WT/DS353/AB/RW/Add.1  
 
28 March 2019 
(19-1218) Page: 1/76 
    
 
  
UNITED STATES – MEAS URES AFFECTING TRADE  IN LARGE CIVIL 
AIRCRAFT (SECOND COM PLAINT)  
RECOURSE TO ARTICLE  21.5 OF THE DSU BY T HE EUROPEAN  UNION  
AB-2017-4 
Report of the Appellate Body  
Addendum  
This Addendum  contains Annexes A to D to the Report of the Appellate Body  circulated as  document  
WT/DS353/AB/RW . 
 
The Notice s of Appeal and Other Appeal  and the executive summaries of written submissions 
contained in this Addendum are attached as they were received fro m 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/DS353/AB/RW/Add.1  
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LIST OF ANNEXES  
ANNEX  A 
NOTICES OF  APPEAL  
Contents  Page  
Annex  A-1 European Union 's Notice of Appeal  4 
Annex  A-2 United States ' Notice of Other Appeal  10 
ANNEX B  
ARGUMENTS OF THE PARTICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the European Union's appellant's submission  13 
Annex  B-2 Executive summary of the United States' other appellant's submission  36 
Annex  B-3 Executive summary of the United States' appellee's submission  38 
Annex  B-4 Executive summary of the European Union' s appellee's submission  44 
ANNEX  C 
ARGUMENTS OF THE THI RD PA RTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Brazil's third participant's submission  54 
Annex  C-2 Executive summary of Canada's third participant's submission  55 
Annex  C-3 Executive summary of China's third participant's submission  56 
Annex C -4 Executive summary of Japan's third participant's submission  57 
ANNEX  D 
PROCEDURAL RULIN GS 
Contents  Page  
Annex  D-1 Procedural Ruling of 21 July 2017 regarding additional procedures to protect 
business confidential information (BCI)  and highly sensitive business 
information (HSBI)  59 
Annex  D-2 Procedural Ruling of 9 August 2017 regarding the United  States' request to 
extend the deadline for objection to the inclusion of any business confidential 
information (BCI) in the European Union's appellant's submission  67 
Annex D -3 Procedural Ruling of 30 August 2017 regarding the United States' request to 
extend the deadline to file the HSBI Appendix to its other appellant's 
submission  68 
Annex D -4 Procedural Ruling of 12 October 2017 regarding the European Union's 
request to extend the deadline for objection to the inclusion of any business 
confidential information (BCI ) in the United States' appellee's submission  69 
Annex D -5 Procedural Ruling of 18 October 2017 regarding the objection by the 
European Union to the inclusion of certain highly sensitive business 
information (HSBI) in the HSBI -redacted version of the Unit ed States' 
appellee's submission  70 
Annex D -6 Procedural Ruling of 5 April 2018 regarding the joint request by the 
European Union and the United States for the oral hearing to be open to 
public observation  71 WT/DS353/AB/RW/Add.1  
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ANNEX  A 
NOTICES OF APPEAL  
Contents  Page  
Annex  A-1 European Union's Notice of Appeal  4 
Annex  A-2 United States' Notice of Other Appeal  10 
 WT/DS353/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 and Article 7.6 of the SCM Agreement , the 
European Union hereby notifies to the Dispute Settlement Body its decision to appeal to the 
Appellate  Body certain issues of l aw covered in the Panel Report and certain legal interpretations 
developed by the Panel in the dispute United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) (Recourse to Article 21.5 of the DSU by the European Union ) (WT/DS353 /RW). 
Pursuant to Rule 20(1) of the Working Procedures for Appellate Review , the European Union 
simultaneously files this Notice of Appeal with the Appellate Body Secretariat.  
The European Union is restricting its appeal to those errors that it believes co nstitute serious errors 
of law and legal interpretation that need to be corrected. Non -appeal of an issue does not signify 
agreement therewith.  
For the reasons to be further elaborated in its submissions to the Appellate Body, the European  Union 
appeals, a nd requests the Appellate Body to reverse, modify, or declare moot and of no legal effect 
the findings, conclusions, and recommendations of the Panel, and to complete the legal analysis, 
with respect to the following errors of law and legal interpretations  contained in the Panel Report:1 
I. SUBSIDIES  
A. DOD Procurement Contracts  
1. The Panel failed to make an objective assessment of the matter, pursuant to Article 11 of the 
DSU, when finding that the provision to Boeing of funding, and of access to DOD facilities, 
equipment, and employees, by the United States Department of Defense ( "DOD") through 
pre-2007 and post -2006 DOD procurement contracts are not subsidies within the meaning of 
Article 1 of the SCM Agreement .2 The Panel erred in characterising the provision of funding 
and support to Boeing as "purchases of services ", rather tha n as, respectively, a direct transfer 
of funds under Article 1.1(a)(1)(i) and the provision of g oods and services under 
Article  1.1(a)(1)(iii).3  
2. The Panel also failed to make an objective assessment of the matter, pursuant to Article 11 
of the DSU, when f inding (in the alternative) that the allocation of intellectual property rights 
arising from the DOD procurement contracts does not demonstrate conferral of a benefit within 
the meaning of Article 1.1(b) of the SCM Agreement .4  
B. Foreign Sales Corporation /Extraterritorial Income Act Subsidies  
3. The Panel erred in the interpretation of Articles 7.8 and 1.1(a)(1)(ii) of the SCM Agreement , 
when finding that the United States no longer continues to grant or maintain the subsidies 
provided pursuant to the Foreign  Sales Corporation/Extraterritorial Income ( "FSC/ETI ") Act 
after the end of the implementation period.5 The Panel erred in finding that, because there is 
                                                
* This document, dated 29 June 2017, was circulated to Members as document WT/DS353/27.  
 
1 Pursuant to Rule 20(2)(d)(iii) of the Working Procedures for Appellate Review , this Notice of Appeal 
includes an indicative list of the paragraphs of the Panel Report containing the alleged errors, without prejudice 
to the ability of the European Union to refer to oth er paragraphs of the Panel Report in the context of its 
appeal.  
2 Panel  Report, paras. 8.360 -8.378, 8.311 -8.316, 8.418 -8.437, 8.1077.a, 9.220, 9.291, 9.298, 9.332, 
9.333 -9.335, 9.373, 9.476, 9.485, 9.486(a), 9.487(a), 9.487(c), 11.7.c.i, 11.8.a, 11.8.b, 11 .8.e.  
3 Panel Report, paras. 8.363 -8.378 , 8.311 -8.316, 8.1077.a, 9.220, 9.291, 9.298, 9.332, 9.333 -9.335, 
9.373, 9.476, 9.485, 9.486(a), 9.487(a), 9.487(c), 11.7.c.i, 11.8.a, 11.8.b, 11.8.e . 
4 Panel Report, paras. 8.418 -8.437 , 8.311 -8.316, 8.1077.a, 9.220 , 9.291, 9.298, 9.332, 9.333 -9.335, 
9.373, 9.476, 9.485, 9.486(a), 9.487(a), 9.487(c), 11.7.c.i, 11.8.a, 11.8.b, 11.8.e . 
5 Panel Report, paras. 8.596 -8.612 , 8.1077.b, 9.252, 9.293, 9.333 -9.335, 9.487(a), 11.7.c.ii, 11.8.a, 
11.8.b, 11.8.e . WT/DS353/AB/RW/Add.1  
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insufficient evidence that Boeing has actually used the tax concessions after 2006, there can 
be no fo regoing of revenue otherwise due within the meaning of Article 1.1(a)(1)(ii) of the 
SCM Agreement .6  
C. City of Wichita Industrial Revenue Bond Programme  
4. The Panel erred in the interpretation of Articles 7.8 and 2.1(c) of the SCM Agreement , when 
finding that the City of Wichita 's Industrial Revenue Bond ( "IRB") programme is no longer 
de facto specific.7  
5. The Panel erred in the application of Articles 7.8 and 2.1(c) of the SCM Agreement , when 
finding that the City of Wichita 's IRB programme is no l onger de facto specific.8 
6. The Panel failed to make an objective assessment of the matter pursuant to Article 11 of the 
DSU, when finding that the City of Wichita 's IRB programme is no longer de facto specific, 
within the meaning of Article 2.1(c) of the SCM Agreement .9  
D. South Carolina Economic Development Bonds  
7. The Panel erred in the interpretation of Articles 7.8 and 2.1(c) of the SCM Agreement , when 
finding that the subsidy provided by South Carolina to Boeing, through economic development 
bond ( "EDB") proceeds used to fund Project Gemini facilities and infrastructure, is not specific 
within the meaning of Article 2.1(c) of the SCM Agreement .10 
8. The Panel erred in the application of Articles 7.8 and 2.1(c) of the SCM Agreement , when 
finding that the subsi dy provided by South Carolina to Boeing, through EDB proceeds used to 
fund Project Gemini facilities and infrastructure, is not specific within the meaning of 
Article  2.1(c) of the SCM Agreement .11  
9. The Panel failed to make an objective assessment of the matter pursuant to Article 11 of the 
DSU, when finding that the subsidy provided by South Carolina to Boeing, through EDB 
proceeds used to fund Project Gemini facilities and infrastructure, is not spe cific within the 
meaning of Article 2.1(c) of the SCM Agreement .12  
E. Multi -County Industrial Park Job Tax Credits  
10. The Panel erred in the application of Articles 7.8 and 2.2 of the SCM Agreement , when finding 
that the subsidy provided by South Carolina to Boeing through the multi -county industrial 
park ( "MCIP") job tax credits is not specific within the meaning of Article 2.2 of the 
SCM Agreement .13 
                                                
6 Panel Report, paras. 8.596 -8.612, 8.1077.b, 9.252, 9.293, 9.333 -9.335, 9.487(a), 11.7.c.ii, 11.8.a, 
11.8.b, 11.8.e.  
7 Panel Report, paras. 8.634 -8.640, 8.1077.c, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.7.c.iii, 11.8.a, 11 .8.b, 11.8.e.  
8 Panel Report, paras. 8.634 -8.640, 8.1077.c, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.7.c.iii, 11.8.a, 11.8.b, 11.8.e.  
9 Panel Report, paras. 8.634 -8.640, 8.1077.c, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9. 486(d), 
9.487(a), 9.487(c), 11.7.c.iii, 11.8.a, 11.8.b, 11.8.e.  
10 Panel Report, paras. 8.837 -8.841, 8.843, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.8.a, 11.8.b, 11.8.e, 8.1077.e, 11.7.c.v.  
11 Panel Report, paras. 8.837 -8.841, 8.843, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.8.a, 11.8.b, 11.8.e, 8.1077.e, 11.7.c.v.  
12 Panel Report, paras. 8.837 -8.841, 8.843, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.8.a,  11.8.b, 11.8.e, 8.1077.e, 11.7.c.v.  
13 Panel Report, paras. 8.931, 8.933, 8.1077.g, 9.277, 9.297, 9.333 -9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.7.c.vii, 11.8.a, 11.8.b, 11.8.e.  WT/DS353/AB/RW/Add.1  
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11. The Panel failed to make an objective assessment of the matter pursuant to Article 11 of the 
DSU, when finding  that the subsidy provided by South Carolina to Boeing through the MCIP 
job tax credits is not specific within the meaning of Article 2.2 of the SCM Agreement .14  
II. ADVERSE EFFECTS  
A. Continuing Adverse Effects  
12. The Panel erred in the interpretation of Art icle 7.8 of the SCM Agreement , when finding that, 
to "take appropriate steps to remove the adverse effects " under that provision, a responding 
Member found to be granting or maintaining an actionable subsidy need not remove adverse 
effects that remain pres ent after the end of the implementation period, in circumstances where 
those effects result from sales transactions that were agreed prior to the end of the 
implementation period and for which performance remains incomplete.15 
13. The Panel erred in the applica tion of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding that sales that had occurred prior to the end of the implementation period cannot 
constitute "present " adverse effects under Article 7.8 of the SCM Agreement , even where 
deliveries under those sales remain outstanding after the end of the implementation period.16 
14. The Panel failed to make an objective assessment of the matter under Article 11 of the DSU,  
when finding that sales that had occurred prior to the end of the imple mentation period cannot 
constitute "present " adverse effects under Article 7.8 of the SCM Agreement , even though the 
original panel had determined that an adverse effect from such sales lasts until deliveries 
under the sale are completed.17  
15. The Panel faile d to make an objective assessment of the matter under Article 11 of the DSU, 
when finding that the European Union 's continuing adverse effects arguments were 
"unsupported by the evidence and/or in contradiction with the findings made in the original 
procee ding".18 
16. The Panel erred in the application of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding, on the basis of an erroneous counterfactual, that the European Union 's continuing 
adverse effects arguments were "unsupported by the evidence and/or in contradiction with 
the findings made in the original proceeding ".19 
B. Role and Consequence of Product Market Delineation  
17. The Panel erred in the interpretation of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
interpreting those provisions  to requir e that, as regards significant price suppression, price 
depression, or lost sales, "a subsidized product can only cause serious prejudice to another 
product if the two products in question compete in the same market ".20 
                                                
14 Panel Report, paras. 8.931, 8.933, 8.1077.g, 9.277, 9.297, 9.33 3-9.335, 9.472, 9.484, 9.486(d), 
9.487(a), 9.487(c), 11.7.c.vii, 11.8.a, 11.8.b, 11.8.e.  
15 Panel Report, paras. 9.107, 9.312 -9.314, 9.332, 9.333 -9.335, 9.487(a), 9.487(c), 11.8(a) -(b), 
11.8(e).  
16 Panel Report, paras. 9.307 -9.314, 9.332, 9.333 -9.335, 9.403 (footnotes 3323, 3329), 9.407, 
9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
17 Panel Report, paras. 9.307 -9.314, 9.332, 9.333 -9.335, 9.403 (footnotes 3323, 3329), 9.407, 
9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
18 Panel Report, paras. 9.315, 9.321 -9.323, 9.326 , 9.331, 9.332, 9.333 -9.335, 9.487(a), 9.487(c), 
11.8(a) -(b), 11.8(e).  
19 Panel Report, paras. 9.315, 9.321 -9.323, 9.326, 9.331, 9.332, 9.333 -9.335, 9.487(a), 9.487(c), 
11.8(a) -(b), 11.8(e).  
20 Panel Report, paras. 9.33, 9.487(a), 9.487(c), 11.8(a) -(b), 11.8 (e). WT/DS353/AB/RW/Add.1  
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C. Collective Assessment of Effects of Multiple Subsidies  
18. The Panel erred in the interpretation of Articles 7.8, 5, and 6.3 of the SCM Agreement in 
identifying "aggregation " and "cumulation " as the only two permissible approaches to assess 
collectively the effects of multiple subsidies.21 
D. Causation Standard for Lost Sales  
19. The Panel erred in the interpretation of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding that there must be "no non -price factors that explain Boeing 's success in obtaining the 
sale" in order for the subsidies at issue to be found to cause significant lost sales.22 
E. Price Effects  
20. The Panel erred in the interpretation of Articles 7.8, 5, and 6.3 of the SCM Agree ment, when 
finding that the European Union had failed to demonstrate that the untied state and local cash 
flow subsidies and the untied post -2006 aeronautics R&D subsidies resulted in lower prices 
for Boeing LCA.23 
21. The Panel erred in the application of Arti cles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding that the European Union had failed to demonstrate that the untied state and local cash 
flow subsidies and the untied post -2006 aeronautics R&D subsidies resulted in price effects.24 
22. The Panel failed to  make an objective assessment of the matter under Article 11 of the DSU, 
when finding that the European Union had failed to demonstrate that the untied state and 
local cash flow subsidies and the untied post -2006 aeronautics R&D subsidies resulted in price  
effects.25 
F. Technology Effects  
23. The Panel erred in the application of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding that the "technology effects " of the pre -2007 US aeronautics R&D subsidies, which 
were found in the original proceedings to h ave accelerated the development of technologies 
applied on the 787 -8/9, do not continue to cause adverse effects in the post -implementation 
period.26 
24. The Panel failed to make an objective assessment of the matter under Article 11 of the DSU, 
when finding th at the "technology effects " of the pre -2007 US aeronautics R&D subsidies, 
which were found in the original proceedings to have accelerated the development of 
technologies applied on the 787 -8/9, do not continue to cause adverse effects in the 
post-implementation period.27 
25. The Panel erred in the application of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding, based exclusively on the counterfactual launch date of the 787 and without 
                                                
21 Panel Report, paras. 9.62, 9.89, 9.93, 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
22 Panel Report, paras. 9.240, 9.241, 9.242, 9.243, 9.246, 9.250 -9.252, 9.292, 9.293, 9.333 -9.335, 
9.379, 9.380, 9.383, 9.426, 9.446, 9.458, 9.477 (footnote 3433), 9.486 (d), 9.487(a), 9.487(c), 11.8(a) -(b), 
11.8(e).  
23 Panel Report, paras. 9.271, 9.273, 9.277, 9.288, 9.291, 9.293, 9.297 -9.298, 9.333 -9.335, 9.470, 
9.472, 9.474, 9.475, 9.476, 9.483, 9.484, 9.485, 9.486(c), 9.486(d), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
24 Panel Report, paras. 9.271, 9.273, 9.277, 9.288, 9.291, 9.293, 9.297 -9.298, 9.333 -9.335, 9.470, 
9.472, 9.474, 9.475, 9.476, 9.483, 9.484, 9.485, 9.486(c), 9.486(d), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
25 Panel Report, paras. 9.271, 9.273, 9.277, 9.2 88, 9.291, 9.293, 9.297 -9.298, 9.333 -9.335, 9.470, 
9.472, 9.474, 9.475, 9.476, 9.483, 9.484, 9.485, 9.486(c), 9.486(d), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
26 Panel Report, paras. 9.128, 9.152, 9.153, 9.156, 9.157, 9.158, 9.161, 9.162, 9.163, 9.164, 9 .165, 
9.166, 9.170, 9.173, 9.176 -9.177, 9.184 -9.186, 9.197, 9.218 -9.220, 9.333 -9.335, 9.352 -9.355, 9.373, 
9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
27 Panel Report, paras. 9.128, 9.152, 9.153, 9.156, 9.157, 9.158, 9.161, 9.162, 9.163, 9.164, 9.165 , 
9.166, 9.170, 9.173, 9.176 -9.177, 9.184 -9.186, 9.197, 9.218 -9.220, 9.333 -9.335, 9.352 -9.355, 9.373, 
9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  WT/DS353/AB/RW/Add.1  
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consideration of the counterfactual timing of deliveries, that the "technology effects " of the 
pre-2007 US aeronautics R&D subsidies do not continue in the post -implementation period.28 
26. The Panel failed to make an objective assessment under Article 11 of the DSU, when finding, 
based exclusively on the counterfactu al launch date of the 787 and without consideration of 
the counterfactual timing of deliveries, that the "technology effects " of the pre -2007 US 
aeronautics R&D subsidies do not continue in the post -implementation period.29 
27. The Panel erred in the applicatio n of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding,  based on evidence regarding the time required to further develop and mature certain 
technologies at already advanced stages of technology development , rather than evidence 
regarding the time  required to conduct early -stage  fundamental R&D for such technologies , 
that the "technology effects " of the pre -2007 US aeronautics R&D subsidies do not continue 
in the post -implementation period.30 
28. The Panel failed to make an objective assessment of the m atter, under Article 11 of the DSU, 
when finding, based on evidence regarding the time required to further develop and mature 
certain technologies at already advanced stages of technology development , rather than 
evidence regarding the time required to conduct early -stage  fundamental R&D for such 
technologies , that the "technology effects " of the pre -2007 US aeronautics R&D subsidies do 
not continue in the post -implementation period.31 
29. The Panel erred in the application of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
finding, based on a failure to consider the proper sequence of technology development, that 
the "technology effects " of the pre -2007 US aeronautics R&D subsidies do not continue in the 
post-implementation period.32 
30. The Panel failed to make an objective assessment of the matter, under Article 11 of the DSU, 
when finding, based on a failure to consider the proper sequence of technology development, 
that the "technology effects " of the pre -2007 US aeronautics R&D subsidies do not continue 
in the post -implementation period.33 
31. The Panel erred in the application of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
accepting the United States ' estimate of the counterfactual launch date of the 787 on the basis 
that the European Union did not "itself enumerate the specific additional tasks that Boeing 
should have reflected in its assessment " and did "not provide evidence of how long Boeing 
would have needed to conduct any of the R&D tasks that were actually performed under the 
NASA and DOD aeronautics R&D programmes ".34 
32. The Panel failed to make an objective assessment of the matter, under Article 11 of the DSU, 
when accepting the United States ' estimate of the counterfactual launch date of the 787 on 
the basis that the European Union did not "itself enumerate the specific additional tasks that 
Boeing should have reflected in its assessment " and did "not provide evidence of how long 
                                                
28 Panel Report, paras. 9.128, 9.152, 9.153, 9.157, 9.161, 9.166, 9.170, 9.173, 9.176 -9.177, 
9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
29 Panel Report, paras. 9.128, 9.152, 9.153, 9.157, 9.161, 9.166, 9.170, 9.173, 9.176 -9.177, 
9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
30 Panel Report, paras. 9.128, 9.161, 9.162 (referring to paras. 9.136, 9.139), 9.163, 9.164, 
9.176 -9.177, 9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 
11.8(a) -(b), 11 .8(e).  
31 Panel Report, paras. 9.128, 9.161, 9.162 (referring to paras. 9.136, 9.139), 9.163, 9.164, 
9.176 -9.177, 9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 
11.8(a) -(b), 11.8(e).  
32 Panel Report, paras. 9.128, 9.152, 9 .161, 9.165, 9.166, 9.170, 9.173, 9.176 -9.177, 9.184 -9.186, 
9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
33 Panel Report, paras. 9.128, 9.152, 9.161, 9.165, 9.166, 9.170, 9.173, 9.176 -9.177, 9.184 -9.186, 
9.197,  9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
34 Panel Report, paras. 9.128, 9.153, 9.158, 9.162, 9.163, 9.164, 9.165, 9.173, 9.176 -9.177, 
9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487 (c), 11.8(a) -(b), 11.8(e).  WT/DS353/AB/RW/Add.1  
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Boeing would have needed to conduct any of the R&D tasks that were actually performed 
under the NASA and DOD aero nautics R&D programmes ".35 
33. The Panel failed to make an objective assessment of the matter, under Article 11 of the DSU, 
when it misconstrued a European Union argument in the original proceedings, in support of 
its finding that "the acceleration effect of th e pre-2007 aeronautics R&D subsidies in relation 
to Boeing 's technology development for the 787, has {not} continued into the 
post-implementation period ".36 
                                                
35 Panel Report, paras. 9.128, 9.153, 9.158, 9.162, 9.163, 9.164, 9.165, 9.173, 9.176 -9.177, 
9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  
36 Panel Report, paras. 9.156, 9. 173, 9.176 -9.177, 9.184 -9.186, 9.197, 9.218 -9.220, 9.352 -9.355, 
9.373, 9.486(a), 9.487(a), 9.487(c), 11.8(a) -(b), 11.8(e).  WT/DS353/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 United States – Measures Affecting Trade in La rge Civil Aircraft (Second  Complaint): 
Recourse to Article 21.5 of the DSU by the European Union (WT/DS353/RW) ( "Compliance Panel 
Report ") and certain legal interpretations developed by the Panel.  
 
1. The United States seeks review by the Appellate Body of the Panel 's finding that 
European  Union ( "EU") claims regarding procurement contracts between the U.S. Department of 
Defense ( "DoD") and The Boeing Company ( "Boeing ") were within its terms of reference. This 
conclusion is in error and is based on erroneous  findings of law and related legal interpretations, 
including an erroneous interpretation and application of Articles 6.2 and 21.5 of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes  ("DSU"). The paragraphs relating to 
these e rrors include paragraphs 7.111 -7.131 and 11.5.a.ii of the Compliance Panel Report.  
2. The United States appeals the Panel 's finding regarding the approximate rate of subsidization 
per 737 MAX and 737NG, resulting from the Washington State B&O tax rate reducti on. This finding 
is in error and is based on erroneous findings of law and related legal interpretations, including an 
erroneous interpretation or application of Articles 5(c) and 6.3(c) of the Agreement on Subsidies and 
Countervailing Measures  ("SCM Agree ment"). In the alternative, the Panel failed to make an 
objective assessment of the matter before it, including an objective assessment of the facts of the 
case and the applicability and conformity with the relevant covered agreements for purposes of 
Article 11 of the DSU. The paragraphs relating to these errors include paragraphs 9.385, 9.395, and 
9.402 -9.403 of the Compliance Panel Report.  
3. The United States appeals the Panel 's findings that the price difference in the Air Canada sales 
campaign was somewh at smaller than the price difference in the Icelandair 2013 sales campaign, 
and that, in the concluding stages of the Air Canada 2013 sales campaign, Airbus thought it was 
close enough to Boeing on price that relatively small improvements on price could af fect the outcome 
of the campaign. The Panel failed to make an objective assessment of the matter before it, including 
an objective assessment of the facts of the case and the applicability and conformity with the 
relevant covered agreements for purposes of  Article 11 of the DSU. The paragraphs relating to these 
errors include paragraph 9.403 of the Compliance Panel Report and paragraph 264 of the HSBI 
Appendix to the Compliance Panel Report.  
4. The United States appeals the Panel 's finding that the evidence re garding the price differential 
in the Icelandair 2013 sales campaign was somewhat contradicted by other evidence, which suggests 
that at the final stage, Airbus may have closed the gap. The Panel failed to make an objective 
assessment of the matter before it, including an objective assessment of the facts of the case and 
the applicability and conformity with the relevant covered agreements for purposes of Article 11 of 
the DSU. The paragraphs relating to these errors include paragraph 9.403 of the Complianc e Panel 
Report and paragraphs 247 and 250 of the HSBI Appendix to the Compliance Panel Report.  
5. The United States appeals the Panel 's finding that the European Union has established that 
the effects of the Washington State B&O tax rate reduction are a genui ne and substantial cause of 
significant lost sales within the meaning of Articles 5(c) and 6.3(c) of the SCM Agreement of A320neo 
and A320ceo families of LCA in the single -aisle LCA market, in respect of the sales campaigns for 
Fly Dubai in 2014, Air Canad a in 2013, and Icelandair in 2013, in the post -implementation period. 
This conclusion is in error and is based on erroneous findings of law and related legal interpretations,  
 
 
 
 
 * This document, dated 12 September 2017, was circulated to Members as docu ment WT/DS353/28.  
 
