WT/DS353/27  
 
6 July 2017 
(17-3619) Page: 1/6 
  Original: English  
 
UNITED STATES – MEASURES AFFECTING T RADE IN LARGE CIVIL AIRCRAFT  
(SECOND COMPLAINT)  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY T HE EUROPEAN UNION  
NOTIFICATION OF AN A PPEAL BY THE EUROPEA N UNION UNDER ARTICL E 16.4 AND ARTICLE 1 7 
OF THE UNDERSTANDING ON RUL ES AND PROCEDURES  GOVERNING THE SETTLE MENT  
OF DISPUTES ("DSU"), ARTICLE 7.6 OF TH E AGREEMENT ON SUBSI DIES AND  
COUNTERVAILING MEASU RES ( "SCM AGREEMENT "), AND UNDER RULE 20 (1)  
OF THE WORKING  PROCEDURES FOR APPEL LATE REVIEW  
The following communication , dated  29 June 2017, from the delegation of the European Union,  is 
being circulated to Members.  
 
_______________  
 
 
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 Settle ment Body its decision to appeal to the 
Appellate Body certain issues of law covered in the Panel Report and certain legal interpretations 
developed by the Panel in the dispute United States – Measures Affecting Trade in Large Civil 
Aircraft (Second Compla int) (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 constitute 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 elabor ated in its submissions to the Appellate Body, the European 
Union appeals, and requests the Appellate Body to reverse, modify, or declare moot and of no 
legal effect the findings, conclusions, and recommendations of the Panel, 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 f inding 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 A rticle 1 of the SCM Agreement .2 The Panel erred in characterising the provision 
of funding and support to Boeing as "purchases of services ", rather than as, respectively, a 
                                                
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 other 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.  WT/DS353/27  
 
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  direct transfer of funds under Article 1.1(a)(1)(i) and the provision of goods 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 finding (in the alternative) that the allocation of intellectual property rights 
arising from the DOD proc urement 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 
insufficient evidence that Boeing has actually used the tax concessions after 2006, there can 
be no foregoing 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 longer 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 Arti cle 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 subsidy provided by South Carolina to Boeing, through EDB proceeds used 
to fund Project Gemini facilities and infras tructure, is not specific within the meaning of 
Article 2.1(c) of the SCM Agreement .11  
                                                
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 . 
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.  WT/DS353/27  
 
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  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, thr ough 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 .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 
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 Article 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 present 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 application 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 can not 
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 Ar ticle 11 of the DSU,  
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 
though the original panel had determined that an adverse e ffect from such sales lasts until 
deliveries under the sale are completed.17  
15. The Panel failed 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 
proceeding ".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 th e European Union 's continuing 
                                                
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.  
14 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.  
15 Panel Report, paras. 9.107, 9.312 -9.314, 9.33 2, 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).  WT/DS353/27  
 
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  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 interpretati on of Articles 7.8, 5, and 6.3 of the SCM Agreement , when 
interpreting those provisions  to require 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 
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 no n-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 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 lower 
prices for Boeing LCA.23 
21. The Panel erred in the application of Articles 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 effec ts.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 have accelerated the development of technologies 
                                                
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).  
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, 9.24 3, 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, 9.4 84, 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, 9.288, 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).  WT/DS353/27  
 
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  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 assessm ent of the matter under Article 11 of the DSU, 
when finding that 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 
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 DS U, when finding, 
based exclusively on the counterfactual 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 application 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 technolog y 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 matter, 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 
                                                
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).  
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, 9.15 3, 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, para s. 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).  WT/DS353/27  
 
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  development, that the "technology effects " of the pr e-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 w ere 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 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 ".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 i ts finding that "the acceleration effect of the 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 
 
__________  
                                                
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).  
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).