WT/DS316/AB/RW/Add.1  
 
15 May 2018  
(18-2863) Page: 1/71 
    
 
EUROPEAN COMMUNITIES  AND CERTAIN MEMBER S TATES – MEASURES 
AFFECTING TRADE IN L ARGE CIVIL AIRCRAFT   
RECOURSE TO ARTICLE 21.5 OF THE DSU BY T HE UNITED STATES  
AB-2016-6 
Report of the Appellate Body  
Addendum  
This Addendum  contains Annexes A to D to the Report of the Appellate Body  circulated as  
document  WT/DS316/AB/R W. 
 
The Notice s of Appeal and Other Appeal and the  executive summaries of written submissions 
contained in this Addendum a re attached as they were received from the participants and third 
participants. The content has 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 
executive summaries do not serve as substitutes for the submissions of the participants and third 
participants in the Appellate Body's examination of the appeal.  
 
 
_______ ________  
 
 WT/DS316/AB/RW/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
NOTICES OF  APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 European Union 's Notice of Appeal  4 
Annex  A-2 United States ' Notice of Other Appeal  9 
ANNEX B  
ARGUMENTS OF THE PARTICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the European Union 's appellant's submission  11 
Annex  B-2 Executive summary of the United States'  other appellant's submission  29 
Annex  B-3 Executive summary of the United States ' appellee's submission  31 
Annex  B-4 Executive summary of the European Union 's appellee's submission  37 
ANNEX  C 
ARGUMENTS OF THE THI RD PA RTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Brazil 's third participant's submission  44 
Annex  C-2 Executive summary of Canada 's third participant's submission  45 
Annex  C-3 Executive summary of China 's third participant's submission  48 
Annex C -4 Executive summary of Japan's third participant's submission  50 
ANNEX  D 
PROCEDURAL RULINGS  
Contents  Page  
Annex  D-1 Procedural ruling of 25 October 2016  regarding additional procedures 
to protect business confidential information (BCI) and highly sensitive 
business information (HSBI)  52 
Annex  D-2 Procedural ruling of 21 November 2016  regarding the inclusion of an 
individual to the European  Union's BCI/HSBI Approved Persons List  60 
Annex D -3 Procedural ruling of 21 November 2016 regarding the designation of 
BCI in the United States' other appellant's submission  62 
Annex D -4 Procedural ruling of 11 January 2017  regarding the European Union's 
request to modify the deadline for filing its appellee's submission  64 
Annex D -5 Procedural ruling of 19 April 2017  regarding public observation of the 
oral hearing  66 
 WT/DS316/AB/RW/Add.1  
 
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  ANNEX  A 
NOTICES OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 European Union 's Notice of Appeal  4 
Annex  A-2 United States ' Notice of Other Appeal  9 
 WT/DS316/AB/RW/Add.1  
 
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  ANNEX  A-1 
EUROPEAN UNION 'S NOTICE OF APPEAL*  
Pursuant to Article 16.4 and Article 17.1 of the DSU, the European Union hereby notifies to the 
Dispute Settlement Body its decision to appeal to the Appellate Body certain issues of law covered 
in the Panel Report and certain legal interpretations developed by the Panel in the dispute 
European Union – Measures Affecting Trade in Large Civil Aircraft (Recourse to Article 21.5 of the 
DSU by the United States)  (WT/DS316/RW).  Pursuant to Rule 20(1) of the Working Procedures for 
Appellate Review , the European Union simultaneously files this Notice of Appeal wit h the 
Appellate  Body Secretariat.  
The European Union is restricting its appeal to those errors that it believes constitute serious 
errors of law and legal interpretation that need to be corrected.  Non -appeal of an issue does not 
signify agreement therewit h.   
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 declare 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: 
I. WHETHER  THE PANEL PROPERLY I NTERPRETED ARTICLE 7 .8 OF THE 
SCM AGREEMENT (SECTIONS 6.6.2 AND 6.6.3 OF T HE REPORT)  
1. The Panel erred in interpreting Article 7.8 of the SCM Agreement  to require an 
implementing Member to “remove the adverse effects” found from an actionable subsidy in 
original proceedings, even if that subsidy has been “withdraw{n}” and is no longer 
“maint ain{ed}”.2 
2. The Panel additionally erred in its interpretation of Article 7.8 (in conjunction with 
Article  1.1(a))  of the SCM Agreement ) when finding that bringing about the end of a 
financial contribution does not result in withdrawal of the subsidy.3  The European Union 
requests the Appellate Body to consider this appeal only if the Appellate Body reverses the 
Panel’s interpretation of Article 7.8 and attempts to complete the analysis under a proper 
interpretation of Article 7.8.  
II. WHETHER THE PANEL ER RED BY REFUSING TO AS SESS WHETHER THE EUR OPEAN 
UNION ACHIEVED COMPL IANCE IN RESPECT OF THE MÜHLENBERGER LOC H AND 
BREMEN AIRPORT RUNWA Y SUBSIDIES (SECTION S 5.10, 6.2.5 AND 6. 6.3.4.4 OF 
THE REPORT)  
3. The Panel erred in interpreting Article 21.5 of the DSU as pr oviding an original respondent 
with the right to seek findings of compliance in Article 21.5 compliance proceedings only in 
the narrow factual circumstances of the US/Canada – Continued Suspension  dispute.4   
                                                
* This notification, dated 13 October 2016, was circulated to Members as document WT/DS316/29.  
 
1 Paragraph numbers provided in footnotes to the following description of the errors of the Panel are 
intended to indicate the primary instance of the errors. These errors have consequences throughout the report, 
and the European Union also a ppeals all findings and conclusions deriving from or relying on the appealed 
errors, and in particular the relevant findings and conclusions in Sections 7.1, 7.2, 7.3 and 7.4 of the Panel 
Report.  
2 Panel Report, paras. 6.803, 6.813, 6.819, 6.822, 6.838, 6. 839-6.841, 6.1078, 6.1089, 6.1094, 
6.1100, 6.1101 -6.1102, 6.1451 -6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii) -(xvii) and 7.2.  
3 Panel Report, paras. 6.1072 -6.1074,  6.1451 -6.1452, 6 .1463, 6.1534, 6.1774, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii) -(xvii) and 7.2.  
4 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and footnote 
1847 to para. 6.1102.  WT/DS316/AB/RW/Add.1  
 
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  4. The Panel erred in the application of Article 2 1.5 of the DSU by finding that no 
disagreement, within the meaning of Article 21.5 of the DSU, existed between the 
European Union and the United States, and consequently by failing to make findings 
concerning the European Union’s withdrawal of the Mühlenbe rger Loch and Bremen airport 
runway subsidies .5   
5. Separately, by declining to make findings on a matter that was properly before it, the 
Panel failed to make an objective assessment of the matter, under Article 11 of the DSU.6  
III. WHETHER LA/MSF FOR T HE A350X WB IS A SUBSIDY (SEC TION 6.5.2 OF THE 
REPORT)  
6. The Panel erred when identifying the appropriate point in time from which to draw the 
corporate borrowing rate component  of the market benchmark to determine whether each 
A350XWB launch aid/member state financi ng (“LA/MSF”) contract confers a “benefit”, and 
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement .7  Specifically, 
in identifying the corporate borrowing rate as “the average yields {on the relevant EADS 
bond} one -month prior and s ix-months prior to the conclusion of the contract, in the form 
of a range”,8 the Panel erred in the application of Articles 1.1(b) and 7.8 of the 
SCM Agreement .9   
7. Separately, by rejecting the yield on the day of the conclusion of each contract, the Panel 
failed to make an objective assessment of the matter, under Article 11 of the DSU.10 
8. Should the Appellate Body disagree with the European Union and reject the appeals 
described in paragraphs 6 and 7, the European Union appeals the Panel’s inclusion, in its 
construction of the corporate borrowing rate, of the six -month average yield on the 
relevant EADS bond within the Panel’s range of average yields.11  Specifically, by including 
the six -month average yield within its range, the Panel erred in the application  of 
Articles  1.1(b) and 7.8 of the SCM Agreement .12 
9. Separately, by including the six -month average yield within its range, the Panel failed to 
make an objective assessment of the matter, under Article 11 of the DSU.13 
10. Further, the Panel erred in identifying the project risk premium component  of the market 
benchmark to determine whether each A350XWB LA/MSF contract confers a “benefit”, and 
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement .14  The Panel 
selected a single undifferentiated  project risk premium for each A350XWB LA/MSF 
contract, which was developed for a different programme (i.e., the A380) in the original 
proceedings.  In so doing, the Panel committed three sets of error.  
11. First, the Panel failed to establish a project -specif ic risk premium for A350XWB LA/MSF 
based on the risks associated with the A350XWB programme.  As a result, the Panel erred 
in the application of Articles 1.1(b) and 7.8 of the SCM Agreement .15   
                                                
5 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and 
footnote  1847 to para. 6.1102.  
6 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and 
footnote  1847 to para. 6.1102.  
7 Panel Report,  paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
8 Panel Report, para. 6.389.  
9 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
10 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
11 Panel Report, paras. 6.389, 6. 430 ( Table 7) and 6.632 (Table 10) .   
12 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
13 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
14 Panel Report, paras. 6.435, 6.459, 6.487, 6.492, 6.527, 6.539 -6.542, 6.579, 6.595, 6.607, 
6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) 
and 7.2. 
15 Panel Report, paras. 6.435, 6.459, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  WT/DS316/AB/RW/Add.1  
 
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  12. Separately, by failing to consider more appropriate benchmarks  and by deviating from the 
approach to project -specific benchmarks taken in the original proceedings, the Panel failed 
to make an objective assessment of the matter, under Article 11 of the DSU.16   
13. Second , by failing  to establish similarity between the ris ks involved in the A350XWB 
project and the A380 LA/MSF project, as well as between the risks involved in the 
A350XWB LA/MSF contracts and the A380 LA/MSF contracts, the Panel failed to make an 
objective assessment of the matter, under Article 11 of the DSU .17   
14. Third, and finally, the Panel erroneously adopted a single project risk premium to 
benchmark all four A350XWB LA/MSF contracts.  As a result, the Panel erred in the 
application of Articles 1.1(b) and 7.8 of the SCM Agreement .18   
15. Separately, by failing  to adopt a differentiated project risk premium while adopting a 
differentiated corporate borrowing rate, the Panel failed to make an objective assessment 
of the matter, under Article 11 of the DSU.19   
IV. WHETHER THE PANEL ER RED IN IDENTIFYING A PPROPRIATE PRO DUCT MARKETS 
(SECTION 6.6.4.4 OF THE REPORT)  
16. The Panel erred in its interpretation of the term “market” in Article 6.3 of the 
SCM Agreement , as permitting two products to be placed in the same product market on 
the basis of any competition between them, ra ther than on the basis of the existence of 
significant competitive constraints between them.20 
17. Should the Appellate Body disagree with the European Union and reject the appeal 
described in paragraph 16 , the Panel erred in the application of Articles 5(c), 6 .3 and 
Article 7.8 of the SCM Agreement  when it identified the relevant product markets for 
purposes of assessing the United States’ adverse effects claims in a manner that is 
inconsistent with its own legal standard .21 
18. Separately, by limiting its assessmen t of the existence of the relevant product markets for 
purposes of assessing the United States’ adverse effects claims to competition between 
only those products that the United States had placed in the same product markets, the 
Panel failed to make an obj ective assessment of the matter, under Article 11 of the DSU.22 
V. WHETHER THE PANEL ER RED IN REACHING ITS FINDINGS RELATING TO  THE 
“NON -SUBSIDIZED LIKE PROD UCT” PROVISIONS OF A RTICLES 6.3, 6.4 AND  6.5 
OF THE SCM AGREEMENT  (SECTION 6.6.4.3 OF THE REPORT)  
19. The P anel erred in reaching its findings on whether there is a new matter.  Specifically, the 
Panel erred in its interpretation and application of the term “matter” in Article 11 of the 
                                                
16 Panel Report, paras. 6.435, 6.459, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
17 Panel Report, paras. 6.487, 6.492, 6.527, 6.5 39-6.542, 6.579, 6.595, 6.607, 6.608 -6.610, 6.632 
(Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
18 Panel Report, paras. 6.607, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 
6.1846, 6.1847, 7.1(c)(i) , 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
19 Panel Report, paras. 6.607, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 
6.1846, 6.1847, 7.1(c)(i) , 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
20 Panel R eport, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348, 
6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv) -7.1(d)(xvii) 
and 7.2.  
21 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.134 8, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
22 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x i), 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  WT/DS316/AB/RW/Add.1  
 
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  DSU.23  The Panel also erred in failing to make an objective assessment of t he matter, 
under Article 11 of the DSU.24   
20. In addition, the Panel erred in reaching its findings on cogent reasons.  Specifically, the 
Panel erred in its interpretation and application of “security and predictability” within the 
meaning of Article 3.2 of t he DSU as it relates to the cogent reasons rule;25 and, erred in 
failing to make an objective assessment of the matter, under Article 11 of the DSU.26  
21. Finally, the Panel erred in its interpretation and application of Articles 6.3(a), 6.3(b), 
6.3(c), 6.4 and  6.5 of the SCM Agreement .27       
VI. WHETHER THE PANEL ER RED IN FINDING ADVER SE EFFECTS (SECTION 6.6.4.4 
OF THE REPORT)  
A. EFFECTS OF LA/MSF ON  THE LAUNCH AND MARKE T PRESENCE OF AIRCRA FT 
22. The Panel erred in the interpretation of Article 5(c) of the SCM Agreement  in adopting a 
“but for” approach to causation that failed to consider the passage of time, and events that 
occurred during that time, and consequently attributing the current market presence of the 
A320, A330 and A380 families of aircraft to pre -A350XWB LA/MSF.28 
23. Should the Appellate Body disagree with the European Union and reject the appeal 
described in paragraph 22, the Panel erred in the  application of Articles 5(c) and 7.8 of the 
SCM Agreement  in adopting a “but for” approach to causation that failed to consider the 
passage of time, and events that occurred during that time, and consequently attributing 
the current market presence of the  A320 and A330 families of aircraft to pre -A350XWB 
LA/MSF.29 
24. Separately, to the extent the Panel found that LA/MSF for the A380 resulted in “direct 
effects” on the launch and market presence of the A380, the Panel failed to make an 
objective assessment of t he matter, under Article 11 of the DSU.30 
25. The Panel additionally erred in the application of Articles 5(c) and 7.8 of the 
SCM Agreement  by attributing the market presence of the A350XWB to the “indirect 
effects” of LA/MSF for the A380.31 
26. Separately, to the e xtent the Panel found that LA/MSF for the A350XWB resulted in “direct 
effects” on the launch and market presence of the A350XWB, the Panel failed to make an 
objective assessment of the matter, under Article 11 of the DSU.32 
                                                
23 Panel Report, paras. 6.1125 -6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
24 Panel Report, paras. 6.1125 -6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
25 Panel Report, paras. 6.1125 -6.1153, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
26 Panel Report, paras. 6.1125 -6.1153, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
27 Panel Report, paras. 6.1125 -6.1154, 6.1798, 6.1817, 6.1847, 7.1(d)(x), 7.1(d)(xiv) -7.1(d)(xvii) 
and 7.2. 
28 Panel Report, paras. 6.1515, 6.1527, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(xii) -7.1(d)(xvii) and 7.2.  
29 Panel Report, paras. 6.1527, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(xii) -7.1(d)(xvii) and 7.2.  
30 Panel Report, paras. 6.1507, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xii) -7.1(d)(xvii) 
and 7.2. 
31 Panel Report, paras. 6.1747, 6.1771, 6.1773, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
32 Panel Report, paras. 6.1717, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiii) -7.1(d)(xvii) 
and 7.2. WT/DS316/AB/RW/Add.1  
 
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  B. FINDINGS OF DISPLACE MENT, IMPE DANCE AND LOST SALES  
27. The Panel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement  by 
failing, in its assessment of lost sales, displacement and impedance, to account for the 
differences in closeness of competition between various a ircraft.33 
28. The Panel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement  by 
failing, in its assessment of lost sales, displacement and impedance, to account for 
non-attribution factors.34 
29. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement  in 
finding that non -withdrawn subsidies cause “displacement and/or impedance”, thereby 
conflating the two separate forms of serious prejudice.35 
30. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement  as 
permitting findings of “displacement” without any assessment of sales volume and market 
share data .36   
31. In addition, the Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b ) and 7.8 
of the SCM Agreement  by finding “displacement” without any assessment of sales volume 
and market share data .37 
32. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement  as 
permitting findings of “impedance” without a ny assessment of sales volume and market 
share data .38   
33. In addition, the Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b) and 7.8 
of the SCM Agreement  by finding “impedance” without any assessment of sales volume 
and market share data .39 
 
                                                
33 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
34 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
35 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
36 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
37 Panel Report, paras. 6.1817, 6.1838, 6.1846,  6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
38 Panel Report, paras. 6.1817, 6.1838, 6.18 46, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
39 Panel Report, paras. 6.1817,  6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  WT/DS316/AB/RW/Add.1  
 
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  ANNEX A -2 
UNITED STATES ' NOTICE OF OTHER APPE AL* 
Pursuant to Rule 23(1) of the Working Procedures for Appellate Review, the United States hereby 
notifies the Appellate Body of its decision to appeal certain issues of law covered in the  Report of 
the Panel 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 
(WT/DS316/RW  & Add.1) ( "Panel Report ") and certain legal interpretations dev eloped by 
the Panel.  
 
1. The United States seeks review by the Appellate Body of the Panel's finding that the 
United  States failed to establish that the French, German, Spanish, and UK LA/MSF subsidies for 
Airbus's A350 XWB constituted prohibited import substitution subsidies, within the meaning of 
Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures ( "SCM Agreement ").1  
While the United States agrees with the Panel's interpretation of Article 3.1(b), a competing 
interpretation is unde r consideration in another dispute, US – Conditional Tax Incentives for 
Large  Civil Aircraft (DS487). If the Appellate Body were to determine that this competing 
interpretation of Article 3.1(b) is correct, then the Panel here erred in its interpretation a nd 
application of Article  3.1(b) and its finding that the French, German, Spanish, and UK LA/MSF for 
the A350 XWB do not constitute import substitution subsidies prohibited by Article 3.1(b). 
The paragraphs relating to these errors include paragraphs 6.745 -6.791 of the Panel Report.  
 
2. In addition, the United States conditionally appeals the Panel's findings that the ex ante lives 
of the French, German, Spanish, and UK LA/MSF subsidies for the A320, A330/A340 Basic, and 
A330-200 had passively "expired " before December 1, 2011, as a result of the amortization of 
benefit.2  These conclusions are in error and are based on erroneous findings of law and related 
legal interpretations, including an erroneous interpretation and application of Article 1.1(b) of the  
SCM Agreement. The paragraphs relating to these errors include paragraphs 6.872 -6.879 of the 
Panel Report. However, the United States only requests the Appellate Body to address this issue if 
it modifies or reverses the Panel's finding that the passive "expiry" events cited by the 
European  Union did not satisfy its obligation to "withdraw the subsidy " for purposes of Article 7.8 
of the SCM Agreement.3  
 
 
_______________  
 
 
 
 
                                                
* This notification, dated 10 November 2016, was circulated to Members as document WT/DS316/30.  
 
1 See Panel Report, para s. 6.790, 7.1(c)(ii).  
2 See Panel Report, paras. 6.879, 7.1(d)(ii) and (iii).  
3 See Panel Report, paras. 6.1094, 7.1(d)(viii).  WT/DS316/AB/RW/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF THE PAR TICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the European Union 's appellant's submission  11 
Annex  B-2 Executive summary of the United States ' other appellant's submission  29 
Annex  B-3 Executive summary of the United States ' appellee's submission  31 
Annex  B-4 Executive summary of the European Union 's appellee's submission  37 
 
 WT/DS316/AB/RW/Add.1  
 
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  ANNEX  B-1 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S APPELLANT'S SUBMISSI ON 
1  INTRODUCTION  
1. The European Union’s Appellant’s Submission sets out appeals of a number of serious errors of 
law and legal interpretation in the Report of the Panel in European Communities and certain 
Member States – Measures Affecting Trade in Large Civil Aircraft (Reco urse to Article 21.5 of 
the DSU by the United States) (“compliance Panel” or “Panel”).   
2  THE PANEL ERRED IN T HE INTERPRETATION OF  ARTICLE 7.8 OF THE 
SCM AGREEMENT1  
2. The Panel erred in interpreting Article 7.8 to require an implementing Member, found in 
original proceedings to have granted or maintained subsidies that cause adverse effects, to 
“remove the adverse effects” of the subsidies, “ irrespective of whether those subsidies 
continue to exist  in the implementation period”.2  That is, for the Panel, an o bligation to 
“remove the adverse effects” applies even if the implementing Member no longer “grant{s} or 
maintain{s}” the subsidy at issue after the end of the implementation period, but has, instead, 
“withdraw{n} the subsidy”.   
3. Properly interpreted, the t erms of Article 7.8, viewed in their context and in light of the object 
and purpose of the SCM Agreement , provide an implementing Member that is “ granting or 
maintaining ” an actionable subsidy, which was found in original proceedings to cause adverse 
effects, with the option  either “to remove the adverse effects or ... withdraw the subsidy”.  
Thus, as is the case throughout the covered agreements with regard to any WTO -inconsistent 
measure, withdrawal of the measure (here, an actionable subsidy) constitutes  compliance, 
regardless whether any historically caused effects of the withdrawn measure temporarily linger 
in the marketplace.  In this respect, compliance under the SCM Agreement  follows the same 
principles that apply throughout the covered agreements.   
4. Whilst in cases of other WTO -inconsistent measures, an adverse impact is presumed  pursuant 
to Article 3.8 of the DSU, for adverse effects claims under Part III of the SCM Agreement , an 
alleged adverse effect must be demonstrated .  In other words, in the c ontext of adverse 
effects claims, the burden to establish effects in the marketplace is shifted to the complainant.  
This places an additional burden on the complainant , reflecting the fact that, unlike other 
measures (including a prohibited subsidy), an a ctionable subsidy is WTO -inconsistent solely if 
it is demonstrated to cause adverse effects.  Thus, unlike a prohibited subsidy, an actionable 
subsidy is “not prohibited per se ”.3  These considerations confirm that compliance with adverse 
effects findings can be achieved either  by withdrawing the subsidy measure or by removing 
the adverse effects.   
5. In contrast, with its interpretation of Article 7.8, the Panel placed an  additional  compliance 
burden on a respondent  found in original proceedings to have granted an actionable subsidy.  
Under the Panel’s interpretation of Article 7.8, respondents face a unique and exacting 
compliance obligation  with regard to an actionable subsidy – an obligation that does not attach 
to any other WTO -inconsistent measure, including prohibited subsidies.  Under the Panel’s 
interpretation, compliance with recommendations and rulings concerning an actionable subsidy 
requires removal of any effects temporar y lingering in the marketplace, even if the subsidy has 
already been withdrawn.   
6. The Panel arrived at its erroneous interpretation of Article 7.8 not on the basis of the proper 
application of the Vienna Convention  rules on treaty interpretation.  Rather, the Panel’s 
                                                
1 Panel Report, paras. 6.803, 6.813, 6.819, 6.822, 6.838, 6.839, 6.840, 6.1078, 6.1100, 6.1101, 
6.1102,  7.1(d)(i), 7.1(d)(viii),  7.1(d)(ix).  
2 Panel Report, para. 6.822 (emphasis in original).  
3 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 238 (emphasis in original).  WT/DS316/AB/RW/Add.1  
 
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  interpretative approach was explicitly  outcome -determined, namely to “ avoid ... an outcome ”4 
that would, in the Panel’s view, make the ruling secured by the United States in the original 
proceedings “purely declaratory” with respect to an expir ed subsidy.5  To “avoid an outcome” it 
considered undesirable, the Panel developed a contrived interpretation that conflicts not only 
with the ordinary meaning of the terms  used in Article 7.8, but also with the context  of the 
provision, and with the overa ll object and purpose  of the SCM Agreement .   
7. The Panel recognised that its interpretation is not rooted in the terms of Article 7.8 .  Instead, 
the Panel acknowledged that the reference in Article 7.8 to “granting or maintaining” of a 
subsidy suggests that  compliance obligations regarding an actionable subsidy are triggered 
whenever “an implementing Member continues  to grant or maintain a subsidy found to have 
caused adverse effects in an original proceeding”.6  Moreover, the Panel acknowledged that 
“the te xt of Article 7.8 may arguably be viewed to suggest that a Member found to have 
caused adverse effects through the use of a subsidy would have no obligation to ‘take 
appropriate steps to remove the adverse effects’ or ‘withdraw the subsidy’ if the subsidy at 
issue no longer exists at the time of the DSB’s adoption of the adverse effects findings”.7  
Although the Panel acknowledged that this was the interpretation flowing from the terms 
“granting or maintaining”, it adopted an interpretation unsupported by t he terms actually used 
in Article 7.8, in their context, and according to the object and purpose of the SCM Agreement . 
8. The Panel’s interpretation also reads the option to “withdraw the subsidy” out of the text of 
Article 7.8.  Under the Panel’s interpretat ion, “withdraw{al of} the subsidy” achieves 
compliance only if doing so also succeeds in “remov{ing} the adverse effects”.8  As a result, 
the Panel’s interpretation renders inutile the phrase “withdraw the subsidy” and the 
conjunction “or” in Article 7.8.  Under the Panel’s interpretation, there remains only one option 
to achieve compliance under Article 7.8, namely through removal of the adverse effects.  The 
Panel’s interpretation is inconsistent with the plain language of Article 7.8.  
9. The Panel’s interpr etation also runs contrary to the context  of Article 7.8, including the most 
proximate context ( i.e., Articles 7.9, 5, and 4.7 of the SCM Agreement ), the structure and 
design of the SCM Agreement , and the DSU.   
10. In assessing context, the Panel began, not w ith proximate  context from the SCM Agreement 
itself, but instead from the DSU.  The Panel used the DSU not to support  the meaning flowing 
from the terms of Article 7.8, but rather to replace  the terms of Article 7.8 with the terms of 
Article 5 of the SCM A greement .  Specifically, the Panel stated that, under various provisions 
of the DSU, implementation must “focus on securing conformity  with the covered 
agreements”.9  According to the Panel, this meant that a subsidy found to cause adverse 
effects in origi nal proceedings must be brought into “ conformity with Article 5 ” of the SCM 
Agreement .10   
11. The Panel misconstrued the DSU and its relevance as context.  First, the Panel ignores that, as 
set forth in Article 3.7 of the DSU, compliance under the DSU is focus ed on the withdrawal  of 
the WTO -inconsistent measure.  Where a WTO -inconsistent measure is withdrawn, the DSU 
does not impose any additional requirement to remove any lingering effects in the 
marketplace.  On the Panel’s view, findings in original proceedi ngs are, therefore, always 
“purely declarative” with respect to temporary lingering effects  of a WTO -inconsistent measure 
in the marketplace.  This feature of WTO dispute settlement has not stopped WTO Members 
from challenging WTO -inconsistent measures and  seeking their withdrawal, despite the 
possibility of a temporarily lingering impact of the withdrawn measure on competitive 
opportunities in the marketplace.  
                                                
