WT/DS487/AB/R/Add.1  
 
4 September 2017  
(17-4682) Page: 1/45 
    
 
  
UNITED STATES – CONDITIONAL TAX INCE NTIVES  
FOR LARGE CIVIL AIRC RAFT  
AB-2016-8 
Report of the Appellate  Body 
Addendum  
This Addendum  contains Annexes A to D to the Report of the Appellate  Body circulated as  
document  WT/DS487/AB/R . 
 
The Notice s of Appeal and Other Appeal and the executive summaries of written submissions 
contained in this Addendum are attached as they were received from the participants and third 
participants. The  content h as not been revised or edited by the Appellate Body, except that 
paragraph and footnote numbers that did not start at one in the original may have been 
re-numbered to do so, and the text may have been formatted in order to adhere to WTO style. The 
executiv e summaries do not serve as substitutes for the submissions of the participants and third 
participants in the Appellate Body's examination of the appeal.  
 
 
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 WT/DS487/AB/R/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
NOTICE S OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States ' Notice of Appeal  A-2 
Annex  A-2 European Union 's Notice of Other Appeal  A-4 
ANNEX B  
ARGUMENTS OF THE PAR TICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States' appellant's submission  B-2 
Annex  B-2 Executive summary of the European Union 's other appellant's submission  B-5 
Annex  B-3 Executive summary of the European Union's appellee's submission  B-9 
Annex  B-4 Executive summary of the United States' appellee's submission  B-14 
ANNEX  C 
ARGUMENTS OF THE THI RD PA RTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Australia's third participant's submission  C-2 
Annex  C-2 Executive summary of Brazil's third participant's submission  C-4 
Annex  C-3 Executive summary of Canada's third participant's submission  C-5 
Annex  C-4 Executive summary of China's  third participant's submission  C-6 
Annex  C-5 Executive summary of Japan's third participant's submission  C-7 
ANNEX  D 
PROCEDURAL RULING S 
Contents  Page  
Annex  D-1 Procedural Ruling of 22 December 2016 regarding additional procedures to 
protect business confidential information (BCI)  D-2 
Annex  D-2 Procedural Ruling of 6 January 2017 regarding the United  States' request to 
modify the deadline for filing its appellant's submission  D-9 
Annex  D-3 Procedural Ruling of 2 June 2017  regarding public observation of the opening 
statements at the oral hearing  D-11 
 
 
 WT/DS487/AB/R/Add.1  
 
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  ANNEX  A 
NOTICE S OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States' Notice of Appeal  A-2 
Annex  A-2 European Union's Notice of Other Appeal  A-4 
 
 WT/DS487/AB/R/Add.1  
 
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  ANNEX  A-1 
UNITED STATES ' NOTICE OF APPEAL*  
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the 
United States files this Notice of Appeal to the Appellate Body on certain issues of law covered in 
the Report of the Panel in United States – Conditional Tax Incentives for Large Civil Aircraft 
(WT/DS487/R & WT/DS487/R/Add.1) ("P anel Report") and certain legal interpretations developed 
by the Panel.  
The United States seeks review by the Appellate Body of the Panel 's finding and conclusion 
that the Washington State B&O aerospace tax rate for the manufacturing or sale of Boeing 777X  
airplanes (the "B&O aerospace tax rate") is inconsistent with Articles 3.1(b) and 3.2 of the 
Agreement on Subsidies and Countervailing Measures (the "SCM Agreement") because it is 
de facto contingent on the use of domestic over imported goods.1 This finding is in error and is 
based on erroneous findings on issues of law and legal interpretations, including the Panel 's failure 
to conduct an objective assessment of the matter as required by Article 11 of the DSU.  
The Panel erred in finding that t he B&O aerospace tax rate for the 777X program is 
contingent on the use of domestic over imported wings for the 777X. In particular:  
a. The Panel erroneously interpreted and applied Article 3.1(b) of the SCM Agreement as if 
it prohibited subsidies conditional  on the domestic siting of production activities.2  
b. The Panel erroneously interpreted and applied Article 3.1(b) of the SCM Agreement in 
finding that the B&O aerospace tax rate for the 777X program is contingent on the "use" 
of wings for the 777X, even tho ugh Boeing does not and will not "use" wings to produce 
the 777X, and Boeing is nonetheless eligible to receive the B&O aerospace tax rate for 
the 777X program (and other programs).3  
c. The Panel erroneously interpreted and applied Article 3.1(b) of the SCM Agreement in 
finding that the B&O aerospace tax rate for the 777X program is contingent on the use 
of "domestic" over "imported" wings for the 777X, even though the Panel did not 
interpret the meaning of the terms "domestic" and "imported," did not provide  sufficient 
analysis of what would make wings "domestic" or "imported," and did not assess 
whether the 777X wings are "domestic."4 The Panel also failed to provide the basic 
rationale behind its finding as required by Article 12.7 of the DSU.  
d. The Panel err oneously interpreted and applied Article 3.1(b) of the SCM Agreement by 
relying on hypothetical scenarios with no evidentiary basis to evaluate whether the B&O 
aerospace tax rate for the 777X program is "contingent" in fact on the use of domestic 
over impo rted goods.5 The Panel failed to make "an objective assessment of the matter 
before it, including an objective assessment of the facts of the case," as required by 
Article 11 of the DSU because it used hypothetical scenarios involving Boeing 's purchase 
of 777X wings from another Washington manufacturer and Boeing 's importation of 777X 
wings from a foreign producer that were contrary to the evidence before it.6 
                                                
* This notification, date d 16 December 2016, was circulated to Members as document WT/DS487/6.  
 
1 See, e.g., Panel Report, paras. 7.369, 8.1(c), 8.2.  
2 See, e.g., Panel Report, paras. 7.360, 7.368 -7.369, 8.1(c), 8.2.  
3 See, e.g.,  Panel Report, paras. 7.219 -7.222, 7.353 -7.356, 7.36 8. 
4 See, e.g., Panel Report, Section 7.5.4 (interpreting certain terms of Article 3.1(b), but not interpreting 
the terms "domestic" and "imported"), paras. 7.364, 7.367.  
5 See, e.g., Panel Report, paras. 7.355 -7.356, 7.359, 7.363 -7.369.  
6 See, e.g., Pane l Report, paras. 7.355 -7.356, 7.359, 7.363 -7.369.  WT/DS487/AB/R/Add.1  
 
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  e. The Panel failed to make "an objective assessment of the matter before it, including an 
objective assessment of the facts of the case," as required by Article 11 of the DSU in 
finding that Boeing would lose the B&O aerospace tax rate for the 777X program if it 
used 777X wings produced outside Washington State, and in finding that it would not 
lose that  tax rate if it sourced 777X wings from a Washington manufacturer.7 
f. The Panel failed to make "an objective assessment of the matter before it, including an 
objective assessment of the facts of the case," as required by Article 11 of the DSU in 
finding that  the Second Siting Provision8 concerns the use of certain goods, and 
specifically the origin of those goods that enter into the production process for the 777X, 
as a condition for the continued availability of the B&O aerospace tax rate for the 777X 
progra m.9 Were the Appellate Body to consider the meaning and operation of the Second 
Siting Provision as an issue of law for purposes of the DSU, then the United States 
considers the Panel erred as a matter of law in its understanding or interpretation of the 
Second Siting Provision.  
The United States respectfully requests that the Appellate Body reverse these findings by 
the Panel.  
                                                
7 See, e.g., Panel Report, paras. 7.363 -7.367, 7.369.  
8 See Panel Report, Section 7.3.2.2.  
9 See, e.g., Panel  Report, paras. 7.341, 7.348 -7.356, 7.358 -7.368.  WT/DS487/AB/R/Add.1  
 
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  ANNEX  A-2 
EUROPEAN UNION 'S NOTICE OF OTHER APPE AL* 
Pursuant to Articles 16.4 and 17.1 of the DSU and Article 4.8 of the SCM Agreement , the 
European  Union hereby notifies to the Dispute Settlement Body its decision to appeal to the 
Appellate Body certain issues of law covered in t he Panel Report and certain legal interpretations 
developed by the Panel in the dispute United States – Conditional Tax Incentives for Large Civil 
Aircraft  (WT/DS487). Pursuant to Rule 23(1) of the Working Procedures for Appellate Review , the 
European Unio n simultaneously files this Notice of Other Appeal with the Appellate Body 
Secretariat.  
 
For the reasons to be further elaborated in its submissions to the Appellate Body, the 
European  Union appeals, and requests the Appellate Body to reverse, modify or de clare moot and 
of no legal effect, the findings, conclusions and recommendations of the Panel, with respect to the 
following errors of law and legal interpretations contained in the Panel Report1: 
 
1. The Panel erred in the interpretation of Article 3.1(b) of  the SCM Agreement  by requiring the 
complaining Member to demonstrate that the measure at issue "per se and necessarily 
exclude{s}" the use of imported goods, and on that basis, finding that the First Siting 
Provision,2 set out in Section 2 of Washington State Engrossed Substitute Senate Bill 5952 
("ESSB 5952"), does not make the subsidies subject to that condition de jure  contingent on 
the use of domestic over imported goods.3 
2. The Panel erred in the application of Artic le 3.1(b) of the SCM Agreement in finding that the 
First Siting Provision does not make the subsidies subject to that condition4 de jure  
contingent on the use of domestic over imported goods.5 
3. The Panel erred in the interpretation of Article 3.1(b) of the SCM Agreement  by requiring the 
complaining Member to demonstrate that the measure at issue "per se and necessarily 
exclude{s} " the use of imported goods, and on that basis, finding that the First Siting 
Provision, considered alone, does not make the subsid ies subject to that condition6 de facto  
contingent on the use of domestic over imported goods.7 The European Union requests the 
Appellate Body to consider this appeal only if it does not find (in accordance with the appeals 
described in paragraph 1 or 2, above) that the First Siting Provision, considered alone, 
makes the subsidies subject to it de jure  contingent on the use of domestic over imported 
goods in violation of Article 3.1(b).  
4. The Panel failed to make an objective assessment under Article 11 of the DSU in finding that 
the First Siting Provision, considered alone, does not make the subsidies subject to that 
condition8 de facto  contingent on the use of domestic over imported goods, within the 
                                                
* This notification , dated 17 January 2017 , was circulated  to Members as document WT/DS 487/7 . 
 
1 Paragraph numbers provided in footnotes to the following description of the Panel's errors are intended 
to indicate the primary instance of the errors.  
2 See Panel Report, paras. 7.28 -7.30 (defining "First Siting Provision "). 
3 Panel Report, paras. 7.290, 7.291, 7.294, 7.296, 7.297, 8.1(1)(b)(i). The subsidies subject to the First 
Siting Provision are the following: (a) reduced business and occupation (B&O) tax rate for the manufacture and 
sale of commercial  airplanes; (b) B&O tax credit for pre -production development for commercial airplanes and 
components; (c) B&O tax credit for property taxes on commercial airplane manufacturing facilities; 
(d) exemption from sales and use taxes for certain computer hardwa re, sof tware, and peripherals; 
(e) exemption from sales and use taxes for certain construction services and materials; (f) exemption from 
leasehold excise taxes on port district facilities used to manufacture superefficient airplanes; and  
(g) exemption fro m property taxes for the personal property of port district lessees used to manufacture 
superefficient airplanes. See Panel  Report, paras. 7.15, 7.28.  
4 See footnote 3, above.  
5 Panel Report, paras. 7.294, 7.296, 7.297, 8.1(1)(b)(i).  
6 See footnote 3, abov e. 
7 Panel Report, paras. 7.291, 7.330, 7.342 -7.345.  
8 See footnote 3, above.  WT/DS487/AB/R/Add.1  
 
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  meaning of Article 3.1(b) of the SCM Agreement .9 The European Union requests the 
Appellate Body t o consider this appeal only if it does not find (in accordance with the appeals 
described in paragraph 1 or 2, above) that the First Siting Provision, considered alone, 
makes the subsidies subject to it de jure  contingent on the use of domestic over imported 
goods in violation of Article 3.1(b) . 
5. The Panel erred in the interpretation of Article 3.1(b) of the SCM Agreement  by requiring the 
complaining Member to demonstrate that the measure at issue "per se and necessarily 
exclude{s} " the use of imported goods, and on that basis, finding that the S econd Siting 
Provision,10 set out in Sections 5 and 6 of ESSB 5952, considered alone or together with the 
First Siting Provision, does not make the B&O tax rate reduction (in respect of the 777X) 
de jure contingent on the use of domestic over imported goods .11  
6. The Panel erred in the application of Article 3.1(b) of the SCM Agreement  in finding that the 
Second Siting Provision, considered alone or together with the First Siting Provision, does 
not make the B&O tax rate reduction (in respect of the 777X) de jure contingent on the use 
of domestic over imported goods.12  
7. The Panel failed to make an objective assessment under Article 11 of the DSU, in finding 
that the Second Siting Provision, considered alone or together with the First Siting Provision, 
does not make the B&O tax rate reduction (in respect of the 777X) de jure  contingent on the 
use of domestic over imported goods, within the meaning of Article 3.1(b) of the 
SCM Agreement .13 In particular, the Panel's findings lacked a sufficient evidentiary basis.  
 