  WT/DS353/AB/RW/Add.1  
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including an erroneous interpretation or application of Articles  5(c) and 6.3(c) of the 
SCM Agreement. In addition, the Panel failed to make an objective assessment of the matter before 
it, including an objective assessment of the fact s of the case and the applicability and conformity 
with the relevant covered agreements for purposes of Article 11 of the DSU. The paragraphs relating 
to these errors include paragraphs 9.385, 9.395, 9.402 -9.404, 9.407, and 11.8(c) of the Compliance 
Panel Report.  
6. The United States appeals the Panel 's finding that the European Union has established that 
the effects of the Washington State B&O tax rate reduction are a genuine and substantial cause of  
a threat of impedance of imports of the A320ceo to the United States single -aisle market, and a 
threat of impedance of exports of Airbus single -aisle LCA in the United Arab Emirates third country 
market, within the meaning of Articles 5(c) and 6.3(a) and ( b) of the SCM Agreement in the 
post-implementation period. This conclusion is in error and is based on erroneous findings of law 
and related legal interpretations, including an erroneous interpretation or application of Articles  5(c) 
and 6.3(c) of the SCM Agreement. The paragraphs relating to these errors include paragraphs 9.385, 
9.395, 9.402 -9.404, 9.438, 9.443, 9.444, and 11.8(d) of the Compliance Panel Report.  
7. The United States conditionally  appeals the Panel 's findings that p ost-2006 National 
Aeronautics and Space Administration ( "NASA ") procurement contracts and cooperative agreements, 
DoD assistance instruments, and the Aviation Administration ( "FAA") Other Transaction Agreement 
DTFAWA -10-C-00030 conferred a benefit on Boein g. 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. In addition, the Panel failed to make an 
objective  assessment of the matter before it, including an objective assessment of the facts of the 
case and the applicability and conformity with the relevant covered agreements for purposes of 
Article 11 of the DSU. The paragraphs relating to these errors include  paragraphs 8.30, 8.44 -8.50, 
8.176 -8.178, 8.181 -8.187, 8.408 -8.414, 8.533 -8.541, and 11.7(b)(i) -11.7(b)(iii) of the Compliance 
Panel Report. The United States only requests the Appellate Body to address this issue if it modifies 
or reverses the Panel 's finding that subsidies conferred through the measures referenced in this 
paragraph did not cause adverse effects under Articles 5 and 6.3 of the SCM Agreement.  
8. The United States conditionally  appeals the Panel 's findings that subsidies conferred by the 
NASA, DoD, and FAA measures referenced in paragraph 2 were specific subsidies. 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 2.1 of th e SCM  Agreement. The paragraphs 
relating to these errors include paragraphs 8.210 -8.211, 8.222 -8.231, 8.460 -8.469, 8.547, 
8.548 -8.533, and 11.7(b)(i) -11.7(b)(iii) of the Compliance Panel Report. The United States only 
requests the Appellate Body to address  this issue if it finds that DoD procurement contracts create 
the same type of financial contribution as the measures referenced in paragraph 2.  
9. The United States conditionally  appeals the Panel 's finding that the State of South Carolina 's 
payment to Boei ng of $270 million in Economic Development Bond and Air Hub Bond proceeds, 
conferred a benefit to Boeing. The Panel failed to make an objective assessment of the matter before 
it, including an objective assessment of the facts of the case and the applicabi lity and conformity 
with the relevant covered agreements for purposes of Article 11 of the DSU. The paragraphs relating 
to these errors include paragraphs 8.823, 8.849, and 11.7(b)(ix) of the Compliance Panel Report. 
The United States only requests the App ellate Body to address this issue if it modifies or reverses 
the Panel 's finding that subsidies conferred through the measures referenced in this paragraph did 
not cause adverse effects under Articles 5 and 6.3 of the SCM  Agreement.  
10. The United States condi tionally appeals the Panel 's finding that the EU 's claim of A330 price 
suppression did not fail as a matter of law, despite that the EU failed to allege that the A330 is "in 
the same market " as an allegedly subsidized product. This conclusion is in error a nd is based on 
erroneous findings of law and related legal interpretations, including an erroneous interpretation or 
application of Articles 5(c) and 6.3(c) of the SCM Agreement. The portions of the compliance Panel 
report relating to these errors include footnote 3173. The United States only requests the 
Appellate  Body to address this issue if it modifies or reverses Panel findings regarding the EU 's claim 
of adverse effects suffered by the A330.  
_______________  WT/DS353/AB/RW/Add.1  
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ANNEX  B 
ARGUMENTS OF THE PARTI CIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the European Union's appellant's submission  13 
Annex  B-2 Executive summary of the United States' other appellant's submission  36 
Annex  B-3 Executive summary of the United States' appellee's submission  38 
Annex  B-4 Executive summary of the European Union' s appellee's submission  44 
 WT/DS353/AB/R W/Add.1  
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ANNEX  B-1 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S APPELLANT'S SUBMISSI ON 
I. INTRODUCTION  
1. The European Union1 ("EU") appeals discrete errors of law and legal interpretation developed 
in the Report of the Panel in United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) (Recourse to Article 21.5 of the DSU by the European Union)  
("Panel  Report " or "compliance Panel Report ").2 
2. The European Union prevailed on significant parts of its claims before the Panel, with the 
Panel ultimately concluding that "the United States has failed to implement the DSB 
recommendations and rulings to bring its measures into conformity with its obligations under 
the SCM Agreement ".3 Nevertheless, the European Unio n files its appeal first, with the 
objective of avoiding any further unwarranted delay in these proceedings.  
II.  THE PANEL ERRED IN F INDING THAT THE DOD RDT&E PROCUREMENT CO NTRACTS 
ARE NOT "SUBSIDIES" UNDER ARTICLE 1.1 OF  THE SCM AGREEMENT   
3. The European U nion appeals the Panel 's finding that the payments and access to Department 
of Defense ( "DOD") facilities, equipment, and employees  provided to Boeing through 
pre-2007 and post -2006 DOD procurement contracts are not subsidies within the meaning 
of Article 1.1 of the Agreement on Subsidies and Countervailing Measures  
("SCM Agreement "). These contracts were funded by several DOD Research, Development, 
Test & Evaluation ( "RDT&E ") program elements ( "PEs") supporting research and 
development ( "R&D") relevant to large civil aircraft ( "LCA"). 
4. The Panel 's conclusion stems from a failure to make an objective assessment of the matter 
in violation of Article 11 of the Dispute Settlement Understanding ( "DSU").4 The 
European  Union 's Article 11 appeal extends to the Panel 's findings with respect to both 
financial contribution and benefit, under Articles 1.1(a)(1) and 1.1(b) of the SCM Agreement , 
respectively.  
5. The Panel found that the DOD procurement contracts (including the funding, goods, and 
services provided by DOD pursuant to those contracts) are most appropriately characterised 
as "purchases of services ", a category not explicitly listed in Article 1.1(a)( 1) of the 
SCM Agreement .5 The Panel then considered whether, assuming purchases of services 
constitute financial contributions, the DOD procurement contracts confer a benefit under 
Article 1.1(b). The Panel concluded that, in view of the market benchmarks on the record, 
the European Union had not demonstrated that the DOD procurement contracts confer a 
benefit.6 The Panel thus found that the DOD procureme nt contracts are not subsidies.  
6. In so finding, the Panel committed two principal errors. The Panel erred  in: (1) characterising 
the DOD procurement contracts as purchases of services; and (2) finding that the DOD 
procurement contracts do not confer a benefit.  
7. First, the Panel failed to make an objective assessment of the matter, including an objective 
assess ment of the facts, in violation of Article 11 of the DSU, when it erroneously 
characterised the payments and access to DOD facilities, equipment, and employees, 
                                                
1 The European Union uses the terms "European Union" and "EU" interchangeably to refer to both the 
European Union and its predecessor , the European Communities.  
2 The European Union considers that errors in the interpretation of Articles 1, 2, 5, and 6 of the 
SCM Agreement also involve errors in the interpretation of Article 7.8 of the SCM Agreement . 
3 Panel Report, para. 11.12.  
4 Panel Report, paras. 8.360 -8.378, 8.418 -8.437.  
5 Panel Report, para. 8.376.  
6 Panel Report, paras. 8.377 -8.378.  WT/DS353/AB/R W/Add.1  
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provided to Boeing through DOD procurement contracts, as "purchases of services ".7 
Specifically , the Panel failed to base its findings in the evidence, failed to engage with EU 
evidence and arguments, disregarded key evidence, and failed to provide coherent reasoning 
or adequate explanatio ns in support of its findings.  
8. The European Union provided ev idence that the DOD procurement contracts share all of the 
relevant characteristics of the National Aeronautics and Space Administration ( "NASA ") 
procurement contracts and DOD assistance instruments that led the Appellate Body to 
conclude that those measur es involved financial contributions to Boeing.8 In particular, the 
European Union demonstrated that, like NASA procurement contracts and DOD assistance 
instruments, DOD procurement contracts are collaborative research arrangements "akin to 
a species of joi nt venture ", as: (i) both parties commit resources; (ii) the parties share the 
fruits of their research; and (iii) the subjects to be researched are often determined 
collaboratively.9 Further, the European Union explained that these joint venture 
arrangeme nts provide funding analogous to equity infusions, as it was uncontested that: 
(i) funding is provided in expectation of some kind of return; (ii) there is no certainty that 
the research will be successful;10 (iii) the funder 's risks are limited to the amou nt of money 
committed and the opportunity cost of other support provided; and (iv) the funder 
contributes by providing access to facilities, equipment, and employees (like some, but not 
all, equity investors).  
9. The Panel 's factual findings regarding the ope ration of DOD procurement contracts (namely, 
that the contracts are not akin to a species of joint venture) are contradicted by the evidence. 
The European Union provided critically important evidence related to: (i) Boeing 's 
contribution of its background intellectual property ( "IP"), including IP resulting from 
non-reimbursed Independent Research and Development ( "IR&D") spending; (ii) Boeing 's 
ability to share in the rewards of the R&D conducted under DOD procurement contracts 
(despite export control rule s), including in both its LCA and military business; and (iii) the 
collaborative nature and purpose of  the DOD procurement contracts.  
10. As evidence that DOD procurement contracts can lead to technologies with civil applications, 
and, thus, that Boeing can sh are in the rewards, the European Union identified numerous 
exemplary DOD -funded Boeing patents (drafted by Boeing 's engineers and patent attorneys) 
that explicitly indicate, on the face of the patents themselves, the potential LCA -related 
applications. As evidence that the United States intends for, and encourages, DOD 
contractors to extract commercial benefit from their work under the RDT&E PEs, the 
European Union referenced undisputed evidence that the DOD decided to terminate its 
previous recoupment poli cy in favour of "assist{ing} the U.S. defense industry to be more 
competitive on a global basis ".11 
11. The Panel 's imbalanced treatment of EU evidence, including its outright failure to 
acknowledge or engage with EU arguments and critical evidence, led the Pan el to conclude 
that the DOD procurement contracts are not akin to a species of joint venture in which DOD 
provides a direct transfer of funds analogous to an equity infusion. Properly assessed, the 
evidence would have compelled the finding that the DOD pro curement contracts establish a 
joint-venture -type relationship in which DOD provides financial contributions to Boeing akin 
to an equity infusion under Article 1.1(a)(1)(i), and in which DOD also provides Boeing with 
goods and services under Article 1.1(a )(1)(iii) of the SCM Agreement . 
12. Second , in assessing benefit under Article 1.1(b), the Panel failed, under Article 11 of the 
DSU, to make an objective assessment of the matter, including the facts, when finding, in 
the alternative, that the distribution of IP rights pursuant to the DOD procurement contracts 
                                                
7 Panel Report, paras. 8.354 -8.378.  
8 Panel Report, paras. 8.320, 8.356.  
9 Panel Report, para. 8.321.  
10 In this context, "success" is understoo d to mean "whether any inventions are discovered and the 
usefulness of the data collected, as well as the scientific and technical information produced". Appellate Body 
Report, US – Large Civil Aircraft , para. 623.  
11 EU FWS, para. 241,  quoting Final Rule, Recoupment of Nonrecurring Costs on Sales of US Items, 
58 FR 16497, 29 March 1993 (exhibit EU -279).  See also EU SWS, para. 396; EU Response to Panel 
Question  29, para. 176.  WT/DS353/AB/R W/Add.1  
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does not confer a benefit on Boeing.12 The Panel based its alternative benef it finding on the 
same factual findings that led it to characterise the provision of funding and support, under 
DOD procurement contracts, as involving purchases of services. In the benefit context, the 
Panel thus failed to make an objective assessment of the matter, including the facts, for the 
same reasons as it also failed in the financial contribution context.  
13. Under DOD procurement contracts (and US government contracts generally), Boeing 
receives the IP rights to any technologies developed by Boeing em ployees in the course of 
conducting R&D, whi le DOD receives a limited licens e to use these technologies without 
having to pay royalties to Boeing. The European Union argued that this distribution of IP 
rights confers a benefit on Boeing, as it is more favo urable to Boeing as a commissioned 
party than to any other commissioned party on the market, and less favourable to DOD as 
a commissioning party than to any other commissioning party on the market. In considering 
this argument (in the alternative), the Pan el failed to com ply with Article 11 of the DSU.  
14. In particular, the Panel failed to take into account EU evidence that, notwithstanding any 
stated "military " objectives of the DOD RDT&E PEs pursuant to which the DOD procurement 
contracts are funded, DOD int ends for contractors such as Boeing to extract commercial  
benefit from their work under the RDT&E PEs, and DOD and Boeing 's interes ts are aligned 
in this regard.  
15. Further, the Panel considered that the license DOD receives to use technologies developed 
by Boeing captures the full economic value of the R&D. However, the Panel failed to engage 
with, and indeed disregarded, evidence that (1) in the military context, Boeing sells military 
aircraft to foreign governments; and (2) outside the military context, leg al restrictions on 
the use of military technologies do not prevent Boeing from applying to LCA the processes, 
expertise, and derivative technologies developed under DOD procurement contracts.  
16. As a result of the Panel 's failure to follow the requirements in  Article 11 of the DSU, the 
European Union requests the Appellate Body to reverse the Panel 's findings and complete 
the legal analysis to determine that the funding, and access to facilities, equipment, and 
employees, that DOD provides to Boeing pursuant t o DOD procurement contracts, are 
specific subsidies within the meaning of Articles 1.1(a)(1), 1.1(b), and 2.1(a) of the 
SCM Agreemen t. The European Union additionally requests the Appellate Body to consider 
this subsidy in its completion of the analysis of  technology effects and price effects.  
III.  THE PANEL ERRED IN F INDING THAT THE UNIT ED STATES HAS WITHDR AWN THE 
FSC/ETI TAX SUBSIDIE S  
17. The European Union appeals the Panel 's finding that the United States does not continue to 
grant or maintain the tax con cession subsidies provided pursuant to the Foreign Sales 
Corporation/Extraterritorial Income ( "FSC/ETI ") legislation and successor acts.13 The Panel 
erred in the interpretation of Article 1.1(a)(1)(ii) of the SCM Agreement ,14 when finding that, 
in order to d emonstrate the foregoing of revenue otherwise due, the European Union was 
required to establish that the FSC/ETI benefits were actually used by a particular subsidy 
recipient after 2006.15 This reflects an error in the interpretation of the phrase "governme nt 
revenue that is otherwise due is foregone ", which concerns the foregoing of an entitlement  
to government revenue, irrespective of whether that entitlement is actually exercised by the 
recipient.16 
18. The original panel found, and the U nited States did not a ppeal, that from 1989 -2006, the 
United States provided $2.199 billion in actionable and prohibited subsidies to Boeing 
                                                
12 Panel Report, paras. 8.421 -8.436.  
13 Panel Report, paras. 8.596 -8.612.  
14 The Europ ean Union notes that the Panel properly referred to Article 1.1 of the SCM Agreement  to 
determine, under Article 7.8 of the SCM Agreement , whether the subsidy continues to exist in the 
post-implementation period.  The European Union, therefore, considers that the error in the interpretation of 
Article 1.1 identified in this section also involves an error in the interpretation of Article 7.8 .  
15 Panel Report, paras. 8.596 -8.601.  
16 See Appellate Body Report, US – FSC, para. 90; Panel Report, US – Tax Incentives , paras. 7.44 -7.55.  WT/DS353/AB/R W/Add.1  
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through tax exemptions under FSC/ETI legislation and successor acts.17 The European  Union 
provided evidence that FSC/ETI tax concessions, with respect to certain foreign income 
recognised after 2006, continued to be available to Boeing. In particular, the European Union 
cited the US Government 's own interpretation, in a 2006 Internal Revenue Service ( "IRS") 
memorandum ( "2006 IRS Memorandum "), of the effect of the most recent FSC/ETI 
successor act, the Tax Increase Prevention and Reconciliation Act of 2005 ("TIPRA ") – 
namely, that certain transactions continue to be eligible for FSC/ETI tax concessions after 
2006. The United States  confirmed that the TIPRA has not been superseded by any further 
IRS guidance, and did not contest the European Union 's description of the effect of the 2006 
IRS Memorandum. The European Union also provided evidence identifying Boeing income 
that is eligib le to receive FSC/ETI benefits after 2006.  
19. The Panel erred in the interpretation of Article 1.1(a)(1)(ii) of the SCM Agreement  in 
requiring the European Union to demonstrate that Boeing actually used the FSC/ETI tax 
concessions, and in not finding it suffi cient that the tax concessions remained available . The 
Panel 's interpretation is not supported by the ordinary meaning of Article 1.1(a)(1)(ii), in its 
context and in light of the object and purpose of the SCM Agreement . As the Appellate Body 
has explained , a proper assessment of whether "government revenue that is otherwise due 
is foregone " within the meaning of Article 1.1(a)(1)(ii) does not require consideration of 
whether, or how, the tax concession provided to the recipient is used by an individual 
recipient, but a comparison between what the challenged tax treatment provides and what 
the baseline tax treatment provides. Actual revenue itself need not have been foregone; 
rather it is the government 's entitlement to collect revenue otherwise due, either now or in 
the future, that is foregone.18 
20. Based on a proper interpretation of Article 1.1(a)(1)(ii), the Panel should have found that 
the FSC/ETI measures provide financial contributions to Boeing in the form of the foregoing 
by the US Government of revenue  otherwise due.  
21. For the reasons detailed above, the Panel erred in the interpretation of Article 1.1(a)(1)(ii). 
As a result, the Panel also erred in the interpretation of Article 7.8 of the SCM Agreement . 
The European Union requests the Appellate Body to reverse the Panel 's findings and 
complete the analysis to determine that the United States continues to grant or maintain 
prohibited FSC/ETI subsidies, such that the subsidies have not been withdrawn within the 
meaning of Article 7.8 of the SCM Agreement . 
IV.  THE PANEL ER RED IN FINDING THAT THE WICHITA INDUSTRI AL REVENUE BOND 
SUBSIDIES ARE NOT SP ECIFIC  
22. The European Union appeals the Panel 's finding that the City of Wichita 's Industrial Revenue 
Bond ( "IRB") subsidy programme is no longer de facto  specific , within the meanin g of 
Article  2.1(c) of the SCM Agreement , on the basis that the Panel erred in the interpretation 
and application of that provision, and failed to make an objective assessment of the matter 
under Article 11 of the DSU.19 
23. IRBs are issued by cities and counti es in the State of Kansas, on behalf of private entities 
aiming to raise revenue to fund the purchase, construction, or improvement of industrial and 
commercial property. While IRBs are generally purchased by the public, Boeing has 
purchased for itself IRB s issued by the City of Wichita. Boeing then receives property and 
sales tax exemptions on property associated with the IRBs for a period of 10 years. The City 
of Wichita also issues IRBs to Spirit Aerosystems ( "Spirit "), which purchased Boeing 's Wichita 
LCA facilities in 2005. Over the life of the IRB subsidy programme, from 1979 to 2012, 
                                                
17 Panel Report, para. 8.568, citing Panel Report, US – Large Civil Aircraft , para. 7.1429.  
18 See Appellate Body Report, US – FSC, para. 90; Panel Report, US – Tax Incentives , paras. 7.44 -7.55. 
19 Panel Report, paras. 8.634 -8.638. The Panel properly referred to Article 2.1(c) of the SCM Agreement  
to determine, under Article 7.8 of the SCM Agreement , whether the subsidy has been withdrawn or instead, 
whether the subsidy continues to exist in the post -implementation period.  The European  Union, therefore, 
considers that the errors in the interpretation and application of Article 2.1(c) identified in this section also 
involve errors in the interpretation and application of Article 7.8 . WT/DS353/AB/R W/Add.1  
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Boeing and Spirit received 59% of the total amount of IRBs issued by the City of Wichita 
(which serves as a proxy for the percentage of tax abatement granted20). 
24. While the  Panel properly found that the City of Wichita continues to provide subsidies to 
Boeing through tax benefits deriving from IRBs, it erroneously concluded that those subsidies 
are no longer de facto  "specific " within the meaning of Article 2.1(c).21 In so finding, the 
Panel erred in the interpretation and application of Article 2.1(c), and failed to make an 
objective assessment of the matter under Article 11 of the DSU.  
25. First, the Panel 's interpretation of the term "disproportionately large " is unsup ported by the 
text of Article 2.1(c), considered in its context, and in light of the object and purpose of the 
SCM Agreement . Specifically, the Panel erred when it failed to follow the requirement, found 
in Article 2.1(c) itself,  that "account shall be tak en . . . of the length of time during which 
the subsidy programme has been in operation " (i.e., 1979 onwards), when adjudging 
whether certain enterprises (namely, Boeing and Spirit) had received "disproportionately 
large amounts of the subsidy ". 
26. Instead, a nd without legal basis, the Panel limited its assessment of disproportionality of 
Wichita 's IRB subsidy programme to the period of time "after the end of the implementation 
period " (i.e., 2013 onwards).22 Based on this shortened period, the Panel found that  Boeing 
and Spirit received 32% of the amount of IRBs issued, which it did not consider to be 
"disproportionately large ". A proper interpretation of Article 2.1(c) would have led the Panel 
to conclude that the relevant period over which to assess dispropor tionality is the entire 
period of the IRB programme 's existence, beginning in 1979. Over that period, Boeing and 
Spirit received 59% of the amount of IRBs issued, which the Panel should have found to be 
"disproportionately large ", in line with the findings  of the original  panel and the 
Appellate  Body.  
27. Second , the Panel erred in the application of Article 2.1(c). Namely, the Panel assessed 
specificity based on facts restricted to "after the end of the implementation period ", and 
failed to consider data for t he entire duration of the subsidy programme, as required by 
Article 2.1(c).  
28. Finally , the Panel failed to make an objective assessment of the matter before it, in violation 
of Article 11 of the DSU, when it inappropriately deviated from the approach taken b y the 
panel and the Appellate Body in the original proceedings. Both the original panel and the 
Appellate Body assessed disproportionality with reference to the entire period during which 
the IRB subsidy programme had been in operation, then 1979 through 2 005. The 
Appellate  Body concluded that the IRB programme was specific, as 69% of IRBs had been 
granted to Boeing and Spirit during that time, which  was disproportionately large.  
29. The original panel indicated that only two circumstances would justify a devia tion from the 
general rule that specificity is to be assessed with reference to the life of the subsidy 
programme. First, where a subsidy programme has been in operation for a short period of 
time, it may be too early to draw conclusions regarding specific ity. Second, where a subsidy 
programme has been in operation for a long period of time, and there has been a change in 
the structure of the economy and the importance of the subsidised activity in the economy, 
reference to the period following the change m ight be more appropriate. The Panel, despite 
the United States ' arguments to the contrary, did not find that there had been a significant 
change to the structure of the Wichita economy and the importance of the subsidised activity. 
(And the IRB subsidy pro gramme had not been in operation for only a short time.) 
Accordingly, in limiting its assessment to the post-implementation period, the Panel 
inappropriately, and without justification, deviated from the approach of the original panel 
and the Appellate Bod y. 
30. In sum, the Panel erred in the interpretation and application of Article 2.1(c) of the 
SCM Agreement , and, as a result, also erred in the interpretation and application of 
Article  7.8 of the SCM Agreement . The Panel also failed to satisfy the requiremen ts of Article 
                                                
20 Panel Report, para. 8.630.  
21 Panel Report,  paras. 8.634 -8.638.  
22 Panel Report, para. 8.634.  WT/DS353/AB/R W/Add.1  
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11 of the DSU. Based on these errors, the European Union requests the Appellate  Body to 
reverse the Panel 's findings, and complete the analysis to determine that the IRB subsidies 
continue to be specific under Article 2.1(c) of the SCM Agreement . 
V.  SOUTH CAROLINA MEASU RES 
31. The European Union appeals the Panel 's findings that two South Carolina subsidies are not 
specific: (A) South Carolina 's funding of Boeing facilities and infrastructure through economic 
development bonds ( "EDBs"); an d (B) South Carolina 's provision of additional corporate 
income tax credits to Boeing, as a result of the designation of Boeing property as being 
located in a multi -county industrial park ( "MCIP"). 
A. The Panel erred in finding that South Carolina 's fundin g of Project Gemini 
facilities and infrastructure, through EDBs, is not specific  
32. The European Union appeals the Panel 's finding that the $220 million subsidy provided by 
South Carolina to Boeing through EDBs is not "specific " within the meaning of Article 2.1(c) 
of the SCM Agreement .23 In reaching this conclusion, the Panel erred in the interpretation 
and application of Article 2.1(c),24 and failed to make an objective assessment of the 
undisputed evidence before it, in contraven tion of Article 11 of the DSU.  
33. As the Panel explained, the State of South Carolina provides Boeing with funding for facilities 
and infrastructure at the site of Boeing 's 787 final assembly and delivery facility, also known 
as the "Project Gemini " facility.25 This funding is generated fr om the sale of EDBs issued by 
the State, as well as through air hub bonds. Since the inception of the EDB subsidy 
programme in 2002, South Carolina had issued EDBs on behalf of only three private 
ventures, i.e., Boeing, BMW, and Boeing 's suppliers (the Pro ject Emerald companies).26 Over 
that time period, 79% of the bonds have been issued to support Boeing and its suppliers 
alone. Air hub bonds have been issued only to Boeing.  
34. In concluding that the issuance of EDBs to three private firms does not demonstrate  use of 
the subsidy programme by a limited number of certain enterprises, and that use of 79% of 
the subsidy by Boeing and its suppliers does not demonstrate predominant use, the Panel 
committed three principal error s. 
35. First, the Panel erred in the interpr etation of Article 2.1(c). The Panel implicitly interpreted 
the term "limited number " to mean fewer than three (even in the context of a large 
economy), when finding that the issuance of air hub bonds to only one company (Boeing) 
constitutes use by a limit ed number of certain enterprises, but that the issuance of EDBs to 
only three companies does not. This interpretation is not supported by the plain meaning of 
"limited number ", understood in its proper context.  
36. The Panel also misinterpreted the term "enterprises " to include public entities. Specifically, 
the Panel stated that the fact that EDBs have been issued to public entities (two cities and 
a public college) in addition to private entities suggests that the subsidy is not limited to 
certain enterp rises.27 However, Appellate Body guidance indicates that the term "certain 
enterprises " encompasses only private  entities. Thus, the Panel should not have factored 
EDB issuances to public entities into its analysis . 
37. Finally, the Panel erred in the interpret ation of the word "predominant ", when finding that 
"predominant " use involves a concept entirely different from "disproportionate " use, such 
that evidence that would be relevant to showing disproportionality could not be relevant to 
                                                
23 Panel Report, paras. 8.838 -8.841, 8.843.  
24 The Panel properly referred to Article 2.1(c) of the SCM Agreement  to determine, under Article 7.8 of 
the SCM Agreement , whether the subsidy has been withdrawn o r instead, whether the subsidy continues to 
exist in the post -implementation period.  The European Union, therefore, considers that the errors in the 
interpretation and application of Article 2.1(c) identified in this section also involve errors in the inte rpretation 
and application of Article 7.8.  
25 See Panel Report, para. 8.682(a); EU FWS, para. 552. 
26 Panel Report, para. 8.838.  
27 Panel Report, para. 8.841.  WT/DS353/AB/R W/Add.1  
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predominance. Nothing i n Article 2.1 indicates that evidence relevant to one de facto  
specificity factor is exclusive to that factor. The Panel therefore improperly dismissed key EU 
evidence as irrelevant, based on an erroneous interpretation of "predominant use ". 
38. Second , the Pa nel erred in the application of Article 2.1(c), by including EDBs issued to public 
entities, such as cities and public colleges, in its evaluation of whether the EDBs were, in 
fact, used by a limited number of enterprises. The fact that public entities may  have also 
received EDBs is immaterial to the specificity analysis, and should not have been factored 
in. Accordingly, in including public entities in its analysis, the Panel improperly applied 
Article  2.1(c).  
39. Third, in considering specificity under Articl e 2.1(c), the Panel failed to make an objective 
assessment of the level of diversification of the South Carolina economy, or the length of 
time that the subsidy programme has been in operation, in contravention of Article 11 of the 
DSU. Without a basis in the evidence, the Panel found that the European Union had not 
"addressed " these two factors, and failed to consider the evidence of record on these 
questions. In particular, the Panel had undisputed evidence before it of (i) a diverse economy 
in which many  companies operated, and (ii) the length of time that the authorising measure 
had ex isted, but failed to consider such evidence . Based on an objective assessment of the 
facts, taking into account this evidence, the Panel would have found that the provision  of 
EDBs to only three private entities constitutes use by a "limited number of certain 
enterprises ", and use of 79% of the subsidy by Boeing and its suppliers amounts to 
predominant use by certain enterprises.  
40. In sum, the Panel erred in the interpretation  and application of Article 2.1(c). As a result, 
the Panel also erred in the interpretation and application of Article 7.8 of the SCM Agreement . 
The Panel also failed to objectively evaluate the facts before it in line with Article 11 of the 
DSU. The Europ ean Union requests the Appellate Body to reverse the Panel 's erroneous 
findings and complete the legal analysis to conclude  that the EDB subsidies are specific within 
the meaning of Article 2.1(c).  
B. The Panel erred in finding that the subsidy provided through the multi -county 
industrial park job tax credits is not specific  
41. The European Union appeals the Panel 's finding that the subsidy provided to Boeing through 
the multi -county industrial park ( "MCIP") job tax credits is not "specific " within the meaning 
of Article 2.2 of the SCM Agreement .28 In particular, the European Union appeals this finding 
as it relates to the designation of the Project Gemini site in North Charleston, as part of an 
industrial park jointly established and developed by two distinct regional governments in 
South Carolina,  i.e., Charleston County and Colleton County.29 
42. As the Panel explained, South Carolina provides Boeing with corporate income tax credits as 
a result of the designation of Boeing 's Project Gemini site as part of an MCIP.30 These credits 
are above and beyond t he "traditional " annual job tax credits that South Carolina provides 
to certain qualifying businesses.31 The "additional " tax credits are available to taxpayers only 
if they are located in an MCIP  and also qualify for the traditional job tax credits.32 While  the 
Panel properly found that these MCIP job tax credits constitute a "subsidy ", it erred when 
finding that the subsidy is not specific, within the meaning of Article 2.2, because it is not 
"limited to certain enterprises located within a designated geogr aphical region ". 
43. First, the Panel erred in the application of Article 2.2, when finding that the limitation on 
access to the subsidy to enterprises located within an MCIP "cannot be meaningfully 
                                                