4 Panel Report, para. 6.819 (emphasis added).  
5 Panel Report, paras. 6.840, 6.1094.  See also Id., para. 6.819 (“merely ‘declaratory in nature’”); 
para. 6.830 (“would also render the disciplines of Article 5 completely ineffective”).  
6 Panel Report, para. 6.802 (emphasis in original).  
7 Panel Report, para. 6.802 (emphasis in original).  
8 Panel Report, paras. 6.813, 6.819, 6.840, 6.1078, 6.1088, 6.1098, 6.1099.  
9 Panel Report, para. 6.813 (emphasis added).   
10 Panel Report, para. 6.813 (emphasis added).  WT/DS316/AB/RW/Add.1  
 
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  12. Second , the Panel relied on the DSU in a way that deprives Article 7.8 of independent 
meaning, di stinct from Article 5 of the SCM Agreement .  The Panel erroneously assumed that, 
with respect to an actionable subsidy in compliance proceedings, “conformity” with the 
SCM Agreement  is defined exclusively by reference to Article 5, with Article 7.8 subsumed by 
and read exclusively through the prism of Article 5.  The Panel’s assumption is wrong.  The 
Appellate Body has explained that  “Article 7.8 specifies the actions that the respon dent 
Member must take when a subsidy granted or maintained by that Member is found to have 
resulted in adverse effects to the interests of another Member”.11  Thus, to achieve 
compliance, Article 7.8 – and not Article 5 – “specifies the actions that the res pondent must 
take”.   
13. Turning to Article 5 as context, the Panel did not explicitly rely on the terms of this provision to 
shed light on the interpretation of Article 7.8.  Instead, it turned to the DSU to reach the 
erroneous conclusion that Article 7.8 mu st be subsumed by and read exclusively through the 
prism of Article 5.  In so doing, the Panel collapsed the substantive obligations under Article 5 
and the implementation obligations under Article 7.8, despite the textual differences between 
the provision s.  Article  5 (like Article 6) is concerned with “ caus{ing}  .... adverse effects ” 
through the use of any subsidy.  Article 7.8 is formulated differently, and explicitly gives the 
implementing Member the option  either  to remove adverse effects, or to withdr aw a subsidy it 
is granting or maintaining.   Thus, contrary to Article 5, Article 7.8 is not “focus{ed} on the 
causing of  adverse effects  through the use of any subsidy ”.12 
14. The Panel’s interpretation of Article 7.8 is also contradicted by context from Artic le 4.7 of the 
SCM Agreement  – the provision setting out the implementation obligation for prohibited 
subsidy findings.  Article 4.7 provides a single implementation option, namely to “withdraw the 
subsidy”.  Although the Panel agreed that the terms “withdr aw the subsidy” must be given 
“parallel” and “consistent” meaning under Articles 4.7 and 7.8, its interpretation of Article 7.8 
failed to achieve this outcome.13  Indeed, the Panel’s interpretation of Article 7.8 gives the 
phrase “withdraw the subsidy” a very different and inconsistent  meaning than the Panel 
affords the same phrase in Article 4.7, resulting in more demanding compliance obligations for 
actionable subsidies than for prohibited subsidies.  Under the Panel’s interpretation, expiry of a 
subsidy a chieves “withdrawal” of that subsidy under Article 4.7.14  Under Article 7.8, however, 
expiry of a subsidy does not achieve “withdrawal” of that subsidy, unless expiry also achieves 
removal of adverse effects.15   
15. This also shows that the Panel’s interpretat ion of Article 7.8 blurs the line between prohibited  
export subsidies and actionable  production subsidies, which is, as the Appellate Body 
explained, contrary to the overall design and structure of the SCM Agreement .16  The 
interpretive approach taken by th e Panel makes compliance with actionable subsidy -related 
recommendations more exacting  than compliance with prohibited subsidy -related 
recommendations under Article 4.7, despite the fact that Article 4.7 relates to subsidies that 
are prohibited  per se , while Article 7.8 relates to subsidies that are merely actionable , and are 
“not prohibited per se ”.17   
16. Finally, the Panel’s interpretation of Article 7.8 also frustrates the object and purpose  of the 
SCM Agreement , as it ignores the textual flexibility afford ed to implement findings regarding 
actionable subsidies.  Under the Panel’s interpretation, an actionable  subsidy would face a 
unique and exacting compliance obligation, not present with regard to a prohibited subsidy , 
nor with regard to any other WTO -inconsistent measure disciplined under the covered 
agreements .  This outcome cannot be reconciled with the object and purpose of the  
SCM Agreement .   
17. The European Union notes that the Panel’s erroneous interpretation of Article 7.8 directly 
informed its errone ous refusal to recognise that, with respect to each subsidy withdrawn as a 
                                                
11 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 235 (emphasis added).  
12 Appellate Body Report, EC – Large Civil Aircraft , para. 712 (emphasis added).  
13 Panel Report, para. 6.1098.  
14 Panel Report, para. 6.1097.  See also Id. , paras. 6.1085 -6.1086.  
15 Panel Report, paras. 6.1086, 6.1098.  
16 Appellate Body Report, EC – Large Civil Aircraft , para. 1054 (emphasis in original).  
17 Appellate Body Report, EC – Large Civil Aircraft , para. 708.  WT/DS316/AB/RW/Add.1  
 
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  result of expiry of the life of the subsidy or otherwise, the compliance remedy specified in 
Article 7.8 had been provided.  Consequently, the Panel’s erroneous interpretation of 
Article 7.8 also undermined the Panel’s adverse effects -related findings.18  The European Union 
also appeals several of these findings directly, on separate and unrelated grounds.  
18. If the Appellate Body reverses the Panel’s interpretation of Article 7.8 and attempts to 
complete the analysis, the European Union raises a conditional appeal.  Specifically, the Panel  
erred in its interpretation of Article 7.8 (in conjunction with Article  1.1(a))  when finding that 
repayment of a financial contribution does not constitute withdrawal of the subsidy.19 
19. The Pan el acknowledged that the full repayment of the principal of a subsidised loan, plus any 
interest due under the terms of that loan, would  “bring about the end of the financial 
contribution, in the sense that there would be no longer any financial contribution in 
existence ”.20  That is, the Panel accepted that, in this scenario, one of the constituent elements 
of the subsidy ( i.e., a financia l contribution) is no longer present.  At the same time, the Panel 
found that bringing about the end of the financial contribution does not suffice to bring about 
the end of, and thus to withdraw, the subsidy.   
20. In so finding, the Panel erred in the interp retation of Article 1 and 7.8 of the SCM Agreement .  
Bringing about the end of one of the constituent element of a “subsidy”, within the meaning of 
Article 1, also brings the life of the subsidy to an end, implying that this subsidy is no longer 
maintained  and is, instead, withdrawn, within the meaning of Article 7.8.  In the original 
proceedings, the Appellate Body made an express finding to this effect, when it stated that the 
“life” of a subsidy may come “to an end, either  through the removal of the fina ncial 
contribution  and/or  the expiration of the benefit”.21   
3  THE PANEL ERRED IN R EFUSING TO ASSESS WH ETHER THE EUROPEAN U NION HAS 
ACHIEVED COMPLIANCE IN RESPECT OF THE MÜ HLENBERGER LOCH AND BREMEN 
AIRPORT RUNWAY SUBSI DIES22 
21. In its Compliance Communication, the European Union indicated that it had adopted 
“measures taken to comply” (“MTTCs”) that resulted in the withdrawal of the subsidies arising 
under (i) the leases of the land and the special -purpose facilities in the Mühlenberger Loch, 
and (ii) the take -off and landing fees at Bremen airport.  Specifically, the MTTCs aligned the 
terms of the leases and the take -off and landing fees with relevant market benchmarks.23  The 
United States identified these MTTCs in its panel request.24  Throughout the Panel proce edings, 
the Parties continued to disagree as to whether the two EU MTTCs had achieved compliance 
with the recommendations and rulings in the original proceedings,25 although the United States 
declined to substantiate its position that they failed to do so.  
22. In these circumstances, the matter was properly before the Panel.   Moreover, the 
European  Union was entitled to a finding that it had withdrawn the Mühlenberger Loch and 
Bremen airport runway subsidies, based on the unrefuted prima facie showing of withdr awal it 
had presented.  Yet, the Panel refused to make such a finding, based on a series of errors in 
the interpretation and application of Article 21.5 of the DSU.  The Panel also failed to 
undertake an objective assessment of the matter properly before i t, under Article 11 of 
the DSU. 
                                                
18 Panel Report, paras. 6.1451 -6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 
6.1847, 7.1(d)(xii) -(xvii), 7.2.  
19 Panel R eport, paras. 6.1072 -6.1074.  
20 Panel Report, para. 6.1073 (emphasis added).  
21 Appellate Body Report, EC – Large Civil Aircraft , para. 709 (emphasis and underlining added).  
22 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6. 42, and 
footnote  1847 to para. 6.1102.  
23 Communication from the European Union to the DSB, 1 December 2011, WT/DS316/17, items 28, 29, 
p. 4. 
24 US Request for Establishment of a Compliance Panel, WT/DS316/23, paras. 5(j), 6(a), 6(e).  
25 US FWS, paras. 5 and 97, and footnote 13; US SWS, para. 265 and heading 4; US 12 February 2016 
Comments on the EU Comments on Interim Panel Report, para. 48.  WT/DS316/AB/RW/Add.1  
 
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  23. First, the Panel erred in its interpretation of Article 21.5 of the DSU, finding that the right of an 
original respondent to request a determination of compliance is limited to situations in which 
(i) an original respondent  initiates an Article 21.5 proceeding; (ii) the original complainant  
refuses to participate in that Article 21.5 proceeding; and, (iii) the original complainant had 
already suspended  concessions vis-à-vis the original respondent under Article 22 of the DSU.26   
24. The terms used in Article 21.5 do not support such an interpretation.  The “disagreement” to 
be resolved in compliance proceedings under Article 21.5 of the DSU relates “to the existence 
or consistency with a covered agreement of measures taken to comp ly”.  Such a disagreement 
may arise – and indeed regularly arises in Article 21.5 compliance proceedings – before  
concessions are suspended under Article 22.   
25. The Panel’s interpretation is also inconsistent with the object of “prompt settlement” reflected  
in Article 3.3 of the DSU, and that of “prompt compliance” set out in Article 21.1 of the DSU.  
Contrary to these objectives, the Panel’s interpretation prolongs the dispute and forces the 
original respondent to endure suspension of concessions, an “abnor mal state of affairs”,27 
before it can seek recourse to Article 21.5.  Such an interpretation also disturbs the “proper 
balance between the rights and obligations of Members” that the dispute settlement system is 
tasked with preserving.28 
26. Second , the Panel erred in the application of Article 21.5 of the DSU, in finding that a 
“disagreement” did not exist between the Parties in respect of the two MTTCs at issue.29  
According to the Appellate Body, a “disagreement” under Article 21.5 “arises from the 
existence of conflicting views: the original complainant’s view that such a measure is 
inconsistent with the WTO agreements or brings about only partial compliance, and the original 
respondent’s view that a measure is consistent with the WTO agreements and brings ab out full 
compliance with the DSB’s recommendations and rulings”.30  The Parties repeatedly expressed 
“conflicting views” on the effectiveness of the two MTTCs in securing withdrawal of the 
Mühlenberger Loch and Bremen airport runway subsidies.  In particula r, while the 
United  States refused to substantiate  its view that compliance was not achieved with the two 
EU MTTCs, it nonetheless maintained that view throughout the Panel proceedings, and did not 
accept that, on the facts, the alignment with market bench marks achieved withdrawal of the 
subsidies.  The Panel erred in mistaking the US refusal to substantiate  its views, for a lack of 
disagreement  between the Parties.  
27. Third, the Panel failed to make an objective assessment of the matter, under Article 11 of t he 
DSU.   
28. In original proceedings, where complainant alone enjoys the right to place a matter before the 
panel and to seek findings, a panel may forego findings on a claim abandoned by the 
complainant.    Being the sole holder of the right to seek findings  in an original proceeding, the 
complainant is at liberty to waive that right.  In contrast, in compliance proceedings, the 
original complainant no longer enjoys the sole right to place matters before a panel and seek 
adjudication in the form of panel find ings and conclusions regarding the adequacy of the 
responding Member’s compliance efforts.  Instead, as the Appellate Body has clarified, “either 
party to the original dispute may initiate the proceedings”.31  This principle reflects the fact 
that both part ies have a shared interest in the resolution of disagreements concerning 
compliance.   
29. Accordingly, in compliance proceedings, even if the original complainant waives its own right 
to adjudication of a particular matter properly placed before a compliance panel, that waiver 
does not prejudice the original respondent’s right  to have the same matter adjudicated.  In the 
present dispute, the Panel improperly “declined to exercise validly established jurisdiction and 
                                                
26 Panel Report, para. 5.77.  
27 Appellate Body Report, US – Continued Suspension , para. 310; Appellate Body Report,  
Canada – Continued Suspension , para. 310.  
28 Article 3.3 of the DSU.  
29 Panel Report, paras. 5.76 -5.78. 
30 Appellate Body Report, US – Continued Suspension , para. 347; Appellate Body Report,  
Canada – Continued Suspension , para. 347.  
31 Appellate Body Report, US – Continued Suspension , para. 347; Appellate Body Report,  
Canada – Continued Suspension , para. 347.  WT/DS316/AB/RW/Add.1  
 
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  abstained from making any finding on the mat ter before it”,32 despite the European Union’s 
express request to the contrary, and in so doing failed to make an objective assessment of a 
matter properly before it.  
30. The European Union requests the Appellate Body to complete the analysis and find, based on  
unrefuted evidence in the record, that the European Union has achieved withdrawal of the 
Mühlenberger Loch and Bremen airport runway subsidies.  
4  THE PANEL ERRED IN D ETERMINING THE CORPO RATE BORROWING RATE 
COMPONENT OF THE MAR KET BENCHMARK FOR A3 50XWB LA/MS F33 
31. To determine whether LA/MSF for the A350XWB confers a “benefit”, the Panel adopted a 
benchmark rate of return comprised of two components:  (i) a corporate borrowing rate, plus 
(ii) a project risk premium.  This appeal concerns the first component of th e benchmark, 
whereas the appeal in Section 5  , below, concerns the second component.  
32. With respect to the corporate borrowing rate component of the benchmark, the P anel erred in 
identifying the benchmark as “the average yields {on an EADS bond} one -month prior and 
six-months prior to the conclusion of the contract, in the form of a range”.34  In selecting a 
range  of average  yields, instead of adopting the yield on the day of conclusion  of each 
contract,35 the Panel erred in the application of Article 1.1(b), and separately failed to make an 
objective assessment of the matter, under Article 11 of the DSU.   
33. The Panel began by correctly identifying the legal standard unde r Article 1.1(b) of the 
SCM Agreement .  As noted by the Appellate Body, borrowing costs “should be observed at the 
time that each particular contract was concluded ”,36 which requires that “the assessment 
focuses on the moment in time when the lender and bor rower commit to the transaction ”.37   
34. The Panel’s first error arose in its application of this standard to the facts at hand.  Specifically, 
the Panel rejected the use of actual data pertaining to the yield at the time  each contract was 
concluded ( i.e., on the day of conclusion of each contract), which was “the moment in time 
when the lender and borrower committ{ed} to the transaction”.  The Panel replaced the yield 
at the time each contract was concluded with a range  based on the average  yields one - and 
six-months prior to the time  each contract was concluded.  By using a range of average  yields, 
the Panel’s approach risks artificially increasing or lowering the market borrowing rate, 
creating the danger of false positive or false negative findings of subsid isation.  
35. In a second error, the Panel rejected the yield on the day of conclusion of each contract 
without a sufficient evidentiary basis to do so, in contravention of Article 11 of the DSU.  The 
Panel’s justification for rejecting the yield on the day of  conclusion of each contract was the 
possibility that the rate “ may reflect atypical fluctuations”.38  However, undisputed evidence 
before the Panel demonstrated that no such distortion existed.39    
36. In light of the demonstrated downward trend in yields during the period leading up to the 
conclusion of the contracts, the Panel’s selection of a range of average  yields prior to – instead 
of at the time  of – conclusion of each contract, could have but one  result, of which the Panel 
must surely have been aware: an artificial  increase  in the benchmark.  These circumstances 
suggest a lack of objectivity and even -handedness on the part of the Panel in its identification 
of the corporate borrowing rate element of the benchmark.   
37. Should the Appellate Body disagree with the EU’s main argument regarding these two errors, 
the European Union appeals the Panel’s erroneous inclusion, within its range of average yields, 
                                                
32 Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 51.  
33 Panel Report, paras. 6.389, 6.430 ( Table 7), 6.632 (Table 10) .   
34 Panel Report, para. 6 .389.   
35 Panel Report, paras. 6.389, 6.430 ( Table 7), 6.632 (Table 10) .   
36 Panel Report, para. 6.385 (emphasis added).  
37 Panel Report, para. 6.388 (emphasis added), referring to Appellate Body Report, EC – Large Civil 
Aircraft , paras. 706, 825 -836. 
38 Panel Report, para. 6.389 (emphasis added).  
39 Panel Report, para. 6.382 (Table 6).  WT/DS316/AB/RW/Add.1  
 
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  of the six-month average yield  on the relevant EA DS bond.  In so doing, the Panel erred in the 
application of Article 1.1(b) of the SCM Agreement , and separately failed to make an objective 
assessment of the matter, under Article 11 of the DSU.40  
38. First, the six -month average yield does not reflect the yi eld “at the time  that each particular 
contract was concluded ”,41 and does not “focus{} on the moment in time when the lender and 
borrower commit to the transaction ”.42  Indeed, the Panel itself found that the six -month 
average was “ less likely  to reflect  expectations during the finalisation period” of each contract 
than the one -month average.43  Including the six -month average yield within the range, 
therefore, amounts to error in the application of Article 1.1(b).  
39. Second , the Panel failed to provide any expla nation, let alone a reasoned and adequate 
explanation, for its decision to adopt a range of values that includes the six -month average, 
when – according to the Panel itself44 – the other part of the range consisted of a more 
appropriate proxy ( i.e., the one -month average).  The Panel’s reasoning is also internally 
inconsistent.  On the one hand, the Panel criticised the use of an average yield over seven 
months, due to the possibility that such an approach could  result in an “artificially” lower (or 
higher) market borrowing rate, and therefore could  result in a “misplaced” finding of 
subsidisation (or of no subsidisation).45  On the other hand, the Panel adopted a six -month 
average yield as one element of the range used for this component of the benchmark, eve n 
though the six -month average demonstrably resulted in  an “artificial” increase of the market 
borrowing rate, and a heightened risk of “misplaced” findings of subsidisation.  For these 
reasons, the Panel failed to make an objective assessment of the matte r, under Article 11.  
40. When the Panel’s erroneous selection of the corporate borrowing rate is corrected, based 
either on the EU’s main appeal argument or on its alternative appeal arguments, the Panel’s 
“benefit” findings become more sensitive to the corre ct identification of the second component 
of the market benchmark, i.e., the risk premium.  The European Union summarises its appeal 
of the Panel’s identification of the project risk premium component of the benchmark in the 
next Section.   
5  THE PANEL ERRED  IN USING THE PROJECT -SPECIFIC RISK PREMIU M FOR ASSESSING 
THE “BENEFIT” FROM A 380 LA/MSF AS THE PR OJECT RISK PREMIUM F OR A350XWB 
LA/MSF46 
41. In addition to identifying  the wrong corporate borrowing rate component of the benchmark, 
the Panel also erred in identifying  the second component of the benchmark for A350XWB 
LA/MSF, i.e., the project risk premium, and, consequently, erred in finding a “benefit” from 
A350XWB LA/MSF.  
42. The Panel’s “benefit” findings, as illustrated in Table 10 of its Report, are highly depe ndent on 
precision and accuracy in the benchmarking exercise, with a small  change in the project risk 
premium potentially changing the results, from a finding that a particular LA/MSF loan 
constitutes a subsidy, to a finding that it does not.  However, the project risk premium chosen 
by the Panel did not result from a precise an d accurate benchmarking exercise that was 
tailored to the A350XWB project risks assumed by the LA/MSF lenders, under the terms of 
each of the four LA/MSF contracts.   
43. Instead, for all four A350XWB LA/MSF contracts, the Panel selected a single, undifferenti ated 
risk premium, which was developed, in the original proceedings, for a different project , i.e., 
the A380, launched at a different moment in time , and implicating different risks .  That is, to 
benchmark the four A350XWB LA/MSF contracts, the Panel appli ed the risk premium 
developed to benchmark another  aircraft project – the A380 – and another set of LA/MSF 
                                                
40 Panel Report, paras. 6.389, 6.430 ( Table 7), 6.632 (Table 10) .   
41 Panel Report, para. 6.385 (emphasis added).  
42 Panel Report, para. 6.388 (emphasis added).  
43 Panel Report, para. 6.389 (emphasis added).  
44 Panel Report, para. 6.389.  
45 Panel Report, para. 6.385.    
46 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348, 
6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 6.1817, 7.1(d)(xi), 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvi), 7.1(d)(xvii).  WT/DS316/AB/RW/Add.1  
 
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  contracts.  The Panel did so without making any adjustments to the benchmark, despite  its 
acknowledgement of differences in risks as between the A380  project and the A350XWB 
project, and differences in risks as between the four A350XWB LA/MSF contracts.   
44. The approach taken by the compliance Panel is particularly surprising, in light of the concerns 
expressed by the original panel about this very same  approach.  The original panel expressed 
significant concern about the use of a single, undifferentiated  project risk premium across LCA 
programmes receiving LA/MSF, precisely because such an approach ignores the differentiated  
risks borne by lenders for ea ch specific LCA programme, and in each specific LA/MSF 
contract.47  The Appellate Body echoed this concern, adding that it was “the Panel’s duty to 
assess, based on the evidence on record, whether the application of a constant project risk 
premium  was the m ost appropriate approach and, to the extent that it was not, to consider 
alternative approaches ”.48   
45. Accordingly, the compliance Panel should have required the United States to establish the 
project risk premium based on the risks associated with the A350XWB project itself , and in 
light of the terms of each specific LA/MSF contract .  Instead, the Panel acquiesced in the 
United States’ approach, which purported to establish the existence of a “benefit” on the basis 
of a single, undifferentiated project risk premium applied across two distinct LCA programmes, 
launched six years  apart, and eight distinct LA/MSF contracts, concluded over a period of 
10 years .   
46. The degree to which this approach required the Panel to gloss over differences between the 
two di stinct LCA programmes and the eight distinct LA/MSF contracts is astonishing, and is 
particularly glaring in light, once again, of the conceit of precision reflected in the 
benchmarking results tabulated in the Panel’s Table 10.  Even with the use of a sin gle, 
undifferentiated project risk premium, to which the Panel made no adjustment whatsoever to 
account for differences in the risk profiles of eight LA/MSF contracts concluded at different 
points in time over a ten-year period, to finance the development of two distinct aircraft 
launched six years  apart, the Panel’s Table 10 results in nothing more than small “benefits”.  
Those findings are sensitive to small changes in the project risk premium, and potential 
changes in the result, from a finding that a pa rticular LA/MSF loan constitutes a subsidy, to a 
finding that it does not.  
47. In reaching its “benefit” findings, the Panel committed three sets of errors.  
5.1  The Panel failed to establish a project -specific risk premium for A350XWB LA/MSF 
based on the risks ass ociated with the A350XWB programme49 
48. The Panel failed to establish a project -specific risk premium for A350XWB LA/MSF based on 
the risks associated with the A350XWB programme, and therefore erred in the application of 
Article 1.1(b) of the SCM Agreement .  For distinct reasons, the Panel’s approach also 
constitutes error under Article 11 of the DSU.  
49. Beginning with the Panel’s error in the application of Article 1.1(b), the Appellate Body has 
explained that a benchmark loan must be identified through “a progr essive search ”, which 
must begin  by assessing the commercial loan that shares “as many elements as possible in 
common with the investigated loan”, before  progressing to less similar commercial loans.50  
The Panel failed to undertake a “ progressive search ” for and to adopt the benchmark that 
shared “as many elements as possible in common with” the A350XWB LA/MSF loans,  and that 
was most closely tailored to the risks associated with the A350XWB programme .51  In fact, the 
Panel did not engage in any search, prog ressive or otherwise, to identify the project risk 
premium.  The Panel failed to do so despite the fact that it was well aware that there was a 
                                                
47 See Appellate Body Report, EC – Large Civil Airc raft, para. 870 (summary by the Appellate Body of 
the major concerns expressed by the original panel).  
48 Appellate Body Report, EC – Large Civil Aircraft , para. 883 (emphasis added).  
49 Panel Report, paras. 6.608, 6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 7.1(c)(i), 
7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).  
50 Appellate Body Report, US – Anti-Dumping and Countervailing Duties  (China) , para. 486.  
51 Appellate Body Report, US – Anti-Dumping and Countervailing Duties  (China) , paras. 476, 486 
(emphasis added).  See also Appellate Body Report, US – Carbon Steel (India) , para. 4.345.  WT/DS316/AB/RW/Add.1  
 
