. 200 -203, 296 -299; EU Response to Arbitration Panel Questions 3 
and 4 (paras. 91 -95); 5 (paras. 128, 136 -137); 6 (paras. 143 -149); 12 (para. 258); 46 (para. 478); 64 
(paras. 214 -215) ; 65 (para. 223); 84 (paras. 309 -310); 88 ( paras. 326 -327).  
136 See EU Written Submission, paras. 300 -305; EU Response to Arbitration Panel Questions 6, 64, 84, 
85, and 88.  
137 US Response to Arbitration Panel Questions 46 (para. 114); 87 (para. 122); 88 (para. 128).  
138 See US Response to Arbitration Pa nel Question 87, para. 121.  
139 EU Comment on US Responses to Arbitration Panel Questions 114, 144; EU Response to Arbitration 
Panel Question 146.  
140 US Response to Arbitration Panel Question 114, para. 48 (citing  Exhibit USA -64 (BCI)).   
141 US Methodology Paper, para. 25.   WT/DS316/ARB/Add.1  
 
- 47 - 
 
  European Union discovered, for example, that eight out of 12 Boeing 747 -8I deliveries included in 
the 747 -8I "global average delivery prices " for the 2012 impedance valuation were made to non -
commercial VIP customers at prices [[***]] airline pricing.142  The United States conceded that the 
inclusion of VIP prices was improper,143 and adjusted its assessment [[***]] of USD  [[***]].144,145 
78. Despite the importance of verifying the US assertions, only in the final stage of these 
proceedings, and upon explicit request by the Arbitration Panel in its Third Set of Questions, did the 
United States provide support for numerous factual assertions tha t it made as far back as its 
Methodology Paper, and that it should  have addressed much earlier in the proceedings, specifically 
in its Methodology Paper. In response  to specific Questions by the Arbitration Panel, the United 
States finally provided some pr imary -source evidence and documentation, covering 45 new 
exhibits,146 running to 2,033 pages of HSBI material and 22 pages of non -HSBI material.   
79. The US approach to backloading evidence has compromised the European Union 's due 
process right to a meaningful opportunity to answer the case put to it by the United States.  Rather 
than having multiple  opportunities over a series of months to address the key evidence in these 
proceedings, the United States ' decision to withhold the evidence until the end of the pr oceedings 
resulted in one opportunity for the European Union to review the evidence and to comment, and, 
additionally, in a compressed time period of just over three weeks that was complicated by 
overlapping deadlines imposed by the Arbitration Panel.   
80. The United States ' conduct also undermines the Arbitration Panel 's ability to make an 
objective assessment of the matter before it,  consistent with its obligation under Article 11 of the 
DSU.  A proper objective assessment requires an exchange between the pa rties, and between the 
parties and the adjudicator.147  The United States ' decision to withhold information until this late 
stage of the proceedings renders that feature of a proper objective assessment impossible.  
 
_______________  
 
 
 
 
 
 
142 See EU Written Submission, paras. 322 -325. 
143 See US Written Submission, paras. 247 -248. 
144 See Exhibit USA -27 (HSBI).   
145 Other instances in which the United States modified evidence submitted to the Arbitration Panel over 
the course of these proceedings include: (i) a two -aircraft discrepancy between VIP sales ( US Response to 
Arbitration Panel Question 116, para. 57); (ii) a switch from pricing information contained in "Delivery 
Invoices" to pr icing information contained in "Purchase Agreements", thereby artificially inflating LCA gross 
prices and deflating Boeing price concessions (US Response to Arbitration Panel Question 135, para. 156(i) and 
footnotes 139, 147, 149, 153, and 198; EU Comment on US Responss to Arbitration Panel Question 135, 
paras. 360, 362, 363, 364); and, (iii) a switch from "average final net revenue" data at the time of delivery to 
net base -year prices at the time of order (adjusted for price concessions and escalated) for the purposes of 
artificially inflating the amount of the United States' impedance claims (US Response to Arbitration Panel 
Question 153, para. 7; EU Comment on US Responses to Arbitration Panel Question 153, paras. 7 -16). 
146 Compare this with the US Methodo logy Paper, which was accompanied by only 22 exhibits.  
147 See, e.g., Appellate Body Report, US — Tuna II (Article 21.5 – Mexico) , para. 7.177; Appellate Body 
Report,  Thailand – Cigarettes (Philippines) , para. 150; Appellate Body Report,  US – Continued Zeroi ng, para. 
347; Appellate Body Report  US – Large Civil Aircraft (2nd complaint) , para. 1137 (footnote 2323).  WT/DS316/ARB/Add.1  
 
- 48 - 
 
  ANNEX  C 
DECISION OF THE ARBI TRATOR CONCERNING TH E EUROPEAN UNION'S P RELIMINARY RULING 
REQUEST  
Contents  Page 
Annex  C-1 Communication from the Arbitrator Preliminary Ruling (Conclusion)  49 
 
 WT/DS316/ARB/Add.1  
 
- 49 - 
 
  ANNEX  C-1 
COMMUNICATION FROM T HE ARBITRATOR  
PRELIMINARY RULING  
(CONCLUSION)  
18 February  2019 
 
 
1.1.  Pursuant to the Arbitrator's letter to the parties of 29 October 2018, and the announcement at 
the meeting of the Arbitrator with the parties, the Arbitrator is issuing today its conclusion in respect 
of the preliminary ruling requested by the European Union of 15 October 2018. The reasons 
supporting this conclusion will, in the interest of efficiency of proceedings, be provided at the end of 
the proceedings in th e Arbitrator's decision. This conclusion and the reasons supporting it will form 
an integral part of the Arbitrator's decision in this matter.  
1.2.  The Arbitrator has carefully considered the issue raised by the European Union's request of 15 
October 2018 for a  preliminary ruling and the parties' relevant arguments and evidence contained 
or referenced , inter alia , in: (i) the European Union's preliminary ruling request of 15 October 2018, 
(ii) the European Union's letter of 22 October 2018, (iii) the United Stat es' letter of 25 October 2018, 
(iv) the United States' written submission of 9 November 2018 and (v) the European Union's 
response to the Arbitrator's question No. 50 of 16 November 2018.    
1.3.  The Arbitrator has concluded that, contrary to the European Union 's view, it is neither 
necessary nor appropriate for it to "await[] the outcome of the second compliance proceedings  
before proceeding to determine the level of countermeasures, if any, legitimately due the United 
States".1 In the light of this, the Arbit rator declines the European Union's request that it coordinate 
its work with the second compliance panel and wait  for the outcome of the second compliance 
proceedings, which may include appellate review proceedings, before determining whether the 
counterme asures proposed by the United States are commensurate with the degree and nature of 
the adverse effects determined to exist.  
1.4.  Consistent with this conclusion , the Arbitrator will proceed with its work and looks forward to 
receiving the parties' replies to its forthcoming  questions.   
__________  
 
1 European Union's preliminary ruling request, para. 3.