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9 Panel Report, paras. 7.330, 7.342 -7.345.  
10 See Panel Report, paras. 7.32 -7.33 (defining "Second Siting Provision "). 
11 Panel Report, paras. 7.305 -7.311, 7.315 -7.317, 8.1(b)(ii) -(iii). 
12 Panel Report, paras. 7.305 -7.311,7.315 -7.317, 8.1(b)(ii) -(iii). 
13 Panel Report, paras. 7.305 -7.311, 7.315 -7.317, 8.1(b)(ii) -(iii). WT/DS487/AB/R/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF THE PAR TICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States' appellant's submission  B-2 
Annex  B-2 Executive summary of the European Union's other appellant's submission  B-5 
Annex  B-3 Executive summary of the European Union's appellee's submission  B-9 
Annex  B-4 Executive summary of the United States' appellee's submission  B-14 
 
 WT/DS487/AB/R/Add.1  
 
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  ANNEX  B-1 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLANT'S SUBMISSI ON 
 
(Business confidential information redacted as marked "[BCI]" ) 
1. The Panel correctly found that the Washington 0.2904 percent business and occupation 
("B&O") tax rate for aerospace activities under Revised Code of Wash ington ( "RCW") § 82.32.850, 
as extended under Engrossed Substitute Senate Bill 5952 ( "ESSB 5952 "), is de jure contingent on 
the location of production activities in the state of Washington, and not on the use of domestic 
goods.1 This finding is in line wit h the understanding of both parties and the third parties that 
Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures  ("SCM Agreement ") 
does not prohibit a Member making the receipt of subsidies contingent on the location of 
production ac tivities in its territory. This principle follows from Article III:8(b) of the General 
Agreement on Tariffs and Trade 1994  ("GATT 1994 "), under which national treatment disciplines 
do not prevent the payment of subsidies exclusively to "domestic producers ". 
2. However, under the Panel's erroneous de facto analysis, defining eligibility for a subsidy in 
terms that describe the necessary production process – or who qualifies as a domestic producer – 
will invariably lead to a finding of de facto  contingency. Spec ifically, Washington made the entry 
into force of the B&O aerospace tax rate contingent on the siting in Washington of a significant 
commercial airplane manufacturing program, which was defined by the manufacture of a new 
airplane model, including its fuse lage and wings.2 (The Panel referred to this as the "First Siting 
Provision. ") The legislation also specified that that tax rate would cease to apply to the airplane 
program that was sited in Washington ( i.e., Boeing's 777X) if Boeing sited 777X wing assem bly or 
final assembly outside of Washington.3 (The Panel referred to this as the "Second Siting 
Provision. ") The Panel found that by making the 777X's continued eligibility for the B&O aerospace 
tax rate conditional on keeping production in Washington of t he aircraft and its wings, the Second 
Siting Provision de facto required the use of domestic over imported wings. Thus, under the 
Panel's analysis, the very act of defining eligibility for the subsidy in terms of production 
activities  – a mechanism express ly permissible under Article III:8(b) – led to the finding of a 
de facto requirement to use domestic over imported goods if the specified production activities 
could potentially result in intermediate goods.  
3. That legal interpretation by the Panel was in er ror and vitiates its conclusion that the Second 
Siting Provision renders the 0.2904 percent B&O tax rate on the manufacture and sale of 777Xs 
inconsistent with Article 3.1(b). In addition, the Panel made multiple errors that led to this 
self-contradictory and erroneous conclusion. These fall into three groups.  
4. First, although Article 3.1(b) prohibits a subsidy only if it is contingent on the "use" of 
domestic over imported goods, the Panel failed to evaluate whether Boeing's 777X process 
involves the "use" of wings to manufacture the 777X. The evidence showed that it does not. The 
ordinary meaning of "use" is the employment as an input or instrumentality in a productive 
process, or consumption of a good for its intended purpose by the end user. In Boeing's production 
of the 777X, the wing is none of these things – it is the output of Boeing's production pro cess, and 
not an input or instrumentality. The wing never exists as a separate entity; it is only completed 
during and as part of final assembly. (In fact, a partial wing structure is joined with a partial 
fuselage structure before a fuselage or wing ever exists.)  
5. In a related vein, the Panel did not evaluate whether the 777X wing, much of which consists 
of parts and components from outside Washington, including from foreign sources, is a "domestic 
good, " another prerequisite legal element to establish an inconsistency with Article 3.1(b). 
Because Boeing is eligible for the tax treatment found to be a subsidy, if Boeing's 777X production 
process does not involve the use of wings at all, or if such wings are not domestic, then the 
                                                
1 Panel Report, paras. 7.296, 7.308, and 7.315. The United States refers to the Panel Report in this 
dispute as "Panel Report, " with no dispute short title following it.  
2 RCW § 82.32.850(1) and (2)(c).  
3 RCW § 82.323.85011(e)(ii).  WT/DS487/AB/R/Add.1  
 
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  subsidy necessarily is not contingent on the use of domestic over imported wings. Thus, the Panel 
failed to correctly apply the legal standard set out in Article 3.1(b) to the facts of the case.  
6. Second, the Panel used hypothetical scenarios devoid of grounding in the facts to analyz e 
whether the Second Siting Provision was de facto contingent on the use of domestic over imported 
goods. The Panel recognized that "{d}e facto  contingency must be established from the total 
configuration of the facts constituting and surrounding the grant ing of the subsidy… . "4  
7. However, the Panel based its evaluation of the operation of the Second Siting Provision on 
hypotheticals in which "Boeing in the future sourced some 777X wings from other entities, 
including foreign producers, rather than assemblin g all of them itself. "5 These hypotheticals relied 
on the assumption that [BCI] . It further assumed that Boeing's production process could be 
modified so as to feed in wings as discrete inputs. And finally, it assumed that it was possible to 
[BCI]. These a ssumptions were not only devoid of evidentiary support, but also contrary to the 
evidence. In performing the analysis in this way, the Panel erroneously interpreted or applied 
Article 3.1(b), failed to make an objective assessment of the matter under Artic le 11 of the DSU, 
and found a de facto  breach before it could exist, even under the Panel's own reasoning.  
8. Third, and finally, the Panel's evaluation of the operation of the Second Siting Provision 
relied on faulty interpretations of evidence that, when o bjectively considered, do not support the 
Panel's conclusion that the Second Siting Provision concerns the use and origin of certain goods. 
The Panel based this finding on three pieces of evidence: the U.S. responses to two questions from 
the Panel, the pr esence of the phrase "wing assembly or final assembly " in the Second Siting 
Provision, and two statements by the Governor of Washington. However, it misinterpreted each of 
these.  
9. The U.S. responses to questions reflected the fact that eligibility for the B&O aerospace tax 
rate depends on the siting of production activities , which does not necessitate, as the Panel 
believed, that the results of such activities would be "domestic goods " if the activities occurred in 
Washington, but "imported goods " if the ac tivities occurred outside of the United States.  
10. The "or" in "wing assembly or final assembly " indicates that these two processes are 
distinct, but contrary to the Panel's apparent view, it does not mean that they are mutually 
exclusive or necessarily sequ ential. In fact, in Boeing's current process for manufacturing the 
777X, the wing never exists as a distinct component.  
11. Lastly, of the two statements by the Governor of Washington, one deals with the siting of 
production activities, and the other addresse s an earlier version of the legislation that framed the 
contingency in terms of "wing fabrication " in addition to "wing assembly, " which was not true of 
the legislation that was ultimately enacted. Thus, neither is relevant to the question of whether 
condi tioning the B&O aerospace tax rate on the location of wing assembly makes it contingent on 
the use of domestic over imported goods.  
12. Below, Section II provides relevant background for the legal issues before the 
Appellate  Body, including undisputed facts an d Panel findings regarding the Washington aerospace 
industry, the elements of large civil aircraft ( LCA), Boeing 's development of the 777X  and its  777X 
manufacturing operations in Washington, the B&O aerospace tax rate, and the Panel 's findings.  
13. Section I II lays out the proper legal standard for assessing claims under Article 3.1(b) of the 
SCM Agreement.  
14. Section IV explains that the Panel erroneously interpreted and applied Article 3.1(b) so as to 
effectively prohibit subsidies conditional on the domestic siting of production activities – even 
though it is clear from Article III:8(b) of the GATT 1994, inter alia, that such subsidies are not in 
fact prohibited.  
                                                
4 Panel Report, para. 7.320 (citing Appellate Body Report, Canada – Aircraft , para. 167; Appellate Body 
Report, EC – Large Civil Aircraft , para. 1051 ). 
5 Panel Report, para. 7.362.  WT/DS487/AB/R/Add.1  
 
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  15. Section V explains that the Panel erred in the interpretation and application of Article 3.1(b) 
by failing to evaluate whether Boeing uses domestic wings to manufacture the 777X.  
16. Section VI explains  that the Panel's reliance on hypothetical scenarios with no basis in fact 
constitutes an erroneous interpretation and application of Article 3.1(b), or in the alternative, a 
failure to make an objective assessment of the matter under Article 11 of the DSU .  
17. Section VI I explains that the Panel 's finding regarding the operation of Washington law 
constitutes a failure to make an objective assessment of the matter before it under Article 11 of 
the DSU , as does the Panel's reliance on the word "or" in the Secon d Siting Provision and its 
reliance on two statements by the Governor of Washington . 
 
 WT/DS487/AB/R/Add.1  
 
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  ANNEX B -2 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S OTHER APPELLANT'S SUBMISSI ON 
I.  INTRODUCTION  
1. Washington State enacted Engrossed Substitute Senate Bill 5952 ("ESSB 5952") in 
November 2013,1 creating the largest targeted state tax break in United States history. This 
legislation amended  aerospace tax incentive s originally created in 2003, including incentives 
found to be WTO-inconsistent in the US – Large Civil Aircraft dispute,  and extended them 
through fiscal year 2040 . 
2. The Panel  found  that each of the seven tax incentives, as amended and extended by 
ESSB  5952, constitutes a subsidy within the meaning of Article 1.1 of the Agreement on 
Subsidies and Countervailing Measures  ("SCM Agreement "). These subsidy findings have not 
been appealed.  
3. ESSB 5952 makes the amendment and extension of all of the subsidies c ontingent on 
satisfying a condition the Panel referred to as the "First Siting Provision ".2 Additionally, one 
of these subsidies  – the B&O aerospace tax rate reduction, in respect of Boeing's 777X – is 
subject to a condition that the Panel referred to as t he "Second Siting Provision ".3 The Panel 
found that the two Siting Provisions, together, make the B&O tax rate reduction for Boeing's 
777X de facto  contingent on the use of domestic over imported goods, in violation of 
Article  3.1(b) of the SCM Agreement . 
4. The European Union appeals the Panel's findings that the European Union failed to 
demonstrate  that (i) the First Siting Provision, considered alone, makes the subsidies 
subject to it contingent on the use of domestic over imported goods, and (ii) the 
Secon d Siting Provision makes the B&O tax rate reduction for the 777X de jure  contingent 
on the use of domestic over imported goods.  
II.  THE PANEL ERRED IN F INDING THAT THE FIRS T SITING PROVISION D OES NOT 
MAKE THE CHALLENGED AEROSPACE TAX SUBSID IES CONTINGENT UPON THE USE 
OF DOMESTIC OVER IMP ORTED GOODS  
5. Section 2 of ESSB 5952 provides that the entirety of the legislation, amending and 
extending (through the year 2040) billions of dollars in tax breaks to the aircraft industry, 
would take effect only upon Boeing 's decision to locate a new commercial aircraft 
programme in Washington State, i.e., the First Siting Provision. In addition  to the production 
of the aircraft itself in Washington, the First Siting Provision requires that wings  and 
fuselages  of the sited a ircraft are manufactured in Washington State. The Washington State 
Department of Revenue ( "DOR") determined in July 2014 that this First Siting Provision had 
been satisfied, based on Boeing's decision to produce the  777X in Washington State, and to 
also ma nufacture the wings and fuselages of that aircraft there.  
6. The European Union details several legal errors made by the Panel in finding that the 
First Siting Provision, alone, does not make the tax incentives either de jure  or de facto  
contingent on the use  of domestic over imported goods.  
                                                
1 Engrossed Substitute Senate Bill 5952 ("ESSB 5952"), Exhibit EU -03. 
2 ESSB 5952 § 2(1), Exhibit EU -03.  
3 ESSB 5952 (exhibit EU -3), Sections 5 and 6; Panel Report, para. 7.32. WT/DS487/AB/R/Add.1  
 
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  A. The Panel erred in the interpretation and application of Article 3.1(b) of the 
SCM Agreement  in finding that the First Siting Provision does not make the 
subsidies de jure contingent on the use of domestic over imported goods  
7. In rejecting the European Union's principal claim of de jure  contingency, in respect of the 
First Siting Provision, the Panel erred in the interpretation and application of Article 3.1(b) of 
the SCM Ag reement .  
8. First, the Panel interpreted Article 3.1(b) to mean that the relevant contingency would exist 
only where the measure "per se  and necessarily exclude{s} " any use of imported goods. 
Under the Panel's interpretation, to the extent that the subsidy r ecipient may use some  
imported goods in addition  to domestic goods, and is nevertheless eligible for the subsidy, 
the subsidy is not contingent on the use of domestic over imported goods. Such an 
interpretation finds no support in Article 3.1(b), would def eat the object and purpose of that 
provision, and is contradicted by the relevant context provided by Article 3.1(a) of the 
SCM Agreement . 
9. Second , the Panel's finding that the First Siting Provision does not, by necessary implication, 
require the use of do mestic over imported goods constitutes an error in the application of 
Article  3.1(b). The words in the First Siting Provision require the siting in Washington State 
of "an airplane program " "in which " the aircraft itself is produced in Washington State, an d 
"in which " the wings and fuselages of that same aircraft type are likewise manufactured in 
Washington State. That is, according to the words and necessary implication of the 
First Siting Provision, the aircraft program would not only include production o f an aircraft in 
Washington State, but would also integrate in that aircraft the wings and fuselages that 
must also be manufactured  in Washington State.  
10. In all possible interpretations envisaged by the Panel for the First Siting Provision, at least 
some p roduction of the 777X must be undertaken in Washington State as a legal 
requirement , and at least some 777X wings and fuselages must be, as a legal requirement , 
manufactured in Washington State. These dual requirements necessarily imply that the 
aircraft p roduced in Washington State would use the  wings and fuselages manufactured in 
Washington State. Thus, the Panel should have found the contingency by necessary 
implication. The Panel's finding to the contrary constitutes an error in the application of 
Article 3.1(b).  
11. The European Union requests the Appellate Body to reverse the Panel's finding and complete 
the analysis to find that the First Siting Provision, considered alone, makes all of the 
subsidies amended and extended by ESSB 5952 de jure  contingent o n the use of domestic 
over imported goods.  
B.  Conditional appeal: The Panel erred in its interpretation of Article 3.1(b) of the 
SCM Agreement , and failed to make an objective assessment of the matter 
before it under Article 11 of the DSU, in finding that  the First Siting Provision, 
considered alone, does not make the subsidies de facto  contingent on the use 
of domestic over imported goods  
12. The European Union appeals the Panel's finding that the First Siting Provision does not make 
these subsidies de facto  contingent on the use of domestic over imported goods. The 
European Union requests the Appellate Body to consider this appeal only if it does not find 
that the First Siting Provision, considered alone, makes all of the subsidies subject to it 
contingent on  the use of domestic over imported goods.  
13. First, the Panel's finding of de facto  contingency suffers from the same interpretative error 
that the European Union demonstrated above, in relation to de jure  contingency.4  
14. Second , the Panel failed to make an ob jective assessment of the matter before it, under 
Article 11 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes ( "DSU"). The Panel found that  "the Department of Revenue 's determination 
                                                