28 Panel Report, paras. 8.931, 8.933. The Panel properly referred to Article 2.2 of the SCM Agreement  to 
determine, under Article 7.8 of the SCM Agreement , whether the subsidy has been withdrawn or instead, 
whether the subsidy continues to exist in the post -implementation period.  The European Union, therefore, 
considers that the errors in the application of Article 2.2 identified in this section also involve errors in the 
application of Article 7.8 .  
29 Panel Report, para. 8.913.  
30 Panel Report, para. 8.913.  
31 Panel Report, para. 8.912. The European Union did not challenge this "traditional" annual jobs tax 
credit. Panel Report, para. 8.914 (footnote 2352).  
32 Panel Report, paras. 8.912 -8.913.  WT/DS353/AB/R W/Add.1  
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considered to amount to a limitation under Article 2.2 ".33 The Panel effectively found that 
just the possibility that a Member can amend or expand an MCIP in the future, through the 
passage of new legislation by local governments ( i.e., "ordinances "), provides sufficient 
reason to disregard the fact that, at the pres ent time , a subsidy is indisputably "limited to 
certain enterprises located within a designated geographical region within the jurisdiction of 
the granting authority ". Simply because a "designated geographical region " theoretically can 
be expanded through additional legislation, at some point in the future, does not change the 
fact that it is, based on the evidence of record, understood to be a "designated geographical 
region " at the time of the panel proceedings.  
44. Second , the Panel 's finding that the "MCIP designation is readily available upon request ", on 
which it based its conclusion that the MCIP tax credits are not regionally specific, lacks any 
basis in fact and is contrary to the undisputed evidence before the Panel. Indeed, the 
European Union provided  undisputed evidence that the MCIP designation requires affirmative 
legislative action by multiple counties, indicating that the designation is not so easily 
"available ". In concluding that the MCIP designation is "readily available ", the Panel failed to 
cite to any evidence. The Panel thus failed to make an objective assessment of the matter, 
including the facts, in violation of Article 11 of the DSU.  
45. In sum, the Panel erred in the application of Article 2.2. As a result, the Panel also erred in 
the applic ation of Article 7.8 of the SCM Agreement . Further, the Panel failed to objectively 
assess the facts , as required by Article 11 of the DSU. Consequently, the European Union 
requests the Appellate Body to reverse the Panel 's erroneous findings, and to compl ete the 
analysis, to find that the MCIP job tax credits constitute a specific subsidy within the meaning 
of Article 2.2.  
VI.  THE PANEL ERRED IN I TS FINDINGS REGARDIN G LOST SALES AND PRI CE 
SUPPRESSION OF SALES  CAMPAIGNS FOR WHICH  THE FINAL DELIVERY HAD NOT 
YET OCCURRED BY THE END OF THE IMPLEMENT ATION PERIOD  
46. The European Union appeals the Panel 's failure to find present  adverse effects on the basis 
of (i) sales that occurred prior to the end of the implementa tion period, but for which 
(ii) delivery was s till pending at the end of the implementation period.34 The Panel, thereby, 
erred in the interpretation and application of Article 7.8 of the SCM Agreement , and failed to 
make an objective assessment of the matter, under Article 11 of the DSU.  
47. In the origin al proceedings, the panel  found that the phenomena of "lost sale " and "price 
suppression " do not begin and end at the time the aircraft is ordered, but rather begin at 
the time of order and continue until the final aircraft is delivered.35 It follows from t his finding 
that, for price -suppressed sales, or any lost sale, for which there remain outstanding 
deliveries of aircraft at the end of the implementation period, present  adverse effects exist 
in the post -implementation period when  the subsidy that caused the adverse effects has not 
been withdrawn. For any such present adverse effects, the responding Member has failed to 
achieve compliance under Articl e 7.8.  
48. However, the Panel disagreed, finding instead that this factual circumstance does not involve 
presen t adverse effect for the purposes of Article 7.8.36 For the Panel, this factual 
circumstance constitutes "continuing manifestations or effects of past adverse effects ".37 
A. The Panel erred in interpreting Article 7.8  
49. The Panel erroneously narrowed the scop e of Article 7.8 by excluding any adverse effects 
"found  in relation to specific transactions during the original reference period " from the 
                                                
33 Panel Report, para. 8.931.  
34 The European Union requests the Appellate Body to reverse the Panel's findings at 
paragraphs  9.307 -9.314.  
35 EU FWS, paras. 1226, 1335, citing Panel Report, EC – Large Civil Aircraft , para. 7.1685.  
36 Panel Report, para. 9.107.  
37 Panel Report, para. 9.314.  WT/DS353/AB/R W/Add.1  
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obligation to take steps to remove adverse effects.38 The Panel 's interpretation does not flow 
from the proper appli cation of the Vienna Convention  rules on treaty interpretation.  
50. First, the text of Article 7.8 does not support the Panel 's interpretation. Adverse effects found 
in relation to specific transactions during the original reference period are not excluded fro m 
the obligation "to take appropriate steps to remove the adverse effects ".39 Instead, 
Article  7.8 states that "the Member granting or maintaining such subsidy " – which refers to 
"any subsidy that has resulted in adverse effects ", as determ ined in the original 
proceeding  – must take appropriate steps to remove "the adverse effects ", or withdraw the 
subsidy.40 
51. Second , the context of Article 7.8 shows the erroneous nature of the Panel 's interpretation. 
Specifically, Articles 7.9 and 7.10 of the SCM Agreeme nt provide that, in case of 
non-compliance, any countermeasures must be "commensurate with the degree and nature 
of the adverse effects determined to exist ".41 This provision "sends the treaty interpreter 
back to the precise findings on adverse effects made  by the panels and the Appellate Body ".42 
Thus, these adverse effects include specific transactions on which the original adverse effects 
findings were based, and that continue to exist. If these adverse effects must be taken into 
account to calculate the a mount of countermeasures in case of non -compliance, they must 
logically also fall within the scope of the respondent 's obligations under Article 7.8.  
52. Third, the Panel 's interpretation is also not supported by the object and purpose of the 
SCM Agreement , as it fails to provide appropriate remedies for an actionable subsidy, parallel 
to those available in the case of measures found to be inconsistent with other provisions of 
the covered agreements. Under the Panel 's interpretation, as regards a WTO -inconsiste nt 
actionable subsidy that is still maintained, no compliance obligation exists with respect to 
"original " adverse effects that are still pres ent. 
53. In developing its interpretation of Article 7.8, the Panel did not apply the Vienna  Convention  
rules of treat y interpretation. Instead, the Panel chose its interpretation because it expressed 
certain concerns with the interpretation advanced by the European  Union.43 However, the 
Panel 's concerns do not justify deviating from a proper interpretation  derived from a 
Vienna  Convention  analysis. Moreover, the Panel 's concerns are unwarranted.  
54. Specifically, the Panel found the interpretation put forward by the European Union "difficult 
to reconcile with the prospective  interpretation of Article 7.8 " and "not meaningful in a 
practical sense ".44 However, to the extent adverse effects continue after the end of the 
implementation period, requiring a respondent to take appropriate steps to remove those 
effects does not involv e imposing a retrospective remedy. Moreover, a complainant cannot 
be faulted for practical difficulties that may arise for a respondent tasked with taking 
appropriate steps to achieve compliance. As the Appellate Body has explained, "a WTO 
Member 's domesti c law does not excuse that Member from fulfilling its international 
obligations ".45 
B. The Panel erred in the application of Article 7.8 and failed to make an 
objective assessment pursuant to Article 11 of the DSU  
55. The Panel also erred in finding that new lo st sales – i.e., sales that had occurred after the 
end of the original  2004-2006 reference period – cannot constitute "present " adverse effects 
under Article 7.8 of the SCM Agreement , even where deliveries under those sales are still 
outstanding at the end  of the implementation period. The Panel, thereby, erred in the 
                                                
38 Panel Report, para. 9.312.  
39 Panel Report, para. 9.312.  
40 Emphasis added.  
41 Emphasis added.  
42 Decision by the Arbitrator, US – Upland Cotton (Article 22.6 – US II) , paras. 4.49 -4.50. 
43 Panel Report, paras. 9.313 -9.316.  
44 Panel Report, paras. 9.314 -9.316.  
45 Appellate Body Report, Brazil – Aircraft (Article 21.5 – Canada) , para. 46.  WT/DS353/AB/R W/Add.1  
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application of Article 7.8, and failed to make an objective assessment of the matter, under 
Article 11 of the DSU.  
56. First, in applying Article 6.3 of the SCM Agreement  to the facts of the LCA m arkets, the Panel 
erroneously found that lost sales and price suppression begin and end at the time at which 
an LCA is ordered, and do not continue until the final aircraft is delivered.46 However, as the 
original panel and Appellate Body found, the specifi c treaty terms in Article 6.3, particularly 
the term "sale" (and, by extension, price effects), must be understood as capturing the life 
of the contract as a whole. Thus, if the contract continues to exist (uncompleted) after the 
end of the implementation period, by definition the adverse effects must also continue to 
exist. This means that adverse effects are "present ", for the purpose of Article 7.8 , 
throughout the life of the contract.  
57. Second , the Panel failed to make an objective assessment, under Artic le 11 of the DSU. The 
original panel found that "price suppression and lost sales … exist from the time an order for 
LCA is made, up to and including its delivery ".47 Without identifying any change in the 
characteristics of LCA sales, the compliance Panel deviated from this finding, by concluding 
that lost sales and price suppression do not continue until final delivery.48 The Panel, 
therefore, inappropriately deviated from the original panel 's finding "in the absence of any 
change in the underlying evidence in the record ".49 
VII.  THE PANEL ERRED IN T HE INTERPRETATION OF  ARTICLES 5, 6.3, AN D 7.8 OF THE 
SCM AGREEMENT , IN FINDING THAT CE RTAIN FORMS (OR INDI CIA) OF ADVERSE 
EFFECTS CAN BE FOUND  ONLY WHEN THE SUBSI DISED PRODUCT AND TH E 
AFFECTED PRODUCT ARE  IN THE SAME PRODUCT  MARKET  
58. The European Union agrees with, and consequently does not appeal, the Panel 's identification 
of the legal standard for delineating product markets  – specifically, that two products are to 
be placed into the same market where they exercise "meaningful competitive constraints " 
on one another. The European Union does, however, appeal a related legal interpretation . 
Specifically, the European Union appe als the Panel's interpretation of Articles 5 and 6.3 of 
the SCM Agreement  as requiring that, with respect to significant price suppression, price 
depression , or lost sales, "a subsidized product can only cause serious prejudice to another 
product if the tw o products in question compete in the same market ".50 
59. The Panel 's finding constitutes error in the interpretation of Articles 5 and 6.3. Additionally, 
given that the question before the Panel was whether the United States has "take{n} 
appropriate steps to remove the adverse effects ", under Article 7.8 of the SCM Agreem ent, 
the Panel 's error also constitutes error in the interpretation of that provision.  
60. In reaching this erroneous interpretation, the Panel purported to rely on guidance from the 
Appellate Body in EC – Large Civil Aircraft .51 However, the referenced Appella te Body  
statement, on its own terms, is limited  to displacement under Articles 6.3(a) and (b), and 
does not apply, in particular, to significant price suppression, price depression, or lost sales 
under Article 6.3(c).  
61. Proper application of the Vienna Conve ntion rules on treaty interpretation confirms that 
serious prejudice in the form of significant price suppression, price depression , and lost sales 
(but not in the form of displacement, impedance , or significant price undercutting) may 
manifest  in groups o f products that fall "in the same market ", even when the subsidised  
product is not placed in that same market. That is, whether or not  a subsidy causes adverse 
effects in these circumstances is a question to be assessed based on the evidence  on subsidy 
                                                
46 Panel Report, paras. 9.307 -9.314, 9.332, 9.403 (footnotes 3323, 3329, 3335), 9.407.  
47 Panel Report, US – Large Civil Aircraft , paras. 7.1685 -7.1686.  
48 Panel Report, US – Large  Civil Aircraft , paras. 9.312, 9.316.  
49 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 103.  
50 Panel Report, para. 9.33.  
51 Panel Report, para. 9.24 (footnote 2682), citing  Appellate Body Report, EC – Large Civil Aircraft , 
para. 1119.  WT/DS353/AB/R W/Add.1  
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/ attribution and non -subsidy / non -attribution factors, and whether this evidence  reveal s 
that the subsidy is a genuine and substantial cause  of the asserted adverse effects.  
62. The European Union derives this interpretation from the ordinary meaning of the terms "the 
effect of the subsidy is … significant price suppression … in the same market ", "the effect of 
the subsidy is … significant … price depression … in the same market ", and "the effect of the 
subsidy  is … significant … lost sales in the same market ". This interpretation is corroborated 
by contextual support afforded by Articles 5, 6.4 , and 6.5 of the SCM Agreement  and 
Article  XVI:1 of GATT 1994.  
63. The Panel 's erroneous interpretation frustrates the object and purpose of the 
SCM Agreement  by artificially limiting the scope of the adverse effects disciplines in Articles  5 
and 6.3(c). In a range of circumstances, the Panel 's interpretatio n prevents recourse against 
subsidies that cause adverse effects, even when a complainant is able to demonstrate such 
adverse effects, and a genuine and substantial causal link to the subsidies, based on 
evidence. To take one particularly troubling example  of such a situation, the Panel 's 
interpretation prevents recourse against those subsidies t hat distort the market the 
most – subsidies that distort the market in favour of the subsidised product to such a degree 
that the complainant 's product is no longer  able to exercise meaningful competitive 
constraints on the subsidised product.  
64. A proper interpretation of Articles 5 and 6.3 avoids this result, by requiring that a panel 
assess the evidence  on subsidy / attribution and non -subsidy / non -attribution facto rs to 
determine whether the subsidy is a genuine and substantial cause  of the asserted adverse 
effects. As a result of the Panel 's errors in the interpretation of Articles 5 and 6.3, the Panel 
also erred in the interpretation of Article 7.8.  
VIII.  THE PAN EL ERRED IN THE INTE RPRETATION OF ARTICL ES 5, 6.3, AND 7.8 O F THE 
SCM AGREEMENT , WITH RESPECT TO TH E COLLECTIVE ASSESSM ENT OF THE 
EFFECTS OF ALL SUBSI DIES AT ISSUE  
65. The Panel erred in the interpretation of Articles 5 and 6.3 of the SCM Agreement  in identify ing 
"aggregation " and "cumulation " as the only two permissible approaches to collectively 
assessing the effects of multiple subsidies.52 Limiting the analytical tools available to panels 
in their collective assessment of the effects of multiple subsidies is  inconsistent with the text 
of Articles 5 and 6.3, and artificially restricts the effectiveness of the adverse effects 
disciplines under the SCM Agreement . 
66. To recall, panels and the Appellate Body have previously relied upon "aggregation " and 
"cumulation " as two helpful analytical tools that panels may employ in assessing the 
existence of the requisite causal link between multiple subsidies and the alleged ad verse 
effects. "Aggregation " allows a panel to assess the effects of a group of subsidies, as if they 
were a single subsidy, provided that the subsidies at issue share sufficient similarities, in 
terms of their design, structure, and operation.53 "Cumulatio n" applies when at least one of 
the subsidies at issue, or an aggregated group of subsidies, has already been demonstrated 
to be a "genuine and substantial cause " of adverse effects (the "anchor subsidy "); in those 
circumstances, other subsidies may be inc luded in the scope of the adverse effects findings, 
provided they are found to be a genuine cause that supplements and complements the 
effects of the anchor subsidy.54 
67. When endorsing the use of these two analytical tools, the Appellate Body was careful not to 
define an exhaustive list of analytical tools that panels may use for the collective assessment 
of the effects of multiple subsidies. Instead, the Appellate Body clarified that "aggregation " 
                                                
52 The European Union notes that the Panel properly referred to Articles 5 and 6.3 of the 
SCM Agreement  to determine, under Article 7.8 of the SCM Agreement , whether adverse effects had been 
removed, or instead, whether adverse effects continued to arise in the post -implementation period. The 
European Union, therefore, considers that the errors in the interpretation of Articles 5 and 6.3 of the 
SCM Agreement identified in this section also involve errors in the interpretation of Article 7.8 of the 
SCM Agreement . 
53 Appellate Body Report, US – Large Civil Aircraft , para. 1285.  
54 Appellate Body Report, US – Large Civil Aircraft , para. 1292.  WT/DS353/AB/R W/Add.1  
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and "cumulation " are among "at least  two approaches to a colle ctive assessment of the 
effects of multiple subsidy measures {that} may be used ".55 
68. The ordinary meaning of the terms in Articles 5 and 6.3, in their context and in the light of 
the object and purpose of the SCM Agreement , supports the view that a panel sho uld 
undertake a collective assessment of the effects of all the subsidies at issue. Nothing in the 
terms of these provisions, their context, or the object and purpose of the SCM Agreement , 
suggests that a panel 's duty to perform a collective assessment of the effects of multiple 
subsidies applies only in situations where the analytical tools of "aggregation " and 
"cumulation " are available. In fact, the Appellate Body was cautious to use the terms "at 
least" in introducing "aggregation " and "cumulation " as permissible analytical tools, 
indicating that the Appellate Body did not intend to define an exhaustive list of analytical 
tools to be used for the collective assessment of the effects of multiple subsidies. The 
fundamental thrust of the Appellate Body 's guidance in this regard is that the adjudicator 
"must take care not to segment  unduly its analysis such that, when confronted with multiple 
subsidy measures, it considers the effects of each on an individual basis only and, as a result 
of such an atomized ap proach , finds that no subsidy is a substantial cause of the relevant 
adverse effects ".56 
69. Limiting the analytical tools available to assist in the collective assessment of the effects of 
multiple subsidies artificially restricts the effectiveness of the adverse effects disciplines 
under the SCM Agreement . For example, to reach a finding that su bsidies cause adverse 
effects, within the meaning of Articles 5 and 6.3, both "aggregation " and "cumulation " 
require that at least one subsidy (or one aggregated group of subsidies) should be found to 
be a "genuine and substantial " cause of adverse effects  ("anchor subsidy "). The Panel 's 
interpretation would preclude an adjudicator from finding adverse effects in circumstances 
where a number of subsidies (or aggregated groups of subsidies) collectively constitute a 
"genuine and substantial " cause of adverse  effects, but where, on its own, each subsidy (or 
aggregated group of subsidies) constitutes only a "genuine ", but not a "substantial ", cause 
of adverse effects.  
70. The Panel 's restrictive interpretation artificially precludes panels from finding adverse effe cts 
that do, in fact, exist. In other words, the Panel 's interpretation results in the very "atomized 
approach ", and undue segmentation of the analysis, that the Appellate Body cautioned must 
not be adopted, when it set out its guidance on the requirement for a collective assessment 
of the effects of challenged subsidies.57 
71. In sum, the Panel erred in the interpretation of Articles 5 and 6.3. As a result, the Panel also 
erred in the interpretation of Article 7.8 of the SCM Agreement . 
IX.  THE PANEL ERRED IN T HE INTERPRETATION OF  ARTICLES 5, 6.3, AN D 7.8 OF THE 
SCM AGREEMENT  WHEN FINDING THAT T HE SUBSIDIES MUST BE  THE SOLE CAUSE 
OF A LOST SALE  
72. The Panel erred in the interpretation of Articles 5 and 6.3 of the SCM Agreement  when 
identifying the applicable causat ion standard for assessing whether the subsidies at issue 
caused "significant lost sales ", within the meaning of Article 6.3(c).58 
73. Specifically, the Panel held that, to find that the subsidies at issue cause significant lost 
sales, there must be  "no non -price factors  that explain Boeing 's success in obtaining the 
                                                
55 Appellate Body Repor t, US – Large Civil Aircraft , para. 1290 (emphasis added).  
56 Appellate Body Report, US – Large Civil Aircraft , para. 1284 (emphases added).  
57 Appellate Body Report, US – Large Civil Aircraft , para. 1284.  
58 The European Union notes that the Panel properly r eferred to Articles 5 and 6.3 of the 
SCM Agreement  to determine, under Article 7.8 of the SCM Agreement , whether adverse effects had been 
removed, or instead, whether adverse effects continued to arise in the post -implementation period. The 
European Union,  therefore, considers that the errors in the interpretation of Articles 5 and 6.3 of the 
SCM Agreement identified in this section also involve errors in the interpretation of Article 7.8 of the 
SCM Agreement . WT/DS353/AB/R W/Add.1  
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sale".59 In other words, for the Panel, a lost sales finding, within the meaning of 
Article  6.3(c), requires that there are no non-subsidy / non -attribution factors that contribute  
to Boeing 's succes s in obtaining a sale.60 
74. The Panel adopted this legal standard without an interpretative analysis. Instead, the Panel 
opted to apply an approach that the Appellate Body had applied in the original proceedings 
for the limited purpose of completing the legal analysis  for lost sales , when faced with critical 
limitations in the undisputed facts and factual findings at its disposal.61 In so doing, the Panel 
opted not to apply the proper legal standard for a panel's assessment  of the existence of 
significant lost sales, as also set out by the Appellate Body in the original proceedings.62 
75. The Panel 's interpretive error led it to identify the wrong standard for assessing causation 
under Article 6.3(c). As the Appellate Body has co nsistently held, a finding of "causation " 
requires panels to assess whether there is "a genuine and substantial relationship of cause 
and effect " between the subsidies at issue and the adverse effects.63 Indeed, the 
Appellate  Body specifically emphasised th at "a panel need not determine {the subsidy} to 
be the sole cause of that effect, or even that it is the only substantial cause of that effect ".64 
In other words, the causation standard under Articles 5 and 6.3 does not require that the 
subsidies at issue b e the sole cause, or even the only substantial cause, of adverse effects, 
including significant lost sales. Instead, the subsidies must be a "genuine and substantial " 
cause of the adverse effects at issue. The Appellate Body 's approach in the specific 
circumstances of completing the legal analysis did not modify or contradict this long -standing 
and well -accepted standard for assessing  causation.65 
76. In sum, the Panel erred in the interpretation of Articles 5 and 6.3. As a result, the Panel also 
erred in the in terpretation of Article 7.8 of the SCM Agreement . 
X.  THE PANEL ERRED WHEN  FAILING TO FIND "PRICE EFFECTS " FROM THE UNTIED 
SUBSIDIES  
77. The European Union appeals additional Panel  errors in the interpretation and application of 
Articles 5 and 6.3 of the SCM A greement .66 These errors arise from the failure to find that 
the untied state and local cash flow subsidies ( i.e., those that are not tied to the production 
                                                
59 Panel Report, paras. 9.242, 9.243, 9.379, 9.3 80, 9.383, 9.426, 9.446 (emphasis added). The Panel 
used the phrase "no non -price factors" interchangeably with the phrase "no other non -price factors", which the 
European Union understands to mean "no factors other than subsidy affected pricing". See, e.g., Panel Report, 
paras. 9.240, 9.241, 9.246, 9.250, 9.292, 9.293, 9.458, 9.477 (footnote 3433).  
60 See, e.g., Panel Report, paras. 9.240 -9.243, 9.246, 9.250, 9.292, 9.293, 9.379 -9.380, 9.383, 9.426, 
9.446, 9.477 (footnote 3433).  
61 Panel Report, para. 9.242. See also  Appellate Body Report, US – Large Civil Aircraft , 
paras.  1261-1265.  
62 Appellate Body Report, US – Large Civil Aircraft , paras. 913 -914. See Id. , paras. 984, 1206.  
63 Appellate Body Report, US – Large Civil Aircraft , para s. 913, 913 (footnote 1864), referring to, 
inter alia, Appellate Body Report, US – Upland Cotton , para. 438; Appellate Body Report, US – Upland Cotton 
(Article 21.5 – Brazil) , para. 374; Appellate Body Report, EC – Large Civil Aircraft , para. 1232.  
64 Appellate Body Report, US – Large Civil Aircraft , para. 914 (emphasis in original). See Id. , paras. 984, 
1206.  
65 See Appellate Body Report, US – Large Civil Aircraft , paras. 1261 -1265.  
66 The European Union notes that the Panel properly referred to Article s 5 and 6.3 of the 
SCM Agreement  to determine, under Article 7.8 of the SCM Agreement , whether adverse effects had been 
removed, or instead, whether adverse effects continued to arise in the post -implementation period. The 
European Union, therefore, consid ers that the errors in the interpretation and application of Articles 5 and 6.3 
of the SCM Agreement identified in this section also involve errors in the interpretation and application of 
Article 7.8 of the SCM Agreement . WT/DS353/AB/R W/Add.1  
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- 26 - 
of each unit of aircraft), along with the untied post -2006 aeronautics R&D subsidies,67 
resulted in l ower prices for Boeing LCA ( "price effects "). The European Union also appeals 
the Panel 's failure to make an objective assessment of the matter, under Article 11 of the 
DSU.68 
A. The Panel's interpretative error in requiring concrete demonstration of 
Boeing's use of a particular subsidy dollar  
78. The Panel held that, in order to find that the subsidies at issue cause price effects, it must 
be shown that Boeing "used" or "allocated " the additional cash represented by those 
subsidies to "lower the prices of its LCA ".69 In other words, the Panel held that it must be 
possible to trace the dollars  from the subsidies to price reductions.  
79. Imposing a "tracing the dollars " requirement to assess the existence of price effects from 
untied subsidies constitutes error in the interpretation of Articles 5 and 6.3 of the 
SCM Agreement . As the panel and the Appellate Body explained in th e original proceedings, 
as an interpretative matter, Articles 5 and 6.3 do not impose a requirement to trace 
particular payments into particular pricing decisions.70 Instead, panels must assess price 
effects by determining whether there is a "genuine and su bstantial relationship of cause and 
effect " between the subsidies and price effects at issue. The Appellate Body held that the 
following elements lead to untied subsidies causing, or contributing to causing, price effects: 
(i) the competitive conditions in  the LCA market; and (ii) the nexus between the subsidy and 
Boeing 's LCA development, production, and sale.  
80. In short, the Panel erred in the interpretation of Articles 5 and 6.3 by failing to identify the 
proper causation standard for analysing price effec ts from untied subsidies. As a result, the 
Panel also erred in the interpretation of Article 7.8 of the SCM Agreement . 
B. The Panel's error of application with respect to the legal standard for 
assessing price effects  
81. To the extent the Appellate Body finds  that the Panel identified the proper legal standard for 
assessing price effects from untied subsidies (and thereby disagrees with the 
European  Union 's appeal of the Panel 's interpretation), the Appellate Body should find that 
the Panel erred in the applic ation of that standard by considering that the absence of 
evidence allowing the Panel to "trace the dollars " was determinative of its assessment. The 
Appellate Body should also find that, as a result of the Panel 's errors in the application of 
Articles 5 a nd 6.3, the Panel also erred in the application of Article 7.8 of the SCM Agreement . 
C. The Panel's deviation from the adopted findings in the original proceedings 
constitutes a violation of Article 11 of the DSU  
82. The Appellate Body has held that deviations from findings in original proceedings, or from 
the approach taken in original proceedings to the application of the law to the facts, may 
indicate a failure on the part of a compliance panel to undertake an objec tive assessment of 
                                                