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  more appropriate benchmark that was more closely tailored to the risks associated with the 
A350XWB programme – that is, A350XWB risk -sharing supplier (“RSS”) contracts.  The Panel 
made other findings relating to RSS contracts for the A350XWB, demonstrating that it knew of 
their existence.  Moreover, the Panel evidently thought RSS financing was an appropriate 
benchm ark, because RSS contracts for the A380 served as the basis for the A380 project risk 
premium that the Panel ultimately applied.   
50. The Appellate Body has further explained that, when resort to a less similar commercial loan to 
serve as the benchmark is nec essary, adjustments  must be made to ensure comparability with 
the investigated loan.52  The Panel failed to make any adjustments to the project risk premium 
developed for the A380 project, despite the Panel’s own findings of differences in risk between 
the A380 project and the A350XWB project.     
51. The Panel’s approach also constitutes error under Article 11 of the DSU.  Paraphrasing the 
Appellate Body’s guidance from the original proceedings, the compliance Panel did not assess 
“whether the application of a{n A380 -based} constant project risk premium {as suggested by 
the United States} was the most appropriate approach  and, to the extent that it was not, to 
consider alternative approaches ”53.  Further, b y inappropriately d eviating from the approach 
taken by the original panel in this regard, the compliance Panel committed another, separate 
error under Article 11.     
5.2  The Panel failed to establish similarity between (i) the risks involved in the 
A350XWB project and the A350X WB LA/MSF contracts, and (ii) the risks involved in the 
A380 project and the A380 LA/MSF contracts, and therefore failed to make an objective 
assessment of the matter54 
52. The Panel erroneously found that the project risk premium developed for the A380 project  is a 
suitable benchmark for the A350XWB project, on the basis that the risks posed by the A380 
and the A350XWB projects were purportedly similar.  However, the Panel’s finding that the 
risks posed by the A380 and the A350XWB projects are similar is not based on an objective 
assessment of the matter, as required under Article 11 of the DSU.   
53. The Panel’s errors relate to its assessment of each of the three aspects of risk considered 
relevant by the Panel to assess the similarity of the risk profiles of, res pectively, the A380 and 
A350XWB projects.   
5.2.1   Price of risk  
54. The Panel found that the United States did not demonstrate the similarity of the price of risk  at 
the time of the provision of A380 and A350XWB LA/MSF.  As a result, the Panel’s conclusion 
that the risks (including the price of risk) of providing financing for the A380 project are 
sufficiently similar to the risks of providing financing for the A350XWB project, is self -evidently 
based on inconsistent reasoning and lacks sufficient evidentiary support .   
5.2.2   Programme risk  
55. The Panel next addressed programme risk , which consists of “development” risk and “market” 
risk.  From its finding that the A380 and A350XWB projects gave rise to different  programme 
risks, the Panel erroneously concluded that the projec ts bore similar  programme risks.  The 
leap from “different” to “similar” programme risks was erroneous, because it was based on 
insufficient support in the evidence, and was additionally not accompanied by a reasoned and 
adequate explanation.  More specifi cally, the Panel failed to reduce the differences in 
programme risk to common terms that are relevant under Article 1.1(b), and that allow for the 
comparison necessary to determine similarity.  That is, the Panel failed to express the 
differences in progra mme risks between the A380 and the A350XWB projects in terms of the 
impact each project’s programme risks had on the market price  that would be demanded by a 
market lender as a risk premium to bear those risks.    
                                                
52 Appellate Body Report, US – Anti-Dumping and Countervailing Duties  (China) , para. 486.  
53 Appellate Body Report, EC – Large Civil Aircraft , para. 883 (emphasis added).  
54 Panel Report, paras. 6.487, 6.492, 6.527, 6.539, 6.542, 6.579, 6.595, 6.608, 6.609, 6.610, 6.632 
(Table 10), 6.633, 6.656, 6.1798, 6.1817, 7.1(c)(i), 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).  WT/DS316/AB/RW/Add.1  
 
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  56. The Panel’s also erred under Article 11 of  the DSU in assessing the respective development 
risks faced by each project.  First, the Panel failed to account for differences in the mitigation 
of development risks as between the A350XWB and the A380 projects.  Specifically, to find 
similarity between  the development risks of each project, the Panel was forced to ignore its 
own findings that, at the time the A350XWB contracts were signed, the development risk of 
the A350XWB project was already mitigated to some extent, whereas the development risk of 
the A380 was not.  Second , the Panel made inconsistent findings in assessing the questions of 
“benefit” and “adverse effects” from LA/MSF for the A35 0XWB, suggesting a lack of 
even-handedness.  Specifically, in its “benefit” assessment, the Panel emphasised  the novelty  
of the A350XWB project (which facilitated its “benefit” findings), whereas, in its assessment of 
the “effects of the subsidies”, the Panel emphasised the continuity  of the A350XWB project in 
light of the A380 project (which facilitated its “ad verse effects” findings).  The Panel did not 
explain the reason for this disparate treatment of the evidence.   
5.2.3   Contract risk  
57. Finally, as regards contract risk , the Panel failed properly to compare the terms of the 
A350XWB contracts to those of the A380 co ntracts.  For several reasons, the Panel’s 
comparison between the A350XWB and A380 LA/MSF contracts lacks a sufficient evidentiary 
basis.   
58. First, the Panel’s finding of similarity in risk -reducing terms between certain A380 LA/MSF and 
A350XWB LA/MSF contr acts is contradicted by the undisputed fact that the risk -reducing terms 
in certain A350XWB LA/MSF contracts were more extensive  than in any of the A380 LA/MSF 
contracts.  Second , the undisputed evidence shows that more A350XWB LA/MSF  contracts  
contained c ertain risk -reducing terms than was the case in the A380 LA/MSF contracts.  Third, 
and finally, undisputed evidence shows that risk -reducing terms in the A350XWB LA/MSF 
contracts are more consequential  than risk -reducing terms in the A380 LA/MSF contracts,  
given that, according to the Panel, the A350XWB project would be exposed to a slightly higher 
development risk than the A380 project.     
59. Additionally, and again with regard to contract risks, the Panel failed entirely to compare the 
terms of the A350XWB LA/MSF contracts to those of the RSS contracts for the A380, which 
were used in the original proceedings to derive the project risk premium for the A380 LA/MSF 
contracts.  The reason is simple: the A380 RSS contracts do not form part of the record.  
Withou t a proper examination of the terms of the A380 RSS contracts, the Panel could not 
know whether the terms of the A350XWB LA/MSF contracts are dissimilar to the terms of the 
A380 RSS contracts.  
5.3  The Panel erroneously adopted a single project risk premium to benchmark all four 
of the A350XWB LA/MSF loans55 
60. The Panel erroneously found that a single project risk premium could be applied as a 
benchmark for each of the four distinct LA/MSF contracts for the A350XWB.  This constitutes 
error in the application of Art icle 1.1(b) of the SCM Agreement .  The Panel’s own factual 
findings reveal that there are important differences in the terms of the four loans that affect 
the risk profile – and hence the market price – of each loan.  However, in selecting a single, 
undifferentiated project risk premium, the Panel failed to consider, let alone adjust for, these 
differences.  
61. The Panel also failed to make an objective assessment of the matter, under Article 11 of the 
DSU.  Specifically, the Panel took inconsistent appro aches to the identification of the corporate 
borrowing rate component of its benchmark, and the project risk premium component of that 
benchmark.  Purportedly to avoid the risk of producing false positive or false negative subsidy 
findings, the differences  in timing between the conclusion of the various LA/MSF contracts 
prompted the Panel to adopt a different corporate borrowing rate for each of the four 
A350XWB LA/MSF contracts.56  On the other hand, as regards the project risk premium 
component of its benc hmark, differences between the four A350XWB LA/MSF contracts did not 
                                                
55 Panel Report, paras. 6.607, 6.608, 6.609, 6.610, 6.632 (Table 10), 6. 633, 6.656, 6.1798, 6.1817, 
7.1(c)(i) , 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).  
56 Panel Report, paras. 6.385 -6.388.  WT/DS316/AB/RW/Add.1  
 
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  prompt the Panel to adopt a different risk premium for each contract, despite a similar risk of 
producing false subsidy findings.   
6  THE PANEL ERRED IN I TS IDENTIFICATION OF  THE APPROPRIAT E  PRODUCT 
MARKETS57 
62. The European Union appeals the Panel’s finding, in paragraph 6.1411 of the Panel Report, 
that: 
the United  States has demonstrated that it would be appropriate to evaluate the 
merits of its claims of serious prejudice in this compliance dispute on the basis of the 
following three separate product markets:  (a) the product market for single -aisle 
aircraft in which Airbus and Boeing sell the A320neo, A320ceo, 737MAX and 737ng 
families of LCA; (b) the product market for twin -aisle aircraft i n which Airbus and 
Boeing sell the A330, A350XWB, 767, 777 and 787 families of LCA; and (c) the 
product market for VLA in which Airbus and Boeing sell the A380 and the 747.  
63. This finding rests on several errors in the interpretation and application of Artic les 5 and 6.3 of 
the SCM Agreement ; separately, the Panel also failed to make an objective assessment of the 
matter, under Article 11 of the DSU . 
64. First, the Panel erred in interpreting the term “market” in Article 6.3 to require the placement 
of two produc ts in the same product market based solely on the existence of competition 
between those products, without regard to the nature or degree of the competitive 
relationship.  In other words, the Panel held that, for two products to be in the same product 
market, it is not necessary “that they impose ‘significant competitive constraints’ on each 
other or that those products are ‘closely competitive’”.58  This interpretation undermines the 
very concept of a “market” as envisaged in Article 6.3 of the SCM Agreemen t, and constitutes 
interpretative error.  That interpretative error also undermines the Panel’s identification of the 
relevant product markets, and the adverse effects findings based thereon . 
65. As the Appellate Body explained in US – Upland Cotton , the ordin ary meaning of the word 
“market” is “the area of economic activity in which buyers and sellers come together and the 
forces of supply and demand affect prices”.59  The Appellate Body also clarified, in the original 
proceedings in this dispute, that “the sco pe of the relevant product market in any given case 
will depend on the nature and degree of competition  between the products of the complaining 
Member and the allegedly subsidized products of the responding Member”.60  It would be 
erroneous to group product s into the same product market based solely on the existence  of 
competition between them, without consideration of the “nature and degree” of the 
competitive relationship.   
66. In the original proceedings, the Appellate Body referred to the “sma ll but signifi cant and 
non-transitory increase in prices” or “SSNIP” test to locate the proper balance, in the product 
market definition, between the complete absence  of competitive constraints 
(or substitutability), on the one hand, and perfect substitutability, on the  other.61  This 
conceptual tool underscores the proposition that the mere existence of competition between 
two products is insufficient to group them into the same product market.  Instead, two 
products may properly be placed in the same market where the “n ature and degree of 
competition” between the products reveals that they exercise “ significant competitive 
constraints ” on one another.  While circumstances may undermine the ability to apply the 
SSNIP test in a given case, the Appellate Body’s choice of th is conceptual tool supports the 
proposition that product markets should be defined on the basis of “significant competitive 
constraints”, and not merely the existence of competition.  
                                                
57 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348, 
6.1382, 6.1362, 6.1409, 6.1416, 7.1(d)(xi).  
58 Panel Report, para. 6.1211.  
59 Appellate Body Report, US – Upland Cotton , para. 408.  
60 Appellate Body Report, EC – Large Civil Aircraft , para. 1123.  
61 Appellate Body Report, EC – Large Civil Aircraft , footnote 2468, citing M. Motta, Competition Policy: 
Theory and Practice , pp. 102, 103.  WT/DS316/AB/RW/Add.1  
 
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  67. The Panel’s approach to identifying product markets based on the mere ex istence of 
competition would produce unworkable product market definitions that make identifying the 
effects of subsidies virtually impossible, thereby undermining the utility of the very exercise of 
demarcating product markets for purposes of a serious pr ejudice assessment.  For example, 
under the Panel’s product market standard, a product market could readily be composed of, 
for example, small regional aircraft, large regional aircraft, single -aisle aircraft, twin -aisle 
aircraft, very large aircraft, and may even include other means of transport.  
68. Second , should the Appellate Body find that the Panel did not err in its interpretation of the 
term “market” in Article 6.3, and instead agree that two products belong in the same product 
market as long as competi tion exists between those products (regardless of the nature or 
degree of that competitive relationship), the Panel failed in its application of Articles 5(c) and 
6.3 to the facts at hand.62  Specifically, on the facts, the Panel’s product market standard 
should have led inexorably to the conclusion that all LCA fall in the same single product 
market.  The Panel’s factual findings reveal that competition exists across the product 
spectrum  covered by the US challenge, such that application of the Panel’s own standard 
should have led it to find a single product market.  In fact, in concluding its finding on product 
markets, the Panel emphasised that “important competitive relationships may also exist 
between pairings or combinations of aircraft across two, or e ven all three, of the product 
markets”.63  Thus, even assuming that the legal standard identified by the Panel was correct, 
quod non , the Panel erred in the application of that standard.  This error undermines the 
Panel’s identification of the relevant prod uct markets, and the adverse effects findings based 
thereon.  
69. Third, and finally, the Panel’s failure to test its erroneous product market standard against the 
competitive dynamics between products that the United States alleged to fall in different 
product  markets constitutes a failure, under Article 11 of the DSU, to make an objective 
assessment of the matter.64  The Panel confined its analysis to an enquiry whether there 
existed some competitive relationship between the aircraft placed by the United States  within  
each of the three product markets it alleged, without also enquiring whether there existed a 
competitive relationship between aircraft that the United States placed into separate  product 
markets.  For instance, on the sole basis that the United Sta tes alleged them to be in different 
product markets, the Panel neglected altogether to examine whether the A321neo exerts 
competitive constraints on the 767, or whether the 777 -300ER or the A350XWB -1000 exert 
competitive constraints on the 747 -8.  In so do ing, just as in the original proceedings, the 
compliance Panel took an undiscerning approach to identifying the product markets, 
uncritically accepting the markets proposed by the United States.  
70. In these circumstances, the European Union requests the Appel late Body to reverse the Panel’s 
product market findings.  Having erred in the identification of the product markets at issue, 
these findings must be reversed, and with them the findings of displacement, impedance and 
significant lost sales that the Panel made on the basis of its erroneously identified product 
markets.  
7  NON-SUBSIDIZED LIKE PROD UCT65 
71. The Panel erred in the section of its report that deals with the subsidization of the like product.  
The Panel should have made an objective assessment of the US claim and the EU arguments 
under Articles 6.3(b) and 6.4, taking into account the facts and evidence submitted by the 
parties, and taking into account the Appellate Body’s guidance that Article 6.4 provides context 
for the interpretation and application of  Article 6.3(b).  The Panel should have assessed not 
only the EU argument that any subsidization of the like product precludes or defeats the US 
claim (the original “clean hands” argument) but also the novel interpretative proposition 
advanced by the EU to  the effect that the compliance Panel was bound to take such 
subsidization into account in its assessment of causation (the “causation” argument).  The 
                                                
62 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 7.1(d)(xi).  
63 Panel Report, para. 6.1416.  
64 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 7.1(d )(xi). 
65 Panel Report, paras. 6.1125 -6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii), 7.2.    WT/DS316/AB/RW/Add.1  
 
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  Panel was also bound to take into account the multilateral determination in DS353 that Boeing 
LCA are su bsidized to the tune of several billion dollars.  
72. Thus, the Panel erred in stating that the EU arguments were “essentially the same” as in the 
original proceedings, and erred in reducing the matter to two questions: whether or not there 
was a new matter; an d whether or not there were cogent reasons.  The Panel further erred in 
its assessment of whether or not there was a new matter, because it failed to take into 
account changes in the law and facts, erred in the interpretation of the term “matter” in Articl e 
11 of the DSU, and failed to make an objective assessment.  The Panel also erred in its 
assessment of whether or not there were cogent reasons, including by failing to make an 
objective assessment under Article 11 of the DSU.  
73. Accordingly, the European Un ion requests the Appellate Body to reverse the Panel's findings 
that relate to or rely on its findings with respect to the subsidized like product, and complete 
the legal analysis with respect to the interpretation of Articles 6.3(b) and 6.4.  The European  
Union further submits that the Appellate Body cannot complete the analysis with respect to the 
US claims of displacement or impedance.  The European Union also asks the Appellate Body to 
take these matters into account when considering and reversing other  aspects of the Panel’s 
findings under Article 6, and specifically Articles 6.3(a) and 6.3(c).  
8  THE PANEL ERRED IN F INDING THAT THE LA/M SF LOANS ARE A GENUI NE AND 
SUBSTANTIAL CAUSE OF  ADVERSE EFFECTS RELA TED TO AIRBUS’ A320,  A330, A380 
AND A350XWB FAMILIES  OF LCA66 
74. The European Union appeals several errors in the Panel’s causation -related findings.   
75. First, the Panel erred in finding that, despite the passage of time and events that occurred 
during that time, “the direct and indirect effects of the pre-A350XWB LA/MSF subsidies 
continue to be a genuine and substantial cause of the present -day market presence of the 
A320, A330 and A380 families”.67  This finding is based on a “but for” approach to causation 
that, in the circumstances of the present disp ute, was incapable of taking into account the 
passage of time, and events that occurred during that time, including the expiry of most of the 
pre-A350XWB subsidies, resulting in error in the interpretation of Article 5(c) of the 
SCM Agreement .   
76. The Panel acknowledged the Appellate Body’s guidance on the relevance of the passage of 
time and events that occurred during that time – in particular, that the effect of any subsidy 
must “diminish{} and eventually come to an end”.68  However, under the Panel’s appro ach to 
causation, adverse effects continue to be attributable to the subsidy for as long as the 
subsidised product exists (as well as any subsequent products manifesting “learning”, “scope” 
or “financial” effects from the subsidised product), since the sub sidy will continue to be the 
necessary “but for” cause of its market presence.  This enquiry was, therefore, ill -suited and 
insufficient to determine whether, at present, and taking into account the passage of time and 
events that occurred over that time, including the expiry o f the subsidies and massive 
non-subsidised investments by Airbus, the subsidies continue to be a “genuine and 
substantial” cause of adverse effects.   
77. The Panel’s “but for” approach to causation, coupled with its approach to the inter pretation of 
Article 7.8, created an anomalous situation in which it is nearly impossible for a Member to 
bring itself into compliance with the recommendations and rulings of the DSB in relation to an 
actionable subsidy.  Under the Panel’s approach to Arti cle 7.8, compliance cannot be achieved 
through withdrawal of the subsidy, though expressly recognised as an option to achieve 
compliance, unless accompanied by the removal of adverse effects.  And  under the Panel’s 
“but for” approach, the finding from the original proceedings that the subsidies were 
historically a “necessary” cause of adverse effects is extended indefinitely, meaning that the 
causal link to alleged adverse effects does not “diminish{} and eventually come to an end”.   
                                                
66 Panel Report, paras. 6.1515, 6.1527, 6.1534, 6.1774, 7.1(d)(xii) -7.1(d)(xiii).  
67 Panel Report, para. 6.1534.   
68 Panel Report, para. 6.1487, quoting Appellate  Body Report, EC – Large Civil Aircraft , 
paras.  1236-1238.  WT/DS316/AB/RW/Add.1  
 
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  78. Additionally, the Europ ean Union appeals the Panel’s error in the application of Article 5(c) and 
7.8 of the SCM Agreement , by failing to examine whether Airbus’ non -subsidised investments 
diluted the causal link between the subsidies and the alleged adverse effects related to A irbus’ 
A320 and A330 families of LCA, such that the subsidies are no longer a “genuine and 
substantial” cause of present adverse effects .69  Having determined that the subsidies were the 
historical “necessary” cause of the market presence of these aircraft,  the Panel outright 
precluded the possibility that these investments could ever have an impact on the existence of 
a “genuine and substantial” present  causal link.   To the Panel, the non -subsidised post -launch 
investments were merely evidence that the adve rse effects of the subsidies persisted, because 
“but for” the subsidies, the programmes into which the non -subsidised investments were made 
would not have existed in the first place.70 
79. Second , the Panel may have implied that LA/MSF for the A380 resulted in “direct effects”.71  To 
the extent the Panel did make such a finding, it constitutes error under Article 11 of the DSU.  
The Panel defined the term “direct effects” as “the effects of any given LA/MSF loan on Airbus’ 
ability to launch and bring to market th e particular model of Airbus LCA specifically funded by 
that LA/MSF loan”.72  Having (i) expressly found that A380 LA/MSF was “not critical to {the} 
very existence” of the A380,73 and (ii) not having found that absent A380 LA/MSF, Airbus 
would have delayed t he launch of the A380, or that the A380 would have been any different in 
technology, the Panel lacked an evidentiary basis to find that LA/MSF for the A380 resulted in 
“direct effects”.  
80. Third, in attributing the market presence of the A350XWB to LA/MSF, th e Panel erred in the 
application of Article 5, and under Article 11 of the DSU.  Specifically, the Panel appears to 
have attributed the market presence of the A350XWB to “indirect effects” of LA/MSF for 
previous aircraft, including LA/MSF for the A380.74  Moreover, certain of the Panel’s statements 
could be read to imply that the market presence of the A350XWB is attributable to “direct 
effects” of LA/MSF for the A350XWB.75 
81. The Panel’s attribution of the market presence of the A350XWB to the “indirect effects ” of the 
LA/MSF for the A380 constitutes error in the application of Article 5(c).  The Panel’s finding 
that A380 LA/MSF was “not critical to {the} very existence”76 of the A380 precludes a finding 
of “direct effects” from that subsidy on the existence of t he A380.  In these circumstances, any 
“learning effects”, “scope and scale effects” or “financial effects” for the A350XWB associated 
with the A380 would have existed even absent A380 LA/MSF, and are not attributable to those 
loans.  Thus, as A380 LA/MSF d id not result in “direct effects” for the A380, those loans were 
logically incapable of resulting in “indirect effects” on later LCA such as the A350XWB.  Yet, the 
Panel appears to have erroneously included A380 LA/MSF in the aggregated group of subsidies 
that had “indirect effects” on the launch and market presence of the A350XWB.77 
82. To the extent that the Panel attributed the market presence of the A350XWB to “direct effects” 
from LA/MSF for the A350XWB, the Panel’s finding rests on its assertion that “without 
A350XWB LA/MSF, the Airbus company that actually existed  could have pursued such a 
programme only by a narrow margin, with a high likelihood that it would, to some degree, 
have had to make certain compromises with respect to the pace of the programme a nd/or the 
features of the aircraft ”.78  This single sentence – which is, incredibly, the concluding sentence 
in the concluding paragraph of a 182 -paragraph section of the Panel Report dedicated to 
assessing the effects of A350XWB LA/MSF – is the sole basis on which the Panel appears to 
have found “direct effects” from A350XWB LA/MSF on the launch and market presence of the 
A350XWB.   
                                                
69 Panel Report, paras. 6.1527, 6.1534, 6.1774, 7.1(d)(xii) -7.1(d)(xiii).  
70 Panel Report, para. 6.1525.  
71 Panel Report, para. 6.1507.  
72 Panel Report, pa ra. 6.1492.   
73 Panel Report, para. 6.1507 and footnote 2597.  
74 Panel Report, paras. 6.1747, 6.1771, 6.1773, 7.1(d)(xiii).  
75 Panel Report, paras. 6.1717, 7.1(d)(xiii).  
76 Panel Report, para. 6.1507 and footnote 2597.  
77 Panel Report, paras. 6.1771, 6.1773, 7 .1(d)(xiii).  
78 Panel Report, paras. 6.1717, 7.1(d)(xiii).  WT/DS316/AB/RW/Add.1  
 
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  83. The Panel’s assertion that, without A350XWB LA/MSF, there was a “high likelihood” that Airbus 
would have had to “make certain compromises” to the timing and features of the aircraft, 
enjoys no support whatsoever in the 182 -paragraph section of the Panel Report dedicated to 
assessing the effects of A350XWB LA/MSF.  Indeed, the Panel does not cite a single piece of 
evidence to supp ort such a finding; nor does it otherwise provide reasoning in support of any 
such finding.  In fact, the Panel’s speculation is contradicted by  a number of its own factual 
findings, which collectively demonstrate that Airbus would not have made compromise s on the 
timing or features of the A350XWB.79  Thus, the Panel’s finding of “direct effects” for the 
A350XWB constitutes error under Article 11 of the DSU.  
84. Fourth , and finally , the Panel erred in its application of the requirement that there be a 
“genuine and substantial” causal link, under Article 5(c) and 6.3 of the SCM Agreement by 
failing to account for, in its causation analysis, the differences in the degree of competition 
between pairings of aircraft, and market -specific and sale -specific non -attribu tion factors.80  
85. The Panel clarified that “it {was} not {the Panel’s} view that the degree of competition 
existing within each of {the} markets will be identical between all pairings or combinations of 
aircraft”.81  The Panel also acknowledged that “where the evidence shows that the competitive 
relationship {between two products} is not direct and ‘at most, indirect or remote’, this must 
be properly taken into account in the {subsequent adverse effects} analysis ”.82  Yet, the Panel 
failed to account for the differences in the degree of competition between relevant LCA in 
assessing the US claims of displacement, impedance and lost sales.  
86. Similarly, in the context of displacement, impedance and lost sales, the Panel failed to account 
for the market -specific and sale -specific non -attribution factors that the European Union 
demonstrated as causing (or contributing to) the observed market phenomena.  Having 
determined that, historically, the LA/MSF subsidies were the “ne cessary” cause of the market 
presence of certain Airbus aircraft, the Panel posited tha t any further discussion of 
non-attribution factors was “obviously” irrelevant.83  In so doing, the Panel erred in its 
application of the requirement that there be a “gen uine and substantial” causal link, under 
Article 5(c) and 6.3 of the SCM Agreement  
9  THE PANEL ERRED IN F INDING “DISPLACEMENT  AND/OR IMPEDANCE” IN  VARIOUS 
COUNTRY AND PRODUCT MARKETS84 
87. The Panel’s findings of “displacement and/or impedance” rest on three sets  of errors.   
88. First, the Panel made undifferentiated findings of “displacement and/or  impedance” with 
respect to each of the country and product markets at issue, without clarifying whether it had 
found, for a particular country and product market, both displacement and impedance, or 
instead one or the other  of these two distinct forms of adverse effects.  Articles 6.3(a) and 
6.3(b) employ the words “displace” and “impede”, separated by the conjunction “or”, which 
confirms that displacement and impedance ar e two distinct forms of serious prejudice.  
Indeed, the Appellate Body has defined the term “displace” to connote a “substitution effect”,85 
and the term “impede” to connote “obstructed” or “hindered” imports/exports.86  The 
Appellate  Body also clarified, in  US – Large Civil Aircraft , that “‘displacement’ and ‘impedance’ 
are ... not interchangeable concepts” .87  The Panel’s undifferentiated findings of “displacement 
and/or impedance” constitute error in the interpretation of Articles 6.3(a) and 6.3(b), and 
amount to treating displacement and impedance as interchangeable concepts.   
                                                
79 Compare Panel Report, para. 7.1717 with Panel Report, paras. 6.1542 -6.1544, 6.1546, 6.1547, 
6.1548, 6.1555, 6.1569, 6.1572, 6.1579.  
80 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7 .1(d)(xiv) -7.1(d)(xvii).  
81 Panel Report, para. 6.1416.  
82 Panel Report, para. 6.1169 (emphasis added).  
83 Panel Report, para. 6.1814.  
84 Panel Report, paras. 6.1817, 7.1(d)(xiv) -7.1(d)(xv).  
85 Appellate Body Report, EC – Large Civil Aircraft , para. 1160.  See also Appellate Body Report,  
US – Large Civil Aircraft , para. 1071.  
86 Appellate Body Report, EC – Large Civil Aircraft , para. 1161.  See also  Appellate Body Report,  
US – Large Civil Aircraft , paras. 1071, 1086.  
87 Appellate  Body Report, US – Large Civil Ai rcraft , para. 1071.  See also Appellate Body Report,  
EC – Large Civil Aircraft , paras. 1160 -1162.  WT/DS316/AB/RW/Add.1  
 