4 See paragraph 8, above.  WT/DS487/AB/R/Add.1  
 
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  {that  the First Siting Provision had been satisfied} was based exclusively on Boeing's 
decision to locate a significant commercial airplane manufacturing programme ( as defined 
by the legislation ) in the state of Washington ".5 The Panel also found that "{t}here {was} 
no indication that the act ivation of the First Siting Provision was the result of any other  
factor, such as a commitment by the manufacturer to use domestic over imported goods ".6  
15. In treating as conclusive the fact that Washington State law described the contingency as a 
decision to locate "a significant commercial airplane manufacturing programme ", and that 
the DOR used those terms in its determination, and by failing to properly consider the 
implications of that contingency on Boeing 's incentives to use domestic over imported 777 X 
wings or 777X fuselages in its Washington State production of the 777X, the Panel failed to 
make an objective assessment of the matter before it.  
16. The European Union explained that the dual requirements, under the First Siting Provision, 
of producing the 777X in Washington State, and of manufacturing the wings and fuselages 
of the same aircraft in Washington State, necessarily implied a requirement that domestic 
wings and fuselages be used on the 777X. Given that the only confirming  fact, outside the 
text of the measure, that the Panel might have considered to arrive at that conclusion was 
that aircraft producers are economically rational entities, the European Union considered 
that a finding of de jure  contingency was warranted. However, if the Panel consi dered that 
the assertion that aircraft manufacturers are rational economic actors somehow fell outside 
the purview of a de jure  contingency claim, the Panel's analysis of the de facto  contingency 
claim would have been the place to accommodate that assertio n.  
17. In light of the errors demonstrated above, the European Union seeks the reversal of the 
Panel's findings, and completion of the analysis to find that the First Siting Provision, 
considered alone, makes the subsidies subject to it de facto  contingent on  the use of 
domestic over imported goods, in violation of Article 3.1(b).  
III. THE PANEL ERRED  IN FINDING THAT THE SECOND SITING PROVIS ION, 
CONSIDERED ALONE OR TOGETHER WITH THE FI RST SITING PROVISION , DOES 
NOT MAKE THE B&O TAX  RATE REDUCTION FOR T HE 777X DE JURE  CONTINGENT 
UPON THE USE OF DOME STIC OVER IMPORTED G OODS  
18. The Second Siting Provision provides that the B&O tax rate reduction subsidy would become 
unavailable in respect of the aircraft program satisfying the First Siting Provision – the 777X 
– if the DOR determines that "any final assembly or wing assembly " of the relevant aircraft 
model "has been sited outside the state of Washington ". 
19. The Panel's finding that the Second Siting Provision does not create, de jure , a contingency 
on using domestic ove r imported goods, is the result of errors in the interpretation and 
application of Article 3.1(b), as well as a failure to make an objective assessment of the 
matter, under Article 11 of the DSU.  
20. First, as the European Union has already demonstrated above,  in the context of the 
First Siting Provision, the Panel erred in the interpretation of Article 3.1(b).7 The Panel's 
finding of lack of de jure  contingency in respect of the Second Siting Provision was driven by 
this same interpretative error.  
21. Second , the United States admitted before the Panel that the Second Siting Provision, 
properly interpreted, would deprive Boeing of the B&O tax rate reduction if the wings for the 
777X were imported. This confirmation by the United States played a key role in the Pane l 
subsequently making a finding of de facto  contingency. This evidence would have been 
critical in the assessment of de jure  contingency, but the Panel entirely ignored it in its 
de jure analysis. By imposing undue restrictions on the scope of evidence tha t it considered 
permissible for the purpose of assessing de jure  contingency, the Panel erred in the 
application of Article 3.1(b).  
                                                
5 Panel Report, para. 7.343 (underlining added).  
6 Panel Report, para. 7.343 (underlining added).  
7 See paragraph 8, above.  WT/DS487/AB/R/Add.1  
 
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  22. Finally , the Panel failed to make an objective assessment, under Article 11 of the DSU , in 
according to the Second Siting Provision an "interpretation " that neither  Party advocated. 
That "interpretation " is contradicted by the words of ESSB 5952, the critical admission made 
by the United States, as well as the arguments put forth by both Parties. The Panel's finding 
thus suffers from the lack of an evidentiary basis.  
23. In light of these errors, the European Union seeks reversal of the Panel's finding, and 
completion of the analysis to find that the Second Siting Provision, considered alone or  
together with the First Siting Provision, makes the B&O tax rate reduction for the 777X 
de jure contingent on the use of domestic over imported goods, in violation of Article 3.1(b).  WT/DS487/AB/R/Add.1  
 
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  ANNEX B -3 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S APPELLEE'S SUBMISSIO N 
I.  INTRODUCTION  
1. The Panel  in the present dispute concluded that a subsidy (the B&O tax rate reduction for 
the 777X) which would be available to Boeing so long as Boeing uses wings manufactured in 
Washington State (including wings man ufactured by third parties in Washington State), but 
would be lost if any imported 777X wings are used, is contingent on the use of domestic 
over imported wings. On that basis, the Panel correctly found that the subsidy is 
inconsistent with Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures 
("SCM Agreement "). The Panel 's finding was based not just on the words of the measure at 
issue, but also confirmed by other evidence that aided the Panel in interpreting those words 
(i.e., admission s by the United States confirming the proper interpretation under domestic 
law, and legislative history of the measure).1 
2. In its Appellant's  Submission, the United States expends significant effort and creativity to 
convert what is a textbook example of a subsidy contingent upon the use of domestic over 
imported goods (in this case, "wings "), within the meaning of Article 3.1(b), into a comple x 
dispute requiring careful consideration of the peculiarities of the currently planned (but not 
yet active) manufacturing  process of the primary subsidy recipient, Boeing. But the Panel 
correctly found that the focus in evaluating a claim under Article 3. 1(b) of the 
SCM Agreement  is "not on the production processes for the 777X ", but the "design, 
structure, and modalities of operation " of the measure at issue .2  
3. As detailed herein, however, a Member cannot defend a measure that, on its face (and in 
view of  confirmatory admissions by that Member) is contingent upon the use of domestic 
over imported goods, by simply asserting that a subsidy recipient has not yet used  those 
goods, whether domestic or imported, or does not currently have plans to use  such goods  in 
the future, whether domestic or imported. Indeed, it is the measure 's contingency, itself, at 
the time the subsidy is granted, that can skew the subsidy recipients ' incentives in a manner 
that shapes its current or future  plans on whether or not to use  imported goods.  
4. Regardless of whether the United States ' assertions about Boeing 's plans for the production 
of the 777X are factually accurate, the entirety of the US appeal rests on a deeply flawed 
reading of the word "use". According to the United Stat es, Boeing can be considered to "use" 
a wing only if it first fully assembles  a wing, and then attaches that wing to the fuselage of 
the aircraft. Under the US ' theory, if Boeing employs a slightly different process, such as 
attaching one part of the wing to the fuselage first, and then finishing the wing (regardless 
of how little additional work is required), then no "use" of a wing occurs. As the 
European  Union details below, this interpretation of the term "use", which makes the 
WTO-consistency of a meas ure dependent on the sequence in which a subsidy recipient 
turns certain screws, is erroneous.  
5. As for the United States ' attempts throughout its Appellant 's Submission to characterise the 
Panel 's finding of de facto  contingency as reflecting an interpretat ion of Article 3.1(b) 
prohibiting subsidies contingent on the location of production activities (regardless of 
whether they are contingent on the use of domestic over imported goods),3 this is 
contradicted by the Panel 's clear explanations to the contrary.   
6. Before turning to the United States ' allegations of error, the European Union notes that the 
United States dedicates 19 pages, of its 56 -page Appellant 's Submission, to a section 
entitled "Background ".4 This section is filled with numerous factual assert ions that are 
                                                
1 Panel Report, paras. 7.361 -7.367.  
2 Panel Report, para. 7.355.  
3 US Appellant's Submission, para. 2.  
4 US Appellant's Submission, pp. 4 -23. WT/DS487/AB/R/Add.1  
 
- B-10 - 
 
  neither factual findings by the Panel nor undisputed. Many of these factual assertions are 
also entirely irrelevant to the present appeal. This attempt at re -litigating, on appeal, purely 
factual matters on which the United States failed to c onvince the Panel, must fail.  
7. Below, the European Union responds to each of the specific allegations of error that the 
United States raises in its Appellant 's Submission.  
II.  THE UNITED STATES' A SSERTIONS RELATING T O "PRODUCTION SUBSIDIES " DO 
NOT REVEAL A N ERROR IN INTERPRET ATION OR APPLICATION  OF ARTICLE 3.1(B)  
8. The United States argues that the Panel erroneously interpreted and applied Article 3.1(b) of 
the SCM Agreement , and characterises the Panel 's application/interpretation as effectively 
prohibiting any subsidies conditional on domestic manufacturing.5  
9. The European Union, and the Panel, agreed with the United States that a subsidy contingent 
solely on domestic production of goods, without more, is not disciplined by Article 3.1(b).6 
Specifically in the context of de facto  contingency, the Panel clarified that "provision of 
subsidies exclusively to domestic producers, without more, is not in itself a breach of the 
obligations under the covered agreements ".7 Thus, the Panel made no err or in 
interpretation.  
10. As for application, the Panel examined whether the subsidy was contingent on the use of 
domestic over imported goods. Having reviewed the evidence before it, the Panel found that 
"the only decision by Boeing to source wings which it w ould then 'use' in producing the 777X 
that would not  trigger the Second Siting Provision would be to source such wings within 
Washington State, which by definition would be domestic wings ".8 Therefore, it was 
abundantly clear to the Panel that the subsidy was conditioned solely on the origin of the 
wings used on the 777X. In this context, the Panel was right in rejecting the United States ' 
unilateral characterisation of the subsidy as a "production subsidy ", and finding that the 
subsidy was inconsistent wit h Article 3.1(b).  
III.  THE UNITED STATES' A SSERTIONS REGARDING THE PLANNED 777X PRO DUCTION 
PROCESS DO NOT REVEA L ANY ERROR IN THE P ANEL'S FINDINGS  
11. The United States alleges that the Panel failed to evaluate whether Boeing 's intended 
production process for  the 777X will involve the "use" of wings.9 The United States begins 
this appeal with an allegation of error in application of Article 3.1(b), expands the allegation 
to include an error in interpretation of Article 3.1(b), and finally alleges error under 
Article 12.7 of the DSU. All of these allegations are baseless.  
A. The US assertions about Boeing's intended production process are based on a 
flawed interpretation of "use", and are not dispositive of the "contingency " 
analysis  
12. The focus of analysis in adj udicating a claim under Article 3.1(b) is the subsidy measure, not 
the recipient. In this context, the Panel was right in finding that "{t}he focus of the Panel's 
analysis, for the purpose of the current dispute, is not on the production processes for the 
777X, in general or at any point in time, but rather on whether the measures at issue, in 
their design, structure, and modalities of operation, would limit access to existing subsidies 
if imported goods were to be used in any such processes ".10 
13. The United S tates repeatedly makes claims regarding the "current production process " for 
the 777X. Yet, it is entirely meaningless to speak of "Boeing 's current 777X production 
process ". It is undisputed that no 777X wing or 777X aircraft production even began during 
                                                
5 US Appellant's Submission, Section IV.  
6 Panel Report, paras. 7.201, 7.357.  
7 Panel Report, para. 7.357.  
8 Panel Report, para. 7.364.  
9 US Appellant's Submission, Section V.  
10 Panel Report, para. 7.355.  WT/DS487/AB/R/Add.1  
 