67 These consist of: (i) Washingto n State B&O tax credit for preproduction/aerospace product 
development; (ii) Washington State B&O tax credit for property taxes; (iii) Washington State B&O tax credit for 
leasehold excise taxes; (iv) Washington State sales and use tax exemptions for comput er hardware, software, 
and peripherals; (v) South Carolina property tax exemption in respect of Boeing's large cargo freighters; 
(vi) South Carolina sales and use tax exemptions for aircraft fuel, computer equipment, and construction 
materials; (vii) South  Carolina Air Hub Bonds; (viii) post -2006 NASA aeronautics R&D procurement contracts, 
cooperative agreements, and Space Act Agreements; (ix) post -2006 DOD assistance instruments; (x) FAA 
aeronautics R&D subsidy. See Panel Report, paras. 9.253, 9.278, 9.468 , 9.473, 9.468 (footnote 3423). The 
European Union notes that it is also appealing the absence of Panel findings that the following measures 
constitute specific subsidies, within the meaning of Articles 1 and 2 of the SCM Agreement : (i) South Carolina 
Economic Development Bonds; (ii) South Carolina MCIP tax credits; (iii) City of Wichita IRB -related property 
and sales tax abatements; and (iv) the provision of funding and access to DOD facilities, equipment, and 
employees to Boeing, pursuant to pre -2007 and post-2006 DOD RDT&E procurement contracts.  
68 Panel Report, paras. 9.271, 9.273, 9.277, 9.288, 9.291, 9.470, 9.472, 9.474, 9.476.  
69 Panel Report, para. 9.273.  
70 Panel Report, US – Large Civil Aircraft , para. 7.1828; Appellate Body Report, US – Large Civil Aircraft , 
para. 1348.  WT/DS353/AB/R W/Add.1  
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- 27 - 
the matter, as required by Article 11 of the DSU.71 The Panel 's imposition of the "tracing the 
dollars " requirement impermissibly deviated from the adopted findings of the original panel 
and the Appellate Body.  
83. The Appellate Body has held  that panels may deviate from factual findings in the original 
proceedings, where there is a "change in the underlying evidence in the record ".72 Yet, the 
United States pointed to no change in the evidence that would undermine the continued 
applicability of  the Appellate Body 's findings regarding price effects from untied subsidies. 
Indeed, the Panel 's own factual findings confirmed the continued existence of the relevant 
conditions of competition in the LCA market.73 Under these circumstances, the Panel 's 
deviation from the adopted findings of the original panel and the Appellate Body was 
impermissible, and is indicative of a lack of objective assessment.  
D. Request for completion of the analysis  
84. The European Union requests the Appellate Body to complete the analysis to reinstate its 
own findings in the original proceedings. Since there was no basis for the compliance Panel 
to deviate from the findings of the panel and the Appellate Body in the original proceedings, 
the Appellate Body should reinstate its own findings by concluding that these untied subsidies 
contribute to adverse effects through a "price effects " causal pathway.74 
85. The European Union also requests the Appellate Body to find that the untied state and local 
cash flow subsidies, and the post -2006 a eronautics R&D subsidies, all75 result in Boeing 
lowering its prices for LCA ( "price effects "). These lower prices thereby contribute to a 
genuine and substantial causal link between all of the US subsidies and the adverse effects, 
under Articles 7.8, 5, an d 6.3 of the SCM Agreement . 
XI. THE PANEL ERRED WHEN  FAILING TO FIND PRE SENT TECHNOLOGY EFFE CTS FROM 
THE PRE -2007 R&D SUB SIDIES  
86. The original panel and the Appellate Body found that the pre -2007 US aeronautics R&D 
subsidies to Boeing cause adverse effects i n the LCA markets through a "technology effects " 
causal pathway. Specifically, these subsidies were found to accelerate the research and 
development of technologies that Boeing can apply on its LCA, and did apply on the 787 -8/9, 
thereby  accelerating its la unch, as well as promised and actual deliveries.76 The 
Appellate  Body agreed with the original panel that the pre -2007 US aeronautics R&D 
"subsidies accelerated the technology development process by some amount of time, and, 
                                                
71 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 103. The 
Appellate  Body has also held that "panels established under {Article 21.5 of the DSU} are bound to follow the 
legal interpretation  contained in t he original panel and Appellate Body reports that were adopted by the DSB". 
See Appellate Body Report, US – Stainless Steel from Mexico , para. 158 (footnote 309) (emphasis added).  
72 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 103.  
73 Panel Report, para. 9.17.  
74 The findings in the original proceedings are consistent with the European Union's arguments and 
evidence in these proceedings, establishing the existence of price effects from untied subsidies. Thus, the 
Appellate Bo dy may reinstate its previous findings and conclude that the untied subsidies caused serious 
prejudice through a "price effects" mechanism, without needing to complete the analysis. However, if it should 
decide to complete the analysis, the Appellate Body may rely on the undisputed facts in the panel record. 
See Appellate Body Report, US – Hot Rolled Steel , para. 235.  
75 These subsidies consist of: (i) Washington State B&O tax credit for preproduction/aerospace product 
development; (ii) Washington State B&O  tax credit for property taxes; (iii) Washington State B&O tax credit for 
leasehold excise taxes; (iv) Washington State sales and use tax exemptions for computer hardware, software, 
and peripherals; (v) South Carolina property tax exemption in respect of B oeing's large cargo freighters; 
(vi) South Carolina sales and use tax exemptions for aircraft fuel, computer equipment, and construction 
materials; (vii) South Carolina Air Hub Bonds; (viii) South Carolina Economic Development Bonds; 
(ix) South  Carolina MC IP tax credits; (x) City of Wichita IRB -related property and sales tax abatements 
provided; (xi)  post-2006 NASA aeronautics R&D procurement contracts, cooperative agreements, and Space 
Act Agreements; (xii)  post-2006 DOD assistance instruments; (xiii) FAA aeronautics R&D subsidy; and 
(xiv) post-2006 DOD procurement contracts. This list includes those measures for which the European Union is 
appealing the absence of Panel findings that these measures constitute specific subsidies. See Panel Report, 
paras. 8. 1076, 9.253, 9.278, 9.468, 9.473, 9.468 (footnote 3423).  
76 Appellate Body Report, US – Large Civil Aircraft , paras. 980, 1350(d)(A)(1); Panel Report, US – Large 
Civil Aircraft , para. 7.1773.  WT/DS353/AB/R W/Add.1  
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- 28 - 
therefore gave Boeing an advanta ge in bringing its technologies to market. The exact amount 
of time was not critical: that the NASA research enabled Boeing to accelerate the research 
process was ".77 
87. The Panel was tasked with evaluating whether the effects of the pre -2007 US aeronautics 
R&D subsidies had continued into the post -implementation period. In so doing, the Panel 
correctly identified the counterfactual question it had to assess in view of the United  States ' 
arguments – namely, "whether it is likely that, absent these subsidies, th e 787 technologies 
would still not have been developed by the end of the implementation period and thus the 
787 would not have been present in the market by that time ".78 
88. The European Union argued that, in light of the delays that would have occurred in the  
development of technologies for the 787 absent the pre -2007 US aeronautics R&D subsidies, 
there remained technology effects on , inter alia , two bases: first, these subsidies continued 
to cause effects through sales and deliveries of Boeing 's 787 -8 LCA ("original subsidy 
technology effects ");79 and, second , these subsidies continued to cause effects through 
Boeing 's use of the subsidised 787 technologies that have "spilled over " onto other  Boeing 
LCA developments, by accelerating the launch an d subsequent delivery of Boeing 's more 
recent 787 -9/10, 737 MAX, and 777X ( "spill-over" technology effects ).80 
89. The Panel, however, found that no such technology effects continued to exist after the end 
of the implementation period. It instead held that the European Union had failed to establish 
the continued existence of technology effects with respect to either Boeing 's 787 -8/9 (which 
were the subject of the findings in the original proceedings), or Boeing 's more recent LCA 
developments, namely the 787 -10, 777X, and 737 MAX.81 The Panel cited arguments 
included in statements by Boeing engineers , in which they asserted that, upon identifying a 
market demand in 2002 for an aircraft with advanced technologies, Boeing would have been 
able to "replicate … in less than two years "82 the fundamental research that Boeing had 
actually performed over decades  under the NASA and DOD aeronautics R&D subsidies.  
90. The European Union appeals several aspects of the Panel 's findings that the European  Union 
failed to establish that the technology effects of the pre -2007 US aeronautics R&D subsidies 
continue into the post -implementation period,83 as detailed below.  
A. The Panel's error in focusing on the counterfactual date of the launch  of the 
787 to the exclusion of the counterfactual delivery  timing, when considering 
the effects of the US aeronautics R&D subsidies  
91. The European Union appeals the Panel 's erroneous focus, in assessing the existence of 
present effects of the US aeronautics  R&D subsidies, on solely the 787 's counterfactual 
launch  date, to the exclusion of additional consideration of the anticipated timing of deliveries  
in the counterfactual.84 In so doing, the Panel erred in the application of Articles  5 and 6.3 
of the SCM Ag reement . A proper counterfactual analysis also required consideration of the 
                                                
77 Appellate Body Report, US – Large Civil Aircraft , para. 980.  
78 Panel Report, para. 9.128.  
79 Panel Report, para. 9.118(a). See also  EU FWS, paras. 984 -987, 992 -995 (general), 1205 -1212 
(787-8/9/10); EU SWS, paras. 955-1057 (general), 1116 -1134 (787 -8/9/10). See also  Airbus Engineers 
Statement, paras. 6 -17 (exhibit EU -31) (HSBI).  
80 Panel Report, para. 9.118(b). See also  EU FWS, paras. 984 -987, 992 -995 (general), 1024, 
1028-1073 (spill -over effects), 1025, 1205 -1212 (787 -8/9/10), 1213 -1222 (777X), 1620 -1625 (737 MAX); 
EU SWS, paras. 955 -1057 (general), 1116 -1134 (787 -8/9/10), 1135 -1141 (777X), 1595 -1604 (737 MAX). 
See also Airbus Engineers Statement, paras. 6 -83 (exhibit EU -31) (HSBI).  
81 Panel Report, paras. 9.176 -9.177, 9.218(a), 9.219 -9.220 (original subsidy technology effects), 9.186, 
9.218(b), 9.219 -9.220, 9.353 -9.355 , 9.368, 9.372 -3.73 (spill -over technology effects), 11.8 (a), 11.8(b), 
11.8(e).  
82 Boeing Engineers Statement, para. 13 (exhibit USA -283) (BCI).  
83 The European Union notes that the Panel properly referred to Articles 5 and 6.3 of the SCM 
Agreement  to deter mine, under Article 7.8 of the SCM Agreement , whether adverse effects had been removed, 
or instead, whether adverse effects continued to arise in the post -implementation period. The European Union, 
therefore, considers that the errors in the application of  Articles 5 and 6.3 of the SCM Agreement identified in 
this section also involve errors in the application of Article 7.8 of the SCM Agreement . 
84 Panel Report, paras. 9.152. See also Panel Report, paras. 9.153, 9.157, 9.161, 9.170, 9.176, 9.183.  WT/DS353/AB/R W/Add.1  
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- 29 - 
effect of the pre -2007 US R&D subsidies on the timing of deliveries of each of  the Boeing 
aircraft at issue.  
92. Separately, the Panel failed to make an objective assessment of the ma tter, under Article  11 
of the DSU, since its focus on the timing of the launch  of the 787 is internally inconsistent 
and at odds with its findings elsewhere in its report . Moreover, the Panel inappropriately 
deviated from the findings of the original panel  and the A ppellate Body in this respect.  
B. The Panel's errors regarding the nature of the R&D at issue  
93. To properly assess  whether the pre -2007 US aeronautics R&D subsidies continued to be a 
genuine and substantial cause of adverse effects in the post -implementation period, the 
Panel was required to undertake a counterfactual analysis u sing relevant facts.  
94. The original panel was clear about the nature of the research that it found to have been 
accelerated by the US subsidies. In describing the pre -2007 US aeronautics R&D subsidies, 
the original panel explained that those subsidies funded research in "foundational science 
and discipline -centric research ",85 for the development of technologies "at the earliest, most 
fundamental stages of research ".86 
95. The compliance Panel was therefore tasked with assess ing what the impact on the timing of 
the 787 launch  would have been had Boeing waited until 2002 to start conducting its 
fundamental  R&D relevant to 787 technologies . The original panel had found that the "real 
value of the aeronautics R&D subsidies "87 was not the actual development of near -term 
technologies, but the experience gained and lessons learned from doing the early -stage 
fundamental research with much of the risk take on by the US Government.   
96. In undertaking its counterfactual assessment, the Panel relied on facts that were not fit for 
purpose. I n following the US lead as set out by the Boeing engineers, the Panel focused its 
assessment on non -subsidised technology developments involving later stages of LC A 
development, rather than taking into account the early phases of fundamental  R&D.88 Yet, 
because early -stage R&D was the focus of the original panel 's analysis  (and of the NASA and 
DOD R&D subsidies), it  should have also been the compliance Panel 's focus in a proper 
counterfactual analysis.  
97. In conducting its counterfactual analysis  based on evidence inherently unsuited for the 
purpose, the Panel erred in its application of Articles 5, 6.3 , and 7.8 of the SCM Agreement . 
98. Moreover, the Panel failed t o make an objective assessment of the matter, under Article 11 
of the DSU. Specifically, the Panel failed to explain how the amount of time required to 
perform the late -stage R&D identified by the Boeing engineers provides a legitimate proxy 
for the amount  of time it would have taken Boeing, without the aeronautics R&D subsidies, 
to conduct the early -stage, fundamental R&D underlying the recommendations and rulings 
in this dispute.  
C. The Panel's errors regarding the sequencing of R&D  
99. The European Union fur ther appeals the Panel 's erroneous findings regarding the sequencing 
of R&D in the overall R&D process. The Panel analysed the counterfactual question before it 
in a manner that disregarded the s equencing of the relevant R&D.  
100.  Specifically, the Panel accept ed the illogical proposition that initial fundamental research into 
technologies could be conducted even after some technology maturation has taken place for 
the same technologies.89 In so doing, the Panel erred in the application of Articles  5 and 6.3 
                                                
85 Appellat e Body Report, US – Large Civil Aircraft , paras. 940 -941, 966, citing  Panel Report, US – Large 
Civil Aircraft , para. 7.1737.  
86 Appellate Body Report, US – Large Civil Aircraft , para. 986, citing  Panel Report, US – Large Civil 
Aircraft , para. 7.1756.  
87 Panel Report, US – Large Civil Aircraft , para. 7.1756.  
88 Panel Report, paras. 9.162 -9.165. See also Panel Report, paras. 9.139 -9.140.  
89 Panel Report, paras. 9.170 -9.173.  WT/DS353/AB/R W/Add.1  
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- 30 - 
of the SCM Agreement . In particular, the Panel erred  when focusing solely on the 
identification of the amount of  time needed to perform certain fundamental research, without 
considering the implications for the overall progression of R&D. Such progression must  start 
with fundamental R&D at the counterfactual start -date of the R&D, and continue through the 
subsequent maturation of technologies for p roduct launch and development.  
101.  Thus, a proper application of the Panel 's counterfactual analysis would have begun a t the 
time Boeing needed to conduct necessary fundamental R&D, starting in 2002, and then (in 
proper sequence) added the time of technology maturation needed after the fundamental 
R&D was undertaken. The graph below depicts what the Panel 's counterfactual R&D process 
should have  looked like:  
 
102.  Separately, the Panel failed to make an objective assessment of the matter, under Article  11 
of the DSU, by failing to provide reasoned and adequate explanations and coherent reasoning 
for the illogical progression of research  on which its findings rest.  
103.  The European Union explains that even if the Appellate Body were to find that the Boeing 
engineers ' description of near -term R&D constituted an adequate proxy for purposes of the 
Panel 's counterfactual as sessment (despite the appeal set out in Section  X1.B), the Panel 's 
errors regarding the sequencing of the relevant R&D alone provide sufficient legal basis for 
the Appellate Body to  reverse the Panel's findings on  technology effects.  
D. The Panel's errors  regarding the standard it placed on the European Union for 
establishing technology effects  
104.  The European Union appeals the Panel 's erroneous imposition on the European Union of an 
artificial and rigid requirement to establish technology effects – i.e., for the European  Union 
to show the specific amount of time for each stage of the counterfactual in which Boeing 
recreates the R&D funded by NASA and DOD.90 
105.  By imposing this requirement, the Panel erred in the application of Articles 5 and 6.3 of the 
SCM Agreem ent, which do not, in light of the applicable causation standard, impose such  a 
requirement.  
106.  In addition, the Panel failed to make an objective assessment of the matter, under Article  11 
of the DSU, by placing upon the European Union an impossible burden o f proof. The evidence 
demanded by the Panel would have simply been impossible for the European  Union to 
adduce, as its participant in the LCA markets, Airbus, does not have insight into the 
proprietary internal R&D operations of its sole competitor, Boeing  (beyond that which is 
publicly reported). The Panel then also rejected  all of the EU critiques of the US estimates, 
simply because they did no t satisfy the impossible burden imposed by the Panel. As for the 
US estimate , the Panel accepted it  without apply ing any rigour in its scrutiny (unlike its 
treatment of the EU estimates and evidence) . 
                                                
90 Panel Report, paras. 9.164 -9.165.  
WT/DS353/AB/R W/Add.1  
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- 31 - 
E. The Panel misconstrued the European Union's arguments as supporting the 
Panel's erroneous findings  
107.  Finally, the Panel failed to make an objective assessment of the m atter, under Article 11 of 
the DSU, when misconstruing an EU statement from the original proceedings regarding the 
time when Boeing would have developed the 787 absent the US aeronautics R&D subsidies.91 
Reviewing what the European Union actually said, as s ummarised by the original panel, 
reveals an argument that, "had Boeing needed to develop the 787 using its own resources, 
the 787 would likely not have been launched any earlier than  mid-2006",92 but likely later.  
Thus, contrary to the Panel's view, this st atement concerns Boeing's inability to launch the 
787 in the reference period at issue in the original proceedings, and does not constitute 
confirmation that, in a counterfactual, Boeing could have launched the 787 by late 2006.  
F. Conclusion and request f or completion of the analysis  
108.  On the basis of any or all of these appeals, the European Union requests that the 
Appellate  Body reverse the Panel 's findings that there no longer exist, in the 
post-implementation period, "original subsidy technology effects of the pre -2007 aeronautics 
R&D subsidies ";93 "spill-over technology effects of the pre -2007 aeronautics R&D subsidies 
in respect of the 787 -9/10{,} … 777X ",94 and 737MAX;95 and the dependent findings that 
those subsidies no longer cause ad verse effects.96 
109.  If the Appellate Body were to reverse the Panel 's technology effects findings, the 
European  Union requests that the Appellate Body complete the legal analysis and conclude  
that the following technology effects continue in the post -implement ation period: (i) the 
original technology effects of the pre -2007 aeronautics R&D subsidies, in respect of the 
787-8 family LCA; and, (ii) the spill -over technology effects of the pre -2007 aeronautics R&D 
subsidies, in respect of Boeing 's 787 -9/10, 737 MAX  and 777X.  
110.  The European Union sets out below the properly -calculated counterfactual launch and 
delivery dates of the 787 -8/-9/-10, 737 MAX, and 777X , which can be determined based on 
the factual findings by the Panel and undisputed facts of record:  
                                                
91 Panel Report, para. 9.156 (footnote 2921), citing  Panel Report, US – Large Civil Aircraft , para. 4.280, 
citing , in turn, the Executive Summary of the EU FWS, para. 56.  
92 Panel Report, para. 9.156 (footnote 2921), citing  Panel Report, US – Large Civil Aircraft , para. 4.280, 
citing , in turn, the Executive Summary of the EU FWS, para. 56.  
93 Panel Report, para. 9.177.  
94 Panel Report, para. 9.186.  
95 Panel Report, para. 9.335.  
96 Panel Report, paras. 9.219 -9.220 (787/777X), 9.352 -9.355, 9.372 -9.373 (737 MAX), and 11.8(a), 
(b) and (e).  WT/DS353/AB/R W/Add.1  
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- 32 - 
  LCA 
Model  Start of intensive 
pre-launch R&D  Launch  Promised  
first 
delivery  Actual  
first 
delivery  
Actual  787-8 2002 2004 2008 2011 
Counterfactual  787-8 2002 Up to 2012  Up to 2016  Up to 2019  
Actual97 787-9 Not on the record  2004 2014 Not on the 
record  
Counterfactual  787-9 -- 2012 2022 -- 
Actual98 787-10 Not on the record  2013 2018/2019  Not on the 
record  
Counterfactual  787-10 -- 2021 2026 -- 
Actual99 737 MAX  Not on the record  2011 2017 Not on the 
record  
Counterfactual  737 MAX  -- 2019 2025 -- 
Actual100 777X -- 2013 2019 Not on the 
record  
Counterfactual  777X -- 2021 2027 -- 
 
111.  These properly -adjusted  counterfactual launch and delivery dates for the 787 -8/9/10, 737 
MAX, and 777X  fall well beyond the implementation deadline (September 2012), even if the 
Appellate Body were to revise downwards the estimates supplied by the European Union. 
The European Union notes that these estimates are realistic, if not conservative, given that 
they reflect Boeing 's actual , undisputed  time gaps between the launch dates for this series 
of LC A developments since 2004. The actual time gaps reflect  resource and engineering 
constraints Boeing faced when launching several LCA models in close succession. Absent the 
non-withdrawn US aeronautics R&D subsidies, Boeing 's engineering and resource constr aints 
would likely have further delayed, or, at a minimum, not accelerated, counterfactual first 
deliveries of the 787 -8-9/10, 737 MAX, and 777X.  
 
112.  In concluding, the European Union notes that, while the factual findings by the Panel and 
undisputed facts of  record support the above dates, in completing the legal analysis, it is not 
necessary to identify the precise times at which the launch, and subsequent delivery, of the 
787-8 and other aircraft would have occurred. Rather, the Appellate Body merely needs to 
confirm, based on undisputed facts and the Panel's factual findings, that the launches and 
deliveries of these aircraft, absent the non -withdrawn subsidies, would have been delayed 
until after September 2012, i.e., after the end of the implementation pe riod. Similarly, in 
completing the legal analysis for the spill -over technology effects, the Appellate Body would 
merely need to confirm, based on undisputed facts and the Panel's factual findings, that the 
launch and subsequent delivery of the 787 -9/10, 7 37 MAX, and 777X would have taken place 
sometime after they actually occurred (or are to occur).  
XII.  THE PANEL ERRED WHEN  FAILING TO FIND CON TINUING ADVERSE EFFE CTS FROM 
THE PRE -2007 AERONAU TICS R&D SUBSIDIES  
113.  The Panel committed several legal errors when  finding that the European Union had failed 
to demonstrate that the pre -2007 US aeronautics R&D subsidies cause adverse effects that 
continue after the end of the implementation period.101 
114.  In Section VI, above, the European Union has already established one of the legal errors 
that resulted in the Panel 's failure to find adverse effects that continue after the end of the 
implementation period; namely, an erroneous interpretation and application of Article 7.8 of 
the SCM Agreement . In particular, the Panel err oneously excluded, from consideration of 
                                                
97 EU FWS, para. 1032.  
98 EU FWS, para. 1034.  
99 EU FWS, para. 1038.  
100 EU FWS, para. 1062.  
101 Panel Report, paras. 9.315, 9.321, 9.322, 9.326, 9.331, 9 .332. WT/DS353/AB/R W/Add.1  
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lost sales and price suppression arguments, LCA orders that occurred prior to the end of the 
implementation period (including those that occurred during the original reference period), 
but where there remain ed deliveries of LCA outstanding under those orders after the end  of 
the implementation period.  
115.  In addition, the Panel committed several further errors that each relate to the Panel 's finding 
that the European Union 's continuing adverse effects arguments were "unsupported by the 
evidence and/or in contradiction with the findings made in the original proceeding ".102 These 
errors stem from the Panel 's failure to make an objective assessment of the matter, under 
Article 11 of the DSU,  and its failure to apply the proper  legal standard for the assessment 
of significant price suppression, under Articles 5 and 6.3 of the SCM Agreement . 
A. The Panel violated Article 11 of the DSU by deviating from the adopted 
findings in the original proceedings with respect to price suppres sion, lost 
sales, and threat of displacement and impedance in the 200 -300 seat LCA 
market  
116.  In the original proceedings, the panel and the Appellate Body found that the US subsidies 
caused significant price suppression, significant lost sales, and a threat o f displacement and 
impedance of EU exports with respect to the "200-300 seat LCA market ".103 The 200 -300 
seat LCA market, as defined in the original proceedings, included the A330, the Original 
A350, and the A350XWB -800 LCA.104 Although the Panel made intermed iate findings that 
were based on a consideration of evidence that related mainly to the A330 and the Original 
A350, the ultimate findings  made by the original panel related to the 200 -300 seat LCA 
market as a whole .105 
117.  Instead of following those findings, the compliance Panel focused on the undisputed – and 
entirely irrelevant – fact that the A330, the Original A350, and the A350XWB are "different 
aircraft ".106 
118.  In circumstances where the Panel 's own findings confirmed the continued existence, albeit 
with a new label, of the same 200 -300 seat LCA market – for which the original panel and 
the Appellate Body made their respective findings of significant price suppression, significant 
lost sales , and displacement and impedance – the Panel had no basis for deviating from the 
approach in the original proceedings. Changing its approach, to focus its adverse effects 
assessment on separate aircraft models , therefore, constitutes legal error, and specifically a 
failure to make an obje ctive assessment of the matter, under Article 11 of the DSU.  
B. The Panel erred when applying the relevant legal standard for assessing 
continuing price suppression on the basis of prices for the A330  
119.  In assessing the continued existence of price suppressi on in the market for medium -sized 
twin-aisle LCA, the Panel was required, but failed, to conduct a counterfactual analysis under 
Articles 5 and 6.3 of the SCM Agreement . 
120.  The Panel did not conduct such a counterfactual analysis when assessing the price effe cts of 
the US subsidies on the A330. Specifically, the Panel did not compare actual A330 prices 
with the appropriate EU benchmark provided by the European Union for the absence of price 
suppression – i.e., A330 prices "pre-2004 … when the A330 was the tech nological market 
                                                
102 Panel Report, para. 9.332.  
103 Panel Report, US – Large Civil Aircraft , paras. 7.1791, 7.1794, 7.1797; Appellate Body Report,  
US – Large Civil Aircraft , paras. 1068, 1126, 1350(d)(i)(A)(5).  
104 Panel Report, US – Large Civil Aircraft , paras. 7.1670, 7 .1672; Appellate Body Report, US – Large 
Civil Aircraft , paras. 897 -898. 
105 Panel Report, US – Large Civil Aircraft , paras. 7.1670, 7.1672; Appellate Body Report, US – Large 
Civil Aircraft , paras. 897 -898.  
106 Panel Report, paras. 9.322 (regarding price supp ression), 9.323 -9.324 (regarding lost sales), 9.331 
(regarding threat of displacement and impedance).  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
- 34 - 
leader ".107 Instead, the Panel compared actual A330 prices with the actual  factual situation 
in which "the 787 and A350XWB have changed the competitive dynamics of this market ".108 
121.  By failing to conduct a proper counterfactual analysis, the Pa nel erred in the application of 
the relevant legal standard, under Articles 5 and 6.3 of the SCM Agreement . 
C. Request for completion of the analysis  
122.  The European Union requests the Appellate Body to complete the legal analysis by reinstating 
the adopted f indings from the original proceedings.109 
123.  Specifically, the Appellate Body should re -instate the finding that the pre -2007 US 
aeronautics R&D subsidies cause adverse effects in the market for medium -sized twin -aisle 
aircraft, in which the 787 -8/9 compete, ba sed on the findings by the original panel and the 
Appellate Body. Nothing in the facts or evidence relating to these adverse effects has 
changed, and there is no basis not to find that they continue after the end of the 
implementation period.  
124.  Alternatively , the European Union asks the Appellate Body to arrive at the same conclusion, 
on the basis of the Panel 's factual findings and undisputed facts of record.  
XIII.  REQUEST FOR COMPLETI ON OF THE ANALYSIS  WITH RESPECT TO SIG NIFICANT 
LOST SALES  
125.  The European Union requests the Appellate Body to complete the analysis, applying the 
proper causation standard, for three specific sales campaigns: (i) All Nippon Airways ' 2014 
order of 20 777 -9X aircraft; (ii) GOL 's 2012 order for 60 737 MAX aircraft; and, 
(iii) United  Airlines ' 2012 and 2013 orders for a total of 100 737 MAX aircraft and 64 737NG 
aircraft. In completing the legal analysis for these three sales campaigns, the Appellate Body 
can rely on factual findings by the Panel and uncontested facts of record. Together, these 
facts establish that the tied B&O tax subsidies, and the resulting subsidy -enabled low pricing 
by Boeing, were a genuine and substantial cause of significant lost sales in these sales 
campaigns.  
126.  In addition , the European Union requests the Appellate Body to complete the analysis for a 
series of sales campaigns, applying (i) the proper causation standard, and (ii) its conclusions 
with respect to pric e effects from the untied subsidies , and technology effects from the 
pre-2007 US aeronautics R&D subsidies. In completing the legal analysis for these sales 
campaigns, the Appellate Body can rely on factual findings by the Panel, and uncontested 
facts of r ecord, regarding the role of delivery positions and pricing in the sales at issue. 
Together, these facts establish that (i) the technology effects from the pre -2007 US 
aeronautics R&D subsidies, and (ii) the price effects from (a) the tied B&O tax subsidie s and 
(b) all of the untied subsidies, collectively, were a genuine and substantial cause of 
significant lost sales in these sales campaigns.  
127.  The European Union begins with a number of sales of the Boeing 787 -8/-9 that took place 
in 2007, soon after the la unch of the A350XWB. This was at a time when Airbus continued 
to suffer from a significant gap in the delivery positions it could offer for the A350XWB, 
relative to the delivery positions Boeing could offer for the 787, as accelerated by the 
pre-2007 US ae ronautics R&D subsidies.  
128.  Next, the European Union addresses several subsequent 787 sales campaigns,  (including of 
the newly launched 787 -10) in which Boeing had less of an advantage in terms of delivery 
timing, but where, in the proper counterfactual absen t the aeronautics R&D subsidies, it 
                                                