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  89. Second , assuming, arguendo , that the Panel’s findings of “displacement” apply to each country 
and product market at issue, the European Union demonstrates that all of the Panel’s fin dings 
of “displacement” are in error.   
90. Properly interpreted, the term “displacement” connotes a substitution effect.  The Appellate 
Body has clarified that in deciding a claim of displacement, a panel must “assess whether this 
phenomenon is discernible by  examining trends  in data relating to export volumes and market 
shares over an appropriately representative period”.88  The Panel erroneously sought to 
distinguish the Appellate Body’s guidance by postulating that it pertained solely to a “two -step” 
analysi s of causation, and not to the type of “unitary” analysis that the Panel undertook.  The 
Panel’s application of the law to the facts confirms that the Panel interpreted Articles 6.3(a) 
and 6.3(b) to allow a finding of displacement without any engagement wi th the sales volume 
and market share data, and without a finding of clearly discernible and identifiable declining 
trends in sales volume or market shares for each of the country and product markets at issue.  
This constitutes error in the interpretation o f Articles 6.3(a) and 6.3(b) of the SCM Agreement.  
91. The Panel additionally erred in the application of Articles 5(c), 6.3(a) and 6.3(b) and 7.8 by 
effectively confining its analysis to two data points (annual data for 2012 and 2013), which, as 
the Appellate  Body clarified in US – Large Civil Aircraft , “by any measure, cannot constitute a 
trend”.89   
92. The Panel further erred in the application of Articles 5(c), 6.3(a) and 6.3(b) and 7.8 in making 
findings of displacement entirely divorced from the data.  The Pa nel failed to engage with the 
data, to determine whether it revealed a “discernible” or “clear” trend of a “substitution effect” 
in the markets at issue.  In several instances, the Panel’s findings of displacement cover 
markets where Boeing’s market share increased  over the period under consideration, 
evidencing the exact opposite of a substitution effect.  
93. Third, assuming, arguendo , that the Panel’s findings of “impedance” apply to each country and 
product market at issue, the European Union demonstrates th at all of the Panel’s findings of 
“impedance” are in error.   
94. Contrary to the meaning of the term “impede”, and the Appellate Body’s guidance, the Panel 
interpreted Articles 6.3(a) and 6.3(b) to support a finding of impedance without any 
engagement with th e sales volume and market share data, and without a finding of clearly 
discernible and identifiable trends in sales volume or market shares for each of the country 
and product markets at issue.  This constitutes error in the interpretation of Articles 6.3( a) and 
6.3(b).  
95. Additionally, the Panel erred in the application of Articles 5(c), 6.3(a) and 6.3(b) by effectively 
confining its analysis to two data points (annual data for 2012 and 2013), and in making 
findings of impedance that are entirely divorced fro m the data.  
10  CONSIDERATIONS THAT APPLY WERE THE APPEL LATE BODY TO ATTEMPT  TO 
COMPLETE THE ADVERSE  EFFECTS ANALYSIS  
96. Having set out the bases on which the Appellate Body should reverse (i) the Panel’s findings 
with respect to the withdrawal of subsidies, unde r Article 7.8 of the SCM Agreement , and 
(ii) the Panel’s causation findings, under Articles 5 and 6.3 of the SCM Agreement , the 
European Union addresses considerations that would apply were the Appellate Body to attempt 
to complete the analysis regarding t he United States’ assertion of adverse effects.  
97. The Panel employed the tools of aggregation and cumulation to undertake a collective  
assessment of the effects of LA/MSF and non -LA/MSF subsidies.  Specifically, the Panel found 
that the aggregated group of L A/MSF subsidies is a “genuine and substantial” cause of adverse 
                                                
88 Appellate  Body Report, US – Large Civil Aircraft , para. 1071.  
89 Appellate Body Report, US – Large Civil Aircraft , para. 1087.  WT/DS316/AB/RW/Add.1  
 
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  effects, and then cumulated the effects of the non -LA/MSF subsidies, which it found to be a 
“genuine” cause of adverse effects.90 
98. Should the Appellate Body reverse the Panel’s interpretation of  Article 7.8 or its causation 
findings, the basket of subsidies subject to the Appellate Body’s analysis of the adverse effects 
asserted by the United States will be different from the basket considered by the Panel.  In the 
reconstituted basket, there wil l no longer be a single LA/MSF subsidy or an aggregated group 
of LA/MSF subsidies to serve as a “genuine and substantial” cause of adverse effects.  The 
Panel’s factual findings provide no basis for a conclusion that anything short of the entire 
group of L A/MSF subsidies considered by the Panel is a “genuine and substantial” cause of 
adverse effects.  
99. Without an “anchor” subsidy (or aggregated group of subsidies) that has been found to be a 
“genuine and substantial” cause of adverse effects, cumulation will no longer be an appropriate 
tool for the collective assessment of the effects of the LA/MSF and non -LA/MSF subsidies.  Nor 
can the non -LA/MSF subsidies be aggregated with the LA/MSF subsidies, given the differences 
in the “design, structure and operation” of these measures.  Neither aggregation nor 
cumulation is appropriate for the collective assessment of the effects of the non -withdrawn 
LA/MSF and non -LA/MSF subsidies, should the Appellate Body seek to complete the analysis.  
100.  While the European Union does not believe that the inapplicability of aggregation and 
cumulation would preclude a collective assessment of the effects of the subsidies, the 
European Union believes that the Appellate Body would be unable to complete the analysis to 
make any findings of adverse effects properly attributable to any non -withdrawn subsidies for 
other reasons:  
a. The Panel erred in its identification of the relevant product markets.91  In doing so, the 
Panel failed to undertake any examination of the competitive dynamic between p roducts 
that the United States alleged to be in different product markets.  The Panel’s failure in 
this regard renders the Panel Report devoid of factual findings that would allow the 
Appellate Body to complete the analysis by identifying the appropriate p roduct markets.  
Nor are there undisputed facts of record to enable the identification of appropriate 
product markets by the Appellate Body.  
b. The Panel erroneously failed to consider whether the United States brought its claim in 
respect of a “non -subsidize d like product”, within the meaning of Article 6.4 of the 
SCM Agreement.92  There are no Panel findings or undisputed facts of record that would 
allow the Appellate Body to identify which, if any, of the Boeing aircraft in respect of 
which the United States alleges adverse effects is “non -subsidized”.  
c. In its causation analysis, the Panel failed to account for the passage of time and events 
that occurred during that time.93  There are no Panel findings or undisputed facts of 
record that would allow the Appellate Body to account for these factors in completing the 
analysis.  
d. The natu re of the adverse effects analysis advocated by the United States, and accepted 
by the Panel, resulted in an absence, from the record, of evidence necessary to assess 
properly the causal link between a reconstituted basket  of subsidies and any adverse 
effects.  The United States did not advance any argument or evidence that could have 
assisted the Panel, or that could assist the Appellate Body, in assessing whether a 
reconstituted basket  of subsidies, short of even one of the subsidies that the United 
State s included in its basket, would still be a “genuine and substantial” cause of any 
adverse effects.  
e. The re -constitution of the basket of subsidies at issue would require properly accounting 
for the effects of those subsidies that are withdrawn, and therefor e excluded from the 
                                                
90 Panel Report, paras. 6.1838, 6.1846, 6.1847, 7.1(d)(xvii).  
91 Section 6  , above.  
92 Section 7  , above.  
93 Section 8  , above.  WT/DS316/AB/RW/Add.1  
 
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  basket of subsidies at issue, as non -attribution factors .  There are no Panel findings or 
undisputed facts of record that would allow such an exercise by the Appellate Body.  
f. With respect to claims of displacement and impedance, the Pane l failed to identify, or 
even look for, clear and discernible trends that are capable of evidencing displacement 
or impedance.94  While the Panel tabulated the volume and market share data pertaining 
to two annual data points in its Report, two data points are insufficient to constitute a 
trend.  As for data for the years preceding 2011, there exist no Panel findings or 
undisputed facts of record that speak to either the existence of trends, or the data based 
on which such trends are to be ascertained.  
g. In assessing displacement, impedance and lost sales, the Panel failed to account for the 
closeness of competition and substitutability between products that it placed in the same 
product market, based solely on the existence  of competition, without regard to th e 
nature or degree of that competitive relationship.95  There are no Panel findings or 
undisputed facts of record that would allow such an exercise by the Appellate Body.  
h. In the context of displacement, impedance and lost sales, the Panel erroneously failed  to 
examine the market -specific and sale -specific non -attribution factors that the European 
Union demonstrated caused or contributed to causing the observed market 
phenomena.96  There are no Panel findings or undisputed facts of record that would allow 
the Appellate Body to account for these factors in an attempt to complete the analysis.  
11  CONCLUSION  
101.  For the reasons set out above, the European Union requests that the Appellate Body reverse 
or modify the findings and conclusions addressed in this Appellant’s S ubmission.  
 
                                                
94 Section 9  , above. 
95 Section 9  , above.  
96 Section 9  , above.  WT/DS316/AB/RW/Add.1  
 
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  ANNEX B -2 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' OTHER APPELLANT'S SU BMISSION  
1. If the Appellate Body were to reverse the Panel and find that the passive expiry of LA/MSF 
subsidies could satisfy the obligation under Article 7.8 in at least some cases, then the 
United  States conditionally appeals the Panel ’s separate finding s that the ex ante lives of the 
pre-A380 LA/MSF subsidies passively “expired ” prior to December 1, 2011 .   
2. In line with the Appellate Body’s guidance in EC – Large Civil Aircraft , the period in which a 
benefit exists should be based on an ex ante assessment of factors such as the nature, 
amount, and projected use of the challenged subsidy.  If at the time of grant, the evidence 
indicates that the grantor expects the benefit to flow over a period whose length is defined to 
be contingent on some other variable event, then logically the life of the subsidy should be 
measured accordingly . 
3. Evidently, the Panel assumed tha t the ex ante life of the subsidies must be expressed as a 
fixed number.  It erred by focusing on the wrong expectations.  It sought to retrospectively 
project an expected life to each aircraft program.  The Panel failed to recognize that, when 
Airbus acce pted a contingent liability and the governments agreed to make payments 
contingent, they expected the benefit of below -market repayments to last for a variable period 
defined by external factors.   
4. In addition, the United States raises an appeal regarding a  legal interpretive question with 
respect to Article 3.1(b).  The United States demonstrated, and the EU did not contest, that 
French, German, Spanish, and UK LA/MSF is each conditioned on the production of goods in 
the grantor’s territory to be used by Ai rbus in the manufacture of the A350 XWB.  The Panel 
found that subsidies conditioned on the domestic production of inputs to be used in the 
manufacture of the A350 XWB are not prohibited under Article 3.1(b).  The Panel determined 
that the contingencies in  the A350 XWB LA/MSF contracts “ensure that the member States are 
subsidizing a domestic producer.  Article 3.1(b), therefore, does not discipline them.”  
5. Under a competing interpretation also under consideration in a separate dispute, where a 
subsidy is co ntingent on domestic production of a good that is an input into a manufacturing 
process, and substituting an imported version result in the loss of an entitlement to the 
subsidy, the subsidy is contingent on the use of domestic over imported goods.  To be clear, 
the United States considers  this is not the best interpretation.  However, the United States has 
an interest in ensuring that the same legal approach is applied in both proceedings.   
6. Moreover, should the Appellate Body determine that this competing  interpretation is indeed 
correct, there is no question that the Panel erred in not finding a violation of Article 3.1(b).  
Further, applying the competing interpretation to the undisputed facts and findings of this 
proceeding, the Appellate Body would be able to complete the analysis and conclude that all 
four instances of A350 XWB LA/MSF breach Article 3.1(b).   
7. The competing interpretation – in contradiction to the interpretation adopted by the Panel – is 
as follows: if (i) a subsidy is granted to a dome stic producer conditional on the domestic siting 
of production activities to produce a domestic input in an industrial process, and (ii) a 
substitution of imported goods for these inputs would result in the producer’s loss of the 
entitlement to the subsidy , then the subsidy is contingent on the use of domestic over 
imported goods, and therefore is inconsistent with Article 3.1(b).  In addition, the competing 
interpretation of Article 3.1(b) assumes that any good completed in a domestic territory is 
“domesti c” for purposes of Article 3.1(b), without the need to examine the significance of the 
operations undertaken in the domestic territory, the proportion of foreign content contained in 
the good, rules of origin, or any other considerations.   
8. If the goods th at Airbus must use to manufacture the A350 XWB are required to be produced 
in the EU, then the goods are “domestic goods” and therefore Airbus is required to use 
domestic over imported goods to receive the subsidy.  WT/DS316/AB/RW/Add.1  
 
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  9. The Panel, however, found that this logic  reflected an improper interpretation of Article 3.1(b).  
Critical to the Panel’s finding was the need to interpret Article III of the GATT 1994 and 
Article  3.1(b) of the SCM Agreement consistently.  The Panel found that a review of both 
provisions “sugges ts that the act of granting subsidies to firms so long as they engage in 
domestic production activities, without more, should not be equated to making those subsidies 
contingent on the use of domestic over imported goods and hence prohibited.”   
10. This raise s a threshold interpretive question that the Appellate Body has yet to consider.  
Where a subsidy is contingent not only on the production of a finished good, but is also 
contingent on the production, in the grantor’s territory, of intermediate goods for u se as inputs 
(or goods used to produce other goods, i.e., instrumentalities of production) – which are then 
presumed to be “domestic” – in manufacturing the downstream good, is the subsidy in breach 
of Article 3.1(b)?  Arguably, the subsidy could be viewed  as contingent on the use of a 
domestic good because using an imported good in place of the domestic good would result in a 
loss of the entitlement to the subsidy.  
11. If the Appellate Body considers that this “competing interpretation” of Article 3.1(b) – which is 
also under consideration in US – Conditional Tax Incentives for Large Civil Aircraft  – is correct, 
then the Panel erred.   
12. Each instance of LA/MSF for the A350 XWB is conditioned on the domestic siting of production 
activities for goods to be used by  Airbus in the manufacture of the A350 XWB, and a 
counterfactual substitution of imported versions of these goods would result in Airbus’s loss of 
the entitlement to the LA/MSF.  The United States reviews below the undisputed facts from 
each of the LA/MSF contracts containing the contingencies and other relevant evidence.  
13. France granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements 
contained in the French A350XWB Protocole  that necessitate the use of domestic goods to 
manufact ure the A350 XWB.  If the Appellate Body determines that the competing 
interpretation of Article 3.1(b) is correct, the undisputed facts establish that the subsidy is 
contingent on the use of domestic over imported goods.  
14. Germany granted LA/MSF for the A3 50 XWB contingent on Airbus fulfilling certain 
requirements that necessitate the use of domestic goods to manufacture the A350 XWB.   
Therefore, if the Appellate Body determines that the competing interpretation of Article 3.1(b) 
is correct, the undisputed facts establish that the subsidy is contingent on the use of domestic 
over imported goods.  
15. Spain granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements 
contained in the Spanish A350XWB Convenio  that n ecessitate the use of dom estic go ods to 
manufacture the A350 XWB.   Therefore, if the Appellate Body determines that the competing 
interpretation of Article 3.1(b) is correct, the undisputed facts establish that the subsidy is 
contingent on the use of domestic over imported goods .  
16. The UK granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements 
contained in the UK A350XWB Repayable Investment Agreement  that necessitate the use of 
domestic goods to manufacture the A350 XWB.  Therefore, if the Appellate Bod y determines 
that the competing interpretation of Article 3.1(b) is correct, the undisputed facts contained in 
the UK A350XWB Repayable Investment Agreement establish that the subsidy is contingent on 
the use of domestic over imported.  
 WT/DS316/AB/RW/Add.1  
 
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  ANNEX B -3 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLEE'S SUBMISSIO N 
I. INTRODUCTION AND EXE CUTIVE SUMMARY  
1. Before launching into a point -by-point rebuttal of the errors in the European Union’s (“EU”) 
appeal of the Panel’s findings, it is useful to recall how, after 12 years of WTO dispute 
settlement, we have arrived at this point.  The United States requested c onsultations in 2004 
regarding the EU’s massive subsidization of its large civil aircraft industry.  In 2010, the 
original panel issued its report finding that the EU violated its obligations under Articles 5 and 
6.3 of the Agreement on Subsidies and Count ervailing Measures (“SCM Agreement”) not to use 
subsidies so as to cause adverse effects to U.S. interests.  The Appellate Body upheld the 
Panel’s ultimate finding in 2011.1  The Dispute Settlement Body (“DSB”) adopted its 
recommendations and rulings in th is dispute on June 1, 2011.2 
2. The key measures, and the ones most central to the original panel and the Appellate Body 
findings, were approximately USD 15 billion  in subsidized lending in the form of Launch Aid 
“LA/MSF” provided by the French, German, Spani sh, and U.K. governments to each and every 
Airbus large civil aircraft (“LCA”) development program: the A300/310, A320, A330/340, 
A340-500/600, and the A380.3  The adverse effects caused by these and other subsidies were 
even greater – more than 300 lost a ircraft orders worth tens of billions of dollars and displaced 
exports to seven major country markets in the 2001 -2006 period alone.4  The subsidies found 
by the original panel and the Appellate Body were unprecedented, both in terms of their 
immensity and  their harmful market effects.  As the original panel found:  
Given the amount of funding transferred to Airbus under the individual LA/MSF 
contracts, and in the light of the formidable risks associated with the LCA business and 
the learning curve effects t hat are necessary to successfully participate in this sector, 
we have found that it would not have been possible for Airbus to have launched all of 
these models, as originally designed and at the times it did, without LA/MSF.  Even 
assuming this were a pos sibility, and that Airbus had actually been able to launch 
these aircraft relying on only market financing, the increase in the level of debt Airbus 
would have accumulated over the years would have been massive.5 
In confirming the original panel’s findings , the Appellate Body concluded that “{w}ithout the 
subsidies, Airbus would not have existed under these scenarios and there would be no Airbus 
aircraft on the market.  None of the sales that the subsidized Airbus made would have 
occurred.”6 
3. The original pa nel recommended that “the Member granting each subsidy found to have 
resulted in such adverse effects ‘take appropriate steps to remove the adverse effects or .  . . 
withdraw the subsidy.”7  In line with Article 19.1 of the Understanding on Rules and 
Proced ures Governing the Settlement of Disputes  (“DSU”), the Appellate Body recommended 
further that “the DSB request the European Union to bring its measures, found in this Report, 
                                                
1 EC – Large Civil Aircraft (AB) , para. 1416.  
2 Minutes of Meeting Held in the Centre William Rappard on 1 June 2011, WT/DSB/M/297, para. 28 
(11 July 2011).  
3 See, e.g. , EC – Large Civil Aircraft (Panel) , para. 7.525 (finding “there is no doubt that all of the 
challenged LA/MSF contracts may be characterised as unsecured loans granted to Airbus on back -loaded and 
success -dependent repayment terms, at below -market interest rates, for the purpose of developing various 
new models of LCA”); US First Written Submission, para. 3 53. 
4 The original panel found, and the Appellate Body confirmed, that Boeing lost sales involving 342 firm 
orders.  EC – Large Civil Aircraft (Panel) , paras. 7.1803 -7.1832; EC – Large Civil Aircraft (AB) , para. 1414(p).  
The total value of these lost orde rs amounts to many billions of dollars by any reasonable calculation.  The 
Appellate Body found displacement in the following markets: in the single -aisle  product market in Australia 
and in the single -aisle and twin -aisle product markets in the European C ommunities, China, and Korea.   
EC – Large Civil Aircraft (AB) , para. 1414(p).  
5 EC – Large Civil Aircraft (Panel) , para. 7.1948.  
6 EC – Large Civil Aircraft (AB) , para. 1264.  
7 EC – Large Civil Aircraft (Panel) , para. 8.7 (ellipsis in original).  WT/DS316/AB/RW/Add.1  
 
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  and in the Panel Report as modified by this Report, to be inconsistent with the 
SCM Agreement , into conformity with its obligations under that Agreement.”8  The DSB 
adopted the reports of the panel and the Appellate Body.9  Under Article 7.9 of the SCM 
Agreement, if the EU did not comply with the DSB’s recommendations within six month s, the 
United States could seek DSB authorization to take countermeasures.  
4. The responses of the EU and Airbus to the Appellate Body’s report signaled from the outset 
that they did not take this report, or the DSB’s request for compliance, seriously.  Where  the 
Appellate Body found that without the subsidies, Airbus would most likely not exist at all,10 the 
EU asserted that “the economic impact of these support measures in the LCA market has been 
found to be very limited.”11  For its part, Airbus saw “no signi ficant consequences for Airbus or 
the European support system from today’s decision.” 12  In fact, Airbus has interpreted the 
rulings as an affirmation of past subsidized funding practices – a “big victory for Europe.”13  
Airbus CEO Tom Enders responded to t he findings with the following statement:  
It is good to see that the WTO has fully green lighted  the public -private partnership 
instruments with France, Germany, Spain and the UK.  We now can and will continue 
this kind of partnership on future development  programs.14 
5. Consistent with these statements, the EU and its member States took no affirmative steps to 
withdraw the LA/MSF subsidies.  This is not litigation rhetoric on the part of the United States.  
The Panel made a factual finding that only two of the  36 steps the EU said it took to comply 
with the DSB recommendations and rulings were related to ongoing subsidization, and that 
these related exclusively to the Bremen airport subsidy and the Mühlenberger Loch subsidy.  
With respect to the other subsidies , including all of the LA/MSF, “the remaining 34 alleged 
compliance ‘steps’  are not ‘actions’ relating to the ongoing (or even past) subsidization of 
Airbus LCA .  . . .”15     
6. The EU did not appeal the Panel’s finding that only two of the 36 alleged steps – and none of 
the LA/MSF -related steps – were affirmative compliance actions.  Thus, for purposes of this 
proceeding, it is a matter of uncontested fact that the EU took no actions to withdraw the 
LA/MSF subsidies or remove their adverse effects.  The EU’s  appeal is therefore not about 
alleged failures by the compliance Panel to recognize the efficacy of its nonexistent compliance 
with respect to LA/MSF subsidies, but about whether the Panel was correct in declining to 
accept a series of mere assertions and  arguments as a substitute for affirmative steps that 
would have brought the EU’s measures into compliance.   
7. To make matters even worse, the four Airbus member States actually granted another  round 
of LA/MSF to Airbus, this time to launch its latest new m odel, the A350 XWB, amounting to an 
additional USD 4.8 billion,16 for a total of approximately USD 20 billion in LA/MSF principal.   
8. After literally thousands of pages of written submissions, 292 questions to the parties, and 
nearly seven years of WTO dispu te settlement, the EU did nothing to withdraw the massive 
                                                
8 EC – Large Civil Aircraft (AB) , para.  1418.  
9 Minutes of Meeting Held in the Centre William Rappard on 1 June 2011, WT/DSB/M/297, para. 28 
(11 July 2011).  
10  EC – Large Civil Aircraft (Panel) , para. 7.1984.  
11  WTO Airbus Case – Appellate Body overturns key findin gs of the Panel in favour of the EU , EU Press 
Release  (May 18, 2011)  (Exhibit USA -3).  
12  WTO final ruling: Decisive victory for Europe , Airbus Press Release (May 18, 2011) (Exhibit USA -4). 
13  WTO final ruling:  Decisive victory for Europe , Airbus Press Release  (May 18, 2011) (Exhibit USA -4). 
14  WTO final ruling: Decisive victory for Europe , EADS Statement  (May 18, 2011) (Exhibit US A-5) 
(emphasis added).  Similarly, Ranier Ohler, Airbus’ s Head of Public Affairs and Communications, said: “‘WTO 
confirmation  of the European loan system is a big victory for Europe.  We see no significant consequences for 
Airbus or the European support system from today’s decision, as the WTO has now fully and finally rejected 
most of the US claims.  Therefore, the WTO findings  are likely to require only limited changes in European 
policies and practices.”  WTO final ruling: Decisive victory for Europe , Airbus Press Release (May 18, 2011) 
(Exhibit USA -4). 
15 European Communities and Certain Member States – Measures Affecting Trad e in Large Civil Aircraft, 
Recourse to Article 21.5 of the DSU by the United States , WT/DS316/RW, circulated 22 September 2016 , 
para. 6.42 (“Compliance Panel Report”).  
16 Airbus set to gain aid for A350 , Kevin Done and Peggy Hollinger, Financial Times (June  15, 2009) 
(Exhibit USA -7). WT/DS316/AB/RW/Add.1  
 