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  the course of the Panel proceedings. Thus, the US assertions must relate only to Boeing 's 
alleged intentions  regarding the production process.  
14. The United States alleges that these intended  production processes do not involve the "use" 
of a wing. The US ' position translates into an assertion that Boeing would "use" wings within 
the meaning of Article 3.1(b) only if it first finishes the manufacture of complete wings, and 
then attaches them to the fuselage of the 777X.11 If Boeing alters this production proces s 
such that one part of the wing is attached to the fuselage first, and then the remaining 
components of the wing (however small or insignificant) are attached to that first part, no 
"use" of a wing occurs.12 
15. As illustrated in the figure below, imagine an a ircraft wing consists of two rectangular 
pieces, A and B. If A and B are first screwed together, and then B (with A attached) is 
screwed on to the fuselage, the United States would consider this "use" of a wing. On the 
other hand, under the US position, if  B is first screwed on to the fuselage, and then A is 
screwed on to B, no "use" of a wing occurs. In this way, the order in which these screws are 
turned would be "dispositive " as to whether a subsidy, which would become unavailable 
upon importation of any  wings, is consistent with Article 3.1(b).  
 "Use" of wings as an "input"  No "use" of wings; wings are part of 
"output"  
Step 1  
 
  
Step 2  
 
  
Step 3  
 
  
 
16. Nothing in the words of Article 3.1(b) supports the view that a good must be "use{d} ", 
within the meaning of that provision, at a particular point of an overall production process. 
Such an interpretation, if accepted, would defeat the object and purpose  of Article 3.1(b), 
making it easy for Members to circumvent the discipline. Under the US position, if a Member 
were found to have violated Article 3.1(b), achieving compliance would merely require 
convincing a subsidy recipient to alter the sequence in wh ich it undertakes assembly 
activities.  
                                                
11 See US Appellant's Submission, para. 115.  
12 Ibid. WT/DS487/AB/R/Add.1  
 
- B-12 - 
 
  17. Additionally, the word "contingent " in Article 3.1(b) does not cover only those subsidies that 
are available exclusively to entities that use domestic over imported goods. When faced with 
a claim under that provision,  the responding Member cannot defeat that claim by simply 
demonstrating that the subsidy is available to some entities that do not use domestic goods, 
or in some circumstances where such use does not occur.  
18. Thus, the United States errs in asserting that B oeing 's production plan does not involve the 
"use" of wings. Even if that assertion were true ( quod non ), it would not be "dispositive " on 
the question of contingency.  
B. The Panel's finding that wings made in Washington State are "domestic " is not 
in erro r 
19. The Panel interpreted and applied the word "domestic " in Article 3.1(b), in finding that wings 
manufactured in Washington State would be "domestic ". The United States alleges error in 
the interpretation and application of Article 3.1(b), and under Articl e 12.7 of the DSU.  
20. The United States fails to offer any legal arguments in support of its allegation of error in 
interpretation. This appeal therefore fails to meet the requirement in Rule 21(2)(b)(i) of the 
Working Procedures for Appellate Review, and mus t fail.  
21. In any event, the words used in Article 3.1(b) support the interpretation that "domestic " 
means "not imported ". Under this proper interpretation, any wings made in Washington 
State are domestic wings. Thus, the Panel did not err in the interpretat ion or application of 
Article 3.1(b).  
22. The brevity of the Panel 's treatment of this issue does not constitute error under Article 12.7 
of the DSU. Nothing in Article 12.7 requires a panel to elaborate the reasons behind each of 
its intermediate findings. Th e requirement is that a panel should inform the responding 
Member about "(i) what must be done in order to implement the eventual rulings and 
recommendations made by the DSB; and (ii) whether and what to appeal ".13 Here, the Panel 
provided the United States adequate information for both implementation and appeal. The 
Panel 's approach is consistent with practice of WTO panels and the Appellate Body. Not a 
single panel adjudicating claims under similar provisions, whe re "domestic " goods, "imported 
goods " or "products of the territory " of a Member are relevant, has ever identified specific 
goods and extensively examined the make -up of those goods in order to determine whether 
they were "domestic ", "imported ", or "produc ts of the territory " of a specific Member. The 
Panel 's approach was further justified by the United States ' failure to allege that wings made 
in Washington State were not "domestic ". 
IV. THE PANEL'S USE OF H YPOTHETICAL SCENARIO S WAS APPROPRIATE  
23. The United States takes issue with the Panel 's use of hypothetical scenarios in assessment of 
de facto  contingency.  
24. The logical way for the Panel to test whether the Second Siting Provision includes a 
contingency on use of domestic over imported wings was to examine  what would happen in 
a scenario where Boeing, in the future, chooses to use imported wings, rather than domestic 
wings. This enquiry is necessarily hypothetical in nature, because the production process of 
the 777X is yet to commence, and the Second Sitin g Provision is yet to be triggered.  
25. Article 3.1(b) "protects competitive opportunities of imported products, rather than existing 
trade flows of such products ".14 In assessing a claim under a provision of that type, "the 
analysis … is not limited to an exa mination of the operation of the {subsidy} at issue within 
the confines of scenarios that are representative of current patterns of trade ".15 
26. The Panel 's use of hypothetical scenarios was thus not only permissible, but also inevitable.  
                                                
13 Appellate Body Report, Mexico – Corn Sy rup (Article 21.5 – US), para. 107.  
14 Panel Report, para. 7.225.  
15 Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico) , para. 5.17.  WT/DS487/AB/R/Add.1  
 
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  V.  THE UNITED STATES  DOES NOT DEMONSTRATE  ANY FAILURE BY THE P ANEL TO 
MAKE AN OBJECTIVE AS SESSMENT, UNDER ARTI CLE 11 OF THE DSU  
27. The United States alleges multiple errors under Article 11 of the DSU. Each of these is 
baseless.  
28. The first appeal in this series16 improperly seeks to modify or retract the US ' confirmatory 
admissions made in response to Panel Questions 40 and 80. These admissions confirmed 
that the subsidy would continue to be available as long as Boeing uses domestic wings 
(including those manufactured by third part ies), but would become unavailable if wings were 
imported. The US assertions on appeal are contradicted by the responses that the 
United  States offered to the Panel.  
29. The second appeal17 is conditional on the Appellate Body finding that the Panel understood  
the word "or" in the Second Siting Provision to require the sequential undertaking of wing 
assembly and final assembly. The Panel made no such finding. Rather, the Panel found that 
none of the Siting Provisions "either explicitly or in their operation, bi nds Boeing to a specific 
process for manufacturing 777X aircraft ".18 Thus, there is no basis for the Appellate Body to 
consider the substance of this appeal.  
30. In the third appeal in this series,19 the United States takes issue with the Panel 's 
appreciation of  the Washington State Governor 's statements. The United States seeks to 
simply re -litigate the meaning and relevance of the Governor 's statements. These US 
disagreements with the Panel 's factual findings do not evidence any error under Article 11. 
In any e vent, the Panel 's finding of de facto  contingency was only confirmed by , not based 
on, the Governor 's statements.  
31. Finally, the United States' factual assertions about the "Section 12 Sub -Assemblies "20 are 
irrelevant . In this section, the United States makes no allegation of error. As such there 
simply is no "appeal " for the Appellate Body to adjudicate.  
                                                
16 US Appellant's Submission, Section VII.A.  
17 US Appellant's Submission, Section VII.B.  
18 Panel Report, par a. 7.355.  
19 US Appellant's Submission, Section VII.C.  
20 US Appellant's Submission, Section VII.D.  WT/DS487/AB/R/Add.1  
 
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  ANNEX B -4 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLEE'S SUBMISSIO N 
1. The Panel correctly found that neither the First Siting Provision nor the Second Siting 
Provision makes the 0.2904 percent Business and Occupation tax rate (the "B&O aerospace tax 
rate"), as extended into 2040, de jure  contingent on the use of domestic ove r imported fuselages 
or wings. The Panel also correctly found that the First Siting Provision does not make the subsidy 
de facto  contingent on the use of domestic over imported fuselages or wings.  
2. The EU's appeal of these findings raises technical argument s, which themselves are 
meritless. But perhaps more importantly, in arguing that the two siting provisions create a 
prohibited import -substitution subsidy, the EU fundamentally misunderstands the nature of the 
measure at issue. The extension from 2024 to 2 040 of the tax treatment that was found to be a 
subsidy was aimed at the employment and related economic activities associated with siting 
manufacturing activity in the grantor's territory. It simply did not concern the "use" of "goods, " 
whether domestic o r imported, within the meaning of Article 3.1(b) of the Agreement on Subsidies 
and Countervailing Measures  ("SCM Agreement "). 
3. Article III:8(b) of the General Agreement on Tariffs and Trade 1994  ("GATT 1994 ") 
establishes that production subsidies ( i.e., subsidies paid exclusively to producer of a good in the 
grantor's territory) are not inconsistent with the provisions of the GATT 1994 and the 
SCM Agreement that prohibit conditioning a subsidy on the use of domestic over imported goods 
as a condition for a s ubsidy. Just as the SCM Agreement, read together with Article III:8(b) of the 
GATT 1994, does not preclude production subsidies (assuming they do not cause adverse effects), 
it does not preclude a Member from defining the scope or extent of the production activity 
necessary to receive the subsidy, and thereby defining who qualifies as a domestic producer. If a 
Member provides subsidies to domestic airplane producers, it can define what it means to produce 
an airplane and, therefore, who qualifies as a domes tic airplane producer. To find otherwise would 
be to severely limit the discretion protected by Members in Article III:8(b) of the GATT 1994 and 
which informs the interpretation of Article 3.1(b) of the SCM Agreement.  
4. The panel in EC – Large Civil Aircraft  (21.5)  recognized as much when it found that subsidies 
requiring the production of A350 XWB components in the EU as well as production of the 
A350 XWB airplane in the EU did not breach Article 3.1(b).  
5. The siting conditions in Engrossed Substitute Senate B ill 5952 ( "ESSB 5952 ") aimed only at 
ensuring that the manufacturing activity Washington sought was indeed sited in Washington. As 
such, it falls squarely within Article III:8(b).  
6. The basis for finding a breach of Article 3.1(b) of the SCM  Agreement in this dispute is far 
weaker than in EC – Large Civil Aircraft (21.5) , where the panel found that Article 3.1(b) did not 
prohibit the EU from requiring the production of certain A350 XWB parts – which were 
unquestionably inputs – along with the  finished A350 XWB in the territory of the EU. Here, the 
measure at issue does not even require the production of parts in the grantor's territory.  
7. The First Siting Provision ensured that the extension of the B&O aerospace tax rate would 
only take effect i f a manufacturer sited a new commercial airplane program in Washington. The 
Second Siting Provision ensured that, as time progressed, the relevant manufacturer would not 
site the wing assembly and final assembly associated with that program somewhere else.   
8. These conditions have nothing to do with disciplining the use of goods. There are millions of 
parts that go into an LCA, and this measure is silent with respect to the domestic or imported 
character of all of them.  
9. Because fuselages and wings are struct ural elements that can be identified on a finished 
airplane, merely referring to fuselages and wings says nothing meaningful about how an airplane 
will be manufactured or what inputs will be used in that process. For the 777X, fuselages and WT/DS487/AB/R/Add.1  
 
- B-15 - 
 
  wings are simpl y elements of the output of Boeing's production process. Again, the most 
fundamental way to describe the main elements of a commercial airplane is with reference to its 
fuselage and wings. Boeing remains free to have the millions of components or parts pro duced 
wherever it chooses.  
10. Because the extended B&O aerospace tax rate with respect to the manufacture and sale of 
the 777X is conditioned only on the location of production activities, and not on the use of goods, 
it is not contingent on the use of domes tic over imported goods within the meaning of 
Article  3.1(b). This is what the panel found in EC – Large Civil Aircraft (21.5) , and this 
interpretation of Article 3.1(b) should be confirmed in this appeal.  
11. The EU's arguments throughout its Other Appellant Submission erroneously assume the 
"use" of fuselages and wings. In Section II, the United States demonstrates that, under the proper 
interpretation of the term "use," airplane manufacturing does not necessarily involve the "use" of 
fuselages and wings. The  United States further shows that there is nothing inherent to LCA 
manufacturing that requires that fuselages or wings be produced as separate articles and then 
used as inputs in downstream production of airplanes.  
12. In Section III, the United States demons trates that the Panel did not err in interpreting and 
applying Article 3.1(b) in finding that the First Siting Provision does not make the B&O aerospace 
tax rate for the 777X de jure  contingent on the use of domestic over imported goods. The EU is 
also wro ng that the Panel misapplied Article 3.1(b) because, according to the EU, under any 
scenario, domestic goods must be used for at least some period of time. As the Panel found, the 
First Siting Provision calls for a one -time determination regarding a decisi on to site manufacturing 
activities in Washington  that occurred prior to the use of any goods. It placed no requirements on 
the use of goods.  
13. In Section IV, the United States demonstrates that the Panel did not err in the interpretation 
of Article 3.1(b) or fail to make an objective assessment in finding that the First Siting Provision is 
not de facto  contingent on the use of domestic over imported goods. There are no undisputed facts 
or Panel factual findings that even suggest that the First Siting Provis ion contains a prohibited 
contingency.  
14. In Section V, the United States demonstrates that the Panel did not err in finding that the 
EU failed to establish that the Second Siting Provision contains a de jure  prohibited 
import -substitution contingency. As th e Panel found, the Second Siting Provision is silent as to the 
use of goods. It merely refers to the siting of production activities. Contrary to the EU's appeal, the 
Panel did not interpret Article 3.1(b) as requiring the use of exclusively domestic goods . Nor did 
the Panel improperly fail to consider a supposed U.S. "admission or to make an objective 
assessment in reaching its de jure  finding. The EU's argument to the contrary merely re -packages 
its complaint that the erroneous conclusion reached in the P anel's de facto  analysis should have 
informed the Panel's de jure  analysis.  
 