107 Panel Report, para. 9.319.  
108 Panel Report, para. 9.319.  
109 The European Union considers that this approach may not be available to the Appellate Body if it 
does not reverse the Panel's findings on the basis of the Article 11 error set out above.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
- 35 - 
would have offered significantly later delivery positions, seriously undermining the 
compet itiveness of the Boeing offer.  
129.  The European Union also addresses a number of sales of the 777X, where Boeing 's offer of 
the 777X similarly benefited from delivery positions that were earlier than they would have 
been absent the pre -2007 US aeronautics R&D subsidies.  
130.  Finally, the European Union addresses a number of 737 MAX / 737NG sales, where Boeing 's 
offer of the 737 MAX similarly  benefited from delivery positions that were earlier than they 
would have been absent the pre -2007 US aeronautics R&D subsidies.  
131.  In each case, Boeing 's subsidy -reduced pricing played at least a genuine role in Boeing 
winning , and Airbus losing, the sale.  
132.  The European Union 's selection of the various sales campaigns discussed in this submission 
should not be seen, in any way, as limiting the Appellate Body 's authority to complete the 
legal analysis with respect to other sales discussed by the Panel. In parti cular, the 
European  Union emphasises that it has selected sales to illustrate the logic underlying a 
completion of the legal analysis for the categories of sales identified in the previous 
paragraphs. The Appellate Body may apply the logic behind the Europ ean Union 's arguments 
to any other sale at issue in this dispute, as it considers appropriate. The sales discussed in 
detail are intended to show the degree to which the Panel 's legal errors have resulted in an 
erroneous narrowing of the Panel 's adverse ef fects findings.  
133.  Since much of the detailed discussion on the sales at issue is HSBI, the European Union does 
not include that information in this executive summary.  
XIV.  CONCLUSION  
134.  For the reasons set out above, the European Union requests the Appellate B ody to reverse 
or modify the legal findings and conclusions appealed by the European Union in this 
Appellant 's Submission, and to complete the analysis where requested to do so.  
 WT/DS353/AB/R W/Add.1  
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ANNEX B -2 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' OTHER APPELLANT'S SU BMISSION  
1. The compliance Panel in this dispute issued a detailed and high -quality report, finding that the 
United States met its compliance obligations with respect to all but one of the measures challenged 
by the European Union ( "EU") (i.e., the Washington State B&O tax rate reduction). On appeal, the 
United States challenges a limited set of Panel findings, many on a conditional basis. If the 
Appellate  Body rejects the EU's claims on appeal, then it only needs to address the U.S. claims in 
Sections I and II.  
2. Section I  demonstrates that t he Panel misinterpreted its terms of reference when it allowed 
the EU to raise in  this proceeding arguments regarding DoD procurement contracts that the original 
panel rejected in the original proceeding. As the Panel recognized, Article 21.5 does not generally 
entitle parties to relitigate issues on which they did not prevail in an or iginal proceeding. While there 
are exceptions to this principle, none of them apply to this situation. Therefore, the United States 
respectfully requests the Appellate Body to reverse the Panel's finding that its terms of reference 
included the EU's claims  that DoD procurement contracts were financial contributions that conferred 
a benefit.  
3. Section I I presents an appeal of the Panel's finding that the Washington State B&O tax rate 
reduction causes adverse effects. The Panel's calculation of a $1.99 million per-aircraft subsidy 
magnitude is flawed because it assumes that Boeing would pool B&O tax savings from all LCA sales 
to lower prices in just three single -aisle sales campaigns. This assumption is inconsistent with the 
Appellate Body's findings in the orig inal proceeding regarding the nature and operation of tied tax 
subsidies like the B&O tax rate reduction – findings that were confirmed by the compliance Panel 
itself. Correctly calculated, the per -aircraft magnitude of the B&O tax rate reduction would be at 
most $100,000, an amount so small that it cannot be a genuine and substantial cause of significant 
lost sales or threat of impedance.  
4. Furthermore, under the Panel's counterfactual causation analysis, even if Boeing had 
increased its prices by the full a mount of the alleged subsidy – $100,000 – Airbus would not have 
won any additional sales. Thus, there is no basis for finding that the Washington B&O tax rate 
reduction was a genuine and substantial cause of the adverse effects a lleged by the EU under 
Articles 5 and 6.3 of the SCM Agreement. Moreover, as discussed in greater detail below, even 
assuming arguendo  that the Panel's magnitude calculation were correct, the Panel's causation 
findings suffer from several additional flaws, including a failure to mak e an objective assessment as 
called for in Article 11 of the DSU, which require reversal of the Panel's findings that the Washington 
B&O tax rate reduction is a genuine and substantial cause of significant lost sales and threat of 
impedance.  
5. Section II I.A presents a conditional appeal: if the Appellate Body reverses  the Panel 's finding 
that all or part of the subsidies it grouped in the category of "aeronautics R&D subsidies " did not 
cause adverse effects, then it should find that the Panel erred in not conducting a holistic analysis 
and instead confining its benefit evaluation for post -2006 NASA instruments, DoD assistance 
instruments, and the FAA Boeing CLEEN Agreement to the allocation of patent rights – while 
disregarding other terms, including the funding commitments, rights to terminate the agreement, 
rights to manage the project, and requirements to use particular accounting practices. In other 
words, the Panel d id not acknowledge the possibility that the benchmark transactions were not fully 
comparable to the NASA, DoD, and FAA transactions with respect to non -intellectual -property terms, 
and that the disregarded terms (including the monetary contribution) of the  commercial transactions 
offset the more favorable  patent -related rights that commercial commissioning parties would be 
expected to obtain.  
6. In proceeding in this fashion, the Panel incorrectly applied Article 1.1(b) of the SCM  Agreement 
by conducting an ev aluation of the benefit without taking account of all of the terms that affected 
the value to the recipient. Even assuming arguendo that the Panel applied Article 1.1(b) correctly in 
addressing only the patent -related rights, it failed to conduct the objec tive assessment called for 
under Article 11 of the DSU by disregarding that these rights included a funding component in most WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
- 37 - 
of the benchmark transactions. The United States accordingly respectfully requests the 
Appellate  Body to reverse the Panel's findi ng that NASA contracts and cooperative agreements, DoD 
assistance instruments, and the Boeing CLEEN Agreement conferred a benefit.  
7. Section II I.B presents a conditional appeal: i f the Appellate Body finds that DoD research 
contracts are collaborative R&D ar rangements that confer a benefit, then the subsidies found to exist 
because of NASA, DoD, and FAA R&D instruments are not specific. The Panel analyzed each 
administrative agency – NASA, DoD, and FAA – separately in determining whether subsidies granted 
by those agencies were specific. However, if the Appellate Body finds that DoD procurement 
contracts create the same type of financial contribution as the DoD assistance instruments, NASA 
instruments, and the FAA's Boeing CLEEN Agreement – as the EU argues th at the Appellate Body 
should do – then the rationale for separate specificity analyses collapses.  
8. The Panel stated that the only benefit it found to exist in all three categories of funding 
instruments was from the allocation of patent rights. As the Appe llate Body found in US – Large Civil 
Aircraft , that allocation of rights is common to all U.S. government contracts, cooperative 
agreements, and assistance instruments that call for research, regardless of the agency, the private 
signatory of the agreement , or the topic of the research. It is dictated by the same set of authorizing 
legislation – the Bayh -Dole Act, related legislative instruments, and implementing regulations.1 In 
this situation, the Appellate Body's guidance in US – Large Civil Aircraft  calls for a specificity analysis 
at the level of "the broader legal framework pursuant to which the particular subsidy is granted and 
the relevant granting authorities operate. "2 That analysis establishes that the United States has not 
limited access to the s ubsidy to an enterprise or industry or group of enterprises or industries for 
purposes of Article 2.1 of the SCM Agreement, and the EU has never argued otherwise.  
9. Section IV  presents a conditional appeal: i f the Appellate Body reverses the Panel's finding 
that the State of South Carolina's payment to Boeing of Economic Development Bond and Air Hub 
Bond proceeds did not cause adverse effects to the EU, then the United States appeals the Panel's 
finding that these payments confer a benefit to Boeing. The Pane l's benefit finding relies on the 
incorrect premise that, at the time of the agreement, South Carolina and Boeing did not foresee 
Boeing providing remuneration for the payments.3 In reaching this finding, the Panel disregarded 
evidence demonstrating that S outh Carolina did expect Boeing to invest in the project site, thereby 
offsetting any benefit conferred, at the time of the agreement. Accordingly, the Panel failed to make 
an objective assessment of the matter before it, as called for by Article 11 of the  DSU. 
10. Section V presents a conditional appeal: if the Appellate Body modifies or reverses any of the 
Panel's findings with respect to adverse effects of the pre -2007 aeronautics R&D subsidies on the 
A330, then it should also reverse the Panel's finding tha t the EU made a prima facie  case of significant 
price suppression under Article 6.3(c) of the SCM Agreement. The Appellate Body has explained that 
in order for a subsidized product to have adverse effects on the complaining Member's product, the 
two must b e in the same market, meaning in actual or potential competition with one another. The 
EU has consistently asserted that, as of the end of the implementation period, the A330 is in a 
monopoly market and is not in actual or potential competition with any Bo eing LCA. Consequently, 
the Panel erred in interpreting and applying Article 6.3(c) by refusing to reject the EU's price 
suppression claim for failure to make a prima  facie case and in failing to conduct an objective 
assessment as required under Article 11  of the DSU.  
 
                                                
1 19 U.S.C. §§ 200 -212, (Exhibit EU -220); Executive Order 12591, Facilitating Access to Science and 
Technology, 10 April 1987 (Exhibit EU -238); Memorandum to the H eads of Executive Departments and 
Agencies: Government Patent Policy, Public Papers 248, 18 February 1983 (Exhibit EU -1062); 48 CFR § 
27.300 -27.306 (Exhibit EU -221); US – Large Civil Aircraft (AB) , paras. 764 -767, 769 -773, and 779 -780. 
2 US – Large Civil A ircraft (AB) , para. 757.  
3 Compliance Panel Report, para. 8.822.  WT/DS353/AB/R W/Add.1  
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ANNEX B -3 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLEE'S SUBMISSIO N 
1. This dispute began in 2004.1 The original panel based its findings on evidence covering a 
period stretching from 1989 to 2006, which after review by the Appellate Body resulted in an ultimate 
finding that:  
• aeronautics research and development subsidies consisting of financial contrib utions 
worth approximately USD $2.6 billion conferred through NASA2 procurement contracts 
and DoD3 assistance instruments caused adverse effects in the market for 200 -300 seat 
aircraft;4 and  
• FSC/ETI5 tax concessions (USD 2.2 billion), the reduction in the  Washington state B&O 
tax rate for aerospace manufacturing and retailing (USD 13.8 million), and tax 
advantages associated with City of Wichita IRBs (USD 476 million) caused adverse 
effects in the market for 100 -200 seat aircraft.6 
The Dispute Settlement b ody ( "DSB") adopted the panel report, as modified by the Appellate Body 
report, and recommended that the United States bring itself into compliance.  
2. On September 23, 2012, the United States notified the DSB that it had taken numerous steps 
to comply with t he DSB recommendations and rulings arising out of the original proceedings. The 
EU disagreed, and commenced a proceeding under Article 21.5 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU"), which not only challenged  U.S. 
compliance with respect to measures found to be WTO inconsistent, but also sought to reopen 
several findings that were in favor of the United States for several measures, and to add a number 
of claims regarding U.S. jurisdictions and agencies that it  had not previously challenged. In all, it 
challenged 29 measures and groups of measures.  
3. As the EU notes, it prevailed on significant parts of its claims.7 But ultimately the EU failed to 
establish that, with the exception of the Washington B&O tax rate r eduction, any of the 29 allegedly 
unwithdrawn subsidies that it challenged were inconsistent with Articles 5 and 6 of the Agreement 
on Subsidies and Countervailing Measures ("SCM Agreement ") after the implementation period:8 
• The financial contribution thro ugh NASA procurement contracts was [BCI]  million for 
2007 to 2012, [BCI]  lower than the amount alleged by the EU, and substantially lower 
on an annual basis than in the original proceeding.9 (The EU does not appeal this 
finding.)  
                                                
1 Section I constitutes the executive summary for this submission. It contains 3,893 words. The 
remainder of the document contains 106,896 words.  
2 National Aeronautics and Space Administration.  
3 U.S. Department of Defense.  
4 US – Large Civil Aircraft (AB) , para.  1350(d)(i) and (ii); US – Large Civil Aircraft (Panel) , para. 7.1433.  
5 Foreign Sales Corporation/Extraterritorial Income.  
6 US – Large Civil Aircraft (AB) , para.  1350(d)(iii); US – Large Civil Aircraft (Panel) , paras. 7.254 and 
7.1433. The original panel found that the value of the financial contribution conferred through DoD assistance 
instruments was "unclear". It stated "if the Panel were to accept the various steps in the European 
Communities' analysis" (wh ich the panel did not do) it would set an upward bound of $1.2 billion on the value 
of the financial contribution through DoD assistance instruments. This figure covered the period from 1992 to 
2006. Ibid., para. 7.1209, note 2800.  
7 EU Appellant Submissio n, para. 2.  
8 The compliance Panel rejected the EU's claims under Article 3 of the SCM Agreement and Article III:4 
of the GATT 1994. See compliance Panel Report, paras. 11.6, 11.9. The EU does not appeal these findings.  
9 Compliance Panel Report, paras. 8. 243, 8.286.  WT/DS353/AB/R W/Add.1  
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• The financial contribution  through DoD assistance instruments was [BCI]  million for 
2007 to 2012, much lower than the amount alleged by the EU.10 (The EU does not 
appeal this finding.)  
• The two largest DoD procurement contracts, which accounted for 84 percent of the 
value challenged by the EU,11 were outside the Panel's terms of reference. (The EU does 
not appeal this finding.)  
• The EU failed to meet its burden of proof with respect to demonstrating that the 
remaining DoD procurement contracts were joint ventures analogous to equity in fusions 
that conferred a benefit.  
• The Panel found that Boeing did not receive FSC/ETI subsidies after 2006, and that the 
Wichita IRBs had ceased to confer a specific subsidy by the end of the implementation 
period.12 
• The Panel found that five of the challen ged South Carolina measures were not received 
by Boeing, did not confer a financial contribution, or were not specific.13 (The EU does 
not appeal these findings.)  
• The acceleration effect of the pre -2007 R&D subsidies, which was the basis for the 
original pa nel's finding of adverse effects, had ended by the end of the implementation 
period.  
• Post-2006 R&D subsidies resulting from a financial contribution worth USD [BCI]  million 
did not make a genuine and substantial contribution to any adverse effects through  a 
price effects causal pathway. (The EU conceded that these measures had no technology 
effects.)  
• Specific state and local cash flow subsidies found to be worth USD [BCI]  million did not 
make a genuine and substantial contribution to any adverse effects through a price 
effects causal pathway.  
The Panel ultimately found that only one of the measures challenged by the EU – a reduction of 
USD 325 million in Boeing's B&O tax  payments over the course of three years – was a financial 
contribution, conferred a benefit, was specific, and was a genuine and substantial cause of adverse 
effects. The U.S. other appellant submission explains why the EU's arguments on that claim 
contai ned fatal flaws, and that the Panel erred in failing to recognize them.  
4. The EU's case suffers from several significant and indeed fatal flaws. First, the amounts of the 
financial contributions found to confer specific subsidies are small in the context of Boeing's annual 
large civil aircraft revenue of USD 49 -60 billion in the 2013 -2015 period.14 They are also significantly 
smaller than the amounts of the financial contributions found in the pre -2007 period, both in the 
aggregate and on an annual average bas is. Second, the amounts of the financial contributions are 
substantially lower than those at issue in EC – Large Civil Aircraft  for the same period. (A comparison 
of benefits is not possible because both compliance panels found that a quantification of the  benefit 
was not necessary to an analysis of adverse effects.) Third, the EU never alleged, and certainly did 
not establish, that the post -2006 subsidies, either individually or in combination with previous 
subsidies, were critical to Boeing's existence, t he launch of any Boeing aircraft, or the company's 
ability to price its products at profit -optimizing levels.  
5. The EU does not challenge the Panel's findings regarding the amounts of the subsidies, which 
are much lower than it had alleged. It does not chal lenge the validity of many of the Panel's findings 
that Boeing did not receive subsidies alleged by the EU, or that the measures were not financial 
contributions, did not confer a benefit, or were not specific. With regard to those findings that it 
                                                
10 Compliance Panel Report, para. 8.496.  
11 Rumpf Report (Exhibit EU -23), Annex D, p. 2; DOD Subsidies to Boeing's LCA Division, p. 2 
(Exhibit  EU-37). 
12 Compliance Panel Report, para. 8.611 and 8.637 -8.638.  
13 Compliance Panel Report, para. 8.1077 (d), (e), (f), (h), and (i).  
14 See Compliance Panel report, para. 9.392.  WT/DS353/AB/R W/Add.1  
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- 40 - 
appeals , however, the EU has failed to identify any genuine error of interpretation or application of 
the SCM Agreement, nor any valid basis to question that the Panel conducted an objective 
assessment for purposes of DSU Article 11.  
6. Below, the United States will  discuss the Panel's key findings and the EU's claims on appeal, 
generally following the sequence of arguments raised in the EU's Appellant Submission. Section II 
demonstrates that the Panel correctly found that DoD procurement contracts were purchases of 
services, and that the EU failed to make a valid showing that they conferred a benefit. The EU argues 
that the Panel's assessments of three categories of evidence were not objective, but the EU fails to 
identify any basis for casting doubt on the Panel's o bjectivity. In particular, first, the EU alleges that 
the Panel failed to recognize Boeing's conduct of R&D activities independent of DoD as 
"contributions " to the contracts (which, in the EU's view, should have led the Panel to find that the 
transactions at issue were akin to a joint venture rather than purchases of services). However, the 
Panel addressed the EU assertions and found that the contributions in  question did not exist. Second, 
the EU argues that the Panel failed to consider evidence that, in the EU's view, was contrary to the 
Panel's findings regarding the allocation of the intellectual property rights arising from the 
performance of R&D under th e contracts. But the evidence in question does not support the 
conclusions the EU sought to draw, or outweigh the more compelling evidence cited by the Panel in 
support of its conclusions. Finally, the EU argues that the Panel failed to consider evidence 
suggesting that, despite the primarily military nature of DoD's research, the agency intended it to 
result in civil applications for Boeing's large civil aircraft. But this evidence does not support the EU's 
assertions and, in fact, indicates that (consiste nt with DoD's military objectives) research under the 
DoD procurement contracts rarely produces results with civil applicability.  
7. Section III shows that the Panel properly focused its analysis on the EU assertion that Boeing 
received FSC/ETI tax concessio ns that lowered its income tax payments in the post -2006 period, 
and correctly rejected those assertions when it found that Boeing did not use those tax benefits in 
that period. On appeal, the EU argues that the subsidy remains available as a legal matter,  and 
therefore the Panel should have found that the United States has not withdrawn it. However, the 
Panel correctly focused on the absence of any subsidy to Boeing , which has been the focus of the 
EU's claims since the original dispute, and was the subjec t of the DSB's recommendations and 
rulings. The Panel found that after 2006, Boeing did not receive any FSC/ETI benefits. Accordingly, 
the EU fails to establish that the Panel erred in finding that the United States had withdrawn the 
FSC/ETI tax concession s. 
8. Section IV shows that the Panel properly found that the subsidy provided through Kansas 
Industrial Revenue Bonds ( "IRBs") is no longer specific. The EU argues that the Panel erred in 
assessing de facto specificity on the basis of information that post -dates the implementation period, 
rather than information from 1979 to the present. However, the Panel's approach enabled it to 
properly assess the U.S. argument that it achieved compliance by eliminating the IRBs' de facto 
specificity; and also to take into  account changes in the structure of Wichita's economy that occurred 
during the 2007 -2013 time period. Accordingly, the Panel properly interpreted and applied Article 2 
of the SCM Agreement, contrary to the EU's arguments.  
9. Section V shows that the Panel pr operly found that two South Carolina subsidies – i.e., those 
provided through Economic Development Bonds ( "EDBs") and the Multi -County Industrial Park 
("MCIP") job tax credit – are not specific. The Panel found that both subsidies were not de jure 
specific , and the EU does not contest these findings. In addition, the Panel found that South Carolina 
had authorized the issuance of EDBs for six recipients, only two of which were in the aerospace 
industry. It appears that all entities eligible for the benefit a ctually received it. With respect to the 
MCIP job tax credit, the EU argues that the Panel should have found that the subsidy is specific 
within the meaning of Article 2.2 of the SCM Agreement. However, the Panel found that the MCIP 
designation is readily available, based on (among other things) the fact that Charleston County had 
added property to one MCIP 18 times from 1995 to 2012. Accordingly, the Panel's specificity findings 
were based on a correct interpretation and application of Article 2 of the SCM  Agreement, as well as 
an objective assessment of the evidence, consistent with DSU Article  11.  
10. Section VI shows that the Panel correctly rejected price suppression and lost sales claims in 
this proceeding with respect to aircraft ordered before the end o f the implementation but delivered 
afterward. The EU alleges that the compliance Panel erred in interpreting Article 7.8 by finding that 
it does not obligate a complying party to "remove " deliveries resulting from transactions found to 
have resulted in los t sales or price suppression in the original proceeding. The Appellate Body does WT/DS353/AB/R W/Add.1  
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not need to decide this interpretive question to resolve this appeal because the relevant claims were 
rejected on other grounds that have not been appealed. In any event, the compliance Panel correctly 
found that the interpretation of Article 7.8 urged by the EU would improperly require the 
United  States to remedy the specific instances of adverse effects found in the original proceeding, 
which cannot be reconciled with the pro spective nature of Article 7.8. The EU also asserted that the 
Panel applied Article 7.8 incorrectly, but its arguments do not identify a disagreement with the Panel, 
and are otherwise erroneous and internally inconsistent.  
11. Section VII shows that the Panel  correctly limited its analysis of serious prejudice to 
competition within the markets it found to exist. Contrary to the EU's assertion, the Panel did not 
err in its interpretation of the term "market " in Article 6.3. The Panel correctly found that that p roduct 
markets must be objectively determined, and that an Article 6.3 breach can only be established if 
the subsidized product and product(s) alleged to suffer adverse effects are in the same market. The 
EU's position is meritless for a variety of reasons . First, the EU's position contradicts the 
Appellate  Body's findings that product markets must be objectively determined at the outset, and 
that an Article 6.3 breach can only be maintained if the subsidized product is in the same market  as 
the products al leged to suffer adverse effects. Second, the EU draws a false distinction between the 
requirements for displacement, impedance, and price undercutting on the one hand, and price 
depression, price suppression, and lost sales on the other hand , that is unsup ported and inconsistent 
with the Appellate Body's findings. Third, the EU's suggestion that, despite a panel's delineation of 
product markets, separate attribution factors such as the nature and magnitude of a subsidy can 
support an Article 6.3 breach when  the subsidized product and products alleged to suf fer adverse 
effects are in different markets is entirely unsupported and contrary to the Appellate Body 's findings. 
Fourth, the EU 's suggestion that the Panel 's interpretation of Article 6.3 is contrary to  the object and 
purpose of the SCM Agreement  has no merit.  
12. Section VIII shows that the Panel performed a proper collective assessment of the effects of 
the subsidies. The EU argues that the Panel erroneously interpreted Articles 5, 6.3, and 7.8 of the 
SCM Agreement to make aggregation and cumulation the only two ways of collectively assessing 
multiple subsidies. It urges the Appellate Body to complete the Panel's analysis by applying a third 
approach to collective assessment under which all subsidies or gro ups of subsidies found to be a 
"genuine cause " of adverse effects would be grouped together without regard to whether they 
complemented or supplemented each other, or contributed to each other's effects. The EU's 
arguments do not provide a valid basis for reversing the Panel's findings, or for completing the 
analysis in the event of a reversal. First of all, the Panel did not make the alleged legal finding that 
the EU appeals, that aggregation and cumulation are the only permissible forms of collective 
assessment. Second, this appeal is largely an academic exercise because, except for the Washington 
B&O tax rate reduction in the single aisle market, the Panel found that none of the other aggregation 
groups was even a genuine cause of adverse effects. Third, even if the Appellate  Body were to find 
that that there are multiple aggregation groups that are a genuine (but not substantial) cause of 
adverse effects in a product market, the EU's third approach is too undemanding to provide a valid 
collective assessme nt of those groups.  
13. Section IX shows that the Panel did not find that subsidies must be the sole cause of a lost 
sale and, therefore, did not err in the interpretation of Articles 5, 6, and 7.8 of the SCM  Agreement. 
The compliance Panel properly assessed whether sales campaigns were price -sensitive on the basis 
of voluminous evidence, including evidence of the role that price and other non -subsidy factors 
played in the relevant sales campaigns. The EU asserts the Appellate  Body analysis adopted by the 
Panel was not generally applicable, but was instead a methodology useful only to identify 
transactions for which the uncontested evidence was sufficient to complete the original panel's 
analysis regarding causation of significant lost sales. However, the EU mi sreads the Appellate Body's 
reasoning, which first identified general conditions of competition in the large civil aircraft industry, 
and on that basis set out the criteria under which a sales campaign was sufficiently price -sensitive 
to support an inferen ce that Boeing used tied tax subsidies to lower its prices in that campaign. 
Furthermore, if the EU's challenge were correct, the Appellate Body would necessarily be unable to 
complete the analysis in this appeal, as it would find itself in the exact posit ion the EU claims the 
Panel erroneously placed itself in – which resulted in an absence of adverse effects findings on the 
basis of the sales campaigns at issue.  
14. Section X shows that the Panel did not err in finding that the EU failed to establish that th e 
untied subsidies cause price effects. The Panel correctly interpreted Articles 5 and 6.3 of the 
SCM Agreement as allowing a finding of serious prejudice only if a causal link exists between the WT/DS353/AB/R W/Add.1  
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subsidies and the alleged indicia. The EU asserts two errors  with the Panel's findings. First, it 
contends that the Panel interpreted (or applied) Articles 5 and 6.3 so as to allow a finding of adverse 
effects only if the complaining party could "trace the dollars " from subsidies to price reductions. But 
the Panel never did this. It simply examined whether the EU had met its burden to show that the 
subsidies contributed to the adverse effects, and found that the EU had failed to provide any theory 
or evidence whatsoever to support its assertion that the subsidies af fected Boeing's pricing, which 
the EU acknowledges15 was only the first step in the causal pathway it alleged. Second, it asserts 
that the Panel failed failed to follow the Appellate Body's guidance that supposedly required a finding 
of adverse effects as l ong as there is a "nexus " between the subsidy and Boeing's LCA  development, 
production, or sale, however superficial or divorced from Boeing's pricing. The Panel rejected the 
EU's argument, which it found overstretched the applicability of the Appellate Body's findings, and 
followed Appellate Body guidance calling fo r an evaluation of the extent to which subsidies contribute 
to the adverse effects alleged by the complaining party.  
15. Section XI shows that the compliance Panel carefully considered the evidence and 
argumentation submitted by the parties, and correctly conc luded that the pre -2007 R&D subsidies 
had no technology effects after the end of the implementation period. Contrary to the EU's claims, 
the Panel correctly applied Articles 5 and 6.3 of the SCM Agreement when it focused its 
counterfactual analysis on the date that Boeing would have launched the 787 in the absence of the 
pre-2007 R&D subsidies, while duly considering deliveries. The EU also errs in its criticism of the 
benchmarks used by the Panel in assessing how long it would take Boeing to launch the 787  in the 
absence of subsidies, because the correctly found that the Boeing Report was based on relevant, 
early-state R&D, and that other evidence conferred the estimate advanced by the United States. 
The EU's argument that the Boeing Report failed to take a ccount of the sequencing of R&D is based 
on a mistaken premise, and fails to recognize that the methodology accounted for technology 
maturation. The EU also asserts that the Panel placed an improperly heavy burden on it, but in 
actuality, t he Panel perform ed its role by evaluating  whether the EU met its burden of making a 
prima facie  case and of responding to the evidence and arguments advanced by the United States . 
Finally, in the event that the Appellate Body reverses any of the Panel's findings, the EU r equests 
completion of the Panel's analysis. However, the findings of the Panel and undisputed facts are 
insufficient for that purpose.  
16. Section XII shows that the compliance Panel correctly found that the EU failed to demonstrate 
that pre -2007 R&D subsidies  had "continuing " adverse effect to the A330 and A350 XWB after the 
implementation period. The EU's appeal under DSU Article 11 fails because the compliance Panel 
adhered to the original panel's legal reasoning, and applied it to the facts and arguments in  this new 
proceeding. That this process in some instances produced different outcomes was not an 
impermissible "deviation, " but rather the result of an objective assessment that addressed the 
relevant new facts and arguments and did not mechanistically rep licate the original results. The EU 
also fails to establish that the Panel erred in applying Articles 5 and 6.3 of the SCM Agreement to 
the claim that A330 prices are significantly suppressed. The Panel explicitly acknowledged that a 
price suppression clai m under Article 6.3(c) is counterfactual in nature. It carefully examined the 
evidence and correctly found no basis for the EU's argument that, absent unwithdrawn subsidies, 
counterfactual A330 prices in the post -implementation period would have been diffe rent, let alone 
that they would have "recovered " to their pre -2004 levels. The EU also asks that, in the event of 
reversal of the challenged Panel findings, the Appellate Body complete the legal analysis, it puts 
forward only generalized assertions, unsupp orted assumptions and a misreading of the original 
Panel's findings in support of its request.  
17. Section XIII shows that the t he EU's has failed to identify sufficient Panel findings or 
undisputed facts to support its r equest for co mpletion of the analysis regarding alleged lost sales. 
The EU has requested that , in the event that the Appellate Body reverses the compliance Panel's 
findings concerning the standard for finding whether a measure has resulted in significant lost sales 
within the meaning of Article  6.3(c) of the SCM Agreement,  the Appellate Body complete the 
analysis , and in particular find the relevant subsidies caused two groups of alleged "additional 
significant lost sales ": (a) sales where the EU alleges additional lost sales caused only by the effects 
                                                