- 33 - 
 
  amounts of LA/MSF that were the subject of the original U.S. consultation and panel requests.  
The United States considered that this course of inaction on the earlier LA/MSF and grant of 
new LA/MSF  only served to bring the EU farther out of compliance with Articles 5 and 6.3 of 
the SCM Agreement.  It accordingly commenced this proceeding under Article 21.5 of the DSU.  
And thus, unsurprisingly, after further thousands of pa ges of written submissions , 
166 additional questions to the parties, and a searching evaluation, the compliance Panel came 
to the conclusion that the EU had not complied with the recommendations and rulings of the 
DSB.  It found further that, as with past Airbus aircraft, the USD 4  billion in LA/MSF for the 
A350 XWB conferred a subsidy and caused adverse effects to U.S. interests, including lost 
sales of 50 airplanes worth billions of dollars.17  Overall, the compliance Panel found 375 lost 
orders worth tens of billions of dollars,18 plus displacement and/or impedance in eight different 
markets, including in the EU, China, India, and Australia.19   
9. That brings us to the present day.  The EU has appealed the compliance Panel’s findings, 
asserting that the Panel misinterpreted and misappl ied the  relevant provisions of the 
SCM Agreement and DSU, and that it failed to conduct an objective assessment of the matter 
for purposes of Article 11 of the DSU.  None of its claims has any merit.  
10. Section II  addresses the standard applied to evaluate wh ether a party has complied with a 
recommendation that it come into compliance with its obliga tion under Article 5 of the 
SCM Agreement not to cause adverse effects through the use of subsidies.  The Panel noted 
that Article 5 defines WTO inconsistency in t erms of the effects of subsidies, and that the 
Appellate Body found that “a past subsidy that no longer exists may be found to cause or have 
caused adverse effects that continue to be present during the reference period.”20  It 
accordingly found that the alleged passive expiry of certain LA/MSF subsidies did not relieve 
the EU of its obligation to come into compliance with Article 5 with respect to the effects of 
those subsidies.  Article 7.8 of the SCM Agreement describes t he remedy for inconsistencies 
with Article as a choice between withdrawing the subsidy or removing its adverse effects.  The 
EU argued before the Panel, and now argues on appeal, that the alleged passive expiry of 
actionable subsidies achieves their “withd rawal,” and argues that it accordingly has no 
obligation with respect to their current adverse effects.  This argument fails to account for the 
Appellate Body’s finding in the original proceeding, based on reasoning that applies to the 
present time, that t he EU’s LA/MSF subsidies cause adverse effects with respect to all of 
Boeing’s existing aircraft.  Thus, the EU’s interpretation of Article 7.8 would allow it to continue 
to act inconsistently with Article 5.  This interpretation contradicts the proper int erpretation of 
Article 7.8, in accordance with customary rules of interpretation applicable to the covered 
agreements, and improperly downplays the massive ongoing lost sales, displacement, and 
impedance that LA/MSF has been causing for at least a decade, as a “temporary” market 
effect.  They provide no basis to modify or reverse the Panel’s findings.  
11. Section III  addresses the EU’s argument that the Panel erred in finding that there is no 
disagreement between the parties as to whether the EU is currently i n compliance with its 
WTO obligations with respect to the Mühlenberger Loch and Bremen runway subsidies and, 
therefore, no need to make a finding on that issue.  The United States has been clear 
throughout the proceeding that it made no claim of noncomplia nce with respect to the Bremen 
runway subsidy, and since its second written submission that it is not pursuing any claim on 
the Mühlenberger Loch subsidy.  The EU has taken the position that any such claim would be 
unfounded.  There is accordingly no disag reement between the parties regarding whether the 
EU’s measures have taken to comply are consistent with the SCM Agreement’s relevant 
disciplines, and no need for a finding by the Panel.  
12. Sections IV and V  respond to the EU’s claims of error regarding the P anel’s selection of a 
commercial benchmark for LA/MSF for the A350 XWB.  Section IV pertains to the corporate 
borrowing rate element of the benchmark in particular.  The EU argues that the Panel erred by 
                                                
17 Compliance Panel Report, para. 6.1781.  List prices for the relevant aircraft as of 2011 are provided 
at paragraph 6.1295 of the compliance Panel’s report.  The total value of these lost orders runs well into the 
billions of d ollars under any reasonable assumption about discounts from list price.  
18 Compliance Panel Report, para . 6.1781.  List prices for the relevant aircraft are provided in 
paragraphs 6.1239, 6.1295, and 6 .1373 of the Compliance Panel R eport.  The total value o f these lost orders 
runs well into the tens of billions of dollars under any reasonable assumption about discounts from list price.   
19 Compliance Panel Report, paras. 6.1817, 7.1(d)(xv).  
20 Compliance Panel Report, para. 6.820, quoting  EC – Large Civil Aircraft (AB) , para. 712.  WT/DS316/AB/RW/Add.1  
 
- 34 - 
 
  using the one -month and six -month average yield of a n EADS bond to establish the corporate 
borrowing rate.  According to the EU, the Panel was required to limit itself to the 24 -hour 
period coinciding with the finalization of the terms and conditions of LA/MSF in selecting data 
for the commercial benchmark.   However, no provision of the covered agreements imposes 
such a limitation on panels – and in fact, the Appellate Body’s guidance suggests that panels 
should construct commercial benchmarks on the basis of any relevant information that is 
available at the  time of finalization of the terms and conditions of a subsidy, including 
information that pre -dates finalization.21  This broader approach is especially suitable on the 
facts of this case, because the terms and conditions of LA/MSF for the A350 XWB were 
negotiated through [BCI]22 that extended over a period of approximately [BCI]  or more.23   
13. Section V  pertains to the Panel’s selection of the project -specific risk premium (“PSRP”) 
element of the commercial benchmark for LA/MSF for the A350 XWB.  The EU argues  that the 
Panel should have undertaken a “progressive search” for a commercial benchmark loan 
instrument, which supposedly would have led it to devise a PSRP based on Airbus contracts 
with its risk -sharing suppliers (“RSS”) for the A350 XWB project, rather  than the PSRP for 
LA/MSF for the A380 from the original dispute, which is what the Panel actually did.  However, 
the Panel was under no requirement to perform the “progressive search” that the EU 
advocates.  On the contrary, the “progressive search” requi rement applies to domestic 
authorities conducting countervailing duty investigations, whereas in WTO disputes under Parts 
II and III of the SCM Agreement the burden is on the parties – not the Panel – to establish the 
appropriate commercial benchmark.  The  United States met this burden by establishing the 
suitability of the A380 PSRP for LA/MSF for the A350 XWB, and the EU failed to put forward 
any alternative.  Indeed, the EU did not even submit the RSS contracts that it now argues, 
belatedly, are so essen tial to the Panel’s benchmark analysis.  In any event, a “progressive 
search” would likely have led the Panel to select the PSRP for the A380, just as it actually did, 
because LA/MSF for the A380 has terms closer to those of LA/MSF for the A350 XWB than RS S 
contracts for the A350 XWB, as far as available evidence indicates.  
14. Section VI  addresses the EU challenge to the Panel’s finding that adverse effects should be 
assessed based on three product markets: single -aisle, twin -aisle, and very large aircraft 
(“VLA”).  The EU alleges that the Panel “replaced the Appellate Body’s ‘significant competitive 
constraints’ standard” with a standard based on the mere existence of a competitive 
relationship, regardless of the nature or degree of that relationship.24  Both E U premises are 
wrong.   
15. As the Panel found, the Appellate Body did not endorse a “significant competitive constraints 
standard” when it used that phrase a single time in a footnote, and “there is no textual basis 
for interpreting the word ‘market’ that app ears in Article 6.3(a), (b), and (c) of the 
SCM Agreement in a way that would mean that ‘serious prejudice’ could only ever  be found to 
exist in the context of product markets where there is vigorous (‘significant’ or ‘close’) 
competition.”25 
16. Moreover, the Panel did not apply a standard that treated products as competing in the same 
market where any competitive relationship existed.  This is obvious in the Panel’s 
acknowledgment that, while the three product markets it found captures most competitive 
interac tions, some competition exists between aircraft in different markets.  Rather, the 
Panel’s 90 -page analysis followed the Appellate Body’s guidance strictly and carefully assessed 
extensive argumentation and voluminous evidence, including multiple expert re ports and HSBI 
concerning marketing strategies and sales campaigns.  Therefore, the Panel correctly 
interpreted and applied Article 6.3 and made an objective assessment of the matter as 
required by DSU Article 11.  Accordingly, the EU’s allegations of erro r are meritless, as 
demonstrated further in Section VI.  
                                                
21 EC – Large Civil Aircraft (AB) , para. 836.  
22 Compliance Panel Report, para. 6.644 (quoting Tom Williams, Executive Vice President, Programmes, 
Airbus SAS, May 17, 2013 (Exhibit EU -354(BCI)), para. 3).  
23 See Compliance Panel Repo rt, paras. 6.55 and 6.645.   
24 EU Appellant Submission, paras. 602, 624.  
25 Compliance Panel Report, para. 6.1211.  WT/DS316/AB/RW/Add.1  
 
- 35 - 
 
  17. Section VII  addresses the EU argument that the finding in US – Large Civil Aircraft  that 
Boeing large civil aircraft were subsidized creates a “new” factual matter.  On that basis, the 
EU contends tha t “cogent reasons,” centered on what the EU purports is intervening Appellate 
Body guidance, require a review of the original panel’s find ing that Article 6.4 of the 
SCM Agreement does not preclude a finding of displacement under Article 6.3(b) when the 
exports of the complaining Member have themselves been subsidized.  The extent to which 
Boeing aircraft were subsidized played no role in the original panel’s legal analysis and finding.  
The original panel’s finding was not appealed, so the Appellate Body d id not address this issue 
of law during the original proceeding.  The DSB adopted the original panel report as modified 
by the Appellate Body.  The EU is not entitled in this compliance proceeding to have the 
Appellate Body consider, pursuant to DSU Articl e 17.13, whether the legal finding of the 
original panel and recommendations and rulings of the DSB in re spect of Article 6.4 of the 
SCM Agreement should be upheld, modified, or reversed.  Therefore, the Panel did not err 
when it found that the EU argument  fails to justify modifying or reversing the original panel’s 
finding that Article 6.4 does not describe the exclusive basis on which a claim of displacement 
or impedance under Article 6.3(b) may be demonstrated.  
18. Section VIII  addresses the EU’s challenge t o the Panel’s analysis of causation.  According to 
the EU, the Panel’s incorrect approach to causation left it blind to the effects of the the 
passage of time and Airbus’s post -launch investments in the A320 and A330 programs, which 
the EU believes severed  any causal link between LA/MSF and the presence in the market of the 
A320, A330, and A380.  These allegations are demonstrably untrue.  The Panel explicitly 
adhered to the counterfactual approach preferred by the Appellate Body.  Using the original 
findin gs as its starting point, the Panel exhaustively examined the evidence and argumentation 
concerning the counterfactual situation in the post -implementation period.  In doing so, it 
carefully evaluated the EU’s arguments about the passage of time and interv ening causes.  It 
found them wanting because they were factually and legally unsupported, not because of an 
incorrect analytical approach.   
19. The Panel followed the Appellate Body’s guidance that the effects of LA/MSF subsidies will at 
some point come to an  end, while recognizing that the determination of when that happens 
will depend on the evidence, and not expectations as to the “life” of the subsidy.  Accordingly, 
the Panel found that the indirect effects of the earliest rounds of LA/MSF did not have a 
genuine connection to the launch and market presence of the A350 XWB.  This disproves the 
EU’s contention that the Panel’s analytical approach was incapable of accounting for the way 
that subsidy effects dissipate over time.  Although the EU repeatedly asse rted that the passage 
of time had deprived past LA/MSF subsidies of any current effect, these were mere assertions, 
without any evidentiary or logical basis.   
20. A similar flaw undermined the EU’s critique of the Panel’s analysis of Airbus’s post -launch 
investments.  The Panel recognized their significance but found that they did not render 
insubstantial the effects of LA/MSF subsidies, particularly given that the post -launch 
investments were dependent on those subsidy effects for their existence.   
21. Overall, the EU did not provide the Panel with any basis to find that, absent LA/MSF subsidies, 
Airbus would have taken the sales and market share that it did during the post -implementation 
period.26  The EU also contends that the Panel lacked a basis for finding an y effects caused by 
LA/MSF to the A380 and A350 XWB, but these arguments are based on mischaracterizations of 
the findings in the original proceeding and this proceeding.  In sum, the Panel found that 
LA/MSF and other subsidies continue to cause serious pr ejudice because that is what the 
evidence showed when considered in light of the findings in the original proceeding.  Airbus’s 
sponsor governments have provided massive subsidies designed to create production 
programs lasting for decades and enable the fi nancial, technological, and industrial bases for 
subsequent production programs that are also directly subsidized at a tremendous scale.  This 
pattern continued during the pendency of the original proceedings and this compliance 
proceeding with the provisi on of still more LA/MSF subsidies to the A350 XWB.27  The Panel did 
not err in recognizing this longstanding pattern of subsidization and its adverse effects on U.S. 
interests.              
                                                
26 See Compliance Panel Report, para. 6.1526 (“the European Union does not argue in this proceeding 
that a non -subsidized Airbus would have com e into being some time after the end of 2006.”).  
27 See Compliance Panel Report, para. 6.145.  WT/DS316/AB/RW/Add.1  
 
- 36 - 
 
  22. Section IX addresses the EU’s critique of the Panel’s displacement and/or impedance findings, 
which reflect an incorrect interpretation of the SCM Agreement and are at odds with the facts 
found by the Panel.  The Panel correctly examined the U.S. claims of displacement and 
impedance through a unitary counterfactual analys is.28  Considered together with its findings 
regarding the absence of Airbus LCA from the market in the plausible counterfactual scenarios, 
the Panel’s assessment of the data demonstrated that the challenged LA/MSF and other 
subsidies prevented the U.S. LCA  industry from realizing improved market positions, either by 
substituting subsidized Airbus LCA for exports of U.S. LCA (displacement) or by obstructing 
U.S. LCA export volumes and market share from being higher or materializing at all 
(impedance).  There fore, the EU has identified no valid reason to reverse or modify the Panel’s 
findings.   
23. Section X  addresses the EU argument that, if the Appellate Body reverses or modifies certain 
findings by the Panel, there is no basis to complete the Panel’s analysis.  As Sections II 
through IX show, the EU has provided no basis to do this.  Nonetheless, assuming arguendo 
that the Appellate Body were to reverse one or more of the Panel’s findings, the EU errs in 
arguing that there are insufficient findings of fact and u ncontested facts for the Appellate Body 
to complete the adverse effects analysis.  The most glaring error is the contention that partial 
reversal of the Panel’s findings regarding the EU’s failure to withdraw LA/MSF subsidies would 
“re-constitute the baske t of subsidies that are subject to the Appellate Body’s adverse effects 
assessment,”29 and transform the effects of any withdrawn subsidies into non-attribution 
factors  that preclude findings of adverse effects with respect to unwithdrawn subsidies.30  In 
effect, this argument asks the Appellate Body to find that the effects of WTO -inconsistent 
subsidies have themselves brought the EU fully into compliance.  
 
                                                
28 EC – Large Civil Aircraft (AB) , para. 1163.  
29 EU Appellant Submission, para. 1074.  
30 EU Appellant Submission, para. 1097.  WT/DS316/AB/RW/Add.1  
 
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  ANNEX B -4 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S APPELLEE'S SUBMISSIO N 
1  INTRODUCTION  
1. In its Other Appellant’s Submission, the United States raise s what it characterises as 
“two limited issues” with the Report of the Panel in European Communities and certain Member 
States – Measures Affecting Trade in Large Civil Aircraft (Reco urse to Article 21.5 of the DSU 
by the United States)  (“compliance Panel” or “Panel”).1  The European Union requests that the 
Appellate Body reject the United States’ appeal regarding both issues.   
2  THE APPELLATE BODY S HOULD REJECT THE US APPEAL THAT THE P ANEL 
ERRONEOUSLY FOUND TH AT THE LIVES OF PRE -A380 LA/MSF SUBSIDIE S HAVE 
EXPIRED  
2. The United States appeals certain elements of the Panel’s fin dings that the lives of the 
pre-A380 LA/MSF subsidies expired before or shortly after the end of the implementation  
period on 1 December 2011.2  The US appeal is contingent on the Appellate Body reversing the 
Panel’s interpretation of Article 7.8 of the SCM Agreement .3  
3. According to the United States, the Panel erred in the interpreta tion and application of 
Article  1.1(b) of the SCM Agreement  with respect to some (but not all) of the pre -A380 
LA/MSF subsidies for which it had found had that their ex ante expected lives had expired.4  
Although its position is not entirely clear, for the United States, this error seems to  arise 
because actual  repayment of principal and interest had not been effected, and/or the actual  
marketing life of the corresponding aircraft had not expired, by the end of the implementation 
period.     
4. The Appellate Body should dismiss the US appeal.  Despite p aying lip -service to the 
firmly -established principle that the life of a subsidy must be determined on an ex ante  basis 
at the time of the grant of a subsidy, the United States’ appeal is in fact premised on the 
firmly -rejected principle that the life of a subsidy depends on how the subsidy actually  
performs following grant.  At its most basic level, the Panel correctly interpreted and applied 
Article 1.1(b) when finding that the lives of all of the pre -A380 LA/MSF subsidies at issue in 
this appeal  have expired, based on ex ante considerations regarding the expected life of each 
subsidy.   
5. First, the Panel correctly interpreted  Article 1.1(b).  Based on the text of Article 1.1(b) and in 
light of its context (Article 14 of the SCM Agreement ), the App ellate Body in the original 
                                                
1 US Other Appellant’s Submission, para. 1.  
2 The United States does not appeal the Panel’s findings that the seven capital contribution subsidies 
had expired before the end of the implementation period, or that two regional development grants had expired 
in 2014.  Nor does the United State s appeal the Panel’s findings that the life of the A300 - and A310 -related 
LA/MSF subsidies have come to an end.  
3 US Other Appellant’s Submission, Section II.   
4 US Other Appellant’s Submission, paras. 17 -18.     WT/DS316/AB/R W/Add.1  
 
- 38 - 
 
  proceedings found that the “benefit” analysis involves an “ ex ante  analysis that does not 
depend on how the particular financial contribution actually performed after it was granted”.5   
6. Consistent with the Appellate Body’s guid ance, the compliance Panel found that it was required 
to determine the life of each LA/MSF subsidies on the basis of an ex ante  assessment.6  The 
United States does not advance any argument suggesting why this interpretation of Article 
1.1(b) is erroneous.   To the contrary, the United Sates seems to agree with the Panel – and 
with the European Union – that Article 1.1(b), properly interpreted, requires determination of 
the life of a subsidy on the basis of an “ ex ante  assessment”.7  Both Participants thus appear 
to agree that the Panel properly  interpreted Article 1.1(b).8  There is, therefore, no 
interpretative appeal.   
7. Second , the United States’ argument that the Panel erred in the application  of Article 1.1(b) 
should also be dismissed.  Despite its agre ement that Article 1.1(b) calls for an ex ante  
assessment, the United States erroneously applies an ex post  assessment, focusing on how 
the particular subsidy actually performed after it was granted .   
8. The United States submits that the ex ante  expectation s of the grantor and recipient must be 
determined ex post , in light of either (i) the actual  loan life; and/or (ii) the actual  marketing 
life for the aircraft programme.  Specifically, in its view, the Panel failed to recognise that “the 
grantor and recipi ent would expect the benefit to continue as long as payments were due ”,9 
which the United States asserts is a “variable event” that depends on actual repayment and 
that is not susceptible to determination ex ante .10  In other instances, the United States 
asserts that “the parties expected the benefit of LA/MSF to last throughout the life of the 
subsidized aircraft programs ”.11   
9. The US argument that the life of a LA/MSF subsidy must be determined in light of how the life 
of the subsidy or the marketing life o f the funded aircraft plays out ex post , is contradicted by 
the United States’ acknowledgement that ex ante expectations must form the basis for the 
determination of the life of a subsidy.   
10. Contrary to the Appellate Body’s guidance, each of the two approa ches counselled by the 
United States by definition “depend on how the particular subsidy actually  performed after it 
was granted”.12  Absent the proverbial crystal ball, the actual  marketing life and actual  loan life 
are not time periods that can be determi ned ex ante .  They are time periods that, by 
definition, can be determined only  ex post , once the actual  marketing life of the LCA 
programme has come to an end, or  actual  final repayment have occurred, often decades after 
the grant of the subsidy.   
                                                
5 Appellate Body Report, EC – Large Civil Aircraft , para. 706 (emphasis in original).  Appellate Body 
Report, EC – Large Civil Aircraft , para. 1241 (emphasis added).  See also , Id., paras. 707 (“a benefit analysis 
under Article 1.1(b) is forward looking and focuses on future projections ”; “ex ante  analysis of benefit”; 
“the period of time over which the subsidy is expected  to be used for future  production) (emphasis in original, 
underlining added), 709 (“{a}t the time of the grant of a subsidy, the subsidy will necessarily be projected to 
have a fi nite life and to be utilized over that finite period”; a panel “must consider the trajectory of the subsidy 
as it was projected  to materialize over a certain period at the time of grant”; “a panel must take into account 
that a subsidy provided accrues and diminishes over time, and will have a finite life”; “‘intervening events’ that 
... may affect the projected  value of the subsidy as determined under the ex ante  analysis”) (emphasis in 
original, underlining added), 710 (“the depreciation of the subsidy tha t was projected ex ante ”), 1236 (“a panel 
must take into account in its ex ante  analysis how a subsidy is expected to materialize over time”; “{a} panel 
is also required to consider whether the life of a subsidy has ended, for example, by reason of the amo rtization 
of the subsidy over the relevant period or because the subsidy was removed from the recipient”) (emphasis in 
original).  
6 Panel Report, paras. 6.876 -6.879, 6.890.  
7 US Other Appellant’s Submission, paras. 9 , 10.  
8 US Other Appellant’s Submission , para. 9.  
9 US Other Appellant’s Submission, para. 12 (emphasis added).  
10 US Other Appellant’s Submission, paras. 10, 14.  
11 US Other Appellant’s Submission, para. 15.  See also , Id., paras. 8 (footnote 15) (“continue to be 
marketed”), 18 (“LA/MSF for the A320, A330 -200, and A330/A340 Basic ha d not expired as of 
December  1, 2011, given that the corresponding large civil aircraft production programs were still active at 
that time (and still are)”), 17 (footnote 35) (“continue to be marketed”).   
12 Appellate Body Report, EC – Large Civil Aircraft , para. 706 (emphasis added).  See also , Id., 
para. 1241.   WT/DS316/AB/RW/Add.1  
 
- 39 - 
 
  11. The Eu ropean Union notes that, in one instance, namely  as regards LA/MSF for the 
A340-500/600, the United States takes a different approach.  Because, in its view, this 
programme “failed prior to full repayment”, the United States submits that the life of the 
subsidies does not end with the actual marketing life of the A340 -500/600 programme, but 
extends well into the future, namely until the life of any so -called “debt forgiveness” comes to 
an end.13  For at least two separate reasons, the US argument must be rej ected.  First, and 
yet again, the US argument effectively rejects an ex ante assessment of the life of a subsidy, 
in favour of an approach based on an ex post assessment of the performance of a subsidy 
subsequent to grant.  Second , the United States mischa racterises the nature of the LA/MSF 
subsidy as involving a second subsidy, in the form of “debt foregiveness”, in situations where 
contingently repayable loans remain un -repaid because the contingency ( i.e., delivery of an 
aircraft) for repayment is not tr iggered.  The US approach results in “double -counting” of the 
benefit conferred on the recipient.14   
12. Further, and also regarding LA/MSF for the A340 -500/600, the United States argues that the 
Panel’s findings were in any event “irrelevant” to assess EU com pliance, because these 
subsidies expired after the end of the implementation period, albeit well before the Panel made 
its findings and issued its report.15  The United States errs.  
13. It is well established that a panel, including a compli ance panel, must ass ess the 
WTO-consistency of a measure before it based on the entirety of the evidence.16  In the 
present case, in light of the ex ante  nature of the analysis, all the evidence on the expiry of 
any pre -A380 LA/MSF subsidy even predates , by more than a decade , the Panel’s 
establishment.  There is, therefore, no obstacle to the assessment of that evidence.  In any 
event, even where evidence post-dates  the panel’s establishment, such developments must be 
taken into account to assess compliance, because not doing  so would frustrate the objective of 
the DSU to provide for the prompt settlement of disputes.   
14. Finally, the European Union notes that the United States does not ask the Appellate Body to 
reverse the Panel’s findings that the lives of LA/MSF subsidies for  aircraft programmes that 
were no longer marketed on 1 December 2011, namely the A300 and A310 models, have 
expired.17  This means that, even were the Appellate Body to agree with the United States’ 
conditional appeal, it would still be compelled to reverse  most of the Panel’s adverse 
effects -related findings.   
15. Indeed, having reversed the Panel’s erroneous interpretation of Article 7.8 of the 
SCM Agreement  (which is the condition imposed by the United States for the Appellate Body to 
consider this aspect of its other appeal), the Appellate Body would have to find that these 
adverse effects -related findings are erroneous, since the adverse effects found by t he Panel 
are fuelled by subsidies that the United States, itself, accepts have expired, and are therefore 
withdrawn, within the meaning of Article 7.8.  
3  THE APPELLATE BODY S HOULD REJECT THE UNI TED STATES’ ASSERTIO NS RELATING 
TO THE PANEL’S FINDI NGS UNDER A RTICLE 3.1(B) OF THE  SCM AGREEMENT  
16. The United States also makes a number of assertions regarding the compliance Panel’s 
findings that the United States failed to demonstrate that French, German, Spanish and UK 
                                                
13 US Other Appellant’s Submission, para. 17 (footnote 35).  See also , Id., paras. 10 (footnote 17), 12.  
14 First, at the time the loan is concluded, because the expected return on the loan falls below what a 
commercial lender would have demanded to assume the risk that deliveries would fall short of the number 
required to effect full repayment of principal and inter est; and, second , where the number of aircraft deliveries 
actually made falls short of projections made by the parties at the time the loan agreements were concluded 
(in which case, the United States considers that an additional subsidy to the recipient in  the form of the 
“forgiveness” of debt is conferred).     
15 US Other Appellant’s Submission, footnotes 14 and 35.   
16 See, e.g., Panel Report, para. 6.1443; Panel Report, US – Upland Cotton (Article 21.5 – Brazil) , 
para. 10.18, 10.105 and 10.248; Panel Rep ort, EC– Large Civil Aircraft , para s. 7.1694 and 7.1714; 
Appellate  Body Report, US – Zeroing (Japan) (Article 21.5 – Japan) , paras. 121 -130. 
17 US Other Appellant’s Submission, paras. 17 -18.     WT/DS316/AB/R W/Add.1  
 