_______________  
 
 
 WT/DS487/AB/R/Add.1  
 
- C-1 - 
 
  ANNEX  C 
ARGUMENTS OF THE THI RD PARTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Australia's third participant's submission  C-2 
Annex  C-2 Executive summary of Brazil's third participant's submission  C-4 
Annex  C-3 Executive summary of Canada's third participant's submission  C-5 
Annex C -4 Executive summary of China's  third participant's submission  C-6 
Annex C -5 Executive summary of Japan's third participant's submission  C-7 
 
 WT/DS487/AB/R/Add.1  
 
- C-2 - 
 
  ANNEX  C-1 
EXECUTIVE SUMMARY OF  AUSTRALIA 'S THIRD PARTICIPANT'S SUBMISSION  
1. This dispute addresses important distinctions between a subsidy which is prohibited for 
being issued contingent on the use of domestic over imported goods, and a subsidy which is 
issued to incentivise an activity taking place in a particular location.  
2. Australia supports the Panel's finding that the first siting provision does not, of itself, make 
any subsidy contingent upon the use of domestic over imported goods.1 Australia regards 
the second siting provision as one which may possibly be contingent upon the use of 
domestic over imported goods.  
I.   THE FIRST SITING PRO VISION  ONLY  DESCRIBES  AN ACTIVITY  
3. Australia supports the Panel's description of the legal tests fo r de jure  and de facto  
contingency. De jure  contingency is to be found, according to the Appellate Body in  
Canada – Autos  where the condition "is set out expressly, in so many words, on the face of 
the law, regulation or other legal instrument  … [or] is clearly, though implicitly, in the 
instrument comprising the measure ."2 In Australia's view, the first siting provision does not 
make any subsidy contingent, de jure , on the use of domestic over imported goods. All it 
does is incentivise an activity taking place in a particular location.  
4. According  to the Appellate Body in EC and certain member States – Large Civil Aircraft , 
de facto contingency is to be "inferred from the total configuration of the facts constituting 
and surrounding the granting of the subsi dy."3 In Australia's written submission to the Panel, 
Australia encouraged the Panel to "clarify whether the beneficiary of the tax incentive would 
receive benefits for manufacture and assembly regardless of the source of the inputs to 
manufacture and asse mbly. " As the Panel found, the total configuration of facts in this 
instance show that the recipient of the subsidy could relocate their manufacturing processes 
without losing access to the tax incentives under the first siting provision.4 
5. Australia theref ore regards the first siting provision as a description of an activity. It does 
not make a subsidy contingent on the use of domestic over imported goods. Subsidies which 
incentivise an activity, absent other elements, are permitted under the Agreement on 
Subsidies and Countervailing Duties (SCM). Article III(8) of GATT provides helpful guidance 
to interpreting the SCM, and makes it clear that subsidies which only encourage local 
activities are permitted. The effect of Articles 1, 8.2(b) and 25.2 of the SCM also help 
demonstrate that a subsidy which does nothing more than encourage an activity is 
permitted under the SCM. Where these subsidies cause adverse effects, a WTO Member 
could still challenge them, but it is appropriate to alter the distinction between  a finding of 
adverse effects and contingency.5 
II. THE SECOND SITING PR OVISION MAKES A S UBSIDY CONTINGENT ON  THE USE OF 
DOMESTIC OVER IMPORT ED GOODS  
6. In contrast, in Australia's view, the second siting provision may establish contingency of a 
subsidy upon the use of domestic goods. The US advised that if a wing was assembled 
outside of Washington State, the siting provision would be triggered, and a subsidy would be 
lost.6 This could equate to prohibited contingency, but could also just acknowledge that 
                                                
1 Panel Report, US – Conditional Tax Incentives For Large Civil Aircraft , para. 7.311.  
2 Appellate Body Report, Canada – Autos , para. 100.  
3 Appellate Body Report, EC – Large Civil Aircraft , para. 1046, quoting Appellate  Body Report,  
Canada – Aircraft , para. 1038.  
4 Panel Report, US – Conditional Tax Incentives For Large Civil Aircraft , para. 7.291.  
5 Appellate Body Report, EC and certain mem ber States – Large Civil Aircraft , para. 1054 , has warned 
against blurring the lines between actionable and prohibited subsidies.  
6 Panel Report, US – Conditional Tax Incentives For Large Civil Aircraft , para. 7.362.  WT/DS487/AB/R/Add.1  
 
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  subsides are only paid to Boeing where it undertakes an activity – assembly of wings and 
aircraft in Washington State.  
III.  CONCLUSION  
7. Australia notes that it is important to recognise the rights of WTO Members to provide 
certain subsidies to domestic manufa cturing activities. In light of this, Australia agrees with 
the Panel that the first siting provision does not, of itself, offer subsidies contingent on the 
use of domestic over imported goods.7 Rather, the first siting provision just incentivises an 
activity taking place in a particular place. With regards to the second siting provision, 
Australia considers that there are questions regarding whether there is a requirement to use 
domestic over imported goods.  
 
                                                
7 Panel Report, US – Conditional Tax I ncentives For Large Civil Aircraft , para. 7.311.  WT/DS487/AB/R/Add.1  
 
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  ANNEX C -2 
EXECUTIVE SUMMARY OF  BRAZIL 'S THIRD PARTICIPANT'S SUBMISSION  
1. Brazil 's submission deals with three main issues: (i) the Panel 's interpretation of prohibited 
import substitution sub sidies under the SCM Agreement, (ii) the Panel 's findings on that  
"by necessary implication " subsidies are de jure  contingent on the use of domestic over 
imported goods, and (iii) the proper interpretation of the term "use" under Article 3.1(b) of 
the SCM  Agreement.  
2. With regard to the first issue, the SCM Agreement does not prevent a Member from 
conditioning the provision of a subsidy on the performance of production steps in the 
country granting the subsidy. It  is not because a subsidy is granted upon a re quirement to 
perform locally certain production steps related to different stages of the production chain 
that a subsidy should be considered ipso facto  a subsidy contingent upon the use of 
domestic product.  
3. On the second , the key question in order to asse ss the existence of de jure contingency is 
whether by necessary implication the requirements establish or create any condition 
favoring domestic or imported  goods as the source of the components used in the 
production process. Just as in the distinction be tween production and product, the 
contingency under Article 3.1(b) of the SCM Agreement must be established upon the actual 
use of the domestic content to the detriment of the imported content , not in relation to "any 
domestic transaction" it may entail.  
4. On the concept of "use", Brazil understands that the sourcing of the input rather than its 
production determines  the import substitution contingency, which is made clear by the term 
"use". Article 3.1(b) prohibits the contingency upon the use of finished do mestic products, 
even if they are inputs used in the production of final goods, not upon the production of 
domestic products.  
 WT/DS487/AB/R/Add.1  
 
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  ANNEX C -3 
EXECUTIVE SUMMARY OF  CANADA 'S THIRD PARTICIPANT'S SUBMISSION1 
1. In Canada's view, the Panel  properly interpreted Article 3.1(b) of the SCM Agreement as not 
prohibiting subsidies contingent on the recipient siting manufacturing activities in the territory of 
the subsidizing Member.  In addition, the Panel properly recognized that Article 3.1(b) do es not 
prohibit subsidies that require the recipient to produce both intermediate goods (e.g. wings or 
fuselages) and finished goods (e.g. commercial airplanes).  Even though the specialized nature of 
the intermediate goods at issue in this case made it lik ely that they would be used in the 
production of finished aircraft, the Panel did not equate a requirement to site the manufacturing of 
intermediate and finished goods in Washington with a requirement to use intermediate goods in 
the production of finished  goods  within the meaning of Article 3.1(b) . 
2. The ability of a Memb er to require a subsidy recipient to produce both intermediate and 
finished goods , even highly specialized goods, logically flows from that Member's ability to provide 
subsidies exclusively to domestic producers. If a Member may provide subsidies exclusively to 
domestic producers, it must also be able to condition receipt of the subsidy on the recipient 
producing both intermediate a nd finished goods. If this were not so, a Member 's ability to  
condition the provision of a subsidy on a production requirement would be significantly curtailed – 
it would only be able to condition the provision of a subsidy on the simple assembly of goods.  
 
                                                
1 Canada's Third -Participant Submission consists of 1,996 words. This Executive Summary consists of 
235 words.  WT/DS487/AB/R/Add.1  
 
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  ANNEX C -4 
EXECUTIVE SUMMARY OF  CHINA'S  THIRD PARTICIPANT'S SUBMISSION  
1. In the present dispute, China has  a systemic  interest  in the interpretation and application of 
Article 3.1(b) of the SCM Agreement:   
2. Firstly, the assessment of de jure  contingency of prohibited subsidy under Article 3.1(b) of 
the SCM Agreement shall be made  with caution. The Panel has established a test for "necessary 
implication ", i.e., an implication is not the necessary implication  as long as there are other 
interpre tations available. China wishes to stress that an "implication " of a legal text shall be  
inevitable  implication  and shall not be mixed with the facts as to operation of the measure.  
Moreover, the "inevitable interpretation " can be rebutted if the defendant  can show there are other 
interpretations available . 
3. Secondly, Article  III:8(b) of the GATT 1994  does not preclude a subsidy measure from being 
found inconsistent  with Article 3.1(b) of the SCM Agreement . Even if a measure meets the 
requirements set by  Article III :8(b) of the GATT 1994 and constitutes  as a production subsidy, it is 
not exempted from the disciplines provided by Article 3.1(b) of the SCM Agreement.  
4. Thirdly, uniqueness  of certain input  shall be an element to be considered in the assessment 
of de facto contingency under Article 3.1(b) of the SCM Agreement.  China considers that the 
existence of de facto  contingency  in the present dispute might be partly due to the uniqueness  of 
the input, i.e., wings and fuselage . China believes that whether a subsidy contingent on the 
location of input production constitutes a de facto  prohibited subsidy , shall be examined on a case-
by-case basis.  
 WT/DS487/AB/R/Add.1  
 
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  ANNEX C -5 
EXECUTIVE SUMMARY OF  JAPAN'S  THIRD PARTICIPANT'S SUBMISSI ON 
1. Japan requests the Appellate Body to examine (i) whether the Panel found, with cogent 
reasons and appropriate  evidence, that the measure was indeed de facto contingent upon 
the use of domestic over imported goods, (ii) without unnecessarily derogating f rom the 
ordinary meaning of the terms, "use", "domestic" and "good".  
A. "Contingency"  
2. Japan agrees with the Panel taking note of the Appellate Body 's findings that " contingency " 
has the same meaning  in Articles 3.1(a) and 3.1(b) of the SCM Agreement.1 
3. In case of de facto  contingency, the Appellate Body has concluded that the contingency 
must be established on the basis of objective evidence2 and by assessing the subsidy itself3, 
rather than by relying on subjective intent.4 
4. Japan considers that if a subsidy -scheme has been designed not to be terminated as long as 
a long -term commitment of the subsidized investment is maintained regardless of the 
circumstances, including when imported goods are used in the production, then the local 
production requirem ent appears not to be contingent upon  the use of domestic products.5 
B. "Use" of a "domestic" "good"  
5. The text of Article 3.1(b) refers to a contingency upon the "use" of domestic over imported 
goods. The position of the US appears unduly restrictive and co nfines the term "use" to the 
phrase "use of purchased products from another entity ". 
6. The Panel added that "… the goods in question must be at least potentially tradable". Japan 
has systemic concerns with this interpretation of "goods" by the Panel6 not least because 
neither the words "potentially tradable" nor "tradable" form part of the text of the 
SCM Agreement whatsoever. Such interpretation limiting the meaning of a "good" would 
open up an easy path for circumvention of the di sciplines under Art icle 3.1(b).  
7. "{D}omestic over imported goods" in Article 3.1(b) suggests that the term " domestic " refers 
to any good that itself is not impor ted. 
C. Irrelevance o f GATT III:8(b) to this dispute  
8. While Japan agrees that GATT Article III:8(b) could in some si tuations provide relevant 
context for the interpretation of Article 3.1(b)7, this cannot diminish or curtail the prohibition 
contain ed in Article 3.1(b).  
 