15 EU Appellant Submission, para. 646 (stating that "the Appellate Body has held that a complaining 
Member must establish a 'genuine and substantial relationship of cause and effect' b etween the subsidies at 
issue and the adverse effects claimed," and that "{e}stablishing the existence of an effect from the untied 
subsidies at issue on Boeing's pricing of LCA is one step in that analysis").  WT/DS353/AB/R W/Add.1  
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of the Washington State B&O tax rate reduction,16 and (b) lost sales allegedly caused by the 
technology effects of pre -2007 aeronautics R&D subsidies, the B&O tax rate reduction, and "all of 
the untied subsidies. "17 In reality, the EU is asking the A ppellate Body to discard the Panel's careful 
analysis of a complex factual record and undertake its own de novo analysis based on EU 
argumentation rather than on the basis of – and often in contradiction to – Panel findings of fact or 
undisputed facts on t he record. This is not the role of the Appellate Body.  
 
                                                
16 EU Appellant Submission, para. 997.  
17 EU App ellant Submission, para. 1036-1038.  WT/DS353/AB/R W/Add.1  
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ANNEX B -4 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S APPELLEE'S SUBMISSIO N 
I. INTRODUCTION  
1. In its Other Appellant 's Submission, the United Stat es appeals a number of findings  in the 
Report of the Panel in United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) (Recourse to Article 21.5 of the DSU by the European Union) 
("Panel  Report " or "compliance Panel Report "), several of which are appealed only on a 
conditional basis. The US appeals include meritless challenges to: findings by the compliance 
Panel (or "Panel ") on the scope of compliance proceedings under Article 21.5 of the 
SCM Agreement ; the Panel's findings of benefit and specificity with respe ct to the NASA, 
DOD, and FAA R&D subsidies; and the Panel's findings on the benefit conferred by South 
Carolina's bond -funded reimbursements to Boeing for Boeing's expenditures on its own 
facilities. With respect to adverse effects, the United States fails  in its attempts to 
demonstrate any error in the Panel's finding that the Washington State B&O tax rate 
reduction subsidy causes adverse effects, or an alleged error in a particular aspect of the 
Panel's analysis of significant price suppression with respe ct to A330 aircraft. The 
European  Union requests that the Appellate Body re ject the United States' appeal.  
II. THE PANEL'S FIND ING THAT THE EUROPEAN UNIO N'S CLAIMS A GAINST PRE -2007 
DOD PROCUREMENT CONT RACTS ARE W ITHIN THE SCOPE OF T HE COMPLIANCE 
PROCEEDING S IS NOT IN ERROR  
2. The European Union requests that the Appellate Body reject the United States ' appeal of the 
Panel 's finding that the pre -2007 DOD procurement contracts are within the scope of the 
compliance proceedings. The United States fails to demonst rate any error by the Panel  in 
this regard , either in the interpretation or application of Article 21.5 of the DSU.  
3. The United States argues  that the pre -2007 DOD procurement contracts are not properly 
within the scope of the compliance proceedings on the basis that the European Union 
"{c}annot {r}elitigate {a}dopted DSB {r}ecommendations and {r}ulings ".1 But, no such 
DSB recommendations and rulings about pre -2007 DOD procurement contracts have ever 
existed , given that the Appellate Body specifically declared  "moot" the original panel 's 
findings with respect to DOD procurement contracts.2 
4. The United States asserts that "{t}he compliance Panel 's errors begin with its statement of 
what it considered to be the decisive question "– i.e., whether the Appellate Body regarded 
the DOD procurement contracts to be before it  on appeal.3 According to the United States, 
the Panel should have instead considered whether  any issues  were being relitigated. This 
critique is without basis, as the Panel clearly considered both whether the measure was 
before the Appellate Body and whether issues were being relitigated such that the European 
Union  would be "'unfairly ' getting a second chance ".4 
5. In the alternative, the United States alleges that the Panel erred in its application of the 
correct legal standard, as much of the Appellate Body's analysis suggests the DOD 
procurement contracts were not b efore it on appeal.5 But just because an adjudicator spends 
more words  considering one of two possible understandings does not mean that such 
possibility is the correct one.  The Panel's understanding of the Appellate Body's analysis was 
fully justified and  correct.  
                                                
1 US Other Appellant's Submission, Heading I(A).  
2 Appellate Body Report, US – Large Civil Aircraft , para. 620 (footnote 1298).  
3 US Other Appellant's Submission, para. 15 citing Panel Report, para. 7.126.  
4 Panel Report , para. 7.130.  
5 US Other Appellant's Submission, para. 17.  WT/DS353/AB/R W/Add.1  
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6. Next, the United States argues that the European Union "{c}annot {r}elitigate {w}hether 
the DoD {p}rocurement {c}ontracts {c}onfer a {b}enefit "6, but this issue was not actually 
litigated to completion.  To recall, the original panel made no factu al findings  with regard to 
the "benefit " conferred by the pre -2007 DOD procurement contracts, and the relevant facts 
remained highly contested. In these circumstances, there is simply no support for the 
position t hat the European Union's decision not  to request the Appellate Body to complete 
the analysis on "benefit ", in the original proceedings , results in preclusion on demonstrating 
"benefit " during the compliance proceedings. As the Panel properly understood, the 
European Union cannot be penalised for refraining from asking the Appellate Body to do 
something that falls outside of the Appellate Body 's competence.  
7. In this case, the original panel had not even begun  an analysis of the highly fact -intensive 
issues of "benefit " or "adverse effects " with respect to DOD procurement contracts.7 Thus, 
there were no "factual findings " related to DOD procurement contracts with which the 
Appellate Body could complete the analysis. Nor were there uncontested facts that could 
have served this purpose, as these wer e highly contentious issues with many disputed facts. 
Indeed, as the Appellate Body noted, the United States, itself, did not request completion of 
the analysis for its own appeals on questions of financial contribution and benefit, because 
of "the complex ity and disputed nature of the facts on the Panel record ".8 
8. Finally , the United States erroneously contends that considerations of efficiency and 
effectiveness of the dispute settlement system – as well as the statement in Article 3.7 of 
the DSU that "the aim of dispute settlement is to secure a positive solution to a dispute " – are 
not relevant for evaluating the proper scope of compliance proceedings pursuant to 
Article  21.5 of the DSU.9 Yet, as previous Appellate Body reports have found, efficiency and 
prompt, po sitive settlement of disputes are indeed  relevant considerations in this context .10 
III.  THE APPELLATE BODY S HOULD REJECT THE US APPEAL OF THE PANEL 'S FINDING 
THAT THE WASHINGTO N STATE B&O TAX RATE  REDUCTION I S A GENUINE AND 
SUBSTANTIAL CAUSE OF  ADVERSE EFFECTS  
9. The United States appeals certain elements of the Panel 's findings that the Washington State 
B&O tax rate reduction subsidy is a genuine and substantial cause of significant lost sales , 
and a threat of impedance in a number of country market s for single -aisle LCA.11 The 
United  States ' main contention is that tied tax subsidies, such as the Washington State B&O 
tax rate reduction, are not only tied in the sense that the government grants  the subsidy 
each time a sale is made, but also tied in th e sense that Boeing can use the subsidy to reduce 
prices only in respect of the specific aircraft for which the subsidy was granted . The United 
States argues that this finding is inconsistent with Articles 5.3(c) and 6.3 of the 
SCM Agreement , or in the alternative, amounted to a failure to make an objective 
assessment of the matter under Article 11 of the DSU.12 The Appellate Body shou ld reject 
the US arguments.  
A. The Panel did not err in its findings regarding the per -aircraft magnitude of 
the Washington  State B&O tax rate reduction  
1. The Panel  properly interpreted Articles 5(c) and 6.3 of the SCM Agreement  
10. The Panel properly exercis ed its discretion in selecting an appropriate methodology to 
analyse the price effects of the tied subsidies, and was under no obligation to interpret 
Article s 5(c) and 6.3 as requiring the US ' proposed calculation methodology.13 Indeed, it 
correctly heeded  the Appellate Body 's warnings against unduly segmenting the analysis and 
                                                
6 US Other Appellant's Submission, Heading I(B).  
7 Panel Report, US – Large Civil Aircraft , paras. 7.1182 -7.1188, 7.1701.  
8 See Appellate Body Report, US – Large Civil Aircraft , paras. 130, 163. 
9 US Other Appellant's Submission, paras. 21 -22. 
10 See, e.g., Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 212; 
Appellate  Body Report, US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) , para. 151.  
11 US Other Appellant's Submission, Section II.  
12 US Other Appellant's Submission, para. 69.  
13 Appellate Body Report, US – Upland Cotton , para. 436.  WT/DS353/AB/R W/Add.1  
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using analytical tools  that would preclude  finding adverse effects  where they do, in fact, 
exist.14 The Panel properly interpreted Articles 5(c) and 6.3 of the SCM Agreement  to permit  
an assessment of whether tied subsidies may have price effects by being pooled , and 
deployed strategically , in particularly price -sensitive sales campaigns.  
2. The Panel properly applied Articles 5(c) and 6.3 of the SCM Agreement  
11. In the original proceedings, the Appellate Body found that tied subsidies are received  based 
on sales of individual LCA.15 In considering how a recipient may use the subsidy, the 
Appellate Body highlighted the competitive conditions in the LCA markets.16 Specifically, the 
Appellate Body emphasised that Boeing and Airbus both have the ability and incentive to 
strategically use tied subsidies to lower prices in particularly price -sensitive sales 
campaigns.17 Thus, when calculating the per -aircraft subsidy magnit ude by focusing on 
price-sensitive sales and not on all sal es of Boeing LCA, the  Panel applied Articles 5(c) 
and 6.3 of the SCM Agreement  consistently with the adopted findings of the Appellate Body.  
12. Moreover, the Panel properly grounded its findings in th e facts that it found. The Panel 's 
reasoning , in finding that the tied tax subsidies resulted in lower prices in certain strategically 
important and price -sensitive sales , builds upon its factual findings regarding the competitive 
conditions of the LCA mar kets.18 Given these conditions of competition, and the resulting 
incentives to use subsidies, the Panel correctly applied Articles 5(c) and 6.3 to conclude that 
Boeing would strategically target the use of its tied tax subsidies to particularly 
price-sensit ive sales campaigns.  
3. The Panel made an objective assessment under Article 11 of the DSU  
13. The United States fails to substantiate its claim under Article 11 of the DSU , separately from 
its general arguments regarding the interpretation and application of Articles 5(c) and 6.3 
of the SCM Agreement . Indeed, the US arguments appear to amount to no more than an 
assertion of disagreement with the Panel 's factual findings. Th e Appellate Body has 
previously explained that the party raising the claim bears the onus of explaining why the 
alleged error meets the standard of review under Article 11.19 In the absence of clearly 
articulated and substantiated claims, the US appeal unde r Article 11 of the DSU must fail.  
14. In any event, the Panel 's findings were properly made. The Panel engaged in a detailed 
assessment of the evidence submitted by both Parties to come to a reasoned assessment of 
the per -aircraft subsidy magnitude.20 Moreover , the Panel 's findings were consistent with 
the adopted findings in the original proceedings.21 In sum, the Appellate Body should reject 
the US appeal under Article 11 of the DSU.  
B. The US arguments regarding the factors that must be considered "in case th e 
Appellate Body considers that more analysis is appropriate" are unavailing  
15. In Section II.E of its Other Appellant 's Submission, the United States raises additional 
assertions that it argues should be considered only "to the extent the Appellate Body 
considers that further analysis is justified ".22 However, the entirety of Section II.E  assumes 
a per -aircraft subsidisation of USD 100,000 to be the correct subsidy magnitude, and 
compares that number to what the United States claims to be the price differential between 
Airbus ' and Boeing 's offers in each of the sales campaigns at issue.23 As such, if, after 
                                                
14 Appellate Body Report, US – Large Civil Aircraft , paras. 1284, 1290.  
15 Appellate Body Report, US – Large Civi l Aircraft , para. 1161.  
16 Appellate Body Report, US – Large Civil Aircraft , para. 1260.  
17 Appellate Body Report, US – Large Civil Aircraft , paras. 1254, 1255, 1260.  
18 Panel Report, paras. 9.17, 9.19, 9.20, 9.50, 9.54, 9.55, 9.242, 9.247, 9.379, 9.454.  
19 Appellate Body Report, EC – Seal Products , para. 5.150.  
20 Panel Report, paras. 9.389 -9.404.  
21 See Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 103 ("doubts 
could arise about the objective nature of an Article 21.5 panel's assessment if, on a specific issue, that panel 
were to deviate from the reasoning in the original panel report in the absence of any change in the underlying 
evidence in  the record"); Appellate Body Report, US – Stainless Steel (Mexico) , para. 158, footnote 309.  
22 US Other Appellant's Submission, para. 118. See also  US Other Appellant's Submission, para.  30. 
23 See US Other Appellant's Submission, paras. 118, 128, 130, 133 , 135, 137, 139, 141.  WT/DS353/AB/R W/Add.1  
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engaging with the US assertions in Section II.D, the Appellate Body "considers that further 
analysis is justified ",24 the United States ' assertions in Section II.E. would fail to offer any 
additional or alternative reasons to reverse the P anel's findings as the United  States 
requests, since Section II.E is premised on the accuracy of Section II.D.  
C. The United States errs in its arguendo  assertion that, even at a per -aircraft 
magnitude of USD 1.99 million, the B&O tax rate reduction subsid y should 
not have been found to constitute a genuine and substantial cause of lost 
sales  
16. Finally , the United States asserts that – assuming, arguendo , that the correct per -aircraft 
subsidy magnitude is USD 1.99 million – the Panel still erred in making fin dings of significant 
lost sales. For the 2008 Fly Dubai and the 2011 Delta sales campaign s, the United States 
alleges that the Panel erred in the interpretation or application of Articles  5(c) and 6.3 of the 
SCM Agreement , or alternatively, failed to make an objective assessment under Article 11 
of the DSU. For the 2013 Icelandair and 2013 Air Canada campaigns, the US appeal is under 
Article 11 of the DSU. The United States does not specify the nature of its appeal against 
the 2014 Fly Dubai campaign.  
17. All of these appeals rest on one erroneous premise – that a finding of lost sales would be 
warranted only in those instances where the per -aircraft magnitude of subsidisation is 
sufficient to bridge the entirety  of the price differential between Boeing 's and Ai rbus' offers. 
For several reasons, that premise is untenable.  
18. First, as a legal matter, a subsidy need not be the sole cause of adverse effects; it need not 
even be the sole genuine and substantial cause of adverse effects. For a finding of adverse 
effects , a subsidy need only be "a genuine and substantial cause ". 
19. Second , in considering sales campaigns for the purchase of differentiated products such as 
aircraft, a finding of lost sales can be made where the subsidy magnitude and price 
differentials in offe rs from two manufacturers are of comparable levels, even if the former 
does not exceed the latter . This is because (i) the outcomes of sales campaigns are driven 
more by differences in the net present value of the offers, for which price differentials are 
only one (albeit important) factor, and (ii) competing offers are made by two sophisticated 
competitors in the absence of perfect information about the other competitor 's offer.  
20. The European Union has also responded individually to each of the sales -specif ic arguments 
advanced by the United States, with reference to HSBI evidence.  
IV. THE UNITED STATES ' CONDITIONAL APPEAL OF THE PANEL' S FINDINGS T HAT THE 
NASA, DOD, AND FAA R &D MEASURES CONFER A  "BENEFIT " HAS NO MERIT  
21. The European Union requests that the App ellate Body reject the United States ' conditional 
appeal of the Panel 's finding s that the post -2006 NASA procurement contracts and 
cooperative agreements, DOD assistance instruments, and the FAA Boeing CLEEN  
Agreement confer a benefit on Boeing. This appeal is conditional upon the Appellate Body 
finding that any aeronautics R&D subsidy causes adverse effects.25 
22. The United States bases its appeal on two grounds. First, the United States  alleges that the 
Panel e rred in the application of Article 1.1(b) of the SCM Agreement , in confining its benefit 
analysis to the allocation of patent rights, and failing to take account of other terms of the 
relevant agreements.26 Second, the United States contends that, assuming arguendo  that 
the Panel properly applied Article 1.1(b), the Panel nevertheless failed to conduct an 
objective assessment under Article 11 of the DSU because it disregarded the monetary 
component of the allocation of patent rights.27 
                                                
24 US Other Appellant's Submission, para. 118.  
25 US Other Appellant's Submission, para. 176.  
26 US Other Appellant's Submission, para. 180.  
27 US Other Appellant's Submission, para. 180.  WT/DS353/AB/R W/Add.1  
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23. These arguments are una vailing.  
24. First, the United States attempts to establish that the Panel erred in the application of 
Article  1.1(b) based on a mischaracterisation of the Panel 's analysis. In reality, the Panel 
identified and applied the correct legal standard for evaluating  "benefit " – which is the very 
same standard identified by the United States, itself – and considered all relevant evidence 
on the record.  
25. As the Panel explained in summarising its own approach to benefit, while its attention – like 
that of the Appellate B ody before it – was focused on the allocation of intellectual property 
rights, this was only because the Panel had first determined, as a factual matter and after 
considering all of the terms of the transactions, that this was the defining, distinguishing 
feature of the NASA, DOD, and FAA R&D instruments at issue, when compared with the 
market benchmarks. In the words of the Panel, whether focusing on intellectual property 
rights is appropriate for the benefit analysis of R&D contracts and agreements "concluded 
between NASA, DOD, or indeed any other U.S. Government agencies ": 
will depend very much on the programmes in question, and a consideration 
of all of the terms of the transactions, including those relevant  to the 
characterization of the financial contr ibution and benefit.28 
This is precisely the type of analysis that the United States claims the Panel did not do.  
26. The Panel 's decision to focus on the intellectual property rights, in the context of the NASA, 
DOD, and FAA R&D agreements and contracts at issue, was not just in line with the Appellate 
Body's analysis, but also fully consistent with the United States ' own argument s before the 
compliance Panel. To recall, the United St ates had argued that it withdrew  the benefit found 
to be conferred by the NASA and DOD measures in question by modifying only one aspect 
of the allocation of intellectual property rights.29 After examin ing the US ' declared compliance 
measures, the Panel concluded that such modifications did not bring the affected instruments 
in line with prevailing market practices for collaborative R&D arrangements in such a way as 
to remove the benefit.30 Left with no m aterial changes to the relevant instruments and many 
of the same benchmarks considered by the Appellate Body, the Panel followed the overall 
logic of the Appellate Body 's reasoning, while also consider ing the new evidence before it.  
27. The United States ' application appeal is thus based on a mischaracterisation of the Panel 's 
analysis. Contrary to  the United States' contentions, t he Panel properly followed and 
incorporated the Appellate Body 's analysis. Moreover, t he Panel conducted a benefit 
assessment that t ook account of all relevant terms of the measures at issue, and compared 
them to the relevant terms of the benchmark agreements. In particular, the Panel 's benefit 
analysis demonstrates that it looked at, inter alia , the relative contributions of the parti es to 
the joint venture, including monetary ( e.g., cost -sharing) and non -monetary contributions; 
relevant characteristics of the measures and benchmarks; and the extent to which the 
parties had col laborative relationships.31 In addition, t he Panel considered "new evidence 
and argumentation ", along with the evidence previously before the original panel, dedicating 
the entirety of Appendix 1 of the Panel Report to a thorough evaluation of all relevant 
evidence and arguments. Based o n this  evaluation, the Panel conclu ded that the new 
evidence  confirms that the aeronautics R&D subsidies confer a benefit.32 
28. Second , the United States ' appeal under Article 11 of the DSU fails because, contrary to the 
US' contention, the Panel considered the monetary  component of patent rights, to the extent 
relevant to the "benefit " analysis. The specific US arguments that a greater focus on the 
"monetary component " could have been determinative of the Panel 's "benefit " analysis do 
not reveal that the Panel exceeded the bounds of its discretion, as the trier of fact, under 
Article 11. Indeed, these arguments are unsupported by any evidence on the record; 
                                                
28 Panel Report, para. 8.464. (emphasis added)  
29 See Panel Report, para. 8.5.  
30 Panel Report, paras. 8.42 -8.49, 8.181 -8.182, 8.408 -8.409.  
31 See, e.g., Panel Report, paras. 8.189, 8.194 (footnote 1236), 8.421, 8.427 -8.433, 8.464, 8.534, 
8.539 -8.540 and Appendix 1, paras. 21 -27. 
32 See Panel Report, Appendix 1.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
- 49 - 
moreover, they involve reframing an argument that the Panel properly considered and 
rejected.  
29. As the United States itself seems to acknowledge, a requirement in the benchmark 
agreements for the commissioning party to pay royalties in return for IP licencing rights 
could eliminate the benefit if and only if  the required royalty payments were greater than or 
equal to the  value of the IP rights.33 The United States has never provided any evidence that 
there was even a single contract in which the royalty requirement exceeded , or was equal 
to, the value of the IP for the commissioning party. Thus, no evidence on the record w ould 
have changed the Panel 's determination that a "benefit " exists, based on considerat ion of 
such royalties.  
30. The lack of evidence  in this regard  is not surprising, as it would be irrational for a 
commissioning party to enter into an agreement ex ante  in which it is anticipated that the 
royalty payment would be greater than , or equal to,  the value of the IP . 
31. Moreover, looking at the other side of the transaction, t he notion advanced by the 
United  States – that the royalties received by a commissioned  party  in the market 
benchmark agreements would put the commissioned party in a better position than Boeing 
under the aeronautics R&D measures at issue34 – is illogical and contrary to the evidence.  
V. THE UNITED STATES ' CONDITIONAL APPEAL OF THE PANEL' S FINDINGS  THAT THE 
NASA, DOD, AND FAA R&D  SUBSIDIES A RE "SPECIFIC " HAS NO MERIT  
32. The European Union requests that the Appellate Body reject the United States ' conditional 
appeal of the Panel 's finding that the NASA, DOD, and FAA R&D subsidies are specific.  
33. As an ini tial matter, it is important to highlight that the United States  does not appeal the 
Panel 's existing  findings that the NASA, DOD, and FAA R&D subsidies are specific, nor does 
the U nited States challenge the reasoning underlying those findings. Rather, the 
United  States ' position is as follows: If the Appellate Body upholds the Panel 's finding that 
the DO D procurement contracts do not constitute subsidies, then the Panel 's findings that 
the NASA, DOD, and FAA R&D subsidies are specific are not in error . If, however, the 
Appellate Body reverses the Panel 's findings on DOD procurement contracts, and finds th at 
they can be characterised in the same way as the other R&D instruments at issue, then there 
could be no basis to find specificity for any of the NASA, DOD, and FAA R&D subsidies, and 
any finding of specificity would constitute error.35 According to the U nited States, reversal of 
the Panel 's subsidy findings with respect to one measure (DOD procurement contracts) 
somehow converts all US Government R&D subsi dies – administered by every 
US Government agency (even beyond NASA, DOD, and FAA) – into a single "patent rights " 
subsidy that, considered as a whole, must be held to be non -specific.  
34. The US  arguments have no merit.  
35. First, at its core, the US appeal is based on a fundamental misunderstanding and/or 
mischaracterisation of the Panel 's analysis. In reality,  the Panel 's specificity findings with 
regard to the NASA, DOD, and FAA R&D subsidies , were not dependent on its ultimate 
conclusion that one particular type of measure, the DOD procurement contracts, did not 
constitute subsidies. Rather, the Panel 's speci ficity findings were based on a consideration 
of each "subsidy " – including a consideration of "financial contribution " and "benefit " – in its 
particular context. The Panel explained that "the role of the allocation of intellectual property 
rights in {the}  analysis of whether a measure constitutes a subsidy depends upon the 
particular context ", and consequently the focus of the "benefit " analysis, as well as the 
ultimate finding, can vary despite similarities in the allocation of IP rights provided pursuant  
to US Government R&D programmes.36 
                                                