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  LA/MSF for the A350XWB constitute prohibited s ubsidies under Article 3.1(b) of the 
SCM Agreement .18   
17. The United States does not, however, allege error with respect to those findings.19  Instead, 
the United States limits its submissions by reference to what it calls a “competing 
interpretation” of Artic le 3.1(b) that it alleges was under consideration by the panel in 
US ‒ Conditional Tax Incentives for Large Civil Aircraft (“DS487”).  In particular, the United 
States requests the Appellate Body to determine the correctness of that alleged “competing 
interpretation” of Article 3.1(b).20  Conditional on the Appellate Body agreeing with this alleged 
“competing interpretation”, the United States requests the Appellate Body to reverse the 
findings of the Panel in the present dispute and to complete the legal an alysis.21   
18. As a threshold matter, the European Union finds it necessary to clarify that the entirety of the 
United States’ “appeal” is premised on an erroneous assumption built into its choice of 
vocabulary.  The United States alleges that “competing inter pretations” of Article 3.1(b) are at 
issue in the present dispute and in DS487.  In making that allegation, the United States 
assumes that different outcomes  in two different disputes, under the same treaty provision, 
necessarily indicate the existence of “competing interpretations” of the provision.  This 
assumption is erroneous – different outcomes may well be the result of differences in the 
application of the same interpretation to two different fact patterns  at issue in the two 
disputes.   
19. This is prec isely what has happened in the present dispute and in DS487.  The interpretation 
of Article 3.1(b) advanced by the European Union in both cases and accepted by both Panels is 
the same:  a subsidy contingent upon the production of a particular good does not , without 
more, breach Article 3.1(b), irrespective of whether or not that good later becomes an input, 
as a matter of fact; but a subsidy contingent upon the production of an LCA and, in addition , a 
requirement that a particular input (the wing) be manufa ctured domestically, does breach the 
provision.  The difference in outcome between the two cases is driven not by different 
interpretations, but rather by different fact patterns  (and associated arguments).   
20. On three separate grounds, the Appellate Body s hould reject the US “appeal”.  First, for 
several reasons, the assertions upon which the United States seeks the Appellate Body’s 
review of the Panel’s findings do not properly constitute an “appeal” within the meaning of the 
DSU.  To begin, at its most ba sic level, the Appellate Body should reject the US “appeal” as 
invalid, because the United States has failed to allege any error relating to “issues of law 
covered in the panel report” or “legal interpretations developed by the panel”, within the 
meaning o f Article 17.6 of the DSU.  In fact, the United States agrees with the interpretation 
adopted by the Panel.22  Without an allegation of error, there is no “appeal” for the Appellate 
Body to adjudicate.  
21. Moreover, considerations relating to DS487 cannot serve  as a basis for appellate review, in 
these proceedings, of interpretative findings allegedly under consideration by a different  panel 
in a different  dispute, and cannot serve as a surrogate for a valid allegation of error by the 
Panel in this dispute.  Dec iding otherwise would prejudice the procedural rights of (i) the 
European Union (by forcing the European Union to comment on the correctness of an 
interpretative position allegedly relevant to DS487, without the assistance of the record in that  
case); and (ii) third parties in DS487 that are not third participants in the present appeal.   
22. Further, the United States’ professed “interest in ensuring that the same legal approach is 
applied” in two disputes cannot serve as the basis for the Appellate Body to un dertake 
appellate review in these proceedings of interpretative issues allegedly arising in DS487.  
Rather than pursuing a pre -emptive appeal, the appropriate course of action for the 
United  States would be to advocate, in its appeal of the panel report in  DS487, the interpretive 
                                                
18 US Other Appellant’s Submission, Section III.  
19 US Other App ellant’s Submission, para. 22.  
20 US Other Appellant’s Submission, paras. 21 -23. 
21 US Other Appellant’s Submission, para. 23, Section III.B.  
22 US Notice of Other Appeal, para. 1; US Other Appellant’s Submission, para. 22.  WT/DS316/AB/RW/Add.1  
 
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  approach to Article 3.1(b) adopted by the Panel in the present dispute, with which the United 
States explicitly “agrees”.23 
23. Second , Rule 21(2)(b)(i) of the Working Procedures for Appellate Review requires that an 
appellant’s submission set out “a precise statement of the grounds for the appeal, including 
the specific allegations of errors in the issues of law covered in the panel report and legal 
interpretations developed by the panel, and the legal arguments in support thereo f”.24  The 
United States’ “appeal” fails to meet this requirement.  
24. Third, and finally, the US “appeal” must be rejected because it is based on a case that is 
entirely different from the case advanced by the United State s before the Panel.  The 
United  States  seeks to litigate before the Appellate Body a fundamentally different case from 
the one it litigated before the Panel.  Appellate proceedings are not the appropriate venue for a 
party to make fundamental changes to the case it has brought, especially wher e, as here, 
doing so requires reliance on factual assertions that are not the subject of panel findings , and 
that do not constitute undisputed facts  of record.   
25. In these appellate proceedings, the United States has abandoned its argument, made to the 
Panel, that the requirement to produce components domestically, coupled with the  fact that 
these components are used in downstream assembly of the aircraft, demonstrates that the 
LA/MSF lenders “ effectively  require” the subsidy recipient to use domestic over i mported 
goods.  Instead, the United States now seeks to identify an express de jure  requirement to 
“use” domestic over imported goods in certain provisions of the A350XWB LA/MSF contracts.  
In advancing this new case, the United States refers on appeal to specific clauses in each of 
the A350XWB LA/MSF contracts, and asserts that those clauses have a particular meaning.  
Yet, the meaning of these provisions in municipal law was never raised before the Panel or 
debated between the Parties, much less the subje ct of findings of fact by the Panel or 
agreement between the Parties.   
26. In these circumstances, the US “appeal” cannot be sustained.  In light of its authority under 
Article 17.6 of the DSU, the Appellate Body is “manifestly preclude{d}” from following the  
course requested by the United States, because doing so would require it “to solicit, receive 
and review new facts that were not before the Panel, and were not considered by it”.25 
27. Finally, even were the Appellate Body to consider it appropriate to address  the United States’ 
“appeal”, it should nonetheless reject the United States’ assertions on the merits.  
28. First, the Panel did not err in its interpretation of Article 3.1(b) of the SCM Agreement .  The 
ordinary meaning of the terms used in Article 3.1(b), i n their context and in the light of the 
object and purpose of the treaty, clarify that a subsidy contingent solely on domestic 
production of goods is not prohibited.  Accordingly, the Panel did not err in finding that “the act 
of granting subsidies to firm s so long as they engage in domestic production activities, without 
more, should not be equated to making those subsidies contingent on the use of domestic over 
imported goods and hence prohibited”.26 
29. Second , even were the Appellate Body to find that the Pa nel erred in its interpretation of 
Article 3.1(b), quod non , it would be unable to complete the legal analysis on the terms 
requested by the United States.  In previous disputes, the Appellate Body has proceeded to 
complete the legal analysis only where fa ctual findings by the panel or undisputed facts of 
record have allowed it to do so.27  The US request for completion is, however, built on factual 
assertions concerning the meaning of provisions in the A350XWB LA/MSF agreements that are 
neither supported by  factual findings by the Panel or undisputed facts of record.  These factual 
                                                
23 US Notice of Other Appeal, para. 1; US Other Appellant’s Submission, para. 22.  
24 Rule 23(3) makes this requirement applicable to an other appellant’s submission.  
25 Paraphrasing Appellate Body Report, Canada – Aircraft , para. 211; Appellate Body Report,  
EC – Export Subsidies on Sugar , paras. 240 -242. 
26 Panel Report, para. 6.785; US Other Appellant’s Submission, para. 27.  
27 See, e.g., Appellate Body Report, Australia – Salmon , paras. 117 -118; Appellate Body Report,  
US – Section 211 , para. 352; Appellate Body Report, US – Anti-Dumping and C ountervailing Duties (China) , 
para. 528; Appellate Body Report, US – Large Civil Aircraft , para. 649; Appellate Body Report,  
Colombia – Textiles , para. 5.30.  WT/DS316/AB/R W/Add.1  
 
- 42 - 
 
  assertions were never made by the United States before the Panel , and are, instead, newly 
made in this appeal .  The European Union never had an opportunity  to dispute the factual 
assertions now raised by the United States; the European Union cannot be said to have left 
undisputed factual assertions that were not put to it by the United States.  Accordingly, there 
are no findings of fact or undisputed facts of record that would allo w the Appellate Body to 
complete the legal analysis in the manner requested by the United States.  
 
 
_______________  
 
 
 
 WT/DS316/AB/RW/Add.1  
 
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  ANNEX  C 
ARGUMENTS OF THE THI RD PARTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Brazil 's third participant's submission  44 
Annex  C-2 Executive summary of Canada 's third participant's submission  45 
Annex  C-3 Executive summary of China 's third participant's submission  48 
Annex  C-4 Executive summary of Japan's  third participant's submission  50 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX  C-1 
EXECUTIVE SUMMARY OF  BRAZIL 'S THIRD PARTICIPANT'S SUBMISSION   
1. In relation to Article 7.8 of the SCM Agreement, Brazil agrees with the Panel’s rejection of the 
European Union’s argument that the end of the life of a subsidy ipso facto  extinguishes a 
Member’s compliance obligation under Article 7.8 of the SCM Agreement  with respect to such 
subsidies.  
2. Brazil recalls that the original panel’s findings under Articles 6.3(b) and 6.4 were not appealed.  
Accordingly, the Appellate Body should not revisit this interpretation in the compliance 
proceeding.  
3. Brazil also considers  that the Panel conducted a correct analysis in interpreting "market" under 
Article 6.3 of the SCM Agreement. There is no support in WTO jurisprudence for the EU's 
attempt to characterize "market" as requiring a complaining Member to undertake a 
quantitati ve assessment of the degree of competition to determine if it is "significant".  
4. Finally, the Panel properly interpreted Article 3.1(b) of the SCM Agreement when it found that 
subsidies conditioned on the domestic production of inputs to be used in the manu facture of a 
subsidized product are not prohibited. For Brazil, this provision does not prevent a Member 
from conditioning the provision of a subsidy on the performance of production steps in the 
country granting the subsidy.  
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX  C-2 
EXECUTIVE SUMMARY OF  CANADA 'S THIRD PARTICIPANT'S SUBMISSION   
I. EXECUTIVE SUMMARY1 
1. Canada submits that the Appellate Body should uphold the Panel’s interpretation of the 
disciplines on prohibited import -substitution subsidies under Article 3.1(b) of the 
SCM Agreement but reverse the Panel’s interpretation of the compliance obligation under 
Article  7.8. 
II. THE PANEL  CORRECTLY INTERPRETE D ARTICLE 3.1(B) OF THE SCM AGREEMENT  
2.  The Appellate Body should uphold the Panel's interpretation that Article 3.1(b) of the 
SCM Agreement does not prohibit subsidies merely because they require the recipient to 
engage in the domestic production of aircraft -related goods.   
3. Article 3.1(b) does not discipline domestic production subsidies, regardless of whether the 
activities mandat ed by those subsidies result in the production of input or finished goods. 
GATT Article III:8(b), the Appellate Body's findings in Canada – Autos  and the panel's findings 
in US – Tax Incentives  support this view.  
4. Furthermore, Article 3.1(b) does not discip line domestic production subsidies even if the 
activities mandated by those subsidies result in the production of specialized input goods that, 
because of their specialized nature, are likely to only be used in the production of finished 
goods by the subsi dy recipient.  In EC and certain member States – Large Civil Aircraft , the 
Appellate Body found that a subsidy would not be de facto  export contingent unless it provided 
the recipient with an incentive to export in a way that did not simply reflect the con ditions of 
supply and demand in the market. Likewise, a subsidy is not a prohibited import -substitution 
subsidy unless it is geared to change the behaviour of a producer when choosing between 
domestic and imported inputs in a way that does not reflect mark et conditions.   
III. THE PANEL  ERRED IN ITS INTERPR ETATION OF ARTICLE 7.8  OF THE 
SCM AGREEMENT  
A. The Correct Interpretation of Article 7.8 of the SCM Agreement  
5. Article 7.8 of the SCM Agreement sets out how a Member is to comply with its obligations 
when it is fo und to have provided a subsidy that caused adverse effects to the interests of 
another Member.  
6. With respect to the ordinary meaning  of the terms of Article 7.8, the phrase "granting or 
maintaining" indicates that the existence of a subsidy during the imple mentation period is a 
precondition for the compliance obligation under Article 7.8. As expired or withdrawn subsidies 
no longer exist, those subsidies entail no compliance obligation under Article 7.8.  
7. Moreover, the phrase "shall take appropriate steps to  remove the adverse effects or shall 
withdraw the subsidy" indicates that the compliance options are disjunctive in nature. 
Therefore, compliance under Article 7.8 can be achieved by withdrawing the WTO -inconsistent 
subsidy.  
8. The following elements of the context  of Article 7.8 support this understanding.  
9. First, the text of Article 7.9 of the SCM Agreement confirms the compliance options under 
Article 7.8 are disjunctive.  
                                                
1 Canada's Third -Participant Submission consists of 13,5 58 words. This Executive Summary consists of 
1,347 words.   WT/DS316/AB/R W/Add.1  
 
- 46 - 
 
  10. Second, the difference in wording between Article 5 and Article 7.8 underscores an asymmetry 
between the circumstances in which a finding of an actionable subsidy may be made and the 
resulting compliance obligation. This difference must be afforded meaning. Where causing 
adverse effects is a constituent element for an actionable subsidy,  removing those adverse 
effects is not the only way to comply with Article 7.8. Members can also comply by 
withdrawing the subsidy.  
11. Third, the compliance obligation for prohibited subsidies and the restrictions on the application 
of countervailing duties c onfirm that withdrawal of the subsidy constitutes compliance under 
Article 7.8. The Appellate Body has indicated that a Member can comply with Article 4.7 of the 
SCM Agreement by removing a prohibited subsidy. Moreover, if removing the subsidy negates 
the right to apply countervailing duties, it must also negate the right to apply countermeasures 
– the remedy for actionable subsidies.  
12. Fourth, the general rule of compliance under the DSU is the removal of the WTO -inconsistent 
measure. Where no subsidy exist s, as a result of expiry or withdrawal, no compliance 
obligation remains.  
13. With respect to the object and purpose  of the SCM Agreement, it is subsidies  that the 
SCM Agreement disciplines, not the adverse effects that linger after the subsidies no longer 
exist. Limiting the application of the compliance obligation under Article 7.8 to existing 
subsidies is consistent with this object and purpose. It is also consistent with the general 
objective of the WTO agreements to foster security and predictability in t he international 
trading system.  
B. Errors  in the Panel’s Interpretation of Article 7.8  
14. The Panel's interpretation of Article 7.8 under which Members are required to remove the 
adverse effects of subsidies that have ceased to exist is deeply flawed.  
15. With res pect to the text of Article 7.8, the Panel essentially ignored the “granting or 
maintaining” requirement in Article 7.8. Where a subsidy has expired or been withdrawn, a 
Member can no longer be said to be “granting or maintaining” the subsidy. Under these 
circumstances, the Member is no longer subject to the compliance obligation under Article 7.8.  
16. The Panel also deprived the phrase "withdraw the subsidy" of its independent meaning.  If 
Article 7.8 was intended under all circumstances  to require the removal of the adverse effects 
caused by the subsidy there would be no reason to refer to the possibility of withdrawing the 
subsidy.  
17. With respect to the context  of Article 7.8, the Panel improperly relied on Artic le 5 of the 
SCM Agreement and various provisions o f the DSU to conclude that "withdraw[ing] the 
subsidy" under Article 7.8 also requires removing adverse effects. The Panel fails to recognize 
that conformity with the compliance obligation under the DSU mea ns removal of the 
WTO-inconsistent measure, and th at conformity with the compliance obligation for an 
actionable subsidy means carrying out one of the two options contemplated under Article 7.8 
of the SCM Agreement.  
18. The Panel also ignored that withdrawing a subsidy is a complete compliance remedy under th e 
SCM Agreement. Imposing more exacting remedial disciplines on actionable subsidies as 
compared to prohibited subsidies would be incongruent with t he overall structure of the 
SCM Agreement.  
19. Last, with respect to the object and purpose  of the SCM Agreemen t, the Panel failed to take 
into account that the withdrawal of a subsidy constitutes compliance. Moreover, the Panel’s 
interpretation creates significant uncertainty as to the responsibility of Members for subsidies 
that no longer exist.  WT/DS316/AB/R W/Add.1  
 
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  C. The Correct Appro ach to a Serious Prejudice Analysis in Compliance Proceedings  
20. The Panel improperly took into account the effects of expired subsidies when it determined 
that subsidies were causing serious prejudice and that the European Union had therefore failed 
to remov e the adverse effects of the subsidies.  
21. The determination of whether a Member that has not withdrawn certain subsidies has 
nevertheless complied with Article 7.8 through the removal of the adverse effects of these 
subsidies should be based on a counterfac tual analysis.  
22. A counterfactual analysis involves a comparison between the current market situation and a 
counterfactual situation without subsidies. The Panel's analysis relied on a counterfactual 
situation where the challenged LA/MSF would not have been  granted.  
23. This is the wrong counterfactual situation. The correct counterfactual situation is rather one 
where only the subsidies present at the end of the RPT do not exist. Indeed, there must be 
consistency between the two options available to a respondin g Member under Article 7.8. A 
Member must either withdraw the subsidies or remove their adverse effects by the end of the 
RPT. If a given subsidy has been withdrawn or has expired, a Member cannot be asked to also 
remove its adverse effects.  
24. It is only thr ough a comparison of the correct counterfactual situation with the current market 
situation that the Panel could have properly assessed whether the subsidies that remained at 
the end of the RPT caused serious prejudice and, relatedly, whether the European Union had 
removed the adverse effects of these sub sidies.  The Panel failed to do  so. 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX C -3 
EXECUTIVE SUMMARY OF  CHINA 'S THIRD PARTICIPANT'S SUBMISSION   
1. China ’s Third Party  Submission discusses  the following three issues on appeal that China 
considers to be of systemic importance . 
2. First, China submits that under the correct interpretation of Article 7.8 of the SCM Agreement  
in accordance with customary ru les of interpretation of public international law , subsidies that 
cease to exist prior to the beginning of the implementation period are outside the scope of an 
implementing Member’s obligation under Article 7.8.  
3. In China’s view, the explicit treaty langua ge in Article 7.8 denotes that, if a subsidy is no 
longer in existence, there is nothing to be withdrawn and that the Member concerned has 
fulfilled its obligation under Article 7.8.   Nothing in Article 7.8 suggest s that the implementing 
action to withdraw  the subsidy must remove any “lingering effects ” of past subsidies that are 
no longer in existence.   The Panel’s interpretation would deprive the independent meaning of 
the option  under Article 7.8 to “withdraw the subsidy” and render the phrase  redundant.  
4. China’s interpretation finds contextual support in  Article 4.7 of  the SCM Agreement , which 
requires the Member  providing prohibited  subsidi es to “withdraw the subsidy without delay ”.  
To interpret the same compliance option in Article 7.8 in a more onerou s way for the less 
harmful form of subsidization  would be against  logic.   China  also considers that  Part V  of the 
SCM Agreement  provides relevant context for interpreting Article 7.8.  In particular, 
Article  19.4 provides that countervailing duties may not be imposed when a subsidy is no 
longer bestowed on the subject merchandise , regardless of any lingering effects .  The limits of 
remedies available under Part V  should also inform the  correct interpretation of Article 7.8 in 
Part III  of the SCM Agreement . 
5. In addition, by first reviewing various provisions of the DSU  instead of Article 7.8 of the 
SCMAgreement , the Panel has allowed the general provisions of the DSU  to subsume the 
“special or additional rules ” of Article 7.8.  In China’s view, the important textual difference 
between Article 4.7 and Article 7.8 also suggests that Article 7.8 does not necessarily require 
the removal of any adverse effects, and can be read in a way that maintains its independent  
meaning while at the same time being in harmony with the DSU . 
6. Finally, neither in  the WTO case s cited by the Panel n or anywhere under the covered 
agreements does China  see the basis to single out actionable subsidies as the only type of 
measures subject t o an implementing obligation requiring the removal of trade effects caused 
by such measures after they are withdrawn, an obligation more onerous than those generally 
applicable vis-à-vis all measures under  Article s 3.7 and 22.8 of the DSU . 
7. Second , China su bmits that  under the correct interpretation and application of Articles 5(c) 
and 6.3 of the SCM Agreement , the Panel ’s “but for ” approach is not a proper analysis to 
determine whether the LA/MSF subsidies  continue to cause serious prejudice under the prese nt 
circumstances at issue.  
8. For the assessment of causation, although an inquiry seeking to identify what would have 
occurred “but for” the subsidie s is one possible approach suggested by the Appellate Body , the 
Panel did not examine or consider whether the factual scenario before it is one of the 
circumstances where the “but for ” analysis will show that the subsidy is both a necessary 
cause of the market phenomenon and a substantial cause.   Without such an e xamination or 
consideration, the Panel improperly equated the “but for ” analysis  with the proper legal 
standard for finding causation under Articles 5(c) and 6.3 of the SCM Agreement , which 
requires for a “genuine and substantial” cause . 
9. The Panel ’s approa ch effectively leads to a long-lasting  causal chain between subsidies and 
adverse effects in the LCA markets  that is inconsistent with the Appellate Body ’s observation 
that the effects of any subsidy  can be expected to diminish and eventually come to an en d WT/DS316/AB/R W/Add.1  
 
- 49 - 
 
  with the passage of time .  Furthermore, t he Panel seems to have  inappropriately  allocat ed the 
burden of proof between the Parties in its application of Articles 5(c) and 6.3 of the 
SCM Agreement  by requiring the European Union to prove that no “genuine and substantial” 
cause  existed in the post-implementation period . 
10. Third,  while China is sceptical  if any general rule or threshold could be pre -defined for the 
purpose of determining the scope of product markets , China  agrees with the European Union 
to the  extent that panels should not find two products in the same product market solely on 
the basis that  they exercise any competitive constraints on one another .  Instead,  a panel  
must examine the nature and degree  of competition so as to determine the scope of the 
relevant product market  on a case -by-case basis .  Furthermore, the “nature and degree ” of 
competition found to exist in a given product market should inform the assessment of serious 
prejudice claims.  
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX C -4 
EXECUTIVE SUMMARY OF JAPAN'S  THIRD PARTICIPANT'S SUBMISSION   
1. Japan wishes to comment on how the effects of such subsidies including R&D subsidies as the 
Appellate Body in the original proceeding referred to as subsidies that (i) had the "product 
effect" on subject products or (ii) "complemented and supplemented" the "product effect" 
must be assessed.  
2. The European Union appealed by arguing that the removal of a subsidy through removal of the 
"financial contribution" will comply with Article 7.8.  
3. However, Japan believes that w hen "benefits" are removed, the subsidy is thereby withdrawn 
and consequently the adverse effects are removed. The definition of a subsidy under 
Article  1.1 and other Appellate Body findings concerning the "life" of subsidy suggest, when 
the recipient is n o longer able to lower the price of products by using the benefit, a Member 
would then not be further asked to remove anything else. The function of R&D subsidies 
contemplates that its benefit will normally be consumed, as the recipient sells the resulting  
product for the development of which the subsidy was provided at a price level which is lower 
than the anticipated price level in the absence of subsidization.  
4. The Appellate  Body must carefully consider whether LA/MSF subsidies that had "expired" 
through the "amortization of benefit", as found by the Compliance Panel, may, as a matter of 
law, be considered tantamount to the removal of the benefit in connection with the projected 
period or sales amount properly anticipated by the granting Member when the su bsidy was 
granted.  
 
 
_______________  
 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX D  
PROCEDURAL RULINGS  
Contents  Page  
Annex  D-1 Procedural ruling of 25 October 2016  regarding additional procedures 
to protect business confidential information (BCI) and highly sensitive 
business information (HSBI)  52 
Annex  D-2 Procedural ruling of 21 November 2016  regarding the inclusion of an 
individual to the European Union's BCI/HSBI Approved Persons List  60 
Annex  D-3 Procedural ruling of 21 November 2016  regarding the designation of  
BCI in the United States' other appellant's submission  62 
Annex  D-4 Procedural ruling of 11 January 2017  regarding the European Union's 
request to modify the deadline for filing its appellee's submission  64 
Annex  D-5 Procedural ruling of 19 April 2017  regarding public observation of the 
oral hearing  66 
 
 
  WT/DS316/AB/R W/Add.1  
 
- 52 - 
 
  ANNEX D -1 
PROCEDURAL RULING OF  25 OCTOBER 2016   
1. On 13 October 2016, the Chair of the Appellate  Body received a joint letter from 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) and highly 
sensitive business information (HSBI) in these appellate proceedings. In their letter, the 
European  Union  and the United  States  suggested that the additional procedures adopted by the 
Appellate  Body in the appeal in United  States  – Measures Affecting Trade in Large Civil Aircraft 
(2nd complaint) (WT/DS353), with certain modifications, should form the basis for any procedural 
ruling on confidentiality in these appellate proceedings. They argued, inter alia , that disclosure of 
certain sensitive information on the record of the Panel proceedings would be severely prejudicial 
to the large civil aircraft manufacturers  concerned , and pos sibly to their customers and suppliers.  
2. On behalf of the Division hearing this appeal, the Chair of the Appellate  Body invited the 
third participants to comment  in writing on the joint request by th e European  Union and the 
United  States  by 12 noon on Wednesday, 19 October 2016. He also informed the participants and 
the third participants that pending a final decision on the joint request by the participants, the 
Division had decided to provide interim additional protection to all BCI and  HSBI transmitted to the 
Appellate  Body in this 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 the BCI and HSBI contained in the Panel 
record pending a  final decision on the joint request. Appellate  Body Members and 
Appellate  Body Secretariat staff shall not disclose BCI or HSBI, or allow either to 
be disclosed to any person other than those identified in the preceding sentence.  
(b) BCI shall be stored in lo cked cabinets when not in use. When in use by 
Appellate  Body Members and Appellate  Body Secretariat staff assigned to work on 
this appeal all necessary precautions will be taken to protect the confidentiality of 
the BCI.  
(c) All HSBI shall be stored in a comb ination safe in a designated secure location in 
the offices of the Appellate  Body Secretariat. Appellate  Body Members and 
Appellate  Body Secretariat staff assigned to work on this appeal may view HSBI 
only in the designated secure location in the offices o f the Appellate  Body 
Secretariat. HSBI shall not  be removed from this location.  
(d) Pending a decision on the joint request for the protection of BCI/HSBI in these 
proceedings, neither BCI nor HSBI shall be transmitted electronically, whether by 
e-mail, facsim ile, or otherwise.  
3. On Wednesday, 19 October 2016, written comments were received from Australia, Brazil, 
Canada, and China. Australia and Brazil did not object to the joint request made by the 
participants, but requested that the Appellate  Body ensure that the rights of third participants are 
taken into account in setting the working schedule for this appeal. China stated that it had no 
comments regarding the request for additional protection of BCI/HSBI. For its part, Canada stated 
that, while it agrees that additional procedures for the protection of confidential information are 
warranted by the specific facts of this case, it considers that the procedures proposed by the 
participants may not provide third participants with effective access to the BCI they need to 
adequately prepare and present their positions. In particular, Canada submitted that the 
procedures set out an overly onerous method for capital -based Third Participant BCI -Approved 
Persons to obtain access to BCI, and that in previous  proceedings where similar procedures were 
adopted, Canadian Geneva -based BCI -Approved Persons were required to spend many hours 
transcribing BCI in the designated reading room and then to spend an equivalent amount of time 
discussing this BCI with capital -based BCI -Approved Persons. Canada therefore propose d that any 
additional procedures specify that, in addition to the "designated reading room" on the premises of 
the WTO, there be a "designated reading room" located in an embassy or other diplomatic miss ion 
of a participant  in the capital of each of the third participants, where capital -based Third 
Participant BCI -Approved Persons can obtain effective access to BCI. According to Canada, this 
would ensure that third participants' rights to meaningfully par ticipate in these appellate 
proceedings are fully protected .  WT/DS316/AB/R W/Add.1  
 