_______________  
 
 
 
                                                
1 Panel Report, para. 7.212.  
2 Appellate Body Report, EC – Large Civil Aircraft , para. 1050.  
3 Ibid, para. 1051.  
4 Ibid, para. 1050.  
5 US Appellant submission, para. 88.  
6 Panel Report, para. 7.225.  
7 Appellate Body Reports on US – Taxes on Petroleum and Labelling Practices on Imported Wines and 
Alcoholic Beverages , para. 5.1.9, and Japan – Alcohol ic Beverages II , para. 109.  WT/DS487/AB/R/Add.1  
 
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  ANNEX D  
PROCEDURAL RULING S 
Contents  Page  
Annex  D-1 Procedural Ruling of 22 December 2016 regarding additional procedures to 
protect business confidential information (BCI)  D-2 
Annex  D-2 Procedural Ruling of 6 January 2017 regarding the United  States' request to 
modify the deadline for filing its appellant's submission  D-9 
Annex  D-3 Procedural Ruling of 2 June 2017 regarding public observation of the opening 
statements at the oral hearing  D-11 
 
 
  WT/DS487/AB/R/Add.1  
 
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  ANNEX D -1 
PROCEDURAL RULING OF  22 DECEMBER 2016  
1. On 16 December 2016, the Chair of the Appellate  Body received a joint letter from the 
participants in these appellate proceedings, the European  Union and the United States, requesting 
the Appellate  Body Division hearing this appeal to adopt additional procedures to protect business 
confidential information (BCI) included in the record of this dispute. In their letter, the 
European  Union and the Un ited States proposed that the additional procedures adopted by the 
Appellate  Body in the appeal in European Communities and Certain Member States – Measures 
Affecting Trade in Large Civil Aircraft – Recourse to Article 21.5 of the DSU by the United States 
(DS316), with adjustments to remove references to highly sensitive business information (HSBI), 
form the basis for any procedural ruling on confidentiality in these appellate proceedings.  
2. The European Union and the United States argued that BCI procedures are needed in these 
proceedings to avoid the undue risk of detrimental disclosure of particularly sensitive confidential 
information provided by the United States to the Panel. Such information pertains to The Boeing 
Company (Boeing), a US manufacturer of large civil aircraft, notably in relation to the production 
process and the selection of suppliers and a manufacturing site for Boeing's 777X program. 
Drawing an analogy with the types of confidential information included in the records in the 
original and  compliance proceedings in EC and certain member States – Large Civil Aircraft , as well 
as in the original proceedings in United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) (DS353) , and which have been protected by BCI/HSBI  procedures adopted at 
the appellate stage of these proceedings, the European Union and the United  States submitted 
that additional procedures to protect BCI  are required in this appeal because the disclosure of 
certain sensitive information on the Panel r ecord to unauthorized persons not entitled to the 
information would be prejudicial to Boeing and to the United States. The European Union and the 
United States further noted the need to balance the risk of prejudicial disclosure of sensitive 
business infor mation against the rights and interests of third participants and the WTO 
membership at large, taking into account due process and the need to preserve the 
Appellate  Body's ability to discharge its mandate. They submitted that the proposed procedures 
would  strike the appropriate balance in this regard.  
3. Also on 16 December 2016, and on behalf of the Division hearing this appeal, the Chair of 
the Appellate  Body invited the third parties in this dispute to comment  in writing on the joint 
request of the Europea n Union and the United  States by 12 noon on Tuesday, 20 December 2016. 
The Chair also informed the participants and the third parties that the Division had decided to 
provide interim additional protection to all BCI transmitted to the Appellate  Body in thi s dispute on 
the terms set out below:  
a. Only Appellate  Body Members and Appellate  Body Secretariat staff assigned to work on 
this appeal may have access to BCI contained in the Panel record pending a final  
decision on the joint request. Appellate  Body Member s and Appellate  Body Secretariat 
staff shall not disclose BCI, or allow BCI to be disclosed to any person other than those 
identified in the preceding sentence.  
b. BCI shall be stored in locked cabinets when not in use. When in use by Appellate  Body 
Members and assigned Appellate  Body Secretariat staff, all necessary precautions will be 
taken to protect the confidentiality of the BCI.  
c. Pending a decision on the joint re quest for the protection of BCI in these proceedings, 
BCI shall not be transmitted electronically, whether by e -mail, facsimile, or otherwise.  
4. On Tuesday, 20 December 2016, written comments were received from Australia. Noting 
that the additional procedure s proposed by the European Union and the United States largely 
reflect those that were adopted  to protect BCI in the appellate proceedings in EC and certain 
member States – Large Civil Aircraft  (Article 21.5 – US), Australia indicated that it did not objec t 
to the joint request, provided that the proposed procedures are not implemented in a manner that 
unduly restricts the ability of third participants to gain reasonable access to information. Australia WT/DS487/AB/R/Add.1  
 
- D-3 - 
 
  further requested the Appellate Body to take account o f the complexity of this matter and to set 
the timetable for this appeal so as to enable meaningful participation by third participants in the 
proceedings.  
5. The Division makes its ruling having considered the arguments made by the European  Union 
and the Uni ted States in support of their request, and the comments received from Australia.  
6. As an initial matter, we recall that the Appellate  Body adopted additional procedures to 
protect the confidentiality of sensitive information in the original and compliance p roceedings in 
EC and certain member States – Large Civil Aircraft  and in the original proceedings in US ‒ Large 
Civil Aircraft (2nd complaint) . In this appeal, the participants have suggested that the additional 
procedures adopted by the Appellate  Body in the ongoing appellate proceedings in EC and certain 
member States – Large Civil Aircraft (Article 21.5 – US) should form the basis for any procedural 
ruling on confidentiality, with adjustments to remove references to HSBI, since neither party 
submitted HS BI to the Panel in this dispute . In the Procedural Rulings adopted in  the original and 
compliance proceedings in EC and certain member States – Large Civil Aircraft  and the original 
proceedings in US – Large Civil Aircraft (2nd complaint) , the Appellate  Body explained the 
considerations relevant to a decision on whether to provide additional protection to certain 
sensitive information.1 We believe that similar considerations are relevant to our evaluation of the 
request made by the European  Union and the United  States in this appeal, and we briefly recall 
them before addressing the specific points raised in the joint request and in the comments of 
Australia . 
7. The confidentiality requirements set out in the Understanding on Rules and Procedures 
Governing the Settlement of Disputes (DSU) and in the Rules of Conduct for the Understanding on 
Rules and Procedures Governing the Settlement of Disputes2 (Rules of Conduct) are stated at a 
high level of generality that may need to be particularized in situat ions in which the nature of the 
information provided requires more detailed arrangements to protect the confidentiality of that 
information. The adoption of such arrangements falls within the authority of the Appellate  Body to 
hear the appeal and to regula te its procedures in a manner that ensures that the proceedings are 
conducted with fairness and in an orderly manner. To the extent that the arrangements elaborate 
on the confidentiality requirements of the DSU, the adoption of such arrangements in an 
"appropriate procedure" needs to conform to the requirement in Rule 16(1) of the 
Working  Procedures for Appellate Review3 (Working Procedures) that any such procedure may not 
be inconsistent with the DSU, the other covered agreements, or the Working Procedures  
themselves.  
8. Additional confidentiality protection implicates the authority of the Appellate  Body and the 
rights and duties of the participants, third participants, and the WTO membership at large. The 
determination of whether such protection is warranted and, if so, of the particular arrangements 
that are appropriate in a given case essentially involves a balancing exercise: the risks associated 
with the disclosure of the information sought to be protected must be weighed against the degree 
to which the pa rticular arrangements affect the rights and duties established in the DSU, the other 
covered agreements, and the Working Procedures. Furthermore, a relationship of proportionality 
must exist between the risks associated with disclosure and the measures ado pted. Participants 
requesting particularized arrangements have the burden of justifying that such arrangements are 
needed in a given case to protect certain information adequately, taking into account the rights 
and duties recognized in the DSU, the other covered agreements, and the Working Procedures. 
This burden of justification will increase the more the proposed arrangements affect the exercise 
by the Appellate  Body of its adjudicative duties, the exercise by the participants of their rights to 
due proc ess, the exercise by the third participants of their participatory rights, and the rights and 
systemic interests of the WTO membership at large.  
                                                
1 See Appellate Body Reports, EC and certain member States – Large Civil Aircraft , WT/DS316/AB/R, 
Annex III – Procedural Ruling and Additional Procedures to Protect Sensitive Information, paras. 7 -13, and 
United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) , WT/DS353/AB/R,  
Annex  III – Procedural Ruling and Additional Procedures to Protect Sensitive Information, paras.  8-9. See also  
EC and certain member States – Large Civil Aircraft (Article 21.5 – US), Procedural Ruling of the 
Appellate  Body dated 25 October 2016, paras. 10 -11. 
2 The Rules of Conduct , as adopted by the DSB on 3  December 1996 (WT/DSB/RC/1), are incorporated 
into the Working Procedures for Appellate Review  (WT/AB/WP/ 6), as Anne x II thereto. (See WT/DSB/RC/2, 
WT/AB/WP/W/2)  
3 16 August 2010 , WT/AB/WP/ 6. WT/DS487/AB/R/Add.1  
 
- D-4 - 
 
  9. In the original and compliance proceedings in EC and certain member States – Large Civil 
Aircraft  and in the or iginal proceedings in US – Large Civil Aircraft (2nd complaint) , the 
Appellate  Body adopted additional procedures that it considered struck an appropriate balance 
between the risks associated with the disclosure of sensitive information, on the one hand, a nd the 
adjudicative authority of the Appellate  Body and the rights and duties of the participants, 
third participants, and the WTO membership at large, on the other hand. Similar considerations 
are relevant in these appellate proceedings.  
10. We recall that it  is for the adjudicator to decide whether certain information calls for 
additional confidentiality protection. Likewise, it is for the adjudicator to decide whether and to 
what extent specific arrangements are necessary, while safeguarding the various righ ts and duties 
that are implicated in any decision to adopt additional protection. We note that, in this dispute, 
and in contrast to the proceedings in EC and certain member States – Large Civil Aircraft  and in 
US – Large Civil Aircraft (2nd complaint) , neither party submitted HSBI to the Panel. This could 
suggest that the procedures to protect sensitive information in this appeal need not be as stringent 
as the procedures adopted in the prior appeals relied upon by the participants , which have 
accorded prot ection to both BCI and HSBI. Indeed, for this reason, the participants themselves  
have suggested that , in basing additional procedures in this appeal on those  adopted in the appeal 
in EC and certain member States – Large Civil Aircraft (Article 21.5 – US), we omit those aspects 
of the procedures that deal with HSBI . At the same time, if we compare the type of BCI at issue in 
this dispute with the BCI that has been accorded protection in these prior appeals , there are some 
similarities in the nature of the i nformation, the industry concerned, and the risks associated with 
disclosure. Moreover, neither participant has appealed the Panel's decisions regarding the 
protection of BCI, and there are issues of practicality to consider. We will therefore proceed larg ely 
on the basis of how BCI was treated before the Panel. Nevertheless, we do not exclude revisiting 
whether a particular piece of information meets the objective criteria justifying additional 
protection, or the particular degree thereof, should a disagre ement on the classification of that 
information arise before us, or should we consider that we need to refer to that information in our 
report in order to give a sufficient exposition of our reasoning and findings.  
11. Having  reaffirmed the relevant considerat ions that guide our decision, we turn to the 
participants' proposed procedures, which essentially replicate the procedures adopted by the 
Appellate  Body in EC and certain member States – Large Civil Aircraft (Article 21.5 – US), insofar 
as they protect BCI .  
12. The arrangements that the participants have jointly proposed do not appear unduly to affect 
the Appellate  Body's ability to adjudicate the dispute, the rights of the third participants to be 
heard, or the rights and interests of the WTO membership at la rge. We have largely reflected the 
proposed arrangements in the additional procedures that we adopt below. These procedures 
ensure that Appellate  Body Members and assigned  Appellate Body Secretariat staff have sufficient 
access to the entirety of the Panel  Report, the submissions, and the record of the dispute. They 
also limit the risk of inadvertent disclosure of  BCI and set out an efficient process for correcting 
and transmitting BCI -redacted versions of submissions . 
13. Finally , we note, as the Appellate Body did in the original and compliance proceedings in 
EC and certain member States – Large Civil Aircraft  and in the original proceedings in US – Large 
Civil Aircraft (2nd complaint) , that we will make every effort to draft our  report without including 
BCI. T he additional procedures that we adopt below foresee that the participants will be provided 
in advance with a copy of the Appellate  Body report intended for circulation to WTO Members, and 
will have an opportunity to request  the removal of any BCI that is inadvertently included in the 
report. If  we consider it necessary to include BCI in our report, the participants will be given an 
opportunity to comment. We will provide further guidance at a later point in these proceedings  as 
to the modalities and details of such a procedure.  
14. For these reasons, we have decided to provide additional confidentiality protection in this 
appeal. Accordingly, we adopt the following additional procedures:  WT/DS487/AB/R/Add.1  
 
- D-5 - 
 
  Additional Procedures to Protect Sensitive  Information  
General  
i. These additional procedures shall apply to information that was treated as business 
confidential information (BCI) in the Panel proceedings and that is contained in 
documents or electronic media that are part of the Panel record. The a dditional 
procedures apply to written and oral submissions made in the appellate  proceedings only 
to the extent that they incorporate BCI.  
ii. To the extent that information on the record is submitted to the Appellate  Body in a form 
that differs from the way in which it was presented to the Panel, and there is a 
disagreement between the participants on the proper treatment of this information, the 
Appellate  Body shall decide upon the treatment to be accorded to such information after 
hearing their views.  
iii. Each participant may, at any time, request that information that it submitted, and that 
was previously treated as BCI, no longer be treated as such.  
iv. The participants and third participants shall file their written submissions and executive 
summaries with the Ap pellate  Body Secretariat in accordance with the Working Schedule 
drawn up by the Division for this appeal. Where a written submission and/or an executive 
summary contains BCI, a redacted version of the submission and/or the executive 
summary (that is, a ve rsion without BCI) shall be filed simultaneously with the 
Appellate  Body Secretariat. Should an executive summary submitted by a participant or 
third participant contain BCI, the redacted version of the executive summary will be 
annexed to the Appellate  Body report. The redacted version shall be sufficient to permit a 
reasonable understanding of the substance of the relevant document. The Division may 
take appropriate action to ensure that this obligation is satisfied. The participants and 
third participant s shall also provide the Appellate  Body Secretariat with an electronic 
version of all submissions, including the redacted versions. The transmittal of 
participants' submissions to each other and to the third participants, and the transmittal 
of third parti cipants' submissions to the participants and to the other third participants 
are further regulated in the provisions below, which  apply mutatis mutandis  to executive 
summaries of written submissions.  
Appellate  Body Members and Appellate  Body Secretariat St aff 
v. Appellate  Body Members and assigned staff of the Appellate  Body Secretariat may have 
access to the BCI on the Panel record and in the written and oral submissions made in 
these appellate  proceedings . Appellate  Body Members and assigned  Appellate  Body 
Secretariat staff shall not disclose BCI, or allow BCI to be disclosed, to any person other 
than those identified  in the preceding sentence, or to those "BCI -Approved Persons" of 
the participants and third participants identified in accordance with paragraphs xii and xiv 
below. Appellate  Body Members and assigned staff of the Appellate  Body Secretariat shall 
ensure that, when it is not in use,  BCI is stored in locked cabinets. Appellate  Body 
Members and Appellate  Body Secretariat staff are covered by the Rules of Conduct . As 
provided for in the Rules of Conduct , evidence of breach of these Rules may be submitted 
to the Appellate  Body, which will take appropriate  action.  
vi. Appellate  Body Members may maintain a copy of documents containing BCI at their 
places of residence outside Geneva. When not in use, the documents and materials 
containing BCI kept by Appellate  Body Members at their places of residence outside of 
Geneva shall be stored in locked cabinets. Documents and materials containing BCI shall 
be sent to Appellate  Body Members only by secure e -mail or courier.  
vii. The participants shall provide printed copies of their submissions and other documents 
containing  BCI that are intended for use by Appellate  Body Members or assigned 
Appellate  Body Secretariat staff on coloured paper and individually watermarked with 
"Appellate  Body" and numbered consecutively ("Appellate  Body No. 1", "Appellate  Body 
No. 2", etc.).  WT/DS487/AB/R/Add.1  
 