33 US Other Appellant's Submission, para. 240.  
34 US Other Appellant's Submission, para. 237.  
35 US Other Appellant's Submission, paras. 243, 255 -256, and Heading III(B)(3).  
36 Panel Report, paras. 8.228, 8.466, 8.551.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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36. Second , the US appeal is reminiscent of its failed arguments before the Panel, where the 
United States attempted to characterise the aeronautics R&D measures at issue as a single 
"patent rights subsidy ". As the Panel corr ectly explained, lumping together the NASA, DOD, 
and FAA R&D subsidies in this way would be tantamount to ignoring that determining the 
proper characterisation of a subsidy requires evaluating not just the "benefit " (or an aspect 
thereof), but also the "financial contribution ".37 It would also be directly contrary to the 
Appellate Body 's guidance in the original proceedings, which cautioned that any specificity 
findings with respect to the European Union 's prior, sepa rate challenge (not pursued in these 
proceedings) to the US Government 's overall regime for allocating government -funded 
patent rights to Boeing did "not traverse the Panel 's {then -unappealed} findings of specificity 
relating to the payments and other supp ort provided under the NASA/USDOD contracts and 
agreements ".38 
37. Third, the US ' arguments are contrary to Appellate Body guidance, which cautions against 
"examin{ing} subsidies that are different from those challenged by the complaining Member " 
and provides "{a} subsidy , access to which is limited to 'certain enterprises ', does not 
become non -specific merely because there are other subsidies that are provided to other 
enterprises pursuant to the same legislation" .39 
38. Finally , the US appeal relies heavily on a po rtion of the Appellate Body Report in the original 
proceedings that the Appellate Body explicitly stated did not apply to the NASA and DOD 
subsidies at issue.40 
VI. THE APPELLATE BODY S HOULD REJECT THE UNI TED STATES ' CONDITIONAL 
APPEAL OF THE PANEL 'S FINDIN G THAT THE S OUTH CAROLINA PAYMEN TS CONFER  
A SUBSIDY ON BOEING  
39. The Appellate Body should reject the United States ' conditional appeal of the Panel 's finding 
that a "benefit " is conferred by the direct transfers of funds from South Carolina to Boeing 
pursuan t to the economic development bonds ( "EDBs") and air hub bonds, as well as the 
United States ' related challenge to the Panel 's valuation of that benefit.  
40. The United States alleges, in particular, that the Panel failed to conduct the objective 
assessment r equired by Article 11 of the DSU.41 The United States  asserts that the Panel's 
benefit finding, pursuant to Article 1.1(b) of the SCM Agreement , relies on the "incorrect 
premise" that there was no evidence that Boeing and South Carolina foresaw, ex ante , any 
remuneration to South Carolina for the direct transfers of funds to be provided through the 
bonds.42 According to the United States, there was "significant evidence to that effect", which 
the Panel did not take into account.43 
41. The United States ' arguments are unavailing, as the United States fails to point to any 
evidence of the kind that it charges the Panel with ignoring. The United States asserts the 
existence of relevant evidence only by mischaracterising both the Panel 's analysis and the 
contents of the evidence of record. The United States focuses on evidence demonstrating 
that Boeing and South Carolina foresaw, ex ante , Boeing 's investment  of its own funds, in 
its own facilities , for its own use . The United States does not point to  evidence  showing that 
Boeing and South Carolina foresaw Boeing 's return of value  to South Carolina  at the end of 
its lease, in 2041, when the land and facilities revert back to the State ( i.e., "residual value "). 
Only the latter class of evidence would have been r elevant for an assessment of "benefit " 
under Article 1.1(b) of the SCM Agreement , as the Panel correctly found – a finding that the  
United States does not appeal.  
42. Throughout its appeal, the United States mischaracterises the Panel 's findings as relating to  
anticipated investment, not anticipated return of any residual value. What the Panel actually 
                                                
37 Panel Report, paras. 8.225 (NASA), 8.463 (DOD), 8.549 (FAA).  
38 Appellate Body Report, US – Large Civil Aircraft , para. 730.  
39 Appellate Body Report, US – Large Civil Aircraft , para. 751. (emphases added)  
40 Appellate Body Report, US – Large Civil Aircraft , para. 730.  
41 US Other Appel lant's Submission, para. 262.  
42 US Other Appellant's Submission, para. 262.  
43 US Other Appellant's Submission, para. 262.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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found is that the United States had failed to show – and ther e was no evidence on the 
record  – that any residual value  of Boeing 's unreimbursed investment was fo reseen in the 
agreement between South Carolina and Boeing, evidence which (if it existed) could be 
reflected in the ex ante  analysis of benefit.44 The evidence now highlighted by the 
United  States in its Other Appellant 's Submission does not relate to any f oreseen residual 
value of the Project Gemini site that would revert to South Carolina in 2041. Thus, the 
United  States lacks any basis to contend that the Panel ignored relevant evidence, and has 
therefore failed to demonstrate any error in the Panel 's assessment of the matter within the 
meaning of Article 11 of the DSU.  
VII. THE PANEL PROPERLY D ECLINED TO REJECT TH E EUROPEAN UNION 'S CLAIM OF 
SIGNIFICANT PRICE SU PPRESSION FOR THE A3 30 BASED SOLELY ON 
CONSIDERATIONS RELAT ING TO PRODUCT MARKE T DELINEATION  
43. The European Union rebuts the US appeal of the Panel 's alleged "intermediate finding that 
the EU made a prima facie  case of significant price suppression under Article 6.3(c) of the 
SCM Agreement " with respect to the A330.45 That appeal is conditional on "the 
Appellate  Body disturb{ing} any of the compliance Panel 's findings with respect to the 
A330".46 
44. For the reasons set out below, the European Union requests the Appellate Body to reject the 
US appeal.  
45. To begin, the United States ' appeal is grounded on a crucial, but erroneous, 
premise  – namely, that significant price suppression under Article 6.3(c) of the 
SCM Agreement  can be found only when the subsidised product and the allegedly affected 
product are in the same product market. While the Panel agreed wi th the premise grounding 
the US argument, and the related interpretation of Article 6.3(c),47 for the reasons set out 
in the European Union 's own appeal, that interpretation is erroneous.48 Accordingly, should 
the Appellate Body reverse the Panel 's finding t hat the subsidised product and the allegedly 
affected product must be in the same product market for adverse effects to be found, the 
very foundation on which the US appeal is built crumble s, and the appeal becomes moot.  
46. In any event, the US appeal is base less for three additional reasons. First, the United  States 
appeals an alleged finding that "the EU made a prima facie  case of significant price 
suppression under Article 6.3(c) of the SCM Agreement ".49 However, nowhere in its Report 
did the Panel actually find that the European Union had made a prima facie  case of significant 
price suppression for the A330. As such, the United States ' appeal is directed against a non -
existent Panel finding, and consequently, falls outside the permissible scope of appellate 
review. To recall, appellate review is "limited to issues of law covered in the panel report 
and legal interpretations developed by the panel ".50 A finding not included in a panel report 
cannot validly be appealed.  
47. Second , while the United States alleges er ror in the interpretation and application of 
Article  6.3,51 the United States simply fails to offer any explanation as to the reasons, nature 
or content of either of these two alleged errors. To the extent that the United States is 
alleging that the Panel i nterpreted or applied Article 6.3(c) such that significant price 
suppression can be found even when the subsidised product and the affected product are in 
different product markets, the US appeal rests on gross mischaracterisations of the Panel 's 
findings.  In any event, the United States ' elaboration of its appeal appears to concern 
matters that fall within the realm of Article 11 of the DSU, rather than interpretation or 
application of Article 6.3(c).  
                                                
44 Panel Report, para. 8.822.  
45 US Other Appellant's Submission, para. 271.  
46 US Other Appellant's Submission, para. 271.  
47 Panel Report, para. 9.33.  
48 EU Appellant's Submission, Section VII.  
49 US Other Appellant's Submission, para. 271.  
50 DSU, Article 17.6.  
51 US Other Appellant's Submission, paras. 270 -279. WT/DS353/AB/R W/Add.1  
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48. Third, the United States ' allegation that the Panel made the case for the European Union is 
baseless. The Panel made its own objective assessment of the proper delineation of the 
relevant product markets, as it was required to do. The Panel then based its assessment of 
the EU 's serious prejudice claims on its own product market findings, rather than the position 
of either Party. This was indeed no t only permissible for, but  required of, the Panel.  
 
_______________  WT/DS353/AB/R W/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  54 
Annex  C-2 Executive summary of Canada's third participant's submission  55 
Annex  C-3 Executive summary of China's third participant's submission  56 
Annex C -4 Executive summary of Japan's third participant's submission  57 WT/DS353/AB/R W/Add.1  
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ANNEX  C-1 
EXECUTIVE SUMMARY OF  BRAZIL 'S THIRD PARTICIPANT'S SUBMISSION  
1. Brazil submits that Articles 5 and 6.3 of the SCM Agreement should be interpreted to allow a 
panel to assess whether tied subsidies have caused adverse effects under the facts specific to each 
case. There may be situations in which a subsidy  recipient coul d apply tied subsidies received for 
non–price-sensitive sales to sales campaigns where price sensitivity is a determinative factor . 
Therefore, nothing should prevent a panel from assessing the practical effects of tied subsidy, 
including beyond the sales to which subsidies are tied.  
2. Brazil also disagrees with the compliance panel's interpretation of Articles 5 , 6.3, and 7.8 of 
the SCM Agreement establishing that cumulation and aggregation are the two only permissible 
means to assess collectively the effects of multiple subsidies. The Appellate Body should reverse this 
interpretation and confirm its previous decision in the original proceedings that "a panel enjoys a 
degree of methodological latitude in selecting its approach to analyzing the collectiv e effects of 
multiple subsidies for purposes of assessing causation".  
3. Moreover, the Panel erred by incorrectly rejecting the interpretation of Article 7.8 of the 
SCM Agreement that  lost or price -suppressed sales for which the final aircraft was undelivere d by 
the end of the implementation period may constitute present adverse effects. As the original panel 
recognized, the sales and delivery process for LCAs are unique in the marketplace, and the effect on 
the market of these sales – and therefore, the effe ct of any subsidy – extend beyond the moment 
of initial sale due to the size of the sale, the terms of the sale, and the amount of time between 
initial sale and delivery.  
4. In relation to Article 6.3(c) of the SCM Agreement, Brazil considers to be erroneous the Panel's 
interpretation that it must use a "sole cause " standard in assessing whether subsidies are causing 
lost sales. The Appellate Body should, thus, reinforce its prior determinations that panels must 
assess whether there is "a genuine and substanti al relationship of cause and effect " between the 
subsidies at issue and the adverse effects to find causation, but that "a panel need not determine 
{the subsidy} to be the sole cause of that effect, or even that it is the only substantial cause of that 
effect." 
5. Finally, Brazil recalls that Article 6.3 of the SCM Agreement focuses on "the effect of the 
subsidy " and not its actual use and allocation to particular product pricing decisions. In this sense, 
in order to demonstrate causation in relation to the pa rticular market phenomena under Article  6.3, 
the Appellate Body should confirm that there is no strict requirement to trace the specific dollars 
received from untied subsidies to the specific product.  
 WT/DS353/AB/R W/Add.1  
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ANNEX C -2 
EXECUTIVE SUMMARY OF  CANADA 'S THIRD PARTICIPANT'S SUBMISSION  
1. Canada's submission focuses on the legal framework that should be applied in compliance 
proceedings for assessing whether a responding Member ha s removed the adverse effects of 
actionable subsidi es. 
2. The existence of the compliance obligation in Article 7.8 of the SCM Agreement  is conditional 
on the continued presence of subsidies in the implementation period. Article 7.8 provides for two 
distinct compliance options : a Member can either remove the adverse  effects of the subsidies  or 
withdraw the subsid ies altogether . 
3. These features of Article 7.8 have direct implications on the counterfactual analysis conducted 
in compliance proceedings to determine whether subsidies ca use adverse effects.  Accordingly, this 
analysis  should: (1) focus exclusively on subsidies that continue to exist in the implementation 
period, and (2) consider what the situation would be if the existing subsidies had been withdrawn 
by the end of the impl ementation period.  
4. In this case, the Panel found that,  because the 787 would have been launched before the end 
of the implementation period in the absence of the pre -2007 aeronautic s R&D subsidies , the adverse 
effects associated with the 787 cannot be attr ibuted to those subsidies . However, the Panel's legal 
framework is incorrectly premised and ultimately misleading.  In accordance with Article 7.8, t he 
Panel should have assessed the counterfactual situation in which the R&D subsidies are withdrawn 
by the end of the implementation period, rather than assessing how the development of the 787 
would have been impacted if those subsidies had never been provided.  
5. The European  Union  argues  that the U nited States contravened Article 7.8 in failing to remove 
the adverse effects caused by the pre -2007 aeronautic s R&D subsidies because deliveries  of Boeing 
aircraft  continued to be made pursuant to the orders that  formed the basis of serious prejudice 
findings in the original proceedings.  However, this position cannot be reconciled with the correct 
counterfactual analysis. If the aircraft  deliveries would have still occurred in the absence of the R&D  
subsidies bein g maintained in the post -implementation period, then the deliveries of those aircraft, 
and their resulting impact on Airbus, cannot be found to be caused by those same subsidies.  
 WT/DS353/AB/R W/Add.1  
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ANNEX C -3 
EXECUTIVE SUMMARY OF  CHINA 'S THIRD PARTICIPANT'S SUBMIS SION  
1. China 's Third Participant  Submission discusses  the following four issues on appeal that China  
considers  to be of systemic importance . 
2. First, China submits that a correct interpretation of the ordinary meaning of the treaty text 
of Article 7.8 and in the light of the object and purpose of the SCM Agreement suggests that, 
subsidies that cease to exist by the end of the implementation period are outside the scope of an 
implementing Member 's obligation under Article 7.8. Therefore, if a Member can establish that 
subsidies found to have caused a violation of Article 5 are no longer in existence by the end of the 
implementation period, that Member should be deemed to have fulfilled its implementing obligation 
by withdraw ing the subsidy wit hin the meaning of Article 7.8 of the SCM Agreement.  
3. Second , China wishes to comment on the technology effect of the pre -2007 aeronautics R&D 
subsidies  from three perspectives.  
(1) The obligation of an implementing Member  under Article 7.8 concerning the technology effect of 
R&D subsides  
 
4. Based on the interpretation of Article 7.8 of the SCM Agreement, China is of the view if  the 
United States withdrew a subsidy, it is not required to remove any lingering effects that the subsidy 
may have. Vice versa , if the United States removed the adverse effects of a subsidy, it is not required 
to withdraw the subsidy.  
(2) Causation assessment under Articles 5(c) and 6.3  
 
5. In this dispute, the compliance  Panel conducted a counterfactual  analysis to assess the effects 
of the pre -2007 R&D subsidies. China submits that the proper legal standard for finding causation 
under Articles 5(c) and 6.3 of the SCM Agreement  requires  a "genuine and substantial " cause  
analysis between the subsidies and  the alleged market phenomenon . In applying a counterfactual 
analysis , a panel must ensure that the assessment demonstrates that the subsidies are a "genuine 
and substantial " cause of the particular  market phenomenon.  
(3) counterfactual analysis for techn ology effects  
 
6. Notwithstanding the analysis in the previous subsection , China submits that to undertake a 
proper counterfactual analysis in the compliance  proceeding, the Panel should require the EU to 
demonstrate that the situation would have been differe nt in the absence of the non -withdrawn 
subsidies at the end of the implementation period , rather than analyze what the situation would be 
if the subsidies  were never granted.  
7. Third, as to  determination of product market delineation, China submits that the text of 
Article  6.3 as well as relevant WTO jurisprudence support the Panel 's interpretation  that a subsidized 
product can only cause serious prejudice to another product if the two produ cts in question compete 
in the same market . 
8. Fourth , with regard to the untied subsidies (i.e., those that are not tied to the production  and 
sales of the LCA ), China submits that serious prejudice will not exist unless  there is  genuine and 
substantial relationship between cause and effect . Besides,  burden of proof is on the side of the 
complainant to show such genuine and substantial relationship .  
 WT/DS353/AB/R W/Add.1  
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ANNEX  C-4 
EXECUTIVE SUMMARY OF  JAPAN'S THIRD PARTI CIPANT'S SUB MISSION  
I.  INTRODUCTION  
1. Japan would like to address the following  issues : the price effects of subsidies, the alleged 
technology effects, the continuance of adverse effects, the lost sales, the collective causation 
analysis and the importance of the existence of a competitive relationship between the 
products.  
II. PRICE EFFECTS  
2. Japan submits that the benefit should be the relevant criterion in the adverse effects  analysis. 
The benefit will normally be consumed when the recipient sells its products at a lower price. 
The assessment of the benefit should thus focus on the projected period or sales amount 
properly anticipated by a government when the subsidy was grant ed. It is therefore 
inappropriate to require complainants to  trace money provided by the subsidy and  
demonstrate how the recipients used or allocated it. 
III. TECHNOLOGICAL EFFECTS  
3. Japan disagrees with the European Union's claim relating to the "technology  causal 
mechanism".  The benefit conferred by the financial contribution allows the recipient to sell the 
subsidised products at a lower price. Consequently, the proper counterfactual is whether the 
recipient would have had to offer products using the techn ology it developed without  the 
subsidy at a higher price.  
IV. CONTINUING ADVER SE EFFECTS  
4. The discussion between the participants seems to focus on when the adverse effects should 
be considered removed. From Japan's point of view, which focusses on the pric e effect of the 
subsidies, the relevant question is whether the benefit was consumed before th e end of the 
compliance period.  
V.  LOST SAL ES 
5. Japan agrees with the European Union's appeal that the subsidies must not be the sole cause 
of a lost sale. Instead , the Appellate Body must take into account different factors and consider 
whether there is a genuine and substantial cause of adverse ef fects.  
VI.  COLLECTIVE CAUSATION  ANALYSIS OF EFFECTS  OF MULTIPLE SUBSIDI ES – THE 
NATURE OF A SUBSIDY IN THE CONTEXT OF  THE FINDING OF ADVER SE EFFECTS  
6. Japan requests the Appellate Body to consider the nature, design and operation of the 
subsidies at issue when it engages in a collective causation analysis. The mere effect of 
lowering the prices of subsidised products is not  sufficient to satisfy the requirement of a 
"genuine causal connection " between the subsidy and the partic ular effects -related variable.  
VII.  IMPORTANCE OF THE EX ISTENC E OF A COMPETITIVE R ELATIONSHIP  
7. Japan submits that an assessment of the existence of an  actual competitive relationship 
between the subsidised product and the like product is crucial for the establishment of 
causality between the subsidies and " serious prejudice ". 
_______________WT/DS353/AB/R W/Add.1  
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ANNEX D  
PROCEDURAL RULI NGS 
Contents  Page  
Annex  D-1 Procedural R uling of 21 July 2017 regarding additional procedures to protect 
business confidential information (BCI)  and highly sensitive business 
information (HSBI)  59 
Annex  D-2 Procedural R uling of 9 August 2017 regarding the United  States' re quest to 
extend the deadline for objection to the inclusion of any business confidential 
information (BCI) in the European Union's appellant's submission  67 
Annex D -3 Procedural R uling of 30 August 2017 regarding the United States' request to 
extend the deadline to file the HSBI Appendix to its other appellant's 
submission  68 
Annex D -4 Procedural R uling of 12 October 2017 regarding the European Union's 
request to extend the deadline for  objection to the inclusion of any business 
confidential information (BCI) in the United States' appellee's submission  69 
Annex D -5 Procedural R uling of 18 October 2017 regarding the objection by the 
European Union to the inclusion of certain highly sensi tive business 
information (HSBI) in the HSBI -redacted version of the United States' 
appellee's submission  70 
Annex D -6 Procedural R uling of 5 April 2018 regarding the joint request by the 
European  Union and the United States for the oral hearing to be open to 
public observation  71 WT/DS353/AB/R W/Add.1  
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ANNEX D -1 
PROCEDURAL RULING  OF 21 JULY 2017  
1. On 29 June 2017, the Chair of the Appellate  Body received a letter from the European  Union  
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 its letter, the European  Union  proposed  that additional proc edures be 
adopted that track the additional procedures recently adopted by the Appellate  Body in the appeal 
in EC and certain member States  – Large Civil Aircraft (Article  21.5 – US). The European  Union  
argued  that, inter alia , disclosure of certain sensit ive information on the record of the compliance 
Panel proceedings would be severely prejudicial to the large civil aircraft manufacturers  concerned , 
and possibly to their customers and suppliers.  
2. On behalf of the Division hearing this appeal, the Chair of the Appellate  Body invited the 
United  States and the third parties  to comment  in writing on the request by th e European  Union  by 
5 p.m.  on Wednesday, 5 July 2017. He also informed the participants  and the third parties  that, 
pending a final decision on the European Union's request, the Division had decided to provide interim 
additional protection to all BCI and HSBI transmitted to the Appellate  Body in this appeal  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 request  by the European Union . 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 locked 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 combination safe in a designated secure location in the offices 
of the Appel late 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 of the Appellate  Body Secretariat. HSBI shall not  be removed from this 
location.  
d. Pending a decision on the European Union's  request for the protection of BCI and H SBI in 
these proceedings, neither BCI nor HSBI shall be transmitted electronically, whether by 
e-mail, facsimile, or otherwise.  
3. On Wednesday, 5 July 2017, written comments were received from the United States and 
third parties Australia and Canada. The United States broadly agreed with the European Union's 
request that the BCI and HSBI procedures adopted in the appeal in EC and cer tain member 
States  – Large Civil Aircraft (Article 21.5 – US) should serve as the basis for BCI and HSBI 
procedures in this appeal. It requested, however, a change regarding the deadline for submission of 
an HSBI appendix to any written submission, suggest ing that if an HSBI  appendix is sent by an 
expedited courier service, that it be deemed filed and served on the date it is sent, instead of on the 
date it is delivered. Australia stated that it did not object to the European Union's request but 
commented t hat support of both of the participants would be important in ensuring fairness and 
orderly procedure in these appellate proceedings. Canada stated that, while it agrees with the 
European  Union's request that additional procedures to protect BCI and HSBI t rack the procedures 
adopted in EC and certain member  States – Large Civil Aircraft (Article 21.5 – US), it considered 
that the requirement that note -taking by third participants in the designated reading room be 
handwritten was unnecessarily burdensome, an d requested that the procedures be modified so as 
to provide for a stand -alone computer and printer to be made ava ilable to third participant 
BCI-approved persons in the designated reading room.  WT/DS353/AB/R W/Add.1  
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4. On Friday, 7 July  2017, the Chair, on behalf of the Division , invited the participants and third 
parties to provide any further views on the request by the European Union, taking into account the 
changes proposed by the United States and Canada,  by 5 p.m. on Tuesday , 11 July 2017 . Comments 
were received from the Eur opean  Union and the United  States.  
5. The European Union stated that it did not, in principle,  object to Canada 's proposal to allow 
taking notes on a computer keyboard in the  designated reading room , provided that  it can be done 
in a manner that ensures adequate protection of BCI . The European Union noted that t he reason for 
excluding  computers or other electronic devices from the designated reading room was to enhance 
the security of BCI , and that t he risks of dis closure are heightened if computers or other electronic 
devices are permitted in the designated reading room.  The European Union also noted that t he 
participants and their stakeholders agreed to the provision of BCI under the express understanding 
that com puters or electronic devices would not be permitted in the designated reading room.  For 
these reasons, the European Union considered that Canada's proposal would be acceptable only if 
certain heightened protections were put in place.1  
6. The European Union objected to  the United States'  proposal  that an HSBI appendix sent by 
expedited courier should be deemed filed the day it is sent . For the European Union, Article  18 of 
the Working Procedures for Appellate Review  (Working Procedures) makes clear  that the "f iling" of 
a submission is not a clerical formality, but an event of legal significance , because  the very status 
of the participants to an appeal derives from the act of filing  the required documents. For the 
European Union, the  Working Procedures clearly e nvisage a filing being made in Geneva, under the 
supervision of the Secretariat, and being completed upon the receipt of the relevant documents by 
the Secretariat.  The European Union also stated that, while it understands that having to transmit 
an HSBI ap pendix to Geneva poses certain practical challenges, such challenges are not unique to 
the United States. The European Union urge d that any measu res taken to address the United  States' 
concerns should be even -handed, and that it trusts the Appellate Body to do so by  setting deadlines 
such that both participants have adequate time to duly file any HSBI appendices.  
7. The United States indicated that it did not favour Canada's request to allow note -taking on a 
computer with an attached printer. The United States  considered that permitting voluminous 
reproduction of BCI with relative ease increases the risk of disclosure. According to the United  States, 
the relative difficulty of copying large amounts of information, rather than more limited notes to 
summarize inf ormation, is an appropriate feature of the proposed procedures. The  United States 
added that extensive notes on the facts seem particularly unnecessary in the context of this appeal, 
given that the purpose of access to BCI at this stage is to help particip ants understand the legal 
arguments, and not to address the information as such.  
8. The Division hereby makes  the following ruling having considered the arguments made by the 
European  Union  in support of its request, and the comments received from the partici pants and third 
parties in this appeal:  
9. In this appeal, the European Union proposes, and the United States supports,  the adoption of 
additional procedures that largely track the additional procedures to protect BCI and HSBI recently 
adopted by the Appellate  Body in the appeal in EC and certain member States  – Large Civil Aircraft 
(Article  21.5 – US). We recall that the Appellate  Body adopted similar addition al procedures to 
protect the confidentiality of sensitive information in the appellate proceedings in the underlying 
disputes in both EC and certain member States – Large Civil Aircraft and US – Large Civil Aircraft 
(2nd complaint) . We further note that th e participants , and most of the third participants , have been 
the same in all of the proceedings in these disputes.  In the p rocedural ruling adopted in EC and 
certain member States – Large Civil Aircraft (Article 21.5 – US), the Appellate  Body explained the 
considerations relevant to a decision on whether to provide additional protection to certain sensitive 
information . We believe that those considerations are also relevant to our evaluation of t he request 
                                                
1 The European Union indicated that the following conditions be obse rved: (i) the computer is provided 
by the WTO and remains permanently in the designated reading room; (ii) the settings and configuration of the 
computer make it technologically impossible to transfer saved files to any external storage or transfer device;  
(iii) all USB and other transfer ports are permanently disabled, the computer is disconnected from all wired 
networks, and has no wireless capacities, including Wi -Fi and Bluetooth; (iv) the computer is connected to a 
printer through a mechanism that does  not permit connection of any external storage or transfer device 
(e.g. the computer should not be connected to the printer through a USB port); (v) the printer has no data 
storage or scanning facilities; and (vi) the computer is monitored by staff of the WTO Secretariat after each 
use, to ensure that no files remain on it.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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made by the European U nion, and supported by the United States,  in this appeal , and we briefly 
recall them before addressing the specific points raised in the responses to the European Union's 
request . 
10. The confidentiality requirements set out in the Understanding on Rules and P rocedures 
Governing the Settlement of Disputes  (DSU) and in the Rules of Conduct for the Understanding on 
Rules and Procedures Governing the Settlement of Disputes (Rules of Conduct )2 are stated at a high 
level of generality that may need to be particulari zed in situations in which the nature of the 
information provided requires more detailed arrangements to protect the confidentiality of that 
information. The adoption of such arrangements falls within the authority of the Appellate  Body to 
hear the appeal and to regulate its procedures in a manner that ensures that the proceedings are 
conducted with fairness and in an orderly manner. To the extent that the arrangements elaborate 
on the confidentiality requirements of the DSU, the adoption of such arrangemen ts in an "appropriate 
procedure" must conform to the requirement in Rule 16(1) of the Working  Procedures , that any 
additional "appropriate procedure" 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 associated 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 . Furthermore, a relationship of proportionality must exist between the risks associated 
with disclosure and the measures ad opted. 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 ot her 
covered agreements, and the Working Procedures . This burden of justification will increase the more 
the proposed arrangements affect the exercise by the Appellate  Body of its adjudicative duties, the 
exercise by the participants of their rights to due process and to have the dispute adjudicated, the 
exercise by the third participants of their participatory rights, and the rights and systemic interests 
of the WTO membership at large.  
12. Additional  confidentiality protection implicates the authority of the A ppellate  Body, and the 
rights and duties of the participants, third participants, and the membership at large. In prior 
instances where similar additional procedures were adopted , the Appellate  Body considered  that it  
struck an appropriate balance between the risks associated with the disclosure of sensitive 
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 , on the other 
hand. Similar considerations are relevant  in these appellate proceedings . The European  Union , the 
United  States , and the third parties  concur that the additional procedures adopted in EC and certain 
member States – Large Civil Aircraft (Article 21.5 – US) provid e an appropriate framework and ask 
that we adopt a similar framework in this appeal.  
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 d ecide 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 
participant has appealed the Pane l's decisions regarding the protection of BCI and 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 not exclude revisiting wheth er a 
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 consider 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 United States and Canad a to the additional procedures proposed by 
the European Union. With regard to the United States' proposal that an HSBI appendix sent by 
expedited courier should be deemed filed the day it is sent, we recognize the burden undertaken by 
                                                