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  4. On Friday, 21 October 2016, the Division invited the participants and other third 
participants to comment, if they so wished, on Canada's request regarding access to BCI by 5:00 
PM on Monday, 24  October 2016. Comments were received from Australia, Brazil, the 
European  Union , and the United  States . 
5. Australia supported Canada's proposal. Australia stated that it recognises the importance 
of protecting sensitive information, while facilitating the m eaningful participation of third 
participants in these appellate proceedings.  Brazil indicated that it had no comments regarding 
Canada's request.  
6. The European  Union  submitted that Canada's request calls for an additional 12 
designated reading rooms in the  missions of the European  Union  and the United  States  in the 
capitals of each third participant, in addition to the designated reading room at the WTO. 
According to the European  Union , this would impose significant additional burdens on the 
participants. I n particular, the European  Union  submitted that the adjustment proposed by Canada 
would require that , for each of the six third participants, the participants would have to: (i) identify 
an appropriate contact person in each mission; (ii) designate those a ppropriate  persons as BCI 
approved; (iii)  communicate with them and explain what is envisaged; (iv) obtain appropriate and 
necessary internal authorisations; (v) identify and set aside appropriate secure locations; (vi) 
identify and set aside appropriate d esignated reading rooms; (vii) securely transmit to them all the 
relevant documents; (viii) arrange for copies of the necessary documents to be made; (ix) make 
arrangements for the appropriate monitoring and surveillance of the designated reading room 
during use; (x) provide appropriate training to the staff involved; and (xi) make appropriate 
additional arrangements for the return or destruction of the materials involved at the appropriate 
time. The European  Union  indicated that it was therefore opposed to  Canada's request. It agreed, 
however, that third participants could be provided with some additional time to prepare their 
third participants' submissions. According to the European  Union , this would meet the concern 
raised by Canada, while avoiding the i mposition of unnecessary and substantial costs on the 
participants.  
7. The United  States  argued, as did the European  Union , that Canada's proposal would 
require a total of 12 new BCI reading rooms – one for each of the two participants in six different 
cities. According to the United  States , this would require identifying officials at each site to 
maintain control over documents containing BCI and to monitor third participant officials during 
the review of the documents, and providing training to those indivi duals regarding their 
responsibilities under the BCI/HSBI procedures. The United  States  considered that this would 
impose a significant burden on the participants, with little benefit to the third participants. In 
particular, t he United  States  argued that Canada's proposal would not have a meaningful effect on 
the burden placed on third parties because even under the proposal, a capital -based official would 
still need to review the BCI and take notes as to the relevant information in the reading room, just 
as under the original rules. Moreover, to the extent that an official considered BCI to be relevant to 
a third participant 's submission, that official would still need to discuss the annotated information 
with colleagues to prepare and finalize the third p articipant submission, just as under the original 
rules. The United  States  noted that the only difference is that under the adjustment proposed by 
Canada, capital -based officials would review the BCI instead of Geneva -based officials. In so doing, 
accordin g to the United  States , Canada's proposal appeared to merely shift the burden of 
reviewing BCI from Geneva -based officials to capital -based officials, rather than reducing the 
burden in a meaningful way. For these reasons, the United  States  opposed Canada' s request and 
asked the Appellate  Body to adopt the same procedures governing third participants' access to BCI 
as it did in the original appellate proceedings.  
8. The Division has made  the following ruling having considered the arguments made by the 
European  Union  and the United  States  in support of their request, and the comments received 
from the participants and third participants : 
9. As an initial matter, w e recall that the Appellate  Body adopted additional procedures to 
protect the confidentiality o f sensitive information in the appellate proceedings in 
United  States  ‒ Measures Affecting Trade in  Large Civil Aircraft (2nd complaint) as well as in the 
original proceedings in this dispute. In this appeal, the participants suggested that the additional 
procedures adopted by the Appellate  Body in United  States  – Measures Affecting Trade in Large 
Civil Aircraft (2nd complaint) should form the basis for any procedural ruling on confidentiality, and 
identified certain modifications that could be made to thos e additional procedures.  We further note WT/DS316/AB/R W/Add.1  
 
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  that the participants and the third participants involved in this case are the same as those involved 
in United  States  – Measures Affecting Trade in  Large Civil Aircraft (2nd complaint) . In the 
Procedural Ruling ado pted in United  States  – Measures Affecting Trade in  Large Civil Aircraft 
(2nd complaint) , the Appellate  Body explained the considerations relevant to a decision on whether 
to provide additional protection to certain sensitive information1. We believe that those 
considerations are also relevant to our evaluation of t he 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 the third participants . 
10. The confidentiality requirements set out in the Understanding on Rules and Procedures 
Governing the Settlement of Disputes  (the "DSU") and in the Rules of Conduct for the 
Understanding on Rules and Procedures Governing the Settlement of  Disputes (the " Rules of 
Conduct ")2 are stated at a high level of generality that may need to be particularized in situations 
in which the nature of the information provided requires more detailed arrangements to protect 
the confidentiality of that informa tion. The adoption of such arrangements falls within the authority 
of the Appellate  Body to hear the appeal and to regulate its procedures in a manner that ensures 
that the proceedings are conducted with fairness and in an orderly manner. To the extent tha t 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 , that any additional "appropriate proce dure" not be inconsistent with the 
DSU, the other covered agreements, and the Working Procedures  themselves.  
11. The determination of whether particular arrangements are appropriate in a given case 
essentially involves a balancing exercise: the risks associate d with the disclosure of the 
information sought to be protected must be weighed against the degree to which the particular 
arrangements affect the rights and duties established in the DSU, the other covered agreements, 
or the Working Procedures . Furthermor e, a relationship of proportionality must exist between the 
risks associated with disclosure and the measures adopted. Participants requesting particularized 
arrangements have the burden of justifying that such arrangements are necessary in a given case 
adequately to protect certain information, 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 exe rcise by the Appellate  Body of its 
adjudicative duties, the exercise by the participants of their rights to due process and to have the 
dispute adjudicated, the exercise by the third participants of their participatory rights, and the 
rights and systemic i nterests of the WTO membership at large.  
12. Additional confidentiality protection implicates the authority of the Appellate  Body, and 
the rights and duties of the participants, third participants, and the membership at large. In the 
original proceeding s in this dispute and in United  States  – Measures Affecting Trade in  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 sensit ive information, 
on the one hand, and the adjudicative authority of the Appellate  Body and the rights and duties of 
the participants, third participants and the WTO membership at large. Similar considerations are 
relevant  in these appellate proceedings . The European  Union , the United  States , and the third 
participants concur that the additional procedures adopted in United  States  – Measures Affecting 
Trade in  Large Civil Aircraft  (2nd complaint)  provide an appropriate framework and ask that we 
apply the same practices in this case, with certain  modifications . 
13. We recall that it is for the adjudicator to decide whether certain information calls for 
additional protection of confidentiality. Likewise , it is for the adjudicator to decide whether and to 
what extent specific arrangements are necessary, while safeguarding the various rights and duties 
that are implicated in any decision to adopt additional protection. We also note, however, that 
neither p articipant has appealed the Panel's decisions regarding the protection of BCI/HSBI and 
that there are also issues of practicality to consider. We will therefore proceed on the basis of how 
the information was treated before the Panel. Nevertheless, we do n ot exclude revisiting whether a 
                                                
1 See Appellate  Body Report,  United  States  – Measures Affecting Trade in  Large Civil Aircraft 
(2nd complaint) , Procedural Ruling and Additional Procedures to Prote ct Sensitive Information, Annex  III, 
paras.  8 and 9.  
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 Annex II thereto. (See WT/DSB/RC/2, 
WT/AB/WP/W/2)  WT/DS316/AB/R W/Add.1  
 
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  particular piece of information meets the objective criteria justifying additional protection, or the 
particular degree thereof, should a dispute on the classification of that information arise before us, 
or should we consid er that we need to refer to that information in our report if this is necessary to 
give a sufficient exposition of our reasoning and findings.  
14. Having reaffirmed the relevant considerations that guide our decision, we turn to the 
modifications requested by the participants to the BCI/HSBI procedures adopted by the 
Appellate  Body in United  States  – Measures Affecting Trade in  Large Civil Aircraft (2nd complaint) . 
The participants propose, inter alia , that any additional BCI/HSBI procedures in this dispute spe cify 
that documents and materials containing BCI shall be sent to the Appellate  Body Members by 
means of encrypted e -mail or courier. They also propose that HSBI contained in any appendix not 
be transmitted over e -mail but on a CD -ROM, labelled with an ind ication that it contains HSBI. In 
addition, the participants suggest certain adjustments to provide clarity on how the electronic 
version of an unredacted version of a submission by a participant and/or a third participant shall 
be corrected and transmitte d, including an adjustment to avoid accidental inclusion of BCI in third 
participant submissions.  
15. The arrangements that the participants have jointly proposed do not appear 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 large. We have reflected them in the 
additional procedures that we adopt below. These procedures ensure that Members of the 
Appellate  Body have sufficient access to the e ntirety of the Panel Report, the submissions, and the 
record of the dispute. They also limit the risk of inadvertent disclosure of  sensitive information and 
render the process of correcting and transmitting redacted version of submissions more efficient . 
16. We have carefully considered Canada's proposal regarding access by third participants to 
BCI in capitals, as well as the comments received from the participants and other third 
participants.  It is our responsibility, in adopting any additional procedures, t o strike an appropriate 
balance between the risks associated with the disclosure of sensitive information, the adjudicative 
duties of the Appellate  Body, and the rights of the participants and third participants. While 
adoption of procedures such as those suggested by Canada may well facilitate access to BCI, we 
recall that the rights of third participants are more limited than those of the participants, and that 
third participants' interests lie mainly in the correct legal interpretation of the provisions of the 
WTO agreements.3 Moreover, as highlighted in the comments received from the participants, it 
would be difficult to design and implement a regime whereby there would be a "designated reading 
room" located in an embassy or other diplomatic mission of a participant  in the capital of each of 
the third participants. For these reasons, we have decided therefore not to adopt the adjustment 
proposed by Canada. However, we will ensure that the rights of third participants are taken into 
account in these appel late proceedings, including when we  set the working schedule for 
this appeal.  
17. Finally, we note, as we did in the original proceeding s and in United  States  – Measures 
Affecting Trade in  Large Civil Aircraft (2nd complaint) , that we will make every effort t o draft our 
report without including sensitive information. 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 ha ve an opportunity to request the removal of 
any sensitive information that is inadvertently included in the report. If  we were to consider it 
necessary to include sensitive information in the reasoning in our report, the participants will be 
given an oppor tunity to comment. We reiterate that the participants will have a timely opportunity 
to comment as to the inclusion of any sensitive information in the report; we will provide further 
guidance at a later point in these proceedings as to the modalities and details of such a procedure.  
18. For the reasons set out above, we have decided to provide additional confidentiality 
protection on the terms set out below. Accordingly, we adopt the following additional procedures 
for the purposes of this appeal:  
                                                
3 See Appellate  Body Repor t, European Communities and Certain Member States – Measures Affecting 
Trade in Large Civil Aircraft , Procedural Ruling and Additional Procedures to Protect Sensitive Information, 
Annex III, para. 11.  WT/DS316/AB/R W/Add.1  
 
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  Additional Procedures to Protect Sensitive Information  
General  
(i) These additional procedures shall apply to information that was treated as 
business confidential information (BCI) or as highly sensitive business information (HSBI) in the 
Panel proceedings and that is c ontained in documents or electronic media that are part of the 
Panel record. The additional procedures apply to written and oral su bmissions made in the 
appellate  proceedings only to the extent that they incorporate information that was treated as BCI 
or HSBI in the Panel proceedings.  
(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 tre atment of this information, the 
Appellate  Body shall decide after hearing their  views.  
(iii) Each participant may at any time request that information that it has 
submitted and that was previously treated as BCI or HSB I no longer be treated as such.  
(iv) The particip ants and third participants shall file their written submissions 
and executive summaries  with the Appellate  Body Secretariat in accordance with the Working 
Schedule drawn up by the Division for this appeal. Where a written submission and/or an 
executive su mmary contain BCI or HSBI, redacted versions of the submission and/or the executive 
summary (that is, a version without BCI and HSBI) shall be filed simultaneously with the 
Appellate  Body Secretariat. Should an executive summary submitted by participants a nd third 
participants contain BCI or HSBI, the redacted version of the executive summary will be annexed 
as addenda 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 participants 
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 participants' submissions to the participants and 
to the other third participants, are further regulated in the provisions bel ow which apply mutatis 
mutandis to executive summaries of written submissions.  
Appellate  Body Members and Appellate  Body Secretariat Staff  
(v) Only Appellate  Body Members, and staff of the Appellate  Body Secretariat 
who have been assigned by the Appellate  Body to work on this appeal, may have access to the BCI 
and HSBI 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 HSBI, or allow either to be disclosed, to any person other than those identified in 
the preceding sentence or to approved persons of the participants and third participants. 
Appellate  Body Members and assigned Appellate  Body Secre tariat 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) BCI shall be stored in locked cabinets when not in use.  
(vii) Appellate  Body Members who are serving on the Division hearing this 
appeal may maintain a copy of all relevant documents containing BCI at their places of residence 
outside Geneva. Appellate  Body Members who are not serving on the Division may maintain at  
their places of residence outside Geneva a copy of the BCI version of the Panel Report, a copy of 
the BCI version of the written submissions made in these appellate proceedings, a BCI version of 
the transcripts of any oral hearings, any internal documents  containing BCI, and, where necessary, 
selected BCI exhibits from the Panel record. 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 when not in use.  Documents and materials containing BCI shall only be sent to 
Appellate  Body Members by secure  e-mail or courier.  WT/DS316/AB/R W/Add.1  
 
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  (viii)  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.).  
(ix) All HSBI shall be stored in a combination safe in a  designated secure location on the 
premises of the Appellate  Body Secretariat. Any computer in that room shall be a stand -alone 
computer, that is, a computer  not connected to a network. Appellate  Body Members and assigned 
Appellate  Body Secretariat staff may view HSBI only in the designated secure location referred to 
above. HSBI shall not be removed from this location, except as provided for in paragraph (x), or in 
the form of handwritten notes that may be used only on the Appellate  Body Secretariat's premises 
and shall be destroyed once no longer use d. 
(x) Subject to appropriate precautions, BCI and HSBI 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.  
(xi) Except as provided for in paragraph (xii), all documents and electronic files 
containing BCI and HSBI shall be destroyed or deleted when the Appellate  Body report in this 
dispute has been adopted by the DSB.  
(xii) The Appellate  Body shall retain one hard copy and o ne electronic version of 
all documents containing BCI and HSBI 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. Documents and e lectronic media containing HSBI shall be placed in a 
sealed container that will be kept in a combination safe on the premises referred to above.  
Appellate  Body Report  
(xiii)  The Division will make every effort to draft an Appellate  Body report that 
does not discl ose BCI or HSBI by limiting itself to making statements or drawing conclusions that 
are based on BCI and HSBI. A copy of the Appellate  Body report intended for circulation to WTO 
Members will be provided in advance to the participants , at a date and in a m anner to  be specified 
by the Division. Participants will be provided with an opportunity to request the removal of any BCI 
or HSBI that is inadvertently included in the report. The Division will also indicate to the 
participants if it has found it necessar y to include in the Appellate  Body report information that 
was treated by the Panel as BCI or HSBI and will provide participants with an opportunity to 
comment. Comments on the inclusion of information previously treated as BCI or HSBI and 
requests for rem oval of BCI or HSBI 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 shall be accepted. In coming to a decision on the need to inc lude BCI or HSBI 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 
exposition of its reasoning and findings, on th e one hand, and the legitimate concerns of the 
participants to protect sensitive information, on the other.  
Participants  
(xiv)  The participants shall provide a list of persons that are "BCI -Approved 
Persons" and that are "HSBI -Approved Persons". These lists shall be provided to the 
Appellate  Body Secretariat by 5  p.m. on Thursday, 27 October 2016, and shall be served on the 
other participant and the third  participants. Any objections to the designation of an outside adviso r 
as a BCI -Approved Person or HSBI -Approved Person must be filed with the Appellate  Body 
Secretariat and served on the other participant by 5 p.m. on Monday, 31 October 2016. 
Participants may submit amendments to their lists of BCI -Approved Persons or HSBI -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 on the amended 
list of an outside advisor by another participant . Any objections must be filed with the 
Appellate  Body Secretariat within two days and simultaneously served on the other participant and 
the third participants. The Division will reject a request for designation of an outside advisor as a WT/DS316/AB/R W/Add.1  
 
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  BCI-Approved  Person or an HSBI -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 and HSBI -Approved Perso ns shall not 
disclose BCI or HSBI, or allow either to be disclosed, except to th e Appellate  Body, assigned 
Appellate  Body Secretariat staff, other BCI -Approved Persons and HSBI -Approved Persons, and 
Third Participant BCI -Approved Persons.  
(xv)  Any participant r eferring in its written submissions to any BCI or HSBI shall 
clearly identify the information as such in those submissions. If the submissions contain HSBI, the 
HSBI shall be included in an appendix. In that case, the version of the submission that include s the 
HSBI appendix shall be transmitted only to HSBI -Approved Persons. The HSBI appendix shall not 
be transmitted via e -mail, but solely on a CD -ROM, labelled with an indication that it contains the 
HSBI appendix. Each participant shall simultaneously pro vide a redacted version of its submissions 
to the other participant. 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 days to object to the inclusion of any BCI. If there are objections, the Division shall 
resolve the matter, and instruct, as appropriate, the relevant participant to transmit a correctly 
redacted version of its submission to the other participant and the third par ticipants, unless the 
participant concerned agrees to remove the information that was subject to the objection. The 
electronic copy of the unredacted 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 other participant; the Appellate  Body shall direct BCI -Approved Persons to 
implement modified confidentiality treatment in any paper copies of the submission as well as to 
replace the elec tronic copies . If there are no objections, the redacted version shall be transmitted 
the following day to the third participants.  
Third Participants  
(xvi)  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 Appellate  Body Secretariat by 5  p.m. on Thursday, 
27 October 2016. A copy of the list of Third Participant BCI -Approved Persons shall be served on 
each participant and on each other third participant. The participants may object to the 
designation of an outside advisor as a Third  Participant BCI -Approved Person. Objections must be 
filed with the Appellate  Body Secretariat by 5 p.m. on Monday, 31 Octobe r 2016. Third participants 
may submit amendments to their lists of BCI -Approved Persons or HSBI -Approved  Persons by 
filing an amended list to the Appellate  Body Secretariat and serving it on the p articipants and the 
other third participants. A participant may object to the designation in an amended list of an 
outside advisor by a third participant. Any objections must be filed with the Appellate  Body 
Secretariat within two days and simultaneously served on the other participant and the third 
participants. T he 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 
Participants BCI -Approved Persons shall not disclose BCI, or allow it to be dis closed, except to the 
Appellate  Body, assigned Appellate  Body Secretariat staff, BCI -Approved  Persons , and other 
Third Participant BCI -Approved Persons.  
(xvii)  The BCI version of all participants' 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 W TO. 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 wit h 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 redacted 
version of the submissions and they may take these copies with them. These documents shall be 
printed on coloured watermarked paper; shall bear the names of the Third Participant BCI -
Approved Persons; state that "This document is not to be cop ied"; and the cover page of each of 
the documents shall state that any handwritten BCI added to the document shall only be discussed WT/DS316/AB/R W/Add.1  
 
- 59 - 
 
  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 the reading room shall be locked in a secure 
container when not in use. These documents and handwritten notes must be returned to the 
Appellate  Body Secretariat after the final oral hearing held in this appeal.  
(xviii)  Each Third Participant BCI -Approved Person viewing the BCI version of the 
Panel Report and sub missions 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.  
(xix)  Third participants shall transmit their submission to the Appellate  Body 
Secretariat and  the part icipants . It shall also be transmitted  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 (xvii) above. If a third participant wishes to refer in its third participant's 
submission to any BCI, it shall clearly identify such information. A third participant referring to BCI 
shall also simultaneously provide the participants with a redacted version of its submission. Third 
participant's submissions containing BCI, and redacted versions of submissions, shall be 
transmitted only to BCI -Approved Persons of the participants. The participants  shall have two days 
to object to the inclusion of any BCI in a third participant's submission.  If there are objections, the 
Division shall resolve the matter, and instruct, as appropriate, the relevant third participant to 
transmit a correctly redacted ve rsion of its submission to each of the participants and the other 
third participants, unless the third participant concerned agrees to remove the information that 
was subject to the objection.  The electronic copy of the unredacted 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 confiden tiality treatment in any paper copies of the 
submission as well as to replace the electronic copies . If there are no objections, the submission or 
the redacted submission , as the case may be  shall be transmitted the following day to the other 
third partici pants  and again to the participants . 
Oral Hearing  
(xx)  Appropriate  procedures shall be adopted to protect BCI and HSBI from 
unauthorized disclosure at any oral hearing held in this appeal.  
 
 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX D -2 
PROCEDURAL RULING OF  21 NOVEMBER 2016   
1. On 31 October 2016, the Appellate Body Division hearing the above appeal received a 
communication from the United States provisionally objecting to the inclusion of 
Prof. Andreas  Klasen on the European Union's proposed list of BCI - and HSBI -Approved Person s. 
The United States requested the  Division to ask the European Union to provide further information 
concerning Prof. Klasen's employment by the European Aeron autic Defence and Space 
Company  N.V. (EADS), whether he has ongoing involvement with Airbus in his current position, 
and the reason he would need  access to BCI and HSBI . 
2. On 1 November 2016, the Division invited the European Union to respond to the 
United  States' provisional objection, an d informed the participants and third participants that, in 
the meantime, the European Union's access to BCI and HSBI on the Panel Record and in written 
submissions in these appellate proceedings shall be restricted to the other individuals on the 
European  Union's list of BCI -Approved Persons and HSBI -Approved Persons, date d 
27 October  2016. 
3. On 2 November 2016, the Division received a response from the European Union  
commenting on the United States' provisional objection, and providing some additional information 
regarding Prof. Klasen, including his full curriculum vitae . The European Union indicated, inter alia , 
that Prof.  Klasen "is  providing external advice for the  European Union as well as the 
European  Union's underlying interests in this case (Airbus)".  
4. On 3 November 2016, the Division invited the United States to respond to the letter received 
from the European Union. On 7 November 2016, the United States reitera ted its request for 
further information regarding Prof. Klasen. The United States explained  that "knowing whether and 
to what extent Prof. Klasen continues to undertake work for Airbus is critical to an understanding 
of whether his access to Boeing BCI and  HSBI would give Airbus an unfair advantage in areas 
outside of this proceeding." The European Union responded to the United States' letter on 
11 November 2016, at the request of the Division. In its letter, the European Union reiterated  that 
Prof. Klasen "is an expert who has been providing advice for the European Union and its underlying 
interests in this case (Airbus) ", and that the European Union wishes to retain the possibility of 
including him in its delegation for that purpose. The European Union further  requested that we 
confirm Prof. Klasen's desig nation as BCI - and HSBI-approved.  
5. On 16 November 2016, the Division invited  the European Union to indicate  whether 
Prof. Klasen  is subject to an enforceable code of professional ethics that requires hi m to protect 
confidential information, or whether he has been retained by an outside advisor who is subject to 
such a code of professional ethics and assumes responsibility for compliance with the additional 
BCI/HSBI procedures adopted by the Appellate  Body in these proceedings.  
6. On 18 November 2016, the European Union confirmed that Prof. Klasen has been retained 
by an outside advisor who is subject to an enforceable code of professional ethics and assumes 
responsibility for compliance with the additional BCI/HSBI proc edures adopted by the 
Appellate  Body in these proceedings. The European Union added that it has responsibility, 
according to the applicable rules, for the constitution and conduct of its delegation, including all of 
its representatives and out side advisors . WT/DS316/AB/R W/Add.1  
 
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  7. We recall that pursuant to paragraph 18(xiv) of our Procedural Ruling of 25 October 2016, 
the Division will reject a request for designation of an outside advisor as a BCI -Approved Person or 
an HSBI -Approved Person only upon a showing of com pelling reasons, having regard to, inter alia , 
the relevant principles reflected in the Rules of Conduct  for the Understanding on Rules and 
Procedures Governing the Settlement of Disputes and the illustrative list  of information to be 
disclosed  in Annex 2 thereto. We further recall that the same paragraph mandates tha t 
BCI-Approved Persons and HSBI -Approved Persons shall not disclose BCI or HSBI, or allow either 
to be disclosed, except to the Appellate  Body, assigned Appellate  Body Secretariat staff, other 
BCI-Approved Persons and HSBI -Approved Persons, and Third Participant BCI -Approved Persons.  
8. In light of the clarifications provided by the European Union, we see no compelling reason to 
reject the European Union's request to designate Prof. Klasen as a BC I- and HSBI -Approved 
Person. We therefore consider it appropriate to accept the European Union's request. Accordingly, 
the European Union's access to BCI  and HSBI on the Panel record and in written submissions in 
these appellate proceedings stands extended  to Prof. Klasen as a BCI- and HSBI -Approved Person 
in addition  to the other individuals  on the European Union's list of BCI -Approved Persons and 
HSBI-Approved Persons, dated  27 October 2016 . 
 