- D-6 - 
 
  viii. Subje ct to appropriate precautions, BCI may be taken outside of the premises of the 
Appellate  Body Secretariat, in hard copy and electronic form, for purposes of any oral 
hearings that may be held in connection with this appeal.  
ix. Except as provided for in paragr aph x, all documents and electronic files containing BCI 
shall be destroyed or deleted when the Appellate  Body report in this dispute has been 
adopted by the DSB.  
x. The Appellate  Body shall retain one hard copy and one electronic version of all 
documents containing BCI as part of the appellate record. Documents and electronic 
media containing BCI shall be kept in sealed boxes within locked cabinets on the 
Appellate  Body Secretariat's premises.  
Appellate  Body Report  
xi. The Division will make every effort to draft an Appellate  Body report that does not 
disclose BCI. The Division will, in particular, endeavour to limit itself to making 
statements or drawing c onclusions that, even when based on BCI, do not quote or reveal 
the substance of such BCI, to the extent that such an approach does not compromise the 
clarity of the reasoning. A copy of the Appellate  Body report intended for circulation to 
WTO Members wil l be provided in advance to the participants, at a date and in a manner 
to be specified by the Division. The participants will be provided with an opportunity to 
request the removal of any BCI that is inadvertently included in the report. The Division 
will also indicate to the participants if it finds it necessary to include in the Appellate  Body 
report information that was treated by the Panel as BCI, and will provide the participants 
with an opportunity to comment. Comments on the inclusion of information  previously 
treated as BCI and requests for removal of BCI inadvertently included in the report shall 
be filed with the Appellate  Body Secretariat within a time period to be specified by the 
Division. No other comments or submissions on the report will be accepted. In coming to 
a decision on the need to include BCI to ensure that the final report is understandable, 
the Division will strike an appropriate balance between the rights of the 
WTO membership at large to obtain a report that gives a sufficient exp osition of its 
reasoning and findings, on the one hand, and the legitimate concerns of the participants 
to protect sensitive information, on the other hand.  
Participants  
xii. The participants shall provide lists of persons who are "BCI -Approved Persons". These 
lists shall be provided to the Appellate  Body Secretariat by 5  p.m. on Wednesday, 
4 January 2017, and shall be served on the other participant and the third  participants. 
Participants may submit amendments to their list of BCI -Approved Persons by filing an  
amended list with the Appellate  Body Secretariat and serving it on the other participant 
and the third participants. A participant may object to the designation of an outside 
advisor as a BCI -Approved Person by the other participant. Any objection to the 
designation of such individual as a BCI -Approved Person must be filed with the 
Appellate  Body Secretariat within two working days of the submission of the original or 
amended list and simultaneously served on the other participant and the third 
participant s. Thus, any objections to the designation of an outside advisor as a 
BCI-Approved Person in the lists to be filed on 4 January 2017 must be filed with the 
Appellate  Body Secretariat and served on the other participant and the third participants 
by 5 p.m. on Friday, 6  January 2017. The Division will reject a request for designation of 
an outside advisor as a BCI -Approved Person only upon a showing of compelling reasons, 
having regard to, inter alia, the relevant principles reflected in the Rules of Conduct  and 
the Illustrative List in Annex 2 thereto. BCI -Approved Persons shall not disclose BCI, or 
allow either to be disclosed, except to the Appellate  Body, assigned Appellate  Body 
Secretariat staff, other BCI -Approved Persons, and Third Participant BCI -Appro ved 
Persons.  
xiii. Any participant referring in its written submissions to information that is classified as BCI 
shall clearly identify the information as such in those submissions. Each participant shall 
simultaneously provide a redacted version of its submissi ons to the other participant. WT/DS487/AB/R/Add.1  
 
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  Submissions containing BCI, and redacted versions of submissions, shall be transmitted 
only to BCI -Approved Persons of the other participant.  The other participant shall have 
two working days to object to the inclusion of any information that it considers to be BCI, 
but that is not designated as such and/or is not redacted. If no objections are made, then 
the redacted version of the relevant submission shall be transmitted the following day to 
the third participants. If there a re objections, the Division shall resolve the matter and 
instruct, as appropriate, the relevant participant to redact the information that was 
subject to the objection, unless the participant agrees to remove it, and to transmit a 
correctly redacted versio n of its submission to the Appellate Body  Secretariat, the other 
participant, and the third participants. The electronic copy of the BCI  version of the 
submission shall be corrected by the participant according to the Division's resolution of 
the matter and re -transmitted to the Appellate  Body Secretariat and the other 
participant. The Appellate  Body shall direct BCI -Approved Persons to im plement modified 
confidentiality treatment in any paper copies of the submission and to replace the 
electronic copies with the corrected versions. The BCI version of all participants' 
submissions shall be transmitted  to the third participants pursuant to p aragraph  xv 
below.  
Third Participants  
xiv. Third participants may designate up to eight individuals as "Third Participant 
BCI-Approved Persons". For this purpose, each third participant shall provide a list of 
Third Participant BCI -Approved Persons to the Appel late Body Secretariat by 5  p.m. on 
Wednesday, 4  January  2017. A copy of the list of Third Participant BCI -Approved Persons 
shall be served on each participant and on each other third participant. Third participants 
may submit amendments to their lists of B CI-Approved Persons by filing an amended list 
with the Appellate  Body Secretariat and serving it on the participants and the other 
third participants. A participant may object to the designation of an outside advisor as a 
Third Participant BCI -Approved Per son by a third participant. Any objections must be filed 
with the Appellate  Body Secretariat within two working days of the filing of the original or 
of an amended list of Third Participant BCI -Approved Persons, and simultaneously served 
on the other parti cipant and the third  participants. The Division will reject the designation 
of an outside advisor as a Third  Participant BCI -Approved Person only upon a showing of 
compelling reasons, having regard to, inter alia , the relevant principles in the Rules of 
Conduct  and the Illustrative List in Annex 2 thereto. Third Participant BCI -Approved 
Persons shall not disclose BCI, or allow it to be disclosed, except to the Appellate  Body, 
assigned Appellate  Body Secretariat staff, BCI -Approved Persons, and other 
Third Participant BCI -Approved Persons.  
xv. The BCI version of all  submissions shall be transmitted to the third participants by 
providing a copy to the Appellate  Body Secretariat for placement in the designated 
reading room located on the premises of the WTO. Third Participant BCI -Approved 
Persons shall be allowed to view in the designated reading room the BCI  version of the 
Panel Report and the BCI version of the submissions filed in these appellate proceedings. 
Third Participant BCI -Approved Persons shall not bring  into that room any electronic 
recording or transmitting devices, nor shall they remove copies of the BCI version of the 
Panel Report or the BCI version of the submissions from that room. Upon request, each 
third participant shall be provided with one copy  of the Panel Report as circulated to WTO 
Members and of the redacted version of the submissions for use in the reading room. 
Third Participant BCI -Approved Persons may take handwritten notes on the provided 
copies of the circulated Panel Report and redact ed version of the submissions and they 
may take these copies with them. These documents shall be printed on coloured , 
individually watermarked paper; shall bear the names of the Third  Participant 
BCI-Approved Persons  for that third participant ; and shall s tate that "This document is 
not to be copied". In  addition, the cover page of each such document shall state that any 
handwritten BCI added to the document shall only be discussed or shared with other 
Third Participant BCI -Approved Persons. The content of any handwritten notes shall not 
be incorporated, electronically or in handwritten form, into any other copy of the Panel 
Report or of the submissions. These documents and any other handwritten notes taken 
by the Third  Participant BCI -Approved Persons in th e reading room shall be locked in a 
secure cabinet when not in use. These documents and handwritten notes must be WT/DS487/AB/R/Add.1  
 
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  returned to the Appellate  Body Secretariat at the closing of the final session of the oral 
hearing held in this appeal.  
xvi. Each Third Participant  BCI-Approved Person viewing the BCI version of the Panel Report 
and submissions in the designated reading room shall complete and sign a log. The 
Appellate  Body Secretariat shall keep such log as part of the record of the appeal.  
xvii.  Third participants making  written submissions shall transmit their submissions to the 
Appellate  Body Secretariat and the participants. If a third participant wishes to refer in its 
written submission to information that is classified as BCI, it shall clearly identify such 
informat ion. A  third participant referring to BCI in its submission shall also 
simultaneously provide the participants with a redacted version of that submission. Third 
participant's submissions containing BCI, and redacted versions of such submissions, 
shall be t ransmitted only to BCI -Approved Persons of the participants. The participants 
shall have two working days to object to the inclusion of any information in a third 
participant's submission that a participant considers to be BCI, but that is not designated 
as such and/or is not redacted. If no objections are made, then on the following day: 
(i) a third participant's submission that contains no BCI shall be transmitted to the other 
third participants; and (ii) if a third participant's submission contains BCI, the redacted 
submission shall be transmitted to the other third  participants. If there are objections, 
the Division shall resolve the matter and instruct, as appropriate, the relevant third 
participant to redact the information that was subject to the obje ction, unless the third 
participant agrees to remove it, and to transmit a corrected BCI version of its submission 
to the Appellate Body Secretariat and the participants, and a correctly redacted version of 
its submission to the Appellate Body  Secretariat , each of the participants , and the other 
third participants. The electronic copy of the BCI version of the submission shall be 
corrected by the third participant according to the Division's resolution of the matter and 
re-transmitted to the Appellate  Body Secretariat  and the participants; the Appellate  Body 
shall direct BCI -Approved Persons to implement modified confidentiality treatment in any 
paper copies of the submission and to replace the electronic copies. Third participants 
shall transmit the BCI ver sion of their  submissions to the other third participants by 
providing a copy to the Appellate  Body Secretariat for placement in the designated 
reading room referred to in paragraph xv above.  
Oral Hearing  
xviii.  Appropriate procedures shall be adopted to protect BCI from unauthorized disclosure at 
any oral hearing held in this appeal.  
 
 
 WT/DS487/AB/R/Add.1  
 
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  ANNEX D -2 
PROCEDURAL RULING OF  6 JANUARY 2017  
1. On Thursday, 5 January 2017 , the Chair of the Appellate  Body received a communication 
from the United  States requesting that the Division selected to hear this appeal modify t he 
deadline for the filing of its appellant's submission. In its letter,  the United States invokes 
Rule 16(2) of the Working  Procedures for Appellate Review1 (Working Procedures) , and seeks to 
have this deadline extended  from 10  January 2017 to 17 January 2017.  According to the 
United  States, there are exceptional circumstances present in these proceedings, such that " failing 
to grant such a request would result in manifest unfairness within the meaning of Rule 16(2)". We 
understand that the European  Union and the third  participants were  served a copy of the 
United  States' request.  The United  States also indicate d, in its letter, that it ha d asked the 
European Union for its views on this request for an extension of time.  
2. In support  of its request, the United  States  highlighted that the deadline for the filing of its 
appellee's submission in EC and certain member States – Large Civil Aircraft (Article  21.5 – US) 
(WT/DS316)  is Friday 13  January 2017. The United States  submitted that the scheduling of the 
deadli nes for the filing of the United States' appellee's submission in EC and certain member 
States – Large Civil Aircraft (Article  21.5 – US) (WT/DS316)  and its appellant's submission in the 
present dispute on 10 and 13 January, respectively, with only a three -day time difference, would 
impede the ability of its staff to finalize these submissions. In particular, the United  States 
observed that in its appellee 's submission in EC and certain member States – Large Civil Aircraft 
(Article  21.5 – US), the U nited States has to respond to a lengthy appellant's submission , and the 
inclusion of  business confidential information (BCI) and possibly highly sensitive business 
information (HSBI) in the appellee's submission presents further difficulties. Moreover, the 
United  States argued that its appellant's submission in this appeal, while shorter than its appellee 's 
submission  in EC and certain member States – Large Civil Aircraft (Article  21.5 – US), will still be 
lengthy , and that the United  States'  appellee 's submission  in that case is farther advanced than its 
appellant's submission in the present appeal.  
3. Also on 5 January 2017 , and on behalf of the Division hearing this appeal, the Chair of the 
Appellate Body invited the European Union and the third participants in this dispute to comment in 
writing on the communication from the United States by 1:00 p.m. on 6 January 2017. No 
comments were received from the third participants.  
4. On Friday , 6 January 2017 , written comments were received from  the European  Union. The 
European Union indicated that it did not, in principle , oppose the United States'  request , if the 
Appellate Body considers that the reasons given by the United States constitute exceptional 
circumstances within the meaning of Rule 1 6(2) of the Working Procedures. However, the 
European  Union observed that the United States has had more than five  months, since receipt of 
the final Panel Report to prepare its appellant's submission, and that the time periods  in this 
dispute  are subject to the expedited treatment required by Art icle 4.12 of the Agreement on 
Subsidies and Countervailing Measures.  According to the European Union, these considerations 
should also be taken into account when deciding whether the United States'  request  meets th e 
burden of demonstrating  exceptional circumstances  within the meaning of Rule 16(2) of the 
Working Procedures.  In its letter commenting on the United States' request, the European Union 
highlighted the " significant overlaps in the matters at issue" in thi s appeal and in the appellate 
proceedings in EC and certain member States – Large Civil Aircraft (Article  21.5 – US). For reasons 
similar to those outlined in the United States' request in this dispute, the European Union 
request ed a one -week extension for  the filing of its appellee 's submission  in the appellate 
proceedings in EC and certain member States – Large Civil Aircraft (Article  21.5 – US), as well as a 
one-week ex tension for the filing of the United  States'  appellee 's submission  in that dispute . 
5. We observe that the United States filed its appeal in the present dispute on 
16 December  2016. Pursuant to Rule  21(1) of the W orking Procedures , an appellant is required to 
file its appellant's submission o n the same day as the date of the filing of the Noti ce of Appeal. 
                                                