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 W T/DSB/RC/2, 
WT/AB/WP/W/2)  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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the participants in t his case to deliver by physical means a part of their submission that cannot be 
delivered electronically together with their full submission on the date that submission is due. At the 
same time, participants must bear the responsibility for ensuring that t heir submissions are filed by 
the specified deadlines with the Appellate Body Secretariat. For this reason, the Division will 
endeavour to set filing dates for the participants such that the filing date for the HSBI appendix will 
be set three days followin g the deadline for the remainder of the submission itself.  
15. In addition, we agree to Canada's proposal that third participant BCI -approved persons be 
allowed to take notes on a stand -alone computer and printer in the designated reading room. While 
we caref ully considered the concerns raised by the European Union and the United States regarding 
the need to ensure adequate protection of BCI, we have determined, in consultations with WTO 
technical staff, that such guarantees can be assured while rendering the process less burdensome 
for third participant BCI -approved persons. Moreover, we do not see that allowing for the typing, as 
opposed to the handwriting, of notes will fundamentally alter the amount and nature of information 
that third participant BCI -appro ved persons will be able to record while in the designated reading 
room. We have therefore provided that a stand -alone computer and printer, which will permit no 
external network or other access, will be made available, and we have reflected this change in  the 
additional procedures below.  
16. Finally, we note that we will make every effort, as the Appellate Body did in prior proceedings 
where similar additional procedures were requested and adopted,  to draft our report without 
including sensitive information. The additional procedures that we adopt below foresee that the 
participants will be provided in advance with a copy of the Appellate  Body report intended for 
circulation to WTO Members and will have an opportunity to request the removal of any sensitive 
information that is inadvertently included in the report. If  we do consider it necessary to include 
sensitive information in the reasoning in our report, the participants will be given a timely  
opportunity to comment. We will provide further guidance at a la ter point in these proceedings as 
to the modalities and details of such a procedure.  
17. 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:  
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 in formation (HSBI) in the Panel 
proceedings and that is contained 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 th ey 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 treatment of this information, the Appellate  Body shall decide after 
hearing their  views.  
iii. Each participant  may a t 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 participants  and third participants shall file their 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 submission and/or an executive summary contain s BCI or HSBI, 
redacted version (s) of the submission and/or the executive summary (that is, a version without BC I 
and HSBI) shall be filed simultaneously with the Appellate  Body Secretariat. Should an executive 
summary submitted by a participant or third participant contain BCI or HSBI, the redacted version 
of the executive summary will be annexed in the addendum  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 WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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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 transmitt al of third 
participants' submissions to the participants and to the other third participants, are further regulated 
in the provisions below , which apply mutatis  mutandis  to executive summaries of 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 Secretariat staff are covered by the Rules of Conduct for the 
Understanding on Rules and Proce dures Governing the Settlement of Disputes  (Rules of Conduct ).3 
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 wh en 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. Appellate  Body Members 
who are not serving on the Division may maintain at their places of residence a copy of the BCI 
version of the Panel Report, a copy of the BCI version of the submissions made in these appellate 
proceedings, a copy of the BCI version of the transcripts of any oral hearings, any internal documents 
containing BCI, and, where necessary, copies of selected BCI exhibits from the Panel record. The 
documents and materials containing BCI kept by Appellate  Body Members at their places of 
residence shall be stored in locked cabinets when not in use. Documents and mater ials containing 
BCI shall only be sent to Appellate  Body Members by secure  e-mail or courier.  
viii. The p articipants 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 outsid e 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 appeal  has been adopted 
by the DSB.  
xii. The Appellate  Body shall ret ain one hard copy and one 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 
                                                
3 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/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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premises. Documents and electronic 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 disclose 
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 participant s, at a date and in a manner to  be specified by the Division. 
The p articipants 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 necessary to include in the Appellate  Body report information that was treated by the Panel 
as BCI or HSBI and will provide the participan ts with an opportunity to comment. Comments on the 
inclusion of information previously treated as BCI or HSBI and requests for removal 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 include BCI or HSBI to ensure that the final report is 
understandable, the Division will strike an appropriate balance between th e rights of the 
WTO membership at large to obtain a report that gives a sufficient exposition of its reasoning and 
findings, on the one hand, and the legitimate concerns of the participants to protect sensitive 
information, on the other  hand. 
Participants  
xiv. The participants shall provide lists of persons who are "BCI -Approved Persons" and who are 
"HSBI -Approved Persons". These lists shall be provided to the Appellate  Body Secretariat by 5  p.m. 
on Wednesday, 26 July 2017 , and shall be served on the other parti cipant and the third  participants. 
Any objection to the designation of an outside advisor 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 Friday, 28 July 20 17. The participants may submit amendments to their list 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 ob ject 
to the designation on an amended list of an outside advisor by another participant. Any objection 
must be filed with the Appellate  Body Secretariat within two days and simultaneously served on the 
other participant and the third participants. The Divi sion 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 
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 
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 HS BI-Approved Persons, 
and Third Participant BCI -Approved Persons.  
xv. Any participant  referring in its submissions to any BCI or HSBI shall clearly identify the 
information as such in those submissions. Each participant shall simultaneously provide 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 inc lusion 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 
participants, 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 the 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 electronic copie s. If there are no objections, the redacted version shall be 
transmitted the following day to the third participants. If a submission contains HSBI, the HSBI shall 
be included in an appendix. In that case, the version of the submission that includes the HS BI 
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.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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Third participants  
xvi. Third participants may designa te 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 Wednesday, 26 July 2017. 
A copy o f the list of Third Participant BCI -Approved Persons shall be served on each participant and 
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 f iled with the Appellate  Body 
Secretariat by 5 p.m. on Friday, 28 July 2017 . Third participants may submit amendments to their 
lists of BCI -Approved Persons by filing an amended list to the Appellate  Body Secretariat and serving 
it on the p articipants and t he other third participants. The participant s 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. The Division will reject the designation of an outside advisor as a Third 
Participant BCI -Approved Person only upon a showing of compelling reasons,  having regard to, 
inter alia, the relevant principles in the Rules of Conduct  and the illustrative list in Annex 2 thereto. 
Third Participant  BCI-Approved Persons shall not disclose BCI, or allow it to be 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 WTO. Third Participant BCI -Approved Persons shall be allowed to 
view in the designated reading room the BCI version of the Panel Report and the BCI version of the 
submissions filed  in these appellate proceedings. Third Participant BCI -Approved Persons shall not 
bring into that room any electronic recording or transmitting devices, nor shall they remove copies 
of the BCI version of the Panel Report or the BCI version of the submissio ns from that room. Upon 
request, each third participant shall be provided with one copy of the Panel Report as circulated to 
WTO Members and of the redacted version of the submissions for use in the reading room. Such 
copies will be printed on coloured, in dividually watermarked paper. 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. Third  Participant 
BCI-Approved Persons will also be supplied with additional paper on which they may take 
handwritten notes , and a stand -alone computer and printer, that is, a computer and printer 
connected only to each other, and not connected to any network, will be made availa ble on which 
to type and print out notes . All documents  that may reflect handwritten or printed notes  shall be 
supplied  on coloured , individually watermarked paper; shall bear the  names of the Third  Participant 
BCI-Approved Persons; state that "This docume nt is not to be copied"; and the cover page of each 
of the documents , and any other individual pages,  shall state that any BCI added to the document 
shall only be discussed or shared w ith other Third Participant BCI -Approved Persons. The content of 
any han dwritten  or printed  notes shall not be incorporated, electronically or in handwritten form, 
into any other copy of the Panel Report or of the submissions. All documents that may reflect 
handwritten or printed  notes taken by the Third  Participant BCI -Approved Persons in the reading 
room shall be locked in a secure container when not in use , and must be returned to the 
Appella te Body Secretariat at the completion of the final session of the oral hearing held in this 
appeal.  
xviii.  Each Third Pa rticipant BCI -Approved Person viewing the BCI version of the Panel Report and 
submissions in the designated reading room shall complete and sign a log. The Appellate  Body 
Secretariat shall keep such log as part of the record of the appeal.  
xix. Each t hird parti cipant shall transmit its submission to the Appellate  Body Secretariat and  the 
participants . It shall also be transmitted  to the other third participants by providing a copy to the 
Appellate  Body Secretariat.  Third participants are requested not to transmi t their submission directly 
to other third participants, regardless of whether the submission contains BCI or not.  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 Perso ns 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 no objections, the submission or the  redacted submission , as 
the case may be , shall be transmitted the foll owing day to the other third participants.  If there are WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
- 66 - 
objections, the Division shall resolve the matter, and instruct, as appropriate, the relevant third 
participant to transmit a correctly redacted version of its submission to each of the participants a nd 
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 accordin g to the Division's resolution of the matter and 
re-transmitted to the Appellate  Body Secretariat and the participants. The Appellate  Body shall direct 
BCI-Approved Persons to implement modified confidentiality treatment  in any paper copies of the 
submissi on as well as to replace the electronic copies .  
Oral hearing  
xx. Appropriate  procedures shall be adopted to protect BCI and HSBI  from unauthorized disclosure 
at any session of the oral hearing held in this appeal.   
 WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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ANNEX D -2 
PROCEDURAL RULING OF  9 AUGUST 2017  
1. On 7 August  2017, the Appellate Body received a communication from the United  States 
requesting that the Division selected to hear this appeal extend  the deadline , from 7 August 2017 
to 9 August 2017, for the United States to object to the inclusion of any business confidential 
information (BCI) in the European Union's Appellant's Submission. The United Stat es indicated that, 
due to the volume of the European Union's submission, it needed two additional days in order to 
undertake the necessary review regarding BCI.  
2. On 8 August 2017, the Chair of the Appellate Body, o n behalf of the Division hearing this 
appea l, invited the European Union and the third  participants to provide any comments on the 
United  States' request by 12:00 noon on Wednesday, 9 August 2017.  The European Union responded 
that it had no objections to the request by the United States.  
3. Having con sidered the request by the United States, the Division decides to grant the request 
of the United States extending by two days the time -period for filing an objection to the inclusion of 
any BCI, as set out in paragraph xv of the Additional  Procedures to P rotect Sensitive Information 
(Additional Procedures), adopted in our Procedural  Ruling of 21  July 2017. We note, in particular, 
that the European Union's Appellant's  Submission is over 400 pages, and that reviewing a 
submission of that length for its treat ment of BCI may accordingly be a time -consuming task. We 
also take note that the United  States has itself stated in its request that it could complete the task 
if it were provided two  additional days, and that the European Union has raised no objections to  the 
United States' request.  The United States therefore has until 5  p.m. today, Wednesday, 
9 August  2017, in which to indicate whether it has any objections to the inclusion of BCI  in the 
European  Union's Appellant's  Submission. In the interest of fairness, we also extend by two days 
the time -period set out in paragraph xv of the Additional Procedures for the European  Union to file 
an objection to the inclusion of any BCI in the Uni ted States' Other Appellant's Submission, which is 
due to be filed on 10 August 2017. Finally, the Division urges the participants, in circumstances 
where they believe they cannot adhere to a deadline, to submit any requests for extensions in a 
timely mann er so as to ensure fairness and orderly procedure in the conduct of appeals. In this 
regard , we note that the request by the United States was filed very shortly before the expiry of the 
deadline.  
 WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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ANNEX D -3 
PROCEDURAL RULING  OF 30 AUGUS T 2017  
1. On 14 August 2017, the Appellate Body received a request from the United States to extend 
the deadline to file the HSBI Appendix to its Other Appellant's Submission from 14 August 2017 to 
15 August 2017. The United States explained that on 10 August  2017 it had commenced transfer of 
the HSBI Appendix to the Appellate Body and European Union via expedited  international courier 
service, with the expectation that it would arrive at the United States' Permanent Mission in Geneva 
by the deadline of Monday , 14 August 2017 . As the shipment had not arrived before the time of 
expiry of the deadline, the United States sought this extension to complete the transfer of the HSBI 
Appendix . On 15 August 2017, the United States submitted the HSBI Appendix to the 
Appellate Body.  
2. On 17 August  2017, the Chair of the Appellate Body , on behalf of the Division hearing this 
appeal, invited the European Union and the third participants to comment on whether the Division 
should accept the late -filed HSBI A ppendi x of the United  States. On 21 August 2017, the 
European  Union responded that the United States request did not place before the Appellate  Body 
all the information that the Appellate Body would require in order to make a procedural ruling on 
the matter, and that it would welcome additional explanation and evidence, including proof of the 
date and time of shipment of the HSBI Appendix.  
3. On 24 August 2017, the Division requested that the United States provide  relevant  
documentation relating to the time and date on which the HSBI Appendix was delivered to the courier 
service for transmission to Geneva. On 28 August 2017, the United States responded by providing 
a printout  of the tracking information for shipment of the HSBI Appendix, together with additional 
details regarding the shipment. The United States explained that physical delivery of the package to 
the courier service occurred on 10 August 2017, and that, although the package arrived in 
Switzerland early in the morning on 14 August 2017, which permitted delivery that s ame day, 
unexplained difficulties on the part of the courier service delayed delivery until the following day.  
The United States further maintained that, while it was unfortunate that the package arrived a day 
later than expected, a decision to grant its e xtension request would not result in prejudice.  
4. Having considered the request by the United States, the additional information supporting the 
request, as well as the comments by the European  Union, the Division decides to accept the late -filed 
HSBI Appendi x to the United States'  Other Appellant's Submission.  The Division reminds the 
participants of the importance of respecting deadlines in these proceedings, and wishes to 
underscore that it is ultimately the responsibility of each participant to organise th e delivery of 
documents so as to ensure compliance with such deadlines.  
 WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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ANNEX D -4 
PROCEDURAL RULING  OF 12 OCTOBER 2017  
1. On 11 October  2017, the Appellate Body received a communication from the European  Union 
requesting the Division hear ing this appeal to extend, from Thursday, 12  October 2017 to Friday, 
13 October 2017, the deadline for the European Union to object to the inclusion of a ny business 
confidential information (BCI) in the United States' appellee's submission.  Both the European Union 
and the United States filed their appellee's submissions on Tuesday, 10 October 2017.  The 
European  Union indicated that, due to the volume of th e United States' submission, it needed one 
additional day in order to complete  the necessary review regarding BCI.  
2. On 11 October 2017, the Division  invited the United States and the third  participants to 
provide any comments on the European Union's request  by 12 noon on Thursday, 12 October 2017.  
The United States  responded that it would have no objection to an extension of the deadline for both 
participants to object to the inclusion of any BCI in the other participant's appellee's submission. 
Brazil, China, and Russia also stated that they do not object to the ex tension request, but Brazil and 
China indicated that third participants should be granted an extension of the deadline for their 
submissions.  
3. Having considered the request by the European Union and the comments from the 
United  States, Brazil, China, and Ru ssia, the Division decides to grant the request of the 
European  Union, extending by one day the time -period for filing an objection to the inclusion of any 
BCI, as set out in paragraph xv of the Additional  Procedures to Protect Sensitive Information 
(Addit ional Procedures), adopted in the Procedural  Ruling of 21  July 2017. In the interest of fairness, 
we also extend by one day the time -period for the United States to file an objection to the inclusion 
of any BCI in the European Union's appellee's submission . Therefore, the European  Union and the 
United States each have until 5 p.m. tomorrow, Friday, 13  October  2017, to indicate any objections 
to the inclusion of BCI in the other participant's  appellee's  submission.  
4. Due to the foregoing extension, and absent any objections by participants to the inclusion of 
BCI in the other participant's appellee's submission, paragraph xv of the Additional Procedures 
prescribes that third participants will now receive the redacted versions of participants' appellee's 
submiss ions on Monday, 16 October 2017. Accordingly, the Division also decides to extend the 
deadline for the filing of third participants' submissions and executive summaries (a nd any 
BCI-redacted versions of such documents), and notifications by third participa nts under Rule 24(2) 
of the Working Procedures for Appellate Review, until 5 p.m. on Monday, 30 October 2017 . WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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ANNEX D -5 
PROCEDURAL RULING  OF 18 OCTOBER 2017  
1. On 13 October 2017, the Appellate Body received a communication from the Europea n Union, 
in which the European Union objected to the inclusion of certain highly sensitive business information 
(HSBI) in the HSBI -redacted version of the United States' appellee's submission, without proper 
designation of that information as HSBI. On 13 O ctober 2017, the Division invited the United States 
to comment on the European Union's request. On  17 October  2017, t he United States responded 
that the relevant information should be treated as HSBI, and requested that it be allowed to submit  
replacement pages for the BCI version s (HSBI -redacted) and non -BCI version s (BCI- and 
HSBI-redacted) of its appellee 's submission , and a corrected HSBI Appendix.  
2. Having considered the request by the European Union and the comments from the 
United  States, the Division decides to grant the United States until 5 p.m. on Monday, 
23 October  2017 to submit the replacement pages for the BCI version s (HSBI -redacted) and non -BCI 
version s (BCI- and HSBI -redacted) of its appellee 's submission , and until 5 p.m. on Thursday, 
26 October 2017  to submit its corrected HSBI Appendix.  
3. Due to the foregoing extensions, it is expected that third participants will now receive the 
redacted versions  of participa nts' appellee's submissions on Tuesday, 24 October 2017. Accordingly, 
the Division also decides to extend the deadline for the filing of third participants' submissions and 
executive summaries (a nd any BCI -redacted versions of such documents), and notifica tions by third 
participants under Rule 24(2) of the Working Procedures for Appellate  Review, until 5 p.m. on 
Tuesday , 7 November  2017. Third participants will shortly be sent a revised schedule for reviewing 
BCI versions of the Panel Report and the partici pants' submissions.  
 WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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ANNEX D -6 
PROCEDURAL RULING  OF 5 APRIL 2018  
1. By letter dated 12 March 2018, the Appellate Body Division hearing the above appeal invited 
the participants, the European Union and the United States, to clarify whether they request the oral 
hearing in this appeal to be open to public observation, and to propose specific modalities in this 
respect, if they so wish, by 5 p.m. Geneva time on Wednesday, 21  March  2018. We also invited the 
third participants to provide  comments on any request the participants might file by 12  noon Geneva 
time on Friday, 23 March 2018.  
2. On Wednesday, 21 March 2018, 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 information ( HSBI) during the oral 
hearing 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  European Communitie s and Certain Member States – Measures Affecting 
Trade in Large Civil Aircraft  – Recourse to Article 21.5 of the DSU by the United States , pursuant to 
the procedural ruling in that appeal dated 19 April 2017. They state that the reasons for their request 
and proposal in the present appeal are substantially the same as the reasons that were given in 
their joint letter of 11 April 2017 in the appeal in EC and certain member States – Large Civil Aircraft 
(Article 21.5 – US), 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 a 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-Approved 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  21 July 2017, 
the Division can and should adopt a further Procedural  Ruling pursuant to Rule  16(1) of the 
Working Procedures for Appellate Review1 (Working Procedures) regulating these matters for 
the oral hearing in this appeal. This will involve strikin g a balance between the systemic 
interest in protecting sensitive information and the systemic interest in transparency, similar 
to that struck in the Procedural Ruling dated 21 July 2017 in this appeal and the Procedural 
Ruling dated 19  April 2017 in EC a nd certain member States – Large Civil Aircraft 
(Article  21.5 – US). 
• 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 wi shes 
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 segment , to the extent necessary, 
by addressing HSBI. While acknowledgin g that neither of these options is ideal in all respects, 
on balance, the participants prefer the second option. The participants believe that this would 
                                                
1 WT/AB/WP/6, 16 A ugust 2010.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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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 the 
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  segment  of 
the hearing would be necessary, it could be organized to take place at the end of each day. 
The participants note that the Appellate Body followed this second approach during the 
proceedings in the original dispute and in EC and certain member States – Large Civil Aircraft 
(Article 21.5 – US), 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 part icipant's or third 
participant's oral statement and oral answers to questions by the Appellate Body have been 
made in a public segment only if the participant or third participant so agreed. In the absence 
of such agreement, it has proved operationally pos sible and effective to divide the hearing 
into an open segment  (for Members who wish to make their statements public) and a closed 
segment  (for Members who do not wish to make their statements public). The participants are 
of the view that as much of the hearing as possible should be open to the public. However, 
they recognize that, in light of the volume of BCI in this dispute and its centr ality 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 same way as the oral statements. 
For this reason, the European Union and the United States prop ose that the same approach 
be adopted in this appeal that was adopted in the app eal in  EC and certain member 
States  – Large Civil Aircraft (Article 21.5 – US). 
• Thus, with regard to the public segment of the hearing, the participants propose that the 
partic ipants and third participants (subject to their agreement) deliver opening statements 
that do not contain BCI or HSBI. These would be video -recorded, reviewed if necessary by the 
participants for confirmation that neither BCI nor HSBI has been uttered, 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 part icipants' request.  Canada expressed its 
agreement with the joint proposal by the European Union and the United States that the 
Appellate  Body allow observation by the public of the oral hearing. Canada supports increased 
transparency in WTO dispute settlem ent proceedings as a means to reinforce the legitimacy of the 
process. At the same time, Canada acknowledged that suitable protection for  BCI is required. China 
submitted that this appeal raises a number of interpretative issues of systematic importance an d 
that those issues deserve full participation of third participants. In this respect, China noted that 
Rule 27(3) of the Working Procedures recognizes and protects the rights and abilities of third 
participants to participate in appeal proceedings, includ ing by responding to questions posed by the 
Division. China requested that its oral statement and its responses to questions at the oral hearing 
be treated as confidential. No comments were received from Australia, Brazil, Japan, Korea, or 
Russia.  
5. The request of the participants raises issues similar to those that were before the 
Appellate  Body in EC and certain member States – Large Civil Aircraft , US – Large Civil Aircraft 
(2nd complaint) , and EC and certain member States – Large Civil Aircraft (Article 2 1.5 – US). 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 co nduct 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 sensitiv e 
information, while ensuring that this sensitive information is not improperly disclosed.  
6. Pursuant to our Procedural Ruling of 21 July 2017, the participants have provided a list of 
persons who are authorized to have access to BCI and a list with a more l imited 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 pr otection for sensitive information. Therefore, only members of 
the participants' delegations who are BCI -Approved Persons are invited to attend the segments  of 
the oral hearing in which BCI will be discussed, and only members of their delegations who are WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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HSBI-Approved Persons are invited to attend segments of the oral hearing where HSBI will be 
discussed.  
7. Moreover, under paragraph 17(xvi) of the Procedural Ruling of 21 July 2017, 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 allow 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 Pe rsons are invited to attend segments of the oral hearing where BCI may be 
discussed, including question s and answer s. 
8. Accordingly, and for reasons similar to those adopted by the Appellate Body in EC and certain 
member States – Large Civil Aircraft , US – Large Civil Aircraft (2nd complaint) , and EC and certain 
member States – Large Civil Aircraft (Article 21.5 – US), we have decided to provide additional 
confidentiality protection for certain sensitive information during the oral hearing 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 indica ted 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 (Article 21.5 – US) provided adequate pro tection 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 Worki ng Procedures. The participants share this view and request us to adopt similar 
procedures in these proceedings. Thus , 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 abstain 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 segments of the oral hearing dedicated to the delivery of the 
opening statements.  
• Accordingly, all members of the participants' and third participants' delegations (including 
non-BCI Approved Persons) may attend this ini tial 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 paragraph 17(xiv) and (xvi) of our Procedural Ruling of 21 July 2017 , 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 a nd answers . 
• Only HSBI -Approved  Persons of the participants are invited to attend segments of the oral 
hearing in which HSBI will be discussed.  
• The third participants  will have access to the BCI versions of the submissions filed in this 
appeal and to the BC I 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 hearing. The 
first involves interrupting the BCI segments of the oral hearing each time reference will be made  to 
HSBI; the second involves having dedicated segments of the hearing to discuss HSBI. We believe it WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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is important that any additional procedures to protect sensitive information should interfere as little 
as possible with the regular conduct of the oral h earing 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 explo ration 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 hea ring 
11. Particular issues arise in this appeal, as they did in EC and certain member States – Large 
Civil Aircraft (Article 21.5 – US), in relation to the public observation of the oral hearing because of 
the need to avoid the disclosure of BCI and HSBI. We b elieve that the additional procedures adopted 
by the Appellate Body in EC and certain member States – Large Civil Aircraft , US – Large Civil Aircraft 
(2nd complaint) , and EC and certain member States – Large Civil Aircraft (Article 21.5 – US) 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 qualific ation in paragraph 13 below, we authorize public 
observation of only the delivery of the opening statements. 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 video -recording 
of the relevant segments of the oral hearing an d showing it to the public only after the participants 
have had an opportunity to review the video -recording for any inadvertent utterance of sensitive 
information. A similar procedure was used in EC and certain member States – Large Civil Aircraft , 
US – Large Civil Aircraft (2nd complaint) , and EC and certain member States – Large Civil Aircraft 
(Article 21.5 – US). We agree with the participants that deferred transmission to the public by 
video -recording will minimize the risk of inadvertent disclosure of  sensitive information , and we will 
give the participants an opportunity to review the video -recording for this purpose be fore it is shown 
to the public.  
15. For the reasons set out above, we adopt the following additional procedures for the conduct 
of all ses sions of the oral hearing to be held in this 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 BCI or as HSBI in the Panel proceedings and that is contained in documents 
or electronic media that are part of the Panel record. These Additional Procedures complement 
the Additional Proc edures to Protect Sensitive Information that we adopted in our Procedural 
Ruling of 21 July 2017.  
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 confidentiality 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 retained for this appeal may be present throughout 
the hearing, including segments dedicated to the discussion of BCI and HSBI.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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iv. BCI shall be disclosed during the oral hearing only to persons indicated in paragraph 15(iii) 
above , BCI-Approved Persons of the participants and Third Participant BCI -Approved Persons.2 
v. HSBI s hall be disclosed during the oral hearing only to  the persons indicated in paragraph 15(iii) 
above  and to HSBI-Approved Persons of the participants.3 
vi. The hearing segment dedicated to the opening statements of the participants and 
third participants shall be open to all members of the delegations of the pa rticipants 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 Thir d 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 una uthorized 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 Pers ons 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 17(xvii) of our Procedural Ruling of 21 July 
2017, shall be made available to each third participant. Only Third Participant BCI -Approved 
Persons 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 containing BCI and HSBI shall become part of the 
appellate record in this appeal and shall be kept in accordance with paragraph 17(vi), (vii), 
and (ix)-(xii) of our Procedural Ruling of 21 July 2017.  
Public observation of the oral hearing  
xiii. The first segment of the oral hearing, which will consist of the opening statements by the 
participants  and third participants, shall be open to public observation, subject to 
paragraph  15(xv) below. The final segment of the oral hearing, which will be reserv ed for closing 
statements, shall be open to public observation to the extent that the participants and 
third participants  indicate that their closing statements will not refer to any sensitive 
information , subject to paragraph 15(xv) below.  
xiv. The segments  open to public observation shall be video -recorded. Within two days of the 
completion of each session of the hearing, either participant may request to review the 
video -recording 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 participants 
review  the video -recording. If the video -recording contains BCI or HSBI, a redacted version of 
the video -recording shall be produced in which the BCI or HSBI ha s been deleted. In case of 
disagreement between the participants regarding the sensitive nature of any information 
                                                
2 BCI-Approved Persons and Third Participant BCI -Approved Persons are those persons designated as 
such under paragraph 17(xiv) and (xvi) of our Procedural Ruling of 21 July 2017.  
3 HSBI-Approved Persons are those persons designated as such unde r paragraph 17(xiv) of our 
Procedural Ruling of 21 July 2017.  WT/DS353/AB/R W/Add.1  
[BCI redacted, as marked [BCI]] 
 
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referred to during the opening or closing statements, the relevant information will not be subject 
to public observation.  
xv. The opening and clo sing statements of third participants wishing to maintain 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 no t be subject to 
public observation. For the first hearing, such requests must be received by the Appellate Body 
Secretariat no later than 5 p.m. Geneva time on Wednesday, 11 April 2018 . 
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 video -recordings, or if applicable the redacted versions 
of the video -recordings, shall be screened to WTO delegates and members of the public who 
have registered to observe the oral hearing once the review process referred to in 
paragraph  15(xiv) above has, if requested, been completed. Th e time and location of the 
video -recording screening and details regarding the registration procedure shall be announced 
in due course.  
 
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