 
 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX D -3 
PROCEDURAL RULING OF  21 NOVEMBER 2016  
1. On 14 November 2016, we received a letter from the European Union requesting that 
certain text in the United States' other appellant's submission be designated as business 
confidential information (BCI). On 15 November 2016, the Division invi ted the United States to 
respond to the European  Union's request. The  United States responded in writing on 16 November 
2016, indicating that it d id not object to the changes proposed by the European Union to 
paragraphs 36, 52, 64, and 69 of the United Sta tes' other appellant's submission. However, the 
United States objected to the  other changes proposed by the European Union (to paragraphs 35, 
37, 41, 43, 45, 47, 49, 51, 53, 55, and 60) arguing that the European Union was proposing to  
designate certain inf ormation as BCI, even though that information could  already be derived from 
information on the Panel record that the European Union previously did not designate as BCI or 
HSBI. The United States indicated that , upon resolution of this issue by the Appellat e Body, it was 
prepared to submit revised BCI and BCI -redacted versions of its other appellant's submission and 
that two days after the Appellate Body 's ruling would be sufficient time to complete this task.   
2. In our Procedural Ruling of 25  October  2016, we surveyed  considerations that are relevant 
to a decision on whether to provide additional protection to certain sensitive information.  We 
believe that these  considerations are also relevant to our evaluation of the European Union's 
request that certain tex t in the United States' other appellant’s submission be designated as BCI . 
3. As an initial matter, w e recall that the determination of whether particular arrangements are 
appropriate in a given case involves a balancing exercise: the risks associated with th e disclosure 
of the information sought to be protected must be weighed against the degree to which the 
particular arrangements affect the rights and duties established in the DSU  and the other covered 
agreements. Furthermore, a relationship of proportional ity must exist between the risks associated 
with disclosure and the measures adopted. It is ultimately for the adjudicator to decide whether 
certain information calls for additional  protection  of confidentiality , while safeguarding the various 
rights and d uties that are implicated in any decision to adopt additional protection . This involves  
striking an appropriate balance between the risks associated with the disclosure of sensitive 
information, the adjudicative duties of the Appellate  Body, and the rights  of the participants and 
third participants .  
4. The changes to BCI bracketing proposed by the European Union d o not appear to affect our 
ability to hear this appeal or the due process rights of the participants, both of which have access 
to BCI and HSBI. With regard to the rights of  third participants , we further recall that, in 
accordance with paragraph 18(xvii) of our Procedural Ruling of 25 October 2016, Third Participant 
BCI-Approved Persons may view in the designated reading room the BCI version of th e 
submissions filed in these appellate proceedings. As we see it, this ensures that third participants 
have sufficient access to the entirety  of the information contained in the United  States' other 
appellant's submission, which the European Union consider s should be subject to additional 
protection.  
5. We further  note that t he United States does not object to the changes proposed by the 
European Union to paragraphs 36, 52, 64, and 69 of the United States' other appellant's 
submission. In particular, the United States has not objected to the European Union's request to 
designa te as BCI the four words that the European Union has included between the additional 
brackets in each of the bullet points following paragraph 69 of the BCI -version of the 
United  States' other appellant's submission, consistent with the designation of the terms of 
Section  21.14 of the UK A350XWB Repayable Investment Agreement as BCI. Nor has the 
United  States objected to the inclusion between additional brackets of the same four words in 
paragraph 64 of the United States' other appellant's submission, consi stent with the designation of 
the terms of Section 11 of the Spanish A350XWB Convenio  as BCI.  WT/DS316/AB/R W/Add.1  
 
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  6. With respect to the French A350XWB Protocole , we note that the four words at issue speak 
more to the substantive content of Articles 8 and 9, designated as conta ining BCI, rather than to 
the headers  of those provisions , which, as the United States points out, have not been designated 
as containing BCI.  
7. With respect to the German KfW A350XWB Loan Agreement , while we agree with the United 
States that the language t o which it refers might provide a basis to derive the  information which 
the European Union now seeks to have designated as BCI, we note that this information cannot be 
found in the Panel Report circulated to WTO Members on 22 September 2016. Nor, as we 
understand it, has it been argued that this information would have otherwise come into the public 
domain, or that it would no longer be confidential due to the passage of time.  
8. We note, moreover, that there are also issues of practicality to consider. Having considered 
the European Union's request and the re sponse received from the United  States, we have decided 
to proceed on the basis of the BCI bracketing proposed by the European Union . Nevertheless, we 
do not exclude revisiting whether a particular piece of  such information meets the objective criteria 
justifying additional protection, or the particular degree thereof, should we consider that we need 
to refer to that information in our report in this dispute if this is necessary to give a sufficient  
expositi on of our reasoning and findings.  However, we reiterate that, if we were to consider it 
necessary to do so, the participants will be given a timely opportunity to comment.  
9. We would  request the United States to kindly submit revised copies of the BCI and no n-BCI 
versions of its other appellant's submission to the Appellate Body Secretariat and the European 
Union, and copies of the non -BCI version of its other appellant's submission, with BCI correctly 
redacted, to each of the third participants, by 5 p.m. on  Wednesday, 23 November 2016 . There is 
no need to resubmit the HSBI Appendix.  We further request the BCI -Approved Persons of each of 
the participants to implement modified confidentiality treatment, as outlined above, in any paper 
copies of the United States' other appellant's submission, and to replace electronic copies.  
 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX D -4 
PROCEDURAL RULING OF  11 JANUARY 2017  
1. On Friday, 6 January 2017, we received a communication from the European  Union 
requesting that the Division modify the deadline for the filing of the appellees' submissions in the 
present dispute. In its letter, the European  Union invokes Rule  16(2) of the Working  Procedures for 
Appellate Review1 (Working Procedures), and seeks to have this deadline extended by one wee k 
from 13  January 2017 to 20  January 2017 . According to the European  Union , strict adherence to 
the time periods set by the Division would result in manifest unfairness  within the meaning of 
Rule 16(2). We understand that the United  States and the third  participants in this dispute were 
served a copy of the European  Union 's request.  
2. The European  Union highlighted that the reasons for its request are similar to those given by 
the United States in support of its request for extension of the deadline for fili ng its appellant's 
submission in US – Tax Incentives (WT/DS487). In particular, the European Union submitted that 
the staff assigned to the appeals in US – Tax Incentives and in the current dispute is to a large 
extent the same, and prepar ation and filing of submissions in these two related and demanding 
appeals poses a significant challenge for the European Union's resources. Moreover, the 
European  Union argued that the absence of key staff during the holiday period has significantly 
impaired the preparati on and revision  of the European  Union's appellee's submission in the present 
appeal . The European  Union also noted that the current working schedule has  left it with 
approximately two  months to respond to the United  States' other appellant's submission  – which 
includes several aspects of a lengthy panel report  – as well as to ensure proper marking of 
business confidential information (BCI) and highly sensitive business confidential information 
(HSBI).  
3. Also on 6 January 2017, the Division invited the United  States and the third participants to 
comment in writing on the communication from the European  Union by 12:00 p.m. on 
Tuesday,  10 January 2017. Written comments were received from the Australia, Canada, and the 
United  States.  Australia  requested that  to the extent the Division  were to grant the 
European  Union's request , it also provide third participants with additional time to review and 
consider the participants' submissions prior to filing their own submissions. Canada made a similar 
request asking the  Division to extend the deadline for filing of the third participants' submissions 
from 31 January 2017 to 7  February 2017, should it grant the request made by the 
European  Union . No comments were received from the other third participants.  
4. In its written comments, the United States opposed the European Union's request for an 
extension of the deadline for for the filing of its appellee's submission . Referring to the reasons 
given by the Division in US – Tax Incentives  for its denial of the United States' re quest for 
extension of the deadline for the filing of its appellant's submission, the United  States did not see a 
basis for granting the European Union's request in the present case. In particular, the 
United  States observed that its staff faces the same c hallenges as the European  Union's staff in 
filing submissions in US – Tax Incentives and the present dispute. Moreover, the United States 
noted  that the European Union's appellee's submission in this appeal responds to a submission 
that is considerably sho rter than the one to which the United  States' appellee's submission has to 
respond  in US – Tax Incentives .  
5. We observe that the European Union filed its appeal in the present dispute on 
13 October  2016. In response to a joint letter by the European  Union a nd the United States, the 
Division hearing this appeal suspended the deadline for the filing of the appellant's submission 
pending the adoption of additional procedures to protect sensitive information  included in the 
record of this dispute. On 25 October 2016, the Division  adopted a procedural ruling to protect 
sensitive information . On 1 November 2016, the Division communicated  to the participants and 
third participants 10 November 2016 as the filing date for the United States' other appellant's 
submissio n. Subsequently, on 22 November 2016, the Division communicated to the participants 
and third participants  13 January 2017 as the filing date for the appellees' submissions. In setting 
                                                
1 WT/AB/WP/6 , 16 August 2010.  WT/DS316/AB/R W/Add.1  
 
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  these deadlines, the Division took into account, in particular, the siz e and complexity of the 
present appeal, including the size of the Panel Report, and the need for inclusion of BCI and HSBI 
in the participants' submissions. Furthermore, in view of the WTO end -of-year closure, the 
deadline set for the filing of the appelle es' submissions in the present dispute was delayed until the 
second working week of 2017. Finally, notwithstanding the size of the Panel Report, the 
United  States' other appellant's submission to which the European Union has to respond in its 
appellee's su bmission is relatively brief. We observe, in this regard, that although the 
United  States must, in its appellee's submission, respond to a very lengthy European Union 
appellant's submission, it has not requested that the filing deadline of 13 January 2016 be 
extended.  
6. For these reasons, we consider that strict adherence to the time periods set by the Division 
for the filing of the appellees' submission s will not result in manifest unfairness within the meaning 
of Rule  16(2) of the Working Procedures, and th at it is not, therefore, necessary or appropriate to 
modify the deadline for the filing of the appellees' submissions in the present dispute .  
7. In these circumstances, the Division declines the European  Union's request for extension of 
the deadline for filing the appellees' submissions in the present appeal and, instead, affirms the 
deadline for filing the appellees' submissions  set for Friday, 13 January 2017 . 
 
 
 
 WT/DS316/AB/R W/Add.1  
 
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  ANNEX D -5 
PROCEDURAL RULING O F 19 APRIL 2017  
1. By letter dated 4 April 2017, the Appellate Body Division hearing the above appeal  invited 
the participants, the European Union and the United States , to indicate whether they request the 
oral hearings in this appeal to be open to public ob servation, and , if so,  to propose specific 
modalities in this respect by 5 p.m. Geneva time on  Tuesday, 11  April 2017. We also invited the 
third participants to provide comment s on any requ est the participants might file,  by 12 noon 
Geneva time on Thursday , 13 April 2017.  
2. On 11 April 2017 , we received a joint communication from the European Union and the 
United States. In their letter, they propose additional procedures to protect Business Confidential 
Information (BCI) and Highly Sensitive Business Informa tion (HSBI) during the oral hearings in 
this appeal and request that we allow observation by the public of the oral hearing.  
3. Specifically , the participants propose that we adopt the same additional procedures that the 
Appellate Body adopted in United State s – Measures Affecting Trade in Large Civil Aircraft 
(Second  Complaint)1, pursuant to the procedural ruling dated 26 July 2011 in that appeal . They 
state that the reasons for their request and proposal are substantially the same as the reasons 
that were gi ven in their joint letter of 11 July 2011 requesting such additional procedures in the 
conduct of the oral hearing in that appeal , which are summarized as follows:  
 Only BCI -Approved Persons are authorized to access BCI, and the participants and 
third participants have designated a limited number of persons as BCI -Approved. Only 
HSBI-Approved Persons are authorized to access HSBI, and the participants have designated 
a limited number of persons as HSBI -Approved. Third participants may not designate 
HSBI-Approved Persons.  
 As regards BCI that might be uttered during any segment of the hearing, the participants 
recall that each of them is precluded from disclosing information designated as BCI by the 
other to non -BCI-Approved persons. Similarly, as regards HSBI that might be uttered during 
a hearing, the participants recall that each of them is precluded from disclosing information 
designated as HSBI by the other to non -HSBI-Approved persons. Third participants are 
precluded from disclosing BCI to non -BCI-Approve d persons.  
 Accordingly, the participants consider that, as provided for in the Additional Procedures for 
the Protection of Sensitive Information  set out in the Procedural Ruling dated 
25 October  2016 in this appeal , the  Division can and should adopt a further 
Procedural  Ruling pursuant to Rule  16(1) of the Working Procedures for Appellate Review2 
regulating these matters for the oral hearings. This will involve striking a balance between 
the systemic interest in protecti ng sensitive information and the systemic interest in 
transparency, similar to that struck in the Procedural Ruling dated 25 October 2016 in this 
appeal and the Procedural Ruling dated 26 July 2011 in US – Large Civil Aircraft 
(2nd complaint) .   
 According to the participants, there appear to be two options with respect to HSBI. The first 
option is that if, during the hearing, one of the participants or a Member of the Division 
wishes to refer to HSBI, the hearing would be momentarily suspended and the third  
participants, as well as members of the participants' delegations who are not 
HSBI-Approved, would be asked to leave the room temporarily. The second option is that 
the hearing be divided into two parts. The first part would deal with all matters to the 
greatest extent possible without uttering HSBI. The second part would complete the 
discussion in a closed session, to the extent necessary, by addressing HSBI. While 
acknowledging that neither of these options is ideal in all respects, on balance, the 
                                                
1 WT/DS353/AB/R, adopted 23 March 2012 . The additional procedures with respect to the oral hearing 
in that appeal are set out in Annex IV to that report.  
2 WT/AB/WP/6, 16 August 2010.  WT/DS316/AB/R W/Add.1  
 
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  participants prefer the second option. The participants believe that this would limit 
unnecessary disruption during the hearing. The participants also believe that careful conduct 
of the first part of the hearing (such as only participants and the Members of th e Division 
having a document before them and discussing it without uttering HSBI) could obviate the 
need for a second HSBI part of the hearing.  In the event that a second closed session of the 
hearing would be necessary, it could be organized to take plac e at the end of each day. The 
participants note that the Appellate Body followed this second approach during the 
proceedings in EC and certain member States – Measures Affecting Trade in Large Civil 
Aircraft 3 and in US – Large Civil Aircraft (2nd complain t), and that it appears to have been 
effective.  
 The participants further suggest that the Appellate Body establish rules regarding a public 
segment of the hearing. The participants recall that, to date, a participant's or third 
participant's oral statement s and oral answers to questions have been made in public 
segment only if the participant or third participant so agreed. In the absence of such 
agreement, it has proved operationally possible and effective to divide the hearing into an 
open session (for Me mbers who wish to make their statements public) and a closed session 
(for Members who do  not wish to make their statements public). The European Union and 
the United States are of the view that as much of the hearing as possible should be open to 
the publi c. However, they recognize that, in light of the volume of BCI in this dispute, and its 
centrality to many of the issues, it may not be feasible to separate the Appellate Body's 
questions and the participants' answers into public and BCI segments in the sa me way as 
the oral statements. For this reason, the European Union and the United States propose that 
the same approach be adopted in this appeal as was adopted in the appeal in US – Large 
Civil Aircraft (2nd complaint) . 
 Thus, with regard to the public seg ment of the hearing, the participants propose that the 
participants and third participants (subject to their agreement) deliver opening statements 
that do not contain BCI or HSBI. These would be videotaped, reviewed by the participants 
for confirmation tha t neither BCI nor HSBI has been uttered (with any disagreements to be 
settled by the Appellate Body), and then transmitted to the public at a later date. The 
participants also propose that such an approach could be used for the closing statements, or 
at least that part of them that does not refer to BCI or HSBI.   
4. Canada and China submitted comments on the participants' request.  Canada expressed its 
agreement with the joint proposal by the European Union and the United States that the Appellate 
Body allow o bservation by the public of the oral hearing. China submitted that the joint proposal 
by the participants to exclude non -BCI-Approved persons of the third participants from segments 
of the hearing that are dedicated to questions and answers would significa ntly constrain the third 
participants' abilities to engage fully in those segments. China added that, in the circumstances of 
this appeal, the need for protection of sensitive information cannot sufficiently justify a complete 
exclusion of non -BCI-Approved  persons from hearing segments dedicated to questions and 
answers. China suggested that the same procedure that is applicable for the protection HSBI from 
unauthorized disclosure be followed for the protection of BCI in this appeal. In addition, China 
stated that it does not want to open its statements and oral responses to the questions during the 
oral hearing to the public. No comments were received from Australia, Brazil, Japan, or Korea.  
5. The request of the participants raises issues similar to those tha t were before the Appellate 
Body in EC and certain member States – Large Civil Aircraft  and in US – Large Civil Aircraft 
(2nd complaint) . In this appeal, we have already adopted additional procedures for the protection 
of sensitive information. Given the amount of information that was treated as BCI and HSBI during 
the Panel proceedings, we believe that it would be difficult to conduct the  oral hearing in these 
appellate proceedings without referring to sensitive information. In carrying out our adjudicative 
function, it will be necessary to conduct the oral hearing in a manner that allows us to explore 
issues that involve sensitive informa tion, while ensuring that this sensitive information is not 
improperly disclosed.  
                                                
3 WT/DS316/AB/R, adopted 1 June 2011 . The additional procedures with respect to the oral hearing in 
that appeal are set out in Annex IV to that report . WT/DS316/AB/R W/Add.1  
 
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  6. Pursuant to our Procedural Ruling of 25 October 2016, the participants have provided a list 
of persons who are authorized to have access to BCI and a list with a more limited number of 
persons who are authorized to have access to HSBI. These limitations on  the participants' 
representatives who would be authorized to discuss BCI and HSBI during the oral hearing are 
incidental to the participants' request for additional protection for sensitive information. Therefore, 
only members of the participants' delegat ions who are BCI -Approved Persons are invited to attend 
the sessions of the oral hearing in which BCI will be discussed, and only members of their 
delegations who are HSBI -Approved Persons are invited to attend segments of the oral hearing 
where HSBI will be discussed.   
7. Moreover, under paragraph 18(xvi) of the Procedural Ruling of 25 October 2016, the third 
participants have been allowed to designate up to eight individuals as Third Participant BCI -
Approved Persons. We consider this to be sufficient to all ow the third participants to be 
represented properly at the oral hearing. In view of the need to provide additional protection to 
BCI, only Third Participant BCI -Approved Persons are invited to attend segments of the oral 
hearing where BCI may be discussed , including the question and answer sessions. Having carefully 
considered the comments provided by China, we do not consider that this will unduly impinge 
upon the rights of the third participants in this case.  
8. Accordingly, and for reasons similar to those  adopted by the Appellate Body in EC and 
certain member States – Large Civil Aircraft and in  US – Large Civil Aircraft (2nd complaint) , we 
have decided to provide additional confidentiality protection for certain sensitive information during 
the oral heari ngs to be held in this appeal on the terms set out below. We also authorize the public 
observation of certain segments of the oral hearing as further indicated below.   
Request for additional procedures to protect sensitive information during the oral 
hearing 
9. We are of the view that the additional procedures adopted in EC and certain member 
States  –Large Civil Aircraft  provided adequate protection for sensitive information while allowing 
the Appellate Body to perform its adjudicative function and the third participants to exercise their 
rights under the Understanding on Rules and Procedures Governing the Settlement of Disputes  and 
the Working Procedures  for Appellate Review. The participants share this view and request us to 
adopt similar procedures in these  proceedings. Thus, as in EC and certain member States –Large 
Civil Aircraft , we consider it appropriate to adopt the following arrangements to protect sensitive 
information during the oral hearing:  
 The participants have indicated that they intend to absta in from mentioning BCI or HSBI in 
their opening statements, and suggest that the third participants may also agree not to 
mention BCI in their opening statements. In such circumstances, it is unlikely that sensitive 
information will be uttered in the segme nts of the oral hearing dedicated to the delivery of 
oral statements.  
 Accordingly, all members of the participants' and third participants' delegations (including 
non-BCI Approved persons) may attend this initial segment of the oral hearing . 
 Similarly, to the extent that it is confirmed by the participants, and the third participants 
also indicate, that no sensitive information will be referred to in the closing statements, all 
members of the participants' and third participants' delegations may attend this  final 
segment of the oral hearing.  
 In accordance with paragraphs xiv and xvi  of our Procedural Ruling of 25 October  2016, the 
participants and third participants have each designated BCI -Approved Persons, and the 
participants have designated HSBI -Approved  Persons.  
 Only members of the participants' and third participants' delegations who have been 
authorized to have access to BCI are invited to attend the segments of the oral hearing 
dedicated to questions and answers . 
 Only HSBI -Approved  Persons of the participants are invited to attend segments of the oral 
hearing in which HSBI will be discussed.  WT/DS316/AB/R W/Add.1  
 
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   The third participants  will have access to the BCI versions of the submissions filed in this 
appeal and the BCI version of the Panel Report in the hearing room during the BCI 
segments. The third participants will be provided with a single, individually watermarked 
copy of these documents. Access to these documents will be limited to Third Participant 
BCI-Approved Persons. These documents may not be removed from the hearing room.  
10. The participants have proposed two options for addressing HSBI during the oral hearings. 
The first involves interrupting the BCI segments of the oral hearing each time reference will be 
made to HSBI; the second involves ha ving dedicated segments to discuss HSBI. We believe it is 
important that any additional procedures to protect sensitive information should interfere as little 
as possible with the regular conduct of the oral hearing and allow the Division to structure its 
questioning by topic. Therefore, to the extent possible, we prefer to focus on HSBI in dedicated 
segments in order to avoid interrupting the regular flow of the hearing. It may be, however, that 
the full exploration of an issue will not allow for deferral of the discussion of HSBI. If such 
circumstance arises, we may decide to interrupt the BCI segment of the hearing to discuss HSBI 
with the HSBI -Approved Persons.  
Request for public observation of the oral hearing  
11. Particular issues arise in this appeal, as  they did in EC and certain member States – Large 
Civil Aircraft , in relation to the public observation of the oral hearing because of the need to avoid 
the disclosure of BCI and HSBI. We believe that the additional procedures adopted by the 
Appellate Body  in EC and certain member States – Large Civil Aircraft  and in US – Large Civil 
Aircraft (2nd complaint) provided an appropriate means to allow public observation of the hearing, 
while protecting sensitive information and safeguarding the Appellate Body's adjudicative function 
and the interests of the third participants.   
12. Therefore, and subject to the qualification in paragraph 13 below, we authorize public 
observation of the delivery of the opening statements  only. We will authorize public observation of 
the closing statements upon indication from the participants and third participants that their 
closing statements will not include any reference to sensitive information.  
13. We authorize observation by the public of the opening statements of only those third 
participants who will have indicated no objection to such observation.  The confidentiality of the 
closing statements by those third participants that do not wish to make their statements public will 
be preserved.  
14. The participants have proposed that public observation take place by making a videotape of 
the relevant segments of the oral hearing and showing it to the public only after the participants 
have had an opportunity to review the videotape for any inadvertent utterance of sensitive 
information. A sim ilar procedure was used in EC and certain member States – Large Civil Aircraft 
and in  US – Large Civil Aircraft (2nd complaint) . We agree with the participants that deferred 
transmission to the public by videotape will minimize the risk of inadvertent disc losure of sensitive 
information and we will give the participants an opportunity to review the videotape for this 
purpose before it is shown to the public. In case of disagreement between the participants 
regarding the sensitive nature of any information r eferred to during the opening or closing 
statements, such information will not be subject to public observation.  
15. For the reasons set out above, we adopt the following additional procedures for the conduct 
of all sessions of the oral hearing to be held in t his appeal:  
Additional Procedures on the Conduct of the Oral Hearing  
i. These Additional Procedures shall apply to all sessions of the oral hearing to be held in this 
appeal and, in particular, to any information that is referred to during the course of  the 
hearing that was treated as business confidential information (BCI) or as highly sensitive 
business information (HSBI) in the Panel proceedings and that is contained in documents or 
electronic media that are part of the Panel record. These Additional Proced ures complement 
the Additional Procedures for the Protection of Sensitive Information that we adopted in our 
Procedural Ruling of 25 October 2016.  WT/DS316/AB/R W/Add.1  
 
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  ii. To the extent that information on the record is presented at the 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 the degree of confident iality of this information, 
the Appellate 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 reta ined for this appeal may be present 
throughout the hearing, including segments dedicated to the discussion of BCI and HSBI.  
iv. In addition to the persons indicated in paragraph iii above, BCI shall be disclosed during the 
hearing only to BCI-Approved Persons of the participants and Third Participant BCI -Approved 
Persons.4 
v. In addition to the persons indicated in paragraph iii above, HSBI s hall be disclosed during the 
hearing only to HSBI-Approved Persons of the participants.5 
vi. The hearing segment dedicated to th e 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 or 
HSBI in their opening  statements.  
vii. 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 segments of 
the hearing dedicated to questions and answers.  
viii. Segments  of the hearing may be reserved for questioning on issues that may require 
reference to HSBI. In order to protect HSBI from unauthorized disclosure, only 
HSBI-Approved Persons of  the participants are invited to attend these segments.  
ix. To the extent that any  participant or third participant indicates that it will make reference to 
BCI in its closing statement, only BCI -Approved Persons of the participants and 
Third Participant BCI -Approved Persons will be invited to attend the closing segment of the 
hearing.  
x. If necessary, the Appellate Body Division hearing this appeal may interrupt a BCI segment 
and hold a segment dedicated to HSBI.  
xi. During the segments of the hearing dedicated to questions and answers, the BCI version of 
the Panel Report and the BCI versions of the submissions filed in this appeal, which will be 
printed and individually watermarked pursuant to paragraph xvii of our Procedural Ruling of 
25 October 2016, shall be made available to each third participant. Only Third Participant 
BCI-Approved Perso ns will 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 each segment addressing BCI.  
xii. The parts of the transcript of the oral hearing conta ining BCI and HSBI shall become part of 
the appellate record in this appeal and shall be kept in accordance with paragraphs vi, vii, 
and ix-xii of our Procedural Ruling of 25 October 2016.  
Public observation of the oral hearing  
xiii. The first segment of the ora l hearing, which will consist of the opening statements by the 
participants  and third participants, shall be open to public observation, subject to 
paragraph  xv below. The final segment of the oral hearing, which will be reserved for closing 
statements, sh all be open to public observation to the extent that the participants and 
                                                
4 BCI-Approved Persons and Third Participant BCI -Approved Persons are those persons designated as 
such under paragraphs xiv and xvi of our Procedural Ruling o f 25 October 2016.  
5 HSBI-Approved Persons are those persons designated as such under paragraph xiv of our Procedural 
Ruling of 25 October 2016.  WT/DS316/AB/R W/Add.1  
 
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  third participants  indicate that their closing statements will not refer to any sensitive 
information and subject to paragraph xiv below.  
xiv. The segments  open to public observation shal l be videotaped. Within two days of the 
completion of each session of the hearing, either participant may request to review the 
videotape to verify that no BCI or HSBI 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 or HSBI, a redacted version of the 
videotape shall be produced in which the BCI or HSBI has been deleted. In case of 
disagreement between the par ticipants regarding the sensitive nature of any information 
referred to during the opening or closing statements, the relevant segment(s) will not be 
subject to public observation.  
xv. The opening and closing statements of third participants wishing to maintai n the 
confidentiality  of their submissions will not be subject to public observation. 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 must b e received by the 
Appellate Body Secretariat no later than 5 p.m. Geneva time on Wednesday, 26 April 2017 . 
xvi. 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 with 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 
who have registered to observe the oral he aring once the review process referred to in 
paragraph  xiv above has, if requested, been completed. The time and location of the 
videotape screening shall be announced in due course. WTO delegates are invited to indicate 
to the Appellate Body Secretariat no lat er than 5  p.m. Gen eva time on Wednesday, 
26 April 2017 whether they wish to have a reserved seat in the room where the videotape will 
be screened.  
 
 
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