WORLD TRADE  
ORGANIZATION   
WT/DS353/17 
2 October 2012  
 
(12-5328) 
 Original:   English 
  
 
UNITED STATES – MEASURES AFFECTING TRADE  
IN LARGE CIVIL AIRCRAFT  
(SECOND COMPLAINT) 
 
Recourse to Article 22.2 of the DSU,  
and Articles 4.10 and 7.9 of the SCM Agreement,  
by the European Union 
  
 The following communication, dated 27 Sept ember 2012, from the delegation of the 
European Union to the Chairperson of the Dis pute Settlement Body, is circulated pursuant to 
Article 22.2 of the DSU, and Articles 4.10 and 7.9 of the SCM Agreement.  
_______________ 
 
 
Request by the European Union pursuant to Article 22.2 of the DSU 
and Articles 4.10 and 7.9 of the SCM Agreement  for authorization from the DSB 
to take countermeasures against the United States in an annual amount of USD 12 billion  
 
 
The Panel Report in United States – Measures Affecti ng Trade in Large Civil Aircraft 
(Second Complaint ) concluded that the United States provid es subsidies to Boeing that are prohibited 
by the Agreement on Subsidies and Countervailing Measures  (SCM Agreement ) and/or that cause 
adverse effects and serious prejudice to the interest s of the European Union. The Panel recalled that 
prior recommendations of the Dispute Settlement Body (DSB) with respect to this matter continue to 
be operative, and recommended that the United Stat es take appropriate steps to remove the adverse 
effects or withdraw the subsidies.
1  
 
The Appellate Body confirmed that the United St ates provides subsidies inconsistent with its 
obligations under the SCM Agreement , and recommended that the United States take appropriate steps 
to remove the adverse effects or withdraw the subsidies.2  
 
At its meeting on 23 March 2012, the DSB a dopted the Appellate Body Report and the Panel 
Report, as modified by the Appellate Body Report.3 
 
Article 22 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  (DSU ) provides that, in the event of a failure to  comply with recommendations and rulings 
                                                      
1 Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint ), 
particularly Section VIII. 
2 Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second 
Complaint ), particularly Section XI. 
3 WT/DS/353/13, 26 March 2012, United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) , Appellate Body Report and Panel Report, Action by the Dispute Settlement Body. WT/DS353/17 
Page 2  
 
  of the DSB within the specified period, the comp laining Member may request authorization from the 
DSB to suspend the application to the Member c oncerned of concessions or other obligations under 
the covered agreements, and the DSB shall, upon request, grant such authorization.  
Articles 4.7 and 4.10 of the SCM Agreement  require prohibited subsidies to be withdrawn 
without delay, failing which the DSB shall, upon request, grant authorization to the complaining 
Member to take appropriate countermeasures.  
Articles 7.8 and 7.9 of the SCM Agreement  require a Member granting or maintaining a 
subsidy that has resulted in adverse effects to take appropriate steps to remove the adverse effects or 
withdraw the subsidy within six months, failing wh ich, in the absence of agreement on compensation, 
the DSB shall grant authorization to the complaini ng Member to take counter measures, commensurate 
with the degree and nature of the adve rse effects determined to exist.  
 
By communication dated 24 April 2012, the Unite d States and the European Union informed 
the DSB of the "Agreed Procedures under Articles 21 and 22 of the Dispute Settlement Understanding  
and Article 7 of the SCM Agreement " between the European Union and the United States with respect 
to the dispute United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)  
(the Sequencing Agreement).
4 Paragraph 6 of the Sequencing Agre ement provides that the European 
Union may request the DSB to authorize counterme asures if it considers th at the United States has 
failed to comply with the DSB recommendations and rulings within the six-month period provided for 
in Article 7.9 of the SCM Agreement . 
 
The six-month period provided for in Article 7.9 of the SCM Agreement expired on Monday 
24 September 2012.  
By communication dated 23 September 2012 the United States notified the European Union 
that the United States has taken a number of actions allegedly withdrawing the subsidies or removing 
their adverse effects, and thus complied with the recommendations and rulings of the DSB. The 
European Union considers that the United States c ontinues to grant or maintain prohibited subsidies 
and that it has not taken appropriate steps to rem ove the adverse effects of the subsidies or to 
withdraw the subsidies, and that it has therefore failed to comply with the DSB recommendations and 
rulings within the six-month period provided for in Article 7.9 of the SCM Agreement . 
 
There is no agreement on compensation. 
 
Accordingly, pursuant to Article 22.2 of the DSU  and Articles 4.10 and 7.9 of the 
SCM Agreement , the European Union requests the DSB to gr ant authorization to the European Union 
to take countermeasures that are appropriate, and commensurate with the degree and nature of the 
adverse effects determined to exist, respectively.   Based on currently available data, countermeasures 
consistent with these standards total approximately USD 12 billion
5 annually.  The European Union 
may update this amount annually using the most recently available data. 
 
In considering this request for authorization to  take countermeasures, the European Union has 
followed the principles and procedures set forth in Article 22.3 of the DSU .  Accordingly, the 
European Union intends, in the first instance, to  take countermeasures in the goods sector, under the 
                                                      
4 WT/DS353/14, 27 April 2012, United States – Measures Affecting Trade in Large Civil Aircraft 
(Second Complaint) , Understanding between the European Union and the United States Regarding Procedures 
under Articles 21 and 22 of the DSU , concluded on 12 January 2012. 
5 Equivalent to approximately EUR 9.35 billion at current exchange rates.  As a matter of commercial 
practice, sales of large civil aircraft are generally ne gotiated in USD, and, accordi ngly, the European Union's 
request for authorization to take countermeasures  is, as stated above,  denominated in USD.  WT/DS353/17 
 Page 3 
 
 
  covered agreements listed belo w.  However, consistent with Article 22.3(c) of the DSU , the European 
Union considers that:  (i) it is not practicable or effective to take counterme asures in the goods sector 
up to the full amount stated above; and, (ii) the circumstances are serious enough, given, inter alia , 
the degree and nature of the adverse effects and serious prejudice.  
Accordingly, the European Union's countermeasures would consist of one or more of the 
following:  
(1) suspension of tariff concessions a nd other related obligations under the General 
Agreement on Tariffs and Trade 1994  on a list of US products to be established in 
due course;  
(2) suspension of concessions a nd other obligations under the SCM Agreement ; and, 
(3) under the General Agreement on Trade in Services , suspension of horizontal or 
sectoral commitments contained in the consolidated EU Schedule of Specific Commitments, as supplemented to incorpor ate the individual Schedules of Specific 
Commitments of its Member States, with re gard to all principal sectors identified in 
the Services Sectoral Classification List. 
In accordance with Article 22.6 of the DSU  and paragraph 7 of the Sequencing Agreement, if 
the United States objects to the level of suspension proposed and/or claims that the principles and 
procedures set forth in Article 22.3 of the DSU  have not been followed, the matter shall be referred to 
arbitration.  Such arbitration shall be carried out by the original panel, if members are available.  
 
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