1 WT/AB/WP/6 , 16 August 2010.  WT/DS487/AB/R/Add.1  
 
- D-10 - 
 
  Therefore, under normal circumstances, the United  States would  already have prepared , and 
would have filed,  its appellant's submission on 16 December 2016. In these appellate proceedings, 
however, on 16 December 2016 , the European  Union and the United  States filed a joint letter  
requesting the adoption of additional procedures to protect sensitive  information  included in the 
record of this dispute . In response to that letter, the Division hearing this appeal suspended t he 
deadline for the filing of the appellant's submission pending the adoption of additional procedures 
to protect sensitive information. On 22 December 2016, the Appellate Body adopted a procedural 
ruling to protect sensitive information, and communicated the filing date for the United States' 
appellant's submission to the participants and third participants.  
6. We highlight  that the reason for postponing the filing deadline for the United States'  
appellant's submission, otherwise due on 16 December 2016, was  to enable  proper procedures to 
be put in place to ensure adequate protection of BCI in that submission. The United States did not 
request more time to prepare the contents of its appellant's submission  at that time . Indeed,  in 
the joint letter by the Euro pean Union and the United  States of 16  December 2016 requesting the 
adoption of BCI procedures, the United States sought " the Appellate Body's guidance on how to 
proceed with the filing of its appellant 's submission consistent with the requirements of Rule  21(1), 
and in light of the particular confidentiality concerns", in the even t that "the Appellate Body is not 
in a position to consider and adopt BCI procedures at this point in time".  We understand  from this 
statement  that, on 16  December 2016, the United  States was already prepared to file its 
appellant 's submission consistently with Rule 21(1) of the Working Procedures . This, in turn, 
suggests that  the filing date for the United States' appellee's submission in EC and certain member 
States – Large Civil Aircraft (Article  21.5 – US), namely 13 January 2017,  should not have affected 
the preparation of the United  States' appellant's submission in the present case.  
7. For this reason, we are not persuaded by the United States' argument that the curren t 
scheduling of the deadlines for its appellant's submission  in the present dispute and its appellee's 
submission in EC and certain  member States – Large Civil Aircraft (Article  21.5 – US) would 
impede the ability of its staff to finalize the submissions . We also recall, in this regard, that the 
European  Union's appellant's submission in EC and certain member States – Large Civil Aircraft 
(Article  21.5 – US) was filed on 3 November 2016, and the United  States' appellee's submission is 
due 71 days later, on 13 January 2017. In normal circumstances, under Rule  22(1) of the 
Working  Procedures, an appellee's submission is to be filed 18 days after the date of the filing of 
the Notice of Appeal (and an appellant's submission filed pursuant to Rule 21).  
8. We furthe r observe that , in view of the WTO end -of-year closure , the deadline  set for the 
filing of the United  States' appellant's submission in the present dispute was delayed until the 
second working  week of 2017. In addition, t he Panel Report in the present dispute is relatively 
short and, i n its letter, the United States itself indicates that its appellant's submission will not be 
exceptionally lengthy.   
9. For the reasons above, we consider that strict adherence to the time periods set by the 
Division for the filing of the United States' appellant's submission will not result in manifest 
unfairness within the meaning of Rule  16(2) of the Working Procedures , and that it is not, 
therefore, necessary or appropriate to modify the deadline for the filing of the Unit ed States 
appellant's submission.  
10. In these circumstances, the Division declines the United  States' request for extension of the 
deadline for filing its appellant's submission in the present appeal, and, instead, affirms the 
deadline for filing the United  States' appellant's submission set for Tuesday, 10 January 2017 . 
 
 
 
 
  WT/DS487/AB/R/Add.1  
 
- D-11 - 
 
  ANNEX D -3 
PROCEDURAL RULING OF  2 JUNE 2017  
1. On 1 June 2017 , we received a communication from the United States proposing additional 
procedures to protect Business Confidential Information (BCI) during the oral hearing in this 
appeal and requesting that we allow public observation of the opening statements at the 
oral hearing. The oral hearing is scheduled for 6 -7 June 2017.  
2. Specifically , the United States proposes that we adopt procedures similar to those adopted 
by the Appellate Body in EC and certain member States – Large Civil Aircraft (Article 21.5 – US), 
pursuant to the Pr ocedural Ruling dated 19 April 2017,  with adjustments to remove references to 
highly sensitive busines s information given that such information does not form part of the record 
of the present dispute. They state that the reasons for their request and propo sal are substantially 
the same as the reasons that were given in a joint letter of 11 April 2017 from the United States 
and the European Union, which contained a similar request.  
3. On 1 June 2017, we issued a communication soliciting the views of the Europea n Union and 
third participants on the United States' request. The European Union and third participants were 
given until the following day at noon on 2 June 2017 in order to respond.  
4. The European Union expressed its support for the United States' request, but noted that it 
should be for the Appellate Body to decide whether or not in this particular instance sufficient time 
remained to organise an open hearing. Australia also supported the United States' request, 
indicating that it considered that the reques t helpfully provided transparency and appropriately 
protected BCI. Brazil noted that it had not received the United States' request, and therefore was 
not able to comment specifically on it, but expressed its concern with the timeliness of the request 
and what measures might be needed to comply with the request. Brazil indicated that it did not 
wish its opening statement to be broadcast. China submitted that the United States' request to 
exclude non -BCI-Approved persons of the third participants from the se gment of the hearing 
dedicated to questions and answers would significantly constrain the ability of third participants to 
engage fully in the oral hearing. China added that, in the circumstances of this appeal, the need 
for protection of sensitive informa tion cannot sufficiently justify a complete exclusion of 
non-BCI-Approved persons from the question and answer session. China also remarked that this 
appeal raises important interpretative issues that deserve the full participation of 
third participants. F inally, China indicated that it does not want to open to the public its 
statements and oral responses to the questions during the oral hearing. No comments were 
received from Canada, India, Japan, Korea, or the Russian Federation.  
5. The request of the partic ipants raises issues similar to those  that were before the 
Appellate  Body in EC and certain member States – Large Civil Aircraft , EC and certain member 
States – Large Civil Aircraft ( Article 21.5 – US), and in US – Large Civil Aircraft (2nd complaint) .  
6. In this appeal, we already adopted, in a Procedural Ruling dated  22 December 2016, 
additional procedures for the protection of sensitive information. Pursuant to that ruling , the 
participants have provided a list of persons who are authorized to have acces s to BCI. Therefore, 
only members of the participants' delegations who are BCI -Approved Persons are invited to attend 
the session of the oral hearing in which  BCI may be discussed. Moreover, also pursuant to this 
Procedural Ruling, the third participants h ave been allowed to designate up to eight individuals as 
Third Participant BCI -Approved Persons. We consider this to be sufficient to allow the 
third participants to be represented properly at the oral hearing. In view of the need to provide 
additional pro tection to BCI, only Third Participant BCI -Approved Persons are invited to attend the 
session of the oral hearing in which  BCI may be discussed.  Having carefully considered the 
comments provided by China, we do not consider that this will unduly impinge up on the rights of 
the third participants in this case.   
7. Regarding the United States' request that we allow public observation of the opening 
statements at the oral hearing, we wish to express our strong concerns regarding the timeliness of 
that request. The  request was filed on 1 June 2017, two working days before the oral hearing in WT/DS487/AB/R/Add.1  
 
- D-12 - 
 
  this dispute. Given the time needed to solicit comments from the European Union and 
third participants, and the fact that the oral hearing follows a weekend and an official WTO holiday, 
there was less than one business day remaining in order to deliberate the United States' request 
together with the comments of the European Union and the third participants. As noted above, 
although the European Union expressed its support for the  United States' request, it also  noted 
that it should be for the Appellate Body to decide whether or not in this particular instance 
sufficient time remained to organise such an open hearing. Devising arrangements for public 
viewing of the opening statemen ts at the oral hearing also entails a burden on a number WTO 
departments and services and causes budgetary expenditures, particularly when such requests are 
made at a very late stage. We note in this respect that the above -mentioned Procedural Ruling 
was i ssued on 22 December 2016 and the pre -hearing letter regarding the hearing arrangements 
was sent to participants on 18 May 2017. While we decide, by majority, to grant exceptionally the 
United States' request, as supported by the European Union, regarding public observation, we 
underscore the importance for participants wishing to request public observation of all or part of 
oral hearings in disputes to make such requests in a timely fashion, taking into account the due 
process rights of other participants and third participants and the burden on WTO Secretariat 
resources.  
8. Notwithstanding the concerns we express above, for reasons similar to those adopted by the 
Appellate Body in prior such disputes, including, most recently,  EC and certain member  
States – Large Civil Aircraft (Article 21.5 – US), we adopt below the Additional Procedures on the 
Conduct of the Oral Hearing in this appeal.  
Additional Procedures on the Conduct of the Oral Hearing  
i. These Additional Procedures shall apply to all sessions of the o ral hearing to be held in this 
appeal and, in particular, to any information that is referred to during the course of  the oral 
hearing that was treated  as business confidential information (BCI) in the Panel proceedings 
and that is contained in documents o r electronic media that are part of the Panel record. 
These Additional Procedures complement the Additional Procedures for the Protection of 
Sensitive Information that we adopted in our Procedural Ruling of 22 December  2016.  
ii. To the extent that information on the record is presented at the oral hearing in a form that 
differs from the way in which it was presented to the Panel, and there is a disagreement 
between the participants as to the proper treatment and confidentiality of this information, 
the Appellat e Body shall decide the matter after hearing the views of the participants.   
iii. Appellate Body Members, Secretariat staff assigned by the Appellate Body to work on this 
appeal, and interpreters and court reporters retained for this appeal may be present 
throughout the oral hearing, including the session dedicated to the discussion of BCI.  
iv. In addition  to the persons indicated in paragraph iii above, BCI shall be disclosed during the 
oral hearing only to BCI-Approved Persons of the participants and Third Participant 
BCI-Approved Persons, as designated in accordance with our Procedural Ruling of 
22 December 2016.  
v. The session of the oral hearing dedicated to the opening statements of the participants and 
third participants shall be open to all members of the delegations of the participants and 
third participants. The participants and third participants shall abstain from referring to BCI in 
their opening statements.  
vi. In order  to protect BCI from unauthorized disclosure, only BCI -Approved Persons of the 
participants and Third Participant BCI -Approved Persons are invited to attend the session of 
the oral hearing dedicated to questions and answers.  
vii. During the session of the oral hearing dedicated to questions and answers, the BCI version of 
the Panel Report and the BCI versions of the submissions filed in this appeal will be made 
available. Only Third Participant BCI -Approved Persons wil l be allowed to consult these 
documents. The documents shall not be removed from the hearing room and shall be 
returned to the Appellate Body Secretariat at the end of the oral hearing.  WT/DS487/AB/R/Add.1  
 
- D-13 - 
 
  viii. The parts of the transcript of the oral hearing containing BCI shall b ecome part of the 
appellate record  in this appeal and shall be kept in accordance with the Procedural Ruling of 
22 December 2016.  
Public observation of the oral hearing  
ix. The first session  of the oral hearing, which will consist of the opening statements by the 
participants  and third participants, shall be open to public observation, subject to paragraph  x 
below. The session of the oral hearing  open to public observation shall be videotaped . Within 
two days of the completion of the oral hearing, either participant may request to review the 
videotape to verify that no BCI has been included inadvertently or otherwise. Upon such 
request, staff of the Appellate Body Secretariat shall be present while the participant(s) 
review the videotape. If the videotape contains BCI, a redacted version of the videotape shall 
be produced in which the BCI has been deleted. In case of disagreement between the 
participants regarding the sensitive nature of any in formation referred to during the opening 
statements, the relevant portion  will not be subject to public observation.  
x. The opening statements of third participants wishing to maintain the confidentiality  of their 
submissions will not be subject to public obs ervation. Any third  participant that has not 
already done so may request that its oral statements remain confidential and not be subject 
to public observation. Such requests should be made as soon as possible, and no later than 
the beginning of the oral he aring at 9:30 a.m. Geneva time on Tuesday, 6 June 2017.  
xi. Notice  of the oral hearing will be provided to the general public through the WTO  website. 
Members of the general public wishing to observe the oral hearing will be required to 
register  in advance wit h the WTO Secretariat. The videotapes, or if applicable the redacted 
versions of the videotapes, shall be screened to WTO delegates and members of the public 
subject to the terms set out  in paragraph  ix above. The time and location of the videotape 
screening shall be announced in due course , and  WTO delegates will be  invited to indicate to 
the Appellate Body Secretariat whether they wish to have a reserved seat in the room where 
the videotape will be screened.  